Sample enterprise law assignment

Requirement

LAWS 1001 ENTERPRISE LAW Assessment task 2b Individual Case Study

PROBLEM SCENARIO: Dada Pty Ltd (Dada) is an Australian chain of supermarkets and grocery stores and hires Lorenzo to distribute products to its different stores in Sydney. Lorenzo does not sign any contract with Dada, and the whole negotiations are conducted over the phone. As part of the arrangement, when the products are delivered to a particular store, an employee of the store signs a form provided by Lorenzo. The form contains a disclaimer. The following disclaimer is written in the form Lorenzo provided to the store: We do not accept any responsibility for the loss of or damage to any item caused by any acts, defaults, or negligence of the carrier.

Lorenzo delivers the products on several occasions, and on each time, after the delivery, an employee signs a form but never reads the form or is even aware that it contains a disclaimer. On one occasion, the products are damaged on the way to delivery due to negligence of Lorenzo. Dada sues Lorenzo for breach of contract. Lorenzo relies on the disclaimer.

Dada also reaches an agreement with Fantasy Advertising Pty Ltd (Fantasy) to provide for its branding and marketing strategies for five years. Dada presents its standard form contract to Fantasy for signing. One of the terms of the standard form contract allows Dada to the right to terminate the contract at any time, provided it gives one month’s notice. Before signing the contract, Fantasy expresses concern about this term as it understands that the contract is for five years. The employee representing Dada assures Fantasy that the contract is for five years and although the term to terminate the contract at any time with one month’s notice is included in the standard form contract, it is rarely used by Dada. Fantasy then signs the contract. However, six months later, Dada considers enforcing this term against Fantasy on the ground of Fantasy’s inability to generate effective strategies for attracting a diverse range of customer base

Answer the following two questions with full explanation:

(a) Advise Dada whether it can recover the value of the damaged products from Lorenzo. (15 Marks)

(b) Advise Fantasy whether it is bound by the term in the contract. (10 Marks)

Solution

• Advise Dada whether it can recover the value of the damaged products from Lorenzo

According to Australian law, goods carriers are liable for the safety of goods. Carrier is liable for the loss and any damage of goods in their possession as transporters unless they can prove that the goods got damaged because of certain excepted causes. An example of excepted causes according to the Australian law include the act of God, fault of the transporting means like vehicle or shipper,  or even the inherent vices of the transported goods. In this case, the damage to goods was not attributed to the above-named excepted causes but because of the carrier’s negligence (Lorenzo).

Under Australian law, the rights and obligations of a carrier are determined by specific contractual terms that the two parties have entered into and the common law principle referred to as the laws of bailment. In this case, there were relevant contractual terms provided as a disclaimer. In this case, Dada had placed a disclaimer at the end of the form that stated that the company does not accept any responsibility for the loss of or damage to any items caused by acts, defaults, or negligence of the carrier or otherwise. In this case, it is not that the goods were damaged due to negligence by Lorenzo; hence, the company can recover the value of the damaged products from the carriers.

Bailment will happen when possession of the goods is transferred by Dada, who is the owner, to Lorenzo, who in this case is the new party of the carrier, the bailee. In this case, when the possession of goods is transferred to the carrier, the ownership of those goods is not; however, in case of damage because of the bailee’s negligence,  the bailee is responsible for the damages.

Thus, Dada can recover the value of the damaged goods because Lorenzo, as the carrier with a contractual term, had the responsibility to take reasonable care for the safety of the goods as they are being transported to the buyer. Lorenzo will compensate for the damaged goods because of the failure to take reasonable care in transporting them. 

• Advise Fantasy whether it is bound by the term in the contract.

An agreement or contract will always have terms, and the two parties must read and understand the provided terms, whether they are delivered in writing or oral (Austen-Baker, 2017). Terms state the contract and what each party should do to make the agreement workable. They include clauses in the contract that addresses, for instance, what each party is supposed to do, how they should execute their mandate, how a contract could end, or the terms of termination of a contract.

In this case, Dada had a contract with Fantasy that has a term that allows the company to terminate the contract at any time, provided it gives one month’s notice. Therefore, Fantasy was not bound by the term of the contract because it was promised by the employee representing Dada that the company rarely used that term. The use of the term rarely means that sometimes it can bind by the term even though not always, and therefore, it can also use the term in the contract. Furthermore, in a contract, whether express or implied, a statement of fact intended to be legally binding is part of the contract. Therefore, Fantasy will not remain bound by the term of the contract because the expression was made by the company’s representative. In fact, this was a pre-contractual statement made by a company representative, and even though the such statement is not a term, it has a contractual effect as a collateral contract.

Fantasy needs to understand the agreement contained express terms as there are terms that set out the details of the agreement or contract. The company employee’s words could be relied upon as an implied contract because such a contract must be determined by facts, usage, custom, dealing, or the law. In this case, there are facts that the company (Dada) rarely uses the term of terminating the contract anytime. In addition, the intention of the employee of Dada was not to prevent Fantasy from finding defects. However, it was only informing Fantasy that sometimes or rarely do, the company a  bind by that term. Therefore, as it was included in the contract in writing and oral, it become an express term that does not bind Fantasy.

References

Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.