Whether Raymond Is Entitled to Pay 2days Hire Fees as Opposed to a Days Fees - Case Study Example

BUSINESS LAW STUDENT NAME PROFESSORS NAME COURSE TITLE DATE Question 1(a): Whether Raymond contractually bound to pay 2-day hire Issue The issue in this problem question is whether Raymond is entitled to pay 2days hire fees as opposed to a day’s fees. This arises because Raymond hired the car on Tuesday and returned it on Wednesday, a different day than one contemplated in the contract. Law A contract is a legally enforceable agreement between two or more parties, enforceable by law and any breach amounts to awarding of a remedy by a court of law1. A valid contract must be certain, outline specifically the obligations of each party to the contract. In the case of Currie v Misa2 the court held that a valuable consideration in the sense of the law, may be a right, interest, profit, or benefit that accrues to one party or some forbearance, detriment or loss or responsibility given suffered or undertaken by the other. In contract law, there can be no contract unless the parties’ agreement is objective, reasonable and certain. In this case, if a clause is vague, ambiguous or uncertain it is of little importance and that clause is void. In the case of Hillas and Co Ltd v Arcos Ltd3, the court can ascertain the intention of the parties in creating the contract or some details. However in the case of Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd4 the court stated that a contract that leaves the essential matter for later determination by one of the contracting parties would be unenforceable as it is either incomplete or uncertain or because the promises contained in the agreement is illusory. Application of Law to Facts A valid contract existed between Raymond and Avista that is a contract for car hire services. In creating the contract, Raymond furnished Avista with $140 as consideration for the car hire services and this was in consideration that it would be for a day. The ambiguity in the contract is that Avista alleges that it meant returning the car on the same day that is 11.00am –midnight. As stated in Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd the court stated that it is wrong for a party to rely on its own interpretation in deciding the terms of the contract. A day is 24hours, a universally accepted practice. Raymond took possession of the car at 11.00am Tuesday and returned the car at 9.30 am. This was at least 2hours earlier than the expected time. Raymond is not entitled to pay for two-day hire since the contract was ambiguous on the meaning of a day and in common practice, a day implies 24hours. Conclusion Raymond is entitled to pay for day and not for two days since the car was returned before the lapse of 24hours. Question 1(b): Whether Raymond Can argue that he is not responsible for damage sustained to the hire vehicle Issue The issue in this scenario question is whether Raymond can claim that he is not responsible for the damage sustained on the car. It follows that in creating the car hire contract, a representation made by Chen that’ ‘the car was insured’, this however was untrue because an exemption clause was introduced at clause 20 limiting liability of Avista in case of damage. Law The law states that pre-contractual statements can form part of a contract, if it induced one party to enter into the contractual agreement. Representations whether express or implied can form can form part of the contract if it is fundamental to the performance of the contract. In Associated Newspapers v Bancks5 in determining whether a representation is a term, then the plaintiff would not have entered into the contract if he or she assured of a strict or at least substantial compliance with the terms of the contract. Further a representation as stated in Van den Esschert v Chappell6 it must have a nexus to the time of contract formation. In Couchman v Hill7 the court stated that the statement made must be important to the parties to the contract. In the case of Oscar Chess Ltd v Williams8 in order for statements to be part of a contract the person making the statements have special skills or knowledge. Where there is a misrepresentation if it is innocent, then the party disadvantaged can rescind the contract but if fraudulent then one is entitled to damages and rescission. A party that undertakes to perform an obligation in a particular manner or keep the status of a particular item, then one cannot rely on the conditions intended to protect you in enforcing the contract9. In this case, there was an implied term on the contract that Raymond would keep the car in the same condition”. However, the probability of an accident occurring at any particular time while performing the contract is still high, then Raymond can claim he is not responsible for the damage. Exemption clauses are included in contracts that limit the liability of one party to the contract in relation to a particular subject matter. In L’Estrange v Graucob10 a general rule was applied that a person who has signed a document that contains an exemption clause is automatically taken to have read that document even if they have not. However, the circumstance surrounding the signing of the contract is important to determine its validity. In Oceanic Sun Line Special Shipping Co v Fay11 where a brochure stated “the carrier contracts on its usual conditions of carriage”, the conditions were not available for inspection. The court held that reasonable notice informing a person the limiting terms of a contract is given; it is not enough that they may be available upon request. An exemption clause would be invalid if there are vitiating factors such as fraud, misrepresentation or undue influence. The exemption clause would then not be applicable or relied upon. Application of the Law to Facts Raymond signed the rental form after Chen informed him that the $140.00 per day includes insurance. This was a representation made by Chen, Avista’s employee and induced Raymond to sign the contract without reading the terms and conditions. The exemption clause was his attention when returning the car. As stated in Oceanic Sun Line Shipping Co v Fay where there vitiating factors such as misrepresentation precedes an exemption clause then it would not applicable. Raymond is not entitled to pay damages to the car. Conclusion Raymond‘s contract contained an exemption clause that was binding since he had signed it. However, vitiated by misrepresentation the contract is void. Question 1(c): Whether Avista can rely on the document, Charlie had him sign Issue The issue presented is whether Avista can rely on the document signed by Raymond in the presence of Charlie. This is because Charlie placed a condition that unless he signs the document the vehicle he booked in the afternoon will not be availed to him. Law A contract is a voluntary undertaking by parties to bind them in contractual agreements. In reiterating, the statements made in the case of L’Estrange v Graucob12 that a person who has signed a document ought to have read the document even if they have not. In contract law, vitiating factors include; duress and undue influence adduced in order to avoid reliance on the document. Common law and equitable doctrines state that duress and undue influence renders a contract voidable. Duress is as an illegitimate pressure exerted by a party to coerce the other to enter into a contract with certain terms13. Duress is provable if there are physical threats or economic pressure that amounts to coercion14. There were no alternatives given or practical alternative course and was forced to enter or modify the contract15. The pressure must also be legitimate16 to induce a reasonable person to enter into a contract. The duress must be able to cause a reasonable person to do something he or she would not do in a similar circumstance. On the other hand, undue influence occurs when a party to the contract uses their influence over the other person to induce them into a transaction for an undue benefit17. In the case of Barclays Bank v O’Brien18 that it is proved that one entered the transaction as a result of undue influence from the other party. In applying undue influence; there must be an influential relationship, the dominant party exercised undue influence to secure an unfair advantage and it caused the subservient party to enter into the transaction. Application of the Law to Facts Charlie produced a document that Raymond must sign to pay for the damage to the vehicle. Upon refusal to sign by Raymond, Charlie tells Raymond that failing to sign the document the vehicle he had booked for the afternoon would be unavailable (Barton v Armstrong19). Under these circumstances, there was no other means of transportation to get to Dubbo so Raymond was with no option but to append his signature to the document. The remedies available are rescission or damages. Conclusion The contract entered into by Raymond and Charlie is void for undue influence and therefore unenforceable. REFERNCES Barclays Bank v O’Brien [1993] UKHL 6 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ld (1991) 24 NSWLR 1 Currie V Misa (1975) LR 10 Ex 153 Gibson, A. & Fraser, D. (2013). Business Law. 7th ed. Pearson Education Australia. Hillas and Co Ltd v Arcos Ltd [1932] 147 LT 503 (HL) L’Estrange v Graucob [1934] All ER 16 Read More