Contract Law Essay

      This is to assess the legal issues in a case study involving a contract law in relation to common law of Australia as well as any Australian legislation.  This is a case involving Michael and Limassol and one of the issues to be answered is whether Limassol can sue Michael for breach of contract while the other is whether Michael is correct in saying that the “Conditions” did not apply.

         Starting with the issue on whether Limassol can sue Michael for breach of contract, it may be stated that such is a right that is bestowed upon the former but as to whether the breach of contract could prosper is another issue.

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  The only requirement is whether Limassol can exclude his liability for possible tort in the contract, which the existing jurisprudence seems to support.

        Under the principle of freedom to enter into a contract, contracting parties can establish clauses and conditions that would bind them provided said clause or conditions does not violate public policy  or the law.

Thus in certain circumstances, it is possible to contract one’ way to tort liability. Under this principle it may be argued that an owner of a sporting event stadium or a concert hall may have a disclaimer on the back of your ticket which says that they cannot be held liable for any accidents on the premises. Such use of ticket which in sense is a tiny written contract but a still a contract is meant to protect the owner to avoid liability from tort. It must be pointed out however that the said existence of a condition or clause excluding or limiting liability contract may not necessarily relieve a person of liability under tort law between the contracting parties, except if there is express provision in the contract. Using a decided case, it was held that where concurrent liability in tort and contract exists, the plaintiff is given by law  the right to emphasize the cause of action that would entitle in a most advantageous situation as far as the particular legal consequence are concerned  except where the effect of this “concurrent or alternative liability in tort … would be to permit the plaintiff to circumvent or escape a contractual exclusion or limitation of liability for the act or omission that would constitute the tort.” Central Trust Co. v. Rafuse (1987).

         As whether the case will prosper is determined by resolving the issue of whether the conditions in the contract which Michael was able to read could apply in the agreement of the parties.  To analyze whether the unread conditions of the contract could apply the question that would be asked is whether the elements of a contract were found to make the contract valid. The requirements for a contract under Australian law appear to be found in the case at hand:   the presence of offer and acceptance; presence of consideration, which take the form of supply of money, property or services; performed formalities as the presence of written document; intention to enter in to legal relations; certainty of what the contract requires or restricts to be done, and the capacity of the parties to enter in to a contract.

       From all the elements stated above, it could be argued that the contract is existing exception as to the certainty of what the contract requires or restricts to be done.  This is of course referring to the conditions on whether they apply. The success of the breach of contract will therefore lie into the validity of the defense of Michael that the conditions do not apply. The conditions being in the nature of exclusion clauses must therefore be examined.  Case facts provide that condition to contain the following: “Limassol is excused of any liability for injuries suffered by band members in the course of performance.”

        As to whether exclusion clauses are valid, the answer is in the positive since agreements to prevent damage claims based on the contract are legal except if the purpose is to protect a party from fraud. As general rule exclusions clauses are interpreted strictly against the party who caused it. In the case at hand, it was Limassol who caused the conditions to be there. Although it may be argued a party can never agree to waive the right to address itself to a court of law absolutely and for all purposes for contractual redress, the court normally upholds the contract in the absence of fraud.

      The cases of Thornton v. Shoe Lane Parking Ltd. (1971) and Parker v. South Eastern Railway Company (1877) are applicable cases to use in deciding the validity of conditions. In both cases,   a customer paid his money into an automatic teller and out came a ticket, as said customer comes into a parking garage. Said patron failed to notice a part of the ticked which says “This ticket is issued subject to the conditions of issue as displayed on the premises.” This notice was in addition to a notice board outside which reads “All cars parked at owner’s risk.”

       The court in said case ruled that the liability exemption condition did not apply because the contract was concluded when the patron put his money into the machine. The judgment portion is quoted as follows: “The customer is bound by those terms as long as they are sufficiently brought to his notice beforehand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late (the patron having already paid). The contract has already been made.” Thornton v. Shoe Lane Parking Ltd. (1971) Parker v. South Eastern Railway Company (1877).

          It may further be argued a contract, written in form, binds the person regardless of whether he or she has read it or not (L’Estrange v. Graucob [1934] 2 KB 394)

as long as the document is contractual in nature. ( Curtis v. Chemical Cleaning and Dyeing Co [1951] 1 KB 805) . However, the circumstances of the case would show negligence on the part of Limassol to prevent the throwing of bottle, hence letting the person to escape liability because of the contract may not be just.

       It may thus be concluded that Michael could not invoke the invalidity of the clause as he has the chance to read the conditions before signing the contract.  However, the nature of circumstances would demand the equity should be applied over that was the decided upon using the case of a parking customer where payment was made before reading.  The fact the Michael was not negligent in conducting its service; it may not be made to suffer for the negligence of the Limassol in preventing the throwing away a bottle to the member of the band. To uphold, Limassol would amount to fraud which is not available in exclusion clauses.

References:

Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147, 31 D.L.R

Curtis v. Chemical Cleaning and Dyeing Co [1951] 1 KB 805

L’Estrange v. Graucob [1934] 2 KB 394

Parker v. South Eastern Railway Company (1877) 2 CPD 416

Thornton v. Shoe Lane Parking Ltd. (1971) 1 All ER 686

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