Law Of Contracts Essays Example

A contract refers to any written or unwritten agreement between two or more parties. However, individuals could form the contracts in written form, oral or implied forms. Nonetheless, both parties should fully understand the terms and the contents of the contract to avoid exploitation from either party. On the other hand hands, a contract should follow all the legal requirements for the authorities to recognize it. In addition, it becomes easy for the affected party to sue the other in a court of law. For this reason, a contract could become null and void if it fails to meet the legal requirements.
One could divide the Australian contract law in several categories. First, the contract must contain all the legal requirements to make it valid. The parties involved should clearly identify and understand the contractual terms and the scope. In addition, the law provides guidelines on how the parties involved could terminate a contract. On the other hand, the law also provides an insight on the avoidance issues. Lastly, the law outlines the available remedies for the breach of the contract.
However, consensus ad idem did not exist in the signing of the contracts. The law states that proper understanding should exist in the parties signing the contract. In the second contract, both parties did not understand each other well leading to the wrong perception. Total discretion should prevail in the formation of the contracts. In this case, Markus failed to clearly describe the ship that Imelda Chow had intended to buy. As a result, the misconception resulted to the conflicting ideas after the presentation of the ship. However, it the first contract, there were elements of negligence and innocent misrepresentation because both parties did not know the state of the ship.
The first contact portrayed an element of a common mistake because both Markus and Luiggi’s Shipping Company had entered in to an agreement. However, the assumption on the state of the ship led to the negligence by both parties because they did not bother to verify the existence and the state of the ship. Nonetheless, both parties had entered in to a genuine agreement, but faced challenges due to the assumptions. Therefore, common mistake due to the supposition that the ship was in a good condition. Nonetheless, the consequences resulted from an innocent misrepresentation because none of the parties knew that the ship had caught the fire and sunk in the waters. As a result, it would become illegal to fine Markus because the damage that occurred was beyond the control.
Nonetheless, Markus required refunding the Luiggi’s Shipping Company money due to the failure to receive value for it. The parties needed to acknowledge the existence of the contract before proceeding to the court matters. In this case, the blame would fall on both parties because each party had the obligation to check the ship before the signing of the contract. Nevertheless, the courts would not hold Markus liable because it was an innocent misrepresentation. The common mistake was accidental, which in most cases are beyond the human control.
Both parties needed to come in to an agreement when claiming for the money back. Markus had the obligation to refund the money to the Luiggi’s Shipping Company. On the other hand, Markus could argue that the situation resulted from innocent misrepresentation thereby easing the burden of imposition of additional fines. An element of avoidance could exist due Markus’ dire need of money. For this reason, Markus would try to avoid in performing on the contract by refusing to refund the money. In this case, the court could hold Markus liable of all the damages caused and abandonment of the refund responsibilities. The situation would cause an increased financial burden on Markus who was already in a financial crisis.
Markus had the right to claim for compensation from the insurance firms if the father had insured the ships. However, it is essential to realize that one can only receive compensation from the insurance company if the individual had consistently paid for the insurance services. The insurance expert needed to show Markus how to go about the whole process in order to receive the compensation from the burnt ship. The law requires one to prove the monetary values of the goods spoiled. It helps the victims become eligible in receiving the insurance compensation. However, the law advises people not to waste much time before claiming for the compensation from the insurance firms. Everybody should avoid time lapse because it nullifies a contract. Insurance helps the insured to go back to the original state before the accident or the loss occurred.
There existed a mutual mistake in the second contract because both parties had entered into an agreement. However, a fundamental assumption concerning the identity of the subject matter occurred. For this reason, the assumptions gave room to ambiguity because both parties did not read from the same page. Markus referred to the blue ship while Imelda Chow thought it was the red ship. As a result, no contract existed due to the failure of the joint agreement. According to the courts and the laws on common mistakes, the contract was void because there was a misunderstanding element in the contract. Therefore, the agreement had no legal effects on the individuals, but Markus had the obligation to refund the $ 20million credited to the account.
In the above case, there existed the mistake concerning the subject matter. The element of the innocent misrepresentation existed. However, to avoid the courts from nullifying the contract, Imelda Chow had to present the case to the courts before the end of the fifth year, leading to the failure to become compensated by Markus. A court can regard a contract legal if there is time lapse. If Imelda Chow needed to get her money back, she had to act as fast as possible before the lapse of the five years because after that, the courts could rule out that the contract became binding thereby creating the constraints to withdraw from it.
Both parties in the second contract had acted in utmost good faith because no one had deliberately hidden useful information that would affect the contract. However, there existed a mutual mistake because both Imelda Chow and Markus referred to two different items hence no agreement existed. Therefore, the contact became null and void due to the inconsistences in the contract. Therefore, Markus needed to refund the $ 20 million dollars to Imelda Chow because they had not entered in to a contract due to the reference of two different ships. However, remedy occurs when one party suffers loss or damage hence Markus needed to refund the money back without additional fines.
Nonetheless, in the contract between Markus and Imelda Chow, there occurred a mistake in equity because it involved monetary value of the ship received. The courts could use it as a remedy to compensate the affected party. It is because the mistake revolved around the quality of the subject matter, which in this case is the ship. The law provides for the equity if the mistake relates to the quality of the topic. Therefore, Markus had the option of refunding the whole amount or refunding the small percentage, which was in excess of the preferred ship. Alternatively, Markus had the option to sell Imelda Chow’s preference ship.
Before, one can sign any contract, it is essential to ensure that the products involved are in good conditions. If Markus had inspected the ship before, then he would have alerted the buyer not to buy it. Before signing the contract, one should understand all the terms and conditions. It is because, the signing of the contract legally binds the parties involved thereby becoming difficult to claim losses or damages. However, it is essential to claim the damages before the time lapses because time lapse leads to the nullification of the contract. In addition it could become void and voidable due to the failure to meet the requirements. Nonetheless, if the parties entering in to a contract do not the adequate knowledge about how to go about the contracts, they should hire an expert who would direct them on the terms to include in the contract. In such a case, if the courts term the contracts void or voidable, then the parties involved could claim remedy from the expert hired. Therefore, the contract expert bears the responsibility to cover for the losses and damages.
In summation, people should observe all the elements required in a contract. It is because ignorance to the law is no defense. For this reason, once an individual signs a contract, it becomes legal hence enforceable by law. However, the parties to a contract should avoid negligence, which leads to misrepresentation. The courts could also nullify the contract depending on the terms and conditions. Nonetheless, consensus ad idem should exist and utmost good faith to alleviate the chances of a contract becoming null and void.

References

Sievers, A. S., & Sievers, A. S. (1996). Associations and clubs law in Australia
and New Zealand. Sydney: Federation Press.
Hadfield, G. K., & University of Toronto. (1996). Advanced contract law: Statutory supplement.
Toronto: University of Toronto, Faculty of Law.
Sainsbury, M. (2003). Moral rights and their application in Australia. Annandale, NSW:
Federation Press.