Compensation From Airbus Corporation Ltd †Myassignmenthelp.Com

Question: Discuss About The Compensation From Airbus Corporation Ltd? Answer: Introducation A contract becomes legally binding and enforceable in the court of law only if there is a valid offer and acceptance between the parties to the contract. The parties to the contract must have legal intention to be bound by the contract. The parties to the contract must agree to the terms of the contract, the offeror has offered to the offeree. Further, after the offeror and the offeree enters into a contract, they become legally bound by the contract irrespective of the fact that either the parties have not entered into such contract without perusing the terms stipulated in the same. Furthermore, the offeree accepting the terms of the contract must not include any additional terms that were not present in the original offer made by the offeror. If the offeree incorporates an additional contractual term, it shall amount to counter offer and shall not be considered as a valid acceptance because under such circumstances, then original offer shall cease to be in effect. the terms of an acceptance must match with the terms be made by the offeror and in case, any additional terms is incorporated in the contract, the original contract shall not exist, as it would be considered as contractual offer. In LEstrange v Graucob [1934] 2 KB 394, a party to the contract is entitled to limit its liability by including an exclusion clause in the contract but the parties cannot restrict their legal liability. A contractual term incorporated by a party which is not usually expected to be stipulated in a contract, must be acknowledged to the other party. If the other party is not informed about such contractual term, and it is detrimental to the other party, such terms shall not be considered as valid. After the contract is confirmed, an additional term cannot be incorporated in the contract as was held in Olley v Marlborough Ltd [1949] 1 KB 532[1]. A condition is a term of contract, the violation of which entitles the aggrieved party to terminate the contract and claim damages from the breaching party. A warranty is a term, which does not, entitles the aggrieved party to discharge himself from the contractual liability. A warranty is not as significant as the other terms of the contract as they do not form the subject matter of the contract. However, if either party fails to fulfill the warranties incorporated in a contract, the aggrieved party shall be entitled to claim damages against the breaching party the court needs to apply the decision held in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962][2]. The court held that the aggrieved person is granted damages by way of compensation. The court grants compensation that reinstates the parties to the position they were in, before the violation of the contractual terms. The compensation includes any loss that the aggrieved party has sustained due to the infringement of the condition or warranty stipulated in the contract. Application In the given scenario, Qantas shall be said to have entered into a contract with Airbus if there is a valid offer and acceptance between them. Since both the parties have agreed on 545 terms incorporated in the agreement, it implies that the parties have made a valid offer and there was a valid acceptance of the offer, which signifies that the parties have entered into a valid contract. It further implies that the parties to the contract have agreed on the terms incorporated in the original offer when it was made by the offeror, hence, the contract is legally binding upon the parties to the contract. In the given case, it is stated that subsequent to the entering of the contract, Airbus had sent several documents that included Color Schemes, Contract. It also included the liability clause, which was not included in the contract when the offer was made. The liability clause stated that the Airbus Company shall be liable to the extent of $300000. As discussed in above, in Olleys case, party to a contract is liable to incorporate an exclusion clause for restricting the contractual liability of such party. However, as discussed in the Graucobs case, Airbus was under statutory obligation to inform Qantas Airlines about the exclusion clause as if an additional term is included in the contract, the party including such additional term must acknowledge the other party about such incorporation, especially, if such term would be detrimental for the other party. But, Airbus airlines did not notify the Qantas airlines about the exclusion clause it incorporated after formation of the contract . Further, in Graucobs case, it was observed that after a contract is confirmed, neither parties to the contract is entitled to incorporate any additional or e contractual terms in the contract. Furthermore, in order to incorporate any additional or new contractual term, consent of both the contractual parties is required. Hence, the inclusion of the exclusion contract and placing it with the other documents in a big box without acknowledging Qantas airlines about the same cannot be considered as valid and legal. The subject matter of the contract was to provide a plane of good quality along with additional good qualities accessories, which includes video entertainment system with 36 channels. Nevertheless, due to technical issue Airbus provided only 34 channels, which amounts to a breach of warranty and entitle Qantas to claim compensation and rescind the contract. According to the principles of damages in contract law, Qantas may claim compensation for the loss sustained owing to the mistake caused by the Airbus company. Even though the loss suffered by the company is more than $300000 and the new system is to be installed within a week, Airbus is entitled to pay compensation to the Qantas