Commercial and Company Law Regards of Advertising

Question: Describe about the Commercial and Company Law for Regards of Advertising. Answer: Solution There are three basic problems that are raised in the given scenario: Solution 1 Law of contract Issue Is there a valid contract between Vanessa and Nikhil car sales Pty. Ltd? Law The question raised relates to the law of contract. A contract is said to be formed between two persons when there is an offer made by an offeror and the same is accepted by another person known as offeree[1]. But only an offer and an acceptance does not brings a contract into existence as there must be presence of consideration, intention and capacity of parties to make a valid contract[2]. An offer is an intent to carry out certain acts or inactions desired by one person (offeror) which is communicated to another person (offeree) with a desire of consent[3]. However, an invitation to treat is not an offer, rather, it is an invitation to invite offers from persons and upon receiving offers the same might be accepted or rejected by the person inviting the offer. In Pharmaceutical Society of Great Britain v Boots advertisement ware considered as invitations.[4] An acceptance is said to be made when the offer is assented to by the offeree upon the terms contained in offer. An acceptance must be same as an offer[5]. A consideration is the value which is paid in return for the performance of the promise by one party to the other [6]. The parties to the contract must have capacity i.e. they must be of sound mind and major. There must be intention to be in legal relation with each other by the parties. Generally presence of legal intention is presumed to be there are commercial contracts and absent in domestic/ social contracts unless otherwise proved[7]. All the elements are necessary to formulate a valid contract[8]. Now, the law is applied to the given factual scenario. Application Nikhils Car Sales Pty Ltd gave an advertisement regarding sale of Mazda. In the ewspaper it was stated Used car sale. Unbeatable offers on 3-year old models. Low kilometres. 12-month warranty. Vanessa wanted a car and visited Nikhils Car Sales Pty Ltd and liked a yellow Mazda. She notes that the odometer showed that the car had run 75,000. The salesman further told her: Personally, I think this one is the best of the lot. Vanessa tells that she can pay $9,500 cash Nikhil assents to the same. Nikhil prepares sale document but here is no mentioning of warranty over it and Vanessa signs the same. Three months later car had slipping out of gear mechanic tells her that repairing that will cost her $2,500. And moreover the mechanic from the service record shows actually the car covered 175,000 kilometres. The advertisement in the newspaper by Nikhils Car Sales Pty Ltd was an invitation to treat as held in Pharmaceutical Society of Great Britain v Boots (1953). Thus an offer was made by Vanessa upon the same and was accepted by Nikhil. Furthered, the parties are capable and intent to create a legal relationship with a valid consideration of $9500. So all the elements of contract that is an offer its acceptance, consideration, intention to be in legal relation and capacity are present. Conclusion So there is a binding contract in the instant case. Solution 2 Law of Misrepresentation Issue Can Vanessa claim anything from Nikhil car sales Pty. Ltd. under common law? Law The question raised relates to the common law of misrepresentation. Whenever a contract is entered between the parties and one of the parties while entering into a contract misrepresents or deceives the other party then in that case the other party can sue the defaulting party under common law. Remedies under Common Law Misrepresentation exists in common law when one party knowingly makes a false statement to another party in order to mislead that other party and persuades him to enter into contract with such mislead party on the basis of such false statement. The various elements that are mandatory for establishing misrepresentation are[9]: The statements made must not be future statements and they must pertain to present or past only[10]. The statements in the form of opinion are not misrepresentations[11]. The party who makes a false statement must have knowledge that the same is false[12]. The statements must be made with the intention to influence the other party to give its assent to the contract[13]. A party who had been misrepresented can rescind the contract and also has the right to claim damages[14]. Now, the law is applied to the given factual scenario. Application A contract was made between Vanessa and Nikhils Car Sales Pty Ltd but still there are remedies which Vanessa can avail the common law as she had been misrepresented by Nikhil. She was told that the car had run 75000 but in fact it had 175000 which was the major reason for purchase of instant car by Vanessa. Hence a factual statement was made to induce her to make a contract. Moreover about the opinion of the salesperson that this was the best in lot would not be covered under misrepresentation as it was an opinion and hold no value. Conclusion So, has right to rescind the contract and can claim damages in instant case. Solution 3 Section 18 of the ACL Issue Can Vanessa claim anything from Nikhil car sales Pty. Ltd. under Australian Consumer Law? Law The question raised relates to section 18 of the Australian Consumer law. If there is misleading conduct by any party then the Australian Consumer Law (ACL) incorporates the liabilities that can be imposed upon such breaching party. As per Section 18 of the ACL, the parties while in trade and commerce should not engage themselves in deceptive or misleading conduct. The elements which are necessary to establish that the party had mislead are[15]. The statement can be written or oral one. The statement must relate to commercial transactions. Silence does not amounts to misrepresentation unless otherwise is proved[16]. In case the party who is being deceived knows that it is being misrepresented then the above section does not applies[17]. As per case law of Yorke v Lucas (1985) in case there is no intentional deception by any party and the other party suffers then in that case the section does not applies[18]. This section does not apply when the deception relates to future transaction and only applies to past and present events. In case of violation of section 18 of the Australian Consumer law the following consequences may follow:[19] As per section 236 of Australian Consumer law damages can be seeked by the suffering party. As per section 243(2) of Australian consumer law the suffering partty may get ancillary orders against the deceiving party. The suffering party can get its money refunded. The suffering party can get declaration regarding the contrcat as void from court and can get avoid the contract entered into by it with he deceiving party. As per section 232 to 236 of Australian Consumer Law the suffering party can get injunction orders from court. Now, the law is applied to the given factual scenario. Application As per statutory law i.e. Australian Consumer Law Vanessa has certain rights. As per section 18 of Australian Consumer Law, Nikhils Sales Pty Ltd deceived Vanessa and gave her wrong information about the previous run of car which leads to purchase of that car by Vanessa. The same was done in trading with Vanessa by Nikhils Sales Pty Ltd. So Vanessa has rights and remedies as per section 18 of the Australian Consumer Law in which she can avoid the contract and claim from Nikhils Sales Pty Ltd. Also apart from other remedies in said section as stated. Conclusion It can be stated that Vanessa has rights under statutory law and Nikhil will have to pay for the deception on its part and Vanessa will be able to rescind the contract entered with Nikhil as per law stated above.