Rights and Liabilities under the Law of Contract - Assignment Example

BUSINESS LAW Course: Instructor: School: City: Date: Question 1 Ref: Client Name: Client Address: BY Email: Dear Client, Business Law RIGHTS AND LIABILITIES UNDER THE LAW OF CONTRACT FOR THE MENTIONED CASES. We are grateful that considered us to advise you on the status of the two cases in relation to the law of business. Highlighted below is clear information on what should be expected in these scenarios. We have also given some background information on the laws of contract; the National Credit Act and The Consumer Protection Act that apply to these situiuation. The existing relationship between consumers and sellers is basically a contract one. The seller accepts to sell their products to consumers who also agree to purchasing similar items without being coerced to do so. Contracts are therefore the main defining factor of consumer laws. For a long time, the relationship between the consumer and the producer or seller has been so unequal (Jeannie, Andrew & Arlen, 2012). The contracts they drew were mostly more beneficial to the producers more than the customers themselves. In that era, a consumer would either sign a contract based on the terms and conditions of the company or fail to buy the product all together. The main challenge was that all other producers had the same terms of contract and therefore no matter how uncomfortable one was, they had to sign the contracts (David & Mary, 1987). Introduction: Several industries have and are still practicing abusive and unacceptable conducts in industries such as poor quality of items, overcharging and overselling. Any attempt by the consumers to push this norm to the wall would have great cost implication on them. Similarly, some producers have also suffered losses because of some perilous acts from their consumers causing conflicts. To strike as balance between the consumers and producers, the Australian government came up with laws to govern consumer related issues. These laws and regulations were to ensure equity for both consumers and producers alike with trade terms that would protect the interests of all the parties involved. Consumer Protection Act and the National Credit Act: So far, the laws have undergone revision into two acts; the consumer protection act and the national credit act. The two laws clearly outline the rights and liabilities of all consumers on the basis of the internationally accepted principles of the eight consumer rights by the United Nations. However, there are still more abuses towards consumers and producers in the market as most producers do not want to operate according to the spelt out standards of operation. This offence can however be punished by implementation of the laws of the state that govern this area. According to the contract law, the requirements allow for one to get into a contract under given conditions that would prove the ability of each of the parties to honor the terms of the contract as stipulated. In the case of James, it is clear that he chose to go for an expensive offer which according the seller was not affordable for him as a student. He however chose to take the expensive product because he it was of good quality. Though seemingly, he did not meet some of these requirements. The right to good quality products and to return faulty goods: Under the consumer protection act, the law gives a provision of the consumers’ right to good quality goods and a possibility of returning those that are found to be faulty. However in this case, he is liable for the stolen product since at the time of purchase, it was in good quality state and therefore he could not benefit from this right. The seller would equally not be held liable for any problem that would have occurred on the good since the consumer accepted it to be in a good state. The damage that followed thereafter could therefore not be paid for since the product was already in custody of James. Legal consequences of defaulting a debt: After paying the first two installments, James was unable to complete the payment according to the contract. This amounted to breach of contract since he was unable to fulfill his part of the contract (Butterworth’s, 2005). According to the consumer protection act, in the event that the consumer is unable to repay the debt as agreed, they should take a step and contacting the creditors immediately and try to make an alternative payment arrangement with them. This would help save him from the harassment that comes with the legal process that will have to involve a debt collector. This is something that James did not do; this therefore increased his liability because the legal process would make him pay more money at the end of the whole process. Getting a minor into a contract: On the other hand, since James was only 17 years at the time of the first contract with Michael, he can hold Michael accountable through a provision of the law that stipulates that a minor does not qualify to get into any contract. Children’s act (No. 38 of 2005) defines a minor as any one less than 18 years old. If the minor has to get into a contract, it has to be with the consent of the guardian or