Airlines for incorporating the exclusion clause and not notifying Qantas about the same, thus, rendering the exclusion clause as invalid. Misrepresentation refers to the false statements of facts that induce an individual to engage in a legally binding agreement. However, there is a distinction between puffery and misrepresentation. Puffery is self-evident overstatements, which are used for advertising purposes. puffery has no legal significance and no claim can be made against puffery. On the other hand, in order to establish a claim against misrepresentation, it must be proved that the person causing misrepresentation has made a false statement with a view to induce the aggrieved person to enter into a contract. A misrepresentation claim can only be made if the aggrieved party can establish that he/she was not aware of the false nature of the statements and their judgment is not affected by it. Silence cannot be considered as misrepresentation and the aggrieved party must establish that the party committing misrepresentation must persuade the aggrieved party to enter into the contract. Fraudulent misrepresentation takes place when the party committing such fraudulent misrepresentation is aware of the same and the aggrieved party must rescind the contract and claim for damages suffered by the aggrieved person. Again, agency refers to a form of contract where the principal authorizes an agent to enter into a contract with third parties on behalf of the principal. The principal is bound by the actions of the agents as was observed in Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199[3]. However, an agent binds the principal by his actions only when such action is carried out within the course of employment and the agent has an apparent, expressed or implied authority conferred upon him by the principal. In Watteau v Fenwick [1889], the court ruled that if a third party enters into a contract with an agent without knowledge that the authority of the agent cease to exist the principal shall persist to be bound by the action of the agent. Further, in the Freeman Lockyer v Buckhurst Park Properties [1964], the court held that even if the principal does not authorizes the agent and the third party believes the agent is authorized; the principal shall be bound by the actions of the agent on the grounds of implied authority[4]. In the given scenario, it has been provided that Gamma is an employee of Frank who works in his appliance shop. A customer Tom saw dishwater preset in the shop worth $350 and he told Gamma that he would inform her whether he could buy the dishwater at $350. Gamma was aware that Frances also required dishwater and she induced Frank to sell the dishwater to Frances at $300 and that the dishwater would never be sold at $350. Frank is induced by Gamma as she was the salesperson and authorized her to sell the dishwater at $300. She sold the dishwater to Frances at $300. Frank later found that the customer Tom could have easily paid $350 for the dishwater. Under such circumstances, as per the rules of misrepresentation, Gamma provided false statement of facts to Frank when she was aware that she is providing false facts and induced Frank to authorize her to sell it for less price, Gamma is said to be liable for committing fraudulent misrepresentation. Hence, frank is entitled to claim compensation of $50 against Gamma for committing fraudulent misrepresentation. In the other scenario, Bob enters into a contract with Angela with whom he frequently sells washing machines. Bib was not performing his duties well and often came to work drunk. Consequently, Frank terminates Bob and his authority as an agent ceases to exist. Bob entered into a contract for selling 10 washing machines for $1000 each with Angela who was not aware of the fact that Bob was fired and did not have any authority to enter into contract with third parties. Angela had transferred $1000 to Bobs account and Bob usurped the amount from the Home Appliance Specialist Bank Account and went overseas. However, after terminating Bob, Frank did not ensure whether Bob left the premises after being fired and rushed to a meeting out of town. As discussed in the Fenwicks case, a principal is bound by the action of an agent even after the authority of the agent ceases to exist if the party with whom the agent enters into a contract is unaware of the fact that agent does not have any authority to enter into a contract. Here, since Bob frequently dealt with Angela with respect to selling of washing machines, Angela entered into a contract with Bob and was not aware of the fact that he has been terminated and that he did not have any authority to enter into the contract with her. Further, in Freemans case, even if the principal does not authorizes the agent to act on behalf of the principal, but if the third party believes that the agent has an authority and enters into as it would be considered as contractual offer.contract with the agent, the principal shall be bound by the action of the agent under such circumstances. Hence, in the given scenario, Frank shall be bound by the contract entered into between Bob and Angela; he must deliver the washing machines to Angela. However, he may claim compensation for damages from Bob. Conclusion Gamma has committed fraudulent misrepresentation by inducing frank to enter into the contract with low price. Frank is bound by the contract of selling washing machines to Angela and may claim damages from Bob. Reference Freeman Lockyer v Buckhurst Park Properties [1964] 1 All ER 630 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 Watteau v Fenwick [1889] 14 App Cas 33 Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199 Olley v Marlborough Ltd [1949] 1 KB 532 LEstrange v Graucob [1934] 2 KB 39 [1] [1949] 1 KB 532 [2] [1962] 2 QB 26 [3] [1994] 2 AC 199 [4] [1964] 1 All ER 630