Contract Law Deceptive Business Conduct

Question: Discuss about the Contract Law for Deceptive Business Conduct. Answer: Issue of the Case: Whether the University is legally obliged to pay the extra cost for work while it is already mentioned in contract that the work must be completed by 1st March, 2016. Facts of the Case: In Western Australia, a regional University made a contract with Marina Construction Limited (MCU) for some renovations in an old hotel to convert it into a hostel so that it can be used for students to be enrolled for the first semester. According to the contract, the work must be completed by 1st March 2016 but later on, MCU have discovered that the structure of the building require a lot of reparation and it is impossible for them to complete the work within given time-period. The directors of MCU recommended the representatives of the University that if the price of the contract is increased to a certain amount, they would be able to hire extra labors to complete the contract within given time. The University agrees to the terms and work continues to complete it by 1st March. The University council is upset with the additional payment and wants an advice whether the University is legally obliged to pay the extra cost for the work. Rules: Australian Contract Law: The Contract law which is framed in Australia comes from the English Common law and does not follow any codified or statute law[1]. The courts of Australia give considerable significance to the intentions of the parties making contract which are kept as evidences in document or written form. According to this law, a contract is considered as a promise between the parties involved in a contract which can be legally enforced and is an undertaking by them to perform or to refrain from doing something. It requires an agreement between the parties, their consideration, their agreement for any legal formalities, and legal capacity to contract. Consumer law framed in Australia states that an individual is considered to be involved in ambiguous or unreliable conduct in trade or commerce, if he/she misleads or deceive or likely to mislead or deceive the other party involved in the contract[2]. Contract law does not provide a party with a right to get away from the contractual obligations if a party is being mistaken about some aspects or clauses of the contract. In unilateral type of mistake, one party is mistaken about some aspect of the contract but the other is not. However, in common law, there is no provision of remedy for unilateral mistake but law of equity plays a significant role in such circumstances. Contracts are considered to be discharged by way of performance of the contractual responsibilities by the parties. According to general rule of contractual responsibilities, a contract must be performed completely and exactly according to the mentioned clauses in the contract. It means that contract must be discharged fully and exactly according to the terms and conditions of the contract. Application: Considering Contract law of Australia, in this case, MCU should be held guilty to deceive the University as it was clearly mentioned in the contract that the work will be completed within the given time and a certain fixed amount of money was decided for the completion of the work. However, after starting construction work, being not capable to complete the work within time, they demanded extra money. It is simply a violation of contract. Considering the case of Smith v. Hughes[3], in which the decision given by the Court was that the plaintiff must have known of the defendant's mistake at the time of making of the contract[4]; it is considered as the duty of MCU to calculate the amount of time required to complete the construction work but unaware of this, they got involved in the contract. Hence, they should be held liable under the law for demanding extra amount for completing the task within time. Taking into consideration unilateral type of mistake under Contract law, contractual remedy should be provided to the University due to unilateral type of mistake done by MCU. The act done by the corporation is not according to the general rule of contractual responsibilities. MCU has demanded extra price by the University to complete the work on time which is mentioned in the contract. The contract is not being discharged exactly according to the terms and conditions agreed by both the parties. Thus, MCU should be held liable to violate the general rule of contract also. Conclusion: After discussing the law of Australia for the purpose of Contract, it is evident that MCU is guilty of violation of contract made with the University. The corporation should be held liable under the Contract Law of Australia and should compensate the University accordingly[5]. Remedies: In case of violation of contract by one party, the non-violating party must be entitled to damages suffered by them as a matter of right. Damages are considered as an alternative for performance and put the non-violating or suffering party in the position it would have been if the contract had been performed according to the terms and conditions mentioned in the contract. Thus, MCU should be held liable to pay the extra amount taken by it in order to perform the contract on time. Common law also provides equitable remedies to the suffering party but it is awarded at the judgment of the court. However, the court is not obliged to award the remedies even when the contractual violation is established. Therefore, the University should file case in the court against MCU for violation of contract and demand compensation from the corporation. However, according to the procedure of Contract law, university will be compensated only for the extra amount of money paid for the performance of the contract if the corporation will be completing the given task within time. If it fails to perform the contractual obligations within time, the amount of compensation shall be increased according to the circumstances. Works Cited Australian Contract Law, 2013. Misleading or Deceptive Conduct. [Online] Available at: https://www.australiancontractlaw.com/law/avoidance-misleading.html [Accessed 22 August 2016]. Johnson, M. Millar, J., 2014. Doing Business in Australia: Contract law. [Online] Available at: https://www.claytonutz.com/knowledge/2014/june/doing-business-in-australia-contract-law [Accessed 22 August 2016]. Legal Services Commission, 2004. Right to recover damages. [Online] Available at: https://www.lawhandbook.sa.gov.au/ch10s02s11s02.php [Accessed 22 August 2016]. TAYLOR V. JOHNSON: UNILATERAL MISTAKE IN AUSTRALIAN CONTRACT LAW (1985). [1] Johnson, M. Millar, J., 2014. Doing Business in Australia: Contract law. [Online] Available at: https://www.claytonutz.com/knowledge/2014/june/doing-business-in-australia-contract-law [Accessed 22 August 2016]. [2] Australian Contract Law, 2013. Misleading or Deceptive Conduct. [Online] Available at: https://www.australiancontractlaw.com/law/avoidance-misleading.html [Accessed 22 August 2016]. [3] (1871) L.R. 6 Q.B. 597 [4] TAYLOR V. JOHNSON: UNILATERAL MISTAKE IN AUSTRALIAN CONTRACT LAW (1985) [5] Legal Services Commission, 2004. Right to recover damages. [Online] Available at: https://www.lawhandbook.sa.gov.au/ch10s02s11s02.php [Accessed 22 August 2016].