Is Good Faith a contractual obligation
Introduction
Traditionally, Australian law does not recognize implied term of good faith applicable to contracts (with certain limited exceptions, such as insurance contracts). Rather, the right and freedom of commercial contracting parties to enter into an agreement on whatever terms they see fit and to prioritize their own self-interest (subject obviously to the usual constraints imposed by considerations of public policy, illegality etc.) is giving by Australian court. This is so irrespective of whether or not the courts might otherwise consider that one or other party has made a bad bargain or compromised itself commercially by what it has agreed to. The overriding principle is that the Australian
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involving mutual co-operation) contracts and whether, in fact, Australian law should be (or is already) moving towards the attitude adopted in some other jurisdictions, mainly civil law systems, which recognize such an implied duty. This report reviews some of the recent commercial contract case related to good faith and these recent decisions and considers what, if any, future impact they may have on parties' obligations under Australian law commercial contracts.
Burger King Corporation v Hungry Jack's Pty Ltd (2001)
Burger King Corporation v Hungry Jack's Pty Ltd was a case decide in New South Wales Court of Appeal on 21 June, 2001. Burger King, an American based fast food franchise attempts to terminate the contract with its Australian partner Hungry Jack’s as the result of breach of the development agreement between two company by Hungry Jack’s. The termination of contract was denied by the court for several reasons, one of the reason was Burger King has taken to engineer the breach of the contract and hence breach an implied term of good
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Therefore, it provided several proposals to buy out Hungry Jack’s either by itself or through a third party. Hungry Jack’s rejected those proposals. In 1995, Burger King started denies all approvals for any new store, and stopped granting financial and operating approval for new stores, which result that Hungry Jack’s was unable to open four new store each year. Furthermore, Burger King refused to extend contract with existing store started in 1996. following this, Burger King announced that it would not renew any of these store franchises once they expired. (Ellinghaus,
Phillip Clarke and Julie Clarke, Contract Law Commentaries, Cases and Perspectives, (Oxford University Press, 2nd ed, 2012) 432-3.
To target the children they introduced different menu that are children's favorite. Hunger Jacks is also focusing on the pricing policy as they charge normal price to increase its number of customers by increasing their affordability. Provision of the friendly environment at restaurant is their basic strategy to make happy its customers. Then Hungry Jacks has come together with iPhone App through which customers within the range of one kilometer can get food item free on shaking their mobile ("Great Strategy Marketing: Hungry Jack's Implements Shake and Win App for Freebies", 2012). To increase their marketing Hungry Jacks are also involved in sponsoring various schools, community, local charity and sports event ("Hungry Jack's - Sponsorship", n.d.). The position of Hungry Jacks in Australia is not as the leader of the fast food industry because they are most probably following the MacDonald although they are coming in the competition of MacDonald but most of their strategies are considered similar to MacDonald so their market position is the "market followers". The share of Hungry Jack in the Australian market is only 5.9 percent which means it is not a market leader yet (Heffernan, 2015).
In this case study a man (Sam Stevens) is living in an apartment where he invented a product. He has verbally promised to deliver this product to a store. He then receives an eviction notice from his landlord, for the product disrupting other tenants and for conducting a business out of the apartment. Then receives a notice from the store; asking for the product that he had promised to be delivered immediately.
The article suggests that mutual intention should replace objective presumptions of intention to provide sufficient evidence for contract formations and argues that the Australian court system has a long way to go. It further investigates the different court hierarchies and examines the impact to them through different case law. The central argument presents that evidence of intention should be of utmost importance and considered in every case, negating a flat objective
9. Woodgate, R., Black, A., Biggs, J., Owens, D. (2003). Legal Studies for Queensland, Volume 1, ForthEdition, Legal Eagle Publications: Queensland. 10. Woodgate, R., Black, A., Biggs, J., Owens, D. (2003).
