Problem Solving Assessment (Using IRAC) PDF

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LAWSQuestion 1 798 WordsIssueThe issue is whether the representations made by Channel X related to ‘Flipping Out!’ are sufficient under general law ‘misrepresentation’ such that you can rescind the underlying contract and/or recover damages via fraudulent misrepresentation.RuleThere are three types ...

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Question 1 798 Words Issue The issue is whether the representations made by Channel X related to ‘Flipping Out!’ are sufficient under general law ‘misrepresentation’ such that you can rescind the underlying contract and/or recover damages via fraudulent misrepresentation. Rule There are three types of misrepresentation, each with different tests, remedies, and capacity for damages. One type- negligent misrepresentation- does not apply here as no requisite duty issue arises between yourself and Channel X, which is necessary for negligent misrepresentation. An innocent misrepresentation may occur where a party makes ‘a material misrepresentation of fact which induced the contract’ (Krakowski, Toohey J, at 590). The innocent party (you) must also show reliance on the misrepresentation in taking up the contract (Byers; Krakowski). Partial reliance (including scepticism) by the representee can be enough. (Gould, Brennan J, at 251). As Krakowski provides, depending on the circumstances, half-truths may be actionable, ‘concealment of a fact may cause the true representation of another fact to be misleading, and may thus become a substantive misrepresentation.’ (Cited in footnote 532). For inducement, it need only be “one of the real inducements to the plaintiff to do whatever caused his loss.” (Gould, Brennan J, at 249-51) Additionally, where a party enters into a contract after a material misrepresentation, inference of inducement may be drawn (Gould, Brennan J). The other party may rebut the inference (Gould, Brennan J, at 249). Fraudulent misrepresentation may be found in instances where the representor has committed an innocent misrepresentation and had ‘no honest belief in the truth of the representation in the sense in which the representor intended it to be understood.’ (Krakowski at 578). However, Krakowski held that no intent is necessary as ‘a representation may be made fraudulently without prior planning or […] without evil motive.’ (at 579-80). The remedy for innocent misrepresentation is recission and is an equitable doctrine (Krakowski) which means it is discretionary and subject to bars/limitations (Byers). Damages may be awarded by a judge in instances of fraudulent misrepresentation (Gould). Application In the present, representations were made by Zoe as to the viability and profitability of the venture. Analysis will be grouped together for reader ease but will largely focus on the question of falsity. The statement ‘you’re going to be such a success’ was arguably “false”, as the show only ranked 87th, it is consistent with a kind of prediction not a statement of fact (Byers). It is not

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actionable. However, ‘Definitely in the top-10 for the year, of that I’m sure’ is plainly false. It is possible to show that as you lacked understanding of broadcasting, reliance on Zoe as the production manager, to guide your involvement in the program, was necessary-an inference of inducement can be drawn (Gould, Brennan J). Zoe has committed innocent misrepresentation. There is no evidence to suggest that you were in no way induced thus, Zoe would fail to rebut this (Gould). Further, as show has already aired, it is not possible to place the parties in the position they were in before the contract (Krakowski); thus, a judge would not order rescission. It is sufficient to argue that you were misled in so far as the representation that ‘all states and territories now on track and 3 overseas targets’ was taken to be confirmed rather than where ‘negotiations were taking place’. This omission constitutes an actionable half-truth (Krakowski). Similar to Gould, assertions that the show had strong foundations with respect to profitability and broadcasting capability were inherent in the representations made, and you need only show that this general representation of a successful and profitable venture was one of the factors which induced you to contract with Channel X (Gould). This can be achieved. Regarding fraudulent misrepresentation, ‘Aldi is already lined up, so is Nissan cars.’ is plainly false, as the advertisers were Toyota and Woolworths. While Zoe later admits that she had forgotten the advertisers had been changed to Woolworths and Toyota prior to your meeting, Krakowski provides that ‘a representation may be made fraudulently without prior planning or […] without evil motive.’ (at 579-80). Thus, it is possible to show no honest belief in the representation (Krakowski). Damages. Damages are only awarded in instances of fraudulent misrepresentation (Gould, Byers). In the present recission will not be available but you may be entitled to damages in the tort of deceit (Byers, Gould). As Zoe has committed fraudulent misrepresentation, a judge is likely to award damages for loss of revenue (advertisement) up to $240,000 based on the difference between actual advertisement income and value originally expected. Conclusion Based on the facts, it is likely that you would succeed in a fraudulent misrepresentation claim against Channel X as you are sufficiently able to show inducement and no honest belief. Damages are highly likely to be awarded with respect to advertising revenue lost.