parents. Without these conditions, the person who entered into a contract with him cannot sue him for the lost property. Reckless lending: According to this law, any creditor or trader who lends to a consumer without asking fundamental questions on the ability of the consumer to pay can be found guilty of careless lending. In this case, Michael knew that James was a student and he doubted his credibility from the beginning but still gave him the product. In this case, we are not given any case of dishonesty on the side of James and therefore, the creditor may not have the right to recover the lost money (MARTINDALE-HUBBELL, 1995). The missing sound equipment at the parking lot: Melbourne CBD management does not remain liable for the stolen item because the terms of the contract are clearly spelt that taking care of the car while at their premises is not part of the deal. James with therefore have to take care of the whole cost. Sale of computer: When James sells his computer to Sam and later demands an additional $500, he does not have any right anymore because at the time of the contract, the price was $500. Changing the price and expecting Sam to pay will not be defended by the contract law. However, Sam can be protected by the law of contract. Question 2 If Patrick is the only secured creditor, will he get his $100,000 back? It a business or company becomes insolvent, the winding up process requires to be carried out as stipulated by the law. This means that once the business disposes of its properties to settle its debts, there is a given order in which the funds are to be distributed. In this process, the secured creditors normally take the first position. This can then be followed by other charges such as winding-up expenses, paying unpaid wages, unsecured creditors and other shareholders (Peter, 1998). It is only the secured creditor who has the right to launch legal proceedings against the company. They can also do security enforcement in case the company is in default (Grand and Robert, 2012). It is important to note the legal rights of the secured creditors over the unsecured ones. to sell off any company assets over which they posses security, this will however make them lose their security unsecured creditors. This will therefore means that before any debt is settled, they receive their entitlement. However, in the event that the secured creditor is a sole proprietor, he will first have to ensure that all the other creditors receive their compensations in full and only take the remaining. In this case, Patrick as a sole shareholder despite being a secured creditor has to act with the interest of all other creditors. According to the law bears responsibility for all the creditors and therefore will only receive his share after all other creditors receive their payment. As he invested into the company business, it was a big risk and therefore he is at a higher risk of losing his money. This therefore means that he will use all the money in paying other debtors. He will therefore not be able to get back his claim of the $100, 000. Workers’ Compensation Claim: The first creditors who normally feel the impact of insolvency of a business operation are the employees. The closure of the premises mean, lose of their jobs unlike the employers who can easily get other sources of income from other investors, there is a high chance that most of their loses and needs will not be covered. Their unpaid wages, allowances and salaries may remain unpaid since the employer may only be concerned with what concerns him and his business but forget about the plight of the employees. Because of this, the provision of the law by both the Corporations Act and Bankruptcy Act provide special consideration for employee compensation by putting them at the second rank in terms of the order in which creditors should be paid. Therefore, in the given case, Patrick, being a worker in the company, will receive his claim of worker’s compensation. The law also stipulates that each level be paid in full before effecting payment for the next level in the specified order. The stated laws that govern rights and entitlements of consumers give a level playing ground for both consumers and traders alike. The equal terms of trade are of great significance in making financial decision since all the parties know the consequences of all decisions made. For further clarification on any other issue related to this, please feel at liberty to contact our offices. Yours Faithfully Reference list Australia. Butterworths Pty.limited. (2005). Federal Statutes Annotations, Volume 2, Butterworths publishers. Grant W. N, & Robert L. (eds). (2012). Bankruptcy and Insolvency Taxation Volume 576 of Wiley Corporate F&A.4th. John Wiley & Sons. Martindale-Hubbell. (1995). Martindale Hubbell International Law Digest. Volume 127, Part 1995; Volume 135, Part 2003, Martindale-Hubbell. ISBN. Jeannie M., Andrew R., & Arlen D. (edds). (2012). Principles of Contract Law; LBC casebooks. 4th, Thomson Reuters (Professional) Australia. Peter, G. (1998). Concise Contract Law; Concise series. Federation Press, Australia. David E., & Mary, E. (1987). Law of contract in Australia, CCH Australia. Read More