Legal Studies Essay Joey Agerholm Exclusion clauses determine the liability of something that might go wrong within a contract. They are used by sellers as an attempt to avoid or limit their liability. The seller has the advantage over the buyer who must agree to the clauses to purchase the product/service. Because of the buyers disadvantage the court takes such cases, involving exclusion clauses, very seriously, and the content of the clauses are carefully interpreted. With the current Trade Practises Act and the Fair Trading Act the standard form of business contract is adequate and effective in protecting the buyer. The Trade Practise Act is the most effective legislation for the protection of the consumer. It implies to the following situations:- - “A promise by the seller that the buyer will become the owner” If a car dealer breaks a promise or part of a contract, for example that he has the right to sell a car, and the car is stolen then although the buyer will have to give the car back he/she will get her money back. - “ A promise by the seller that goods will fit the description supplied by the seller” In this case the buyer is protected if the seller makes a promise, which is a condition of the contract, describing the product, and when the buyer receives the product, it does not match the description. - “ A promise where the seller is made aware of the purpose for which the goods are required, that the goods will be reasonably fit for that purpose” This condition is implied when the buyer makes the purpose of the goods needed known to the seller, and the buyer then relies on the seller’s judgement in providing the correct product. For example it would not be reasonable if you made the seller aware that you wished to purchase something suitable for mowing the average suburban backyard and you were sold a tractor. - “A Promise that goods are of merchantable quality” According to this act a good is considered to be merchantable if they are suitable for the prospect for which other similar goods are sold, involving the description applied to them, the price and any other relevant information. This act does however does not protect the consumer if he/she has examined the product and missed any defects that should have been seen or if the seller made him/her aware of the defect prior to the purchase of the product.
With commercial dealings on the rise in Australia and globally, so too are the complications. If some sort of codification is not established and built from the principals that already exist, commercial opportunities could be in jeopardy due to the uncertainty and risk of not having a clear outline or set of laws to cover contracts generally.
Andrews N, Strangers to Justice No Longer: The Reversal of the Privity Rule under the Contracts (Rights of Third Parties) Act 1999 (2001) 60 The Cambridge Law Journal 353
This essay will discuss the issues extracted from the case and give suggestions to Rosie and Frank. The analysis will be based on Australian Business Law and divided into two main parts for different characters in this case. Firstly, issues and recommendation relevant to Rosie will be explained.
The law of contract in many legal systems requires that parties should act in good faith. English law refuses to impose such a general doctrine of good faith in the field of contract law. However, despite not recognizing the principle, English contract law is still influenced by notions of good faith. As Lord Bingham affirmed, the law has developed numerous piecemeal solutions in response to problems of unfairness. This essay will seek to examine the current and future state of good faith in English contract law.
Thorpe, C. P., & Bailey, J. C. L. (2006). Commercial contracts: A practical guide to deals
Based on common law and precedent, the English law of contract has been formulated and developed over a number of years with it’s primary purpose to provide a regulated framework within which individuals can contract freely. In order to ensure a contract is enforceable there are certain elements which must be satisfied, one of which is the doctrine of consideration. Lord Denning famously professed; “the doctrine of consideration is too firmly fixed to be overthrown by a side wind” . This is a crucial indication that consideration has long been regarded as the cardinal ‘badge of enforceability’ in the formulation and variation of contracts in English common law.
HILLIARD, J. And O’SULLIVAN, J. (2012) The Law of Contract [Online] 5th Ed. Oxford: Oxford University Press. Available from - http://books.google.co.uk/ [Accessed: 2nd January 2014]
The situation at hand is Burger King’s downfalls within the competitive Japanese market. Burger King faces tremendous competition. McDonald’s controls half of the entire fast-food market in Japan having 2,000 outlets and generating $2.5 billion in sales. KFC has 1,040 stores making it number two in the fast-food market. The most effective way to analyze Burger King’s situation is through the SWOT analysis method.
McDonalds has always been a leader in the fast food industry. Through its dynamic market expansion, new products and special promotional strategies, it has succeeded in making a name for itself in the minds of the target customers. However, McDonald’s earnings has declined in the late 1990’s and 2000s. This is mainly due to a fiercely competitive industry and variety in customer tastes and preferences.