Question 2 798 words Issue The issue here is whether Tallulah is likely to be successful in a claim of unconscionable conduct against Zoe, namely in relation to her conduct in negotiating the licensing agreement, such that she is able to avoid the contract through equitable remedy. Rule Mason J’s two-prong test and Deane J’s three prong test in Amadio provide the contemporary tests for unconscionable conduct, which can be found ‘whenever one party by reason of some

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condition or circumstance is placed at a special disadvantage vis-a-vis another’ (Amadio, Mason J, at 462). To show a special disadvantage, the disadvantage must ‘seriously affect the ability of the innocent party to make a judgment as to [their] own best interests.’ (at 462). Special disadvantage can be determined through application of prescribed ‘Blomley factors’ and their requisite meeting of the threshold (Amadio, Mason J, at 462). Factors that have the effect of placing one party at a serious disadvantage vis-a-vis the other include ‘poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.’ (at 462). Where it is practical, multiple factors may be relied upon to prove the legal threshold for special disadvantage. (Amadio, Louth). For unconscionable conduct, advantage is taken by the other party, ‘when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party’ (at 462) and can be shown that they took up an ‘unfair or unconscientious advantage […] of the opportunity thereby created’ (Berbatis), thus the test will be made out. If shown, the onus rests with the stronger party to prove that the ‘transaction was fair, just and reasonable’ (Amadio, Deane J, at 474). The remedy for unconscionable conduct is purely equitable, as such it is discretionary (Amadio). Circumstances permitting, a judge may make an order that either partly or wholly nullifies a transaction (Amadio). Application Special Disadvantage. Although the facts fit within Blomley, whether alone they meet the requisite legal threshold is questionable (Amadio). However, application of the Amadio approach suggests that in relying on multiple factors, the legal threshold for special disadvantage could be met (Amadio, Louth). Tallulah fits into two Blomley factors- poverty, and drunkenness. Much like the Respondents in Amadio, Tallulah’s reliance on and confidence in Zoe was due to a large degree on her adverse circumstances. Firstly, Tallulah has little money and has accumulated debts that she must pay back. Her money problems are extensive, for months she hasn’t been able to afford to renew her visa. Consequently, she is living on the streets of the CBD as an international visitor, residing in Australia illegally. Tallulah also has no experience in the business field so has no option due to the desperation in her situation, but to trust the representations by Zoe, ‘Well, you’re the one who is the music celebrity, and you’ve been around a lot longer than I have, so you’d probably know best.’ Secondly, we are told that Tallulah’s inhibitions have been considerably lowered by the consumption of alcohol. Despite Tallulah ‘almost never talk[ing] about these things’ she shares her life story with Zoe including her homelessness and debt issues. This character change provides further evidence that Tallulah is not able to make a worthwhile judgement as to her own best interest (Amadio). Thus, Tallulah stood in a position of special disadvantage vis-a-vis Zoe (Amadio). Advantage Taken. Whether Zoe knew or ought to have known of Tallulah’s special disadvantage (Amadio) and whether Zoe can show that the transaction was fair (Amadio, Louth) are next for determination. Unlike the defendants in Louth and Amadio, Zoe’s awareness of the factors affecting Tallulah is straightforward and obvious. Zoe ‘kept asking

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for more and more detail’ as well as, among other things, her deep understanding of the financial hardships, poverty faced by Tallulah. As onus falls to Zoe to show the transaction was ‘fair’, looking to consideration is important (Amadio, Deane J). Tallulah received $1,000 in exchange for her licensing agreement. It is said that other artists have received upwards of $10,000 for similar agreements and consequently a case could be made that the original purchase price would not amount to ‘adequate consideration’ (Deane J, at 475). Authority suggests that advantage was taken and a failure by Zoe to prove the transaction was fair (Deane J). As the elements have been met, Tallulah is likely able to rescind the contract (Amadio). Conclusion Based on these facts, it is likely that a judge would find Zoe’s conduct unconscionable as a special disadvantage can be shown as well as advantage taken. It is unlikely that Zoe could show transactional fairness, so rescission is likely to be granted....