Assignment Help With Law Assignment Help For Townsville Case

The conduct of Townsville in the present circumstances, whether or not amounts to economic duress has to be determined on various touchstones and parameters including the changing approach of the Australian Judiciary on the topic of economic duress because the judicial sensibilities have undergone a sea of change regarding the subject of economic duress.

To develop a better understanding of the same, a very brief insight into the facts of the case is being submitted here. The agreement was entered into between the two parties when the market was very volatile and the price was fixed for a period of 24 months. For a delivery made in March, CML would receive payment in June.  A concession of three months was granted to Townsville for each shipment. It can be safely stated that the terms offered to Townsville were quite liberal and favourable to Townsville. After the decline in the free/spot market price of bauxite, it communicated to CML that for the same price that Townsville has been paying, they want supply of bauxite to be increased by 50 %. Apart from that, Townsville also sought increase in the concession from 3 months to six months for payment in lieu of each shipment. More than anything else, Townsville imposed a condition of securing guarantee against an unsecured loan of $ 6 million for the remainder period of the contract as condition precedent for the continuance of the agreement. It is submitted here that, even though Townsville did not coerce CML to adhere to these conditions, they made it clear that the original contract would not be performed until the new terms and conditions were agreed upon by CML.

The traditional view pertaining to the concept of duress under the contract law was that of a threat or criminal intimidation to the signatory of the agreement or to some close person of the signatory so as to force the person to sign the agreement even though the same might not be in the best interest of the signatory. Economic duress as a concept refers to putting the other party under some sort of financial threat. 

Earlier, the court were of the myopic view that duress has to be seen its traditional sense meaning to be criminal threat or intimidation. However, of late the judicial view on the subject has changed a great deal. While in the landmark case of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447[1]  requirement of one of the parties being in a specially “disadvantaged position” was present. In light of the aforementioned judgement and that of ANZ v Karam [2005] NSWCA 344[2], it can be stated that Townsville has not been putting CML under economic duress as the market position of Townsville is also not good and under any circumstance, CML is at liberty not to agree to the proposed variations and then sue Townsville for the performance of the contract.

In order to give an answer to this question an analysis of the assumptions given along with the factual situation of the parties has to be undertaken to ensure that a correct decision is made regarding CML’s response to Townsville’s actions. For the purpose of understanding the course of action to be taken by CML and justifying the same, all parts of the assumption are submitted here separately.

i)          It is submitted that the initial agreement between the parties has not been repudiated so far and as such it is very much in existence. The terms provide for price @ $400/ tonne, supply @ 5000 tonnes/month and concession @ 3 months.

ii)         The second scenario is the proposed variations, i.e. supply @7500tonnes/month for the same payment at the same price along with securing bank guarantee for the remaining period of contract (original contract) against an unsecured loan. It is worthwhile to note here that the term of bank guarantee was not present in the original agreement and it was not an alteration of the existing terms but an addition to the terms of the original agreement. 

iii)        The variation as per the proposal made by Townsville after being received by CML vide entering “a whole agreement clause” would generally have had the effect of making the original agreement completely redundant apart from the duration clause of the original agreement as all other clauses of the agreement have been changed.

iv)        However, the word of mouth agreement which was entered into between the parties has put the original agreement in an eclipsed position rather than making the agreement redundant completely. In case, as per the agreement, the prices of both bauxite and aluminium jointly rebound then the terms of the original contract could come back into force.

In this regard, it is submitted that after the prices of both the items jointly rebound in March 2010 and CML asked Townsville to pay as per the original agreement as was agreed upon by the parties. Even though sanctity of a written agreement is always higher than an oral agreement, nevertheless an oral agreement is a perfectly valid form of contract provided the same can be proved and as in the instant case, the oral agreement was witnessed by the lawyers of both the parties, hence it can be proved even in the court of law. It is submitted that the oral agreement was independent of the variation agreement and as such in case Townsville refused to pay as per the original agreement, CML can terminate the agreement in view of the oral agreement entered into between the parties prior to signing of the various “whole agreement clause’.

e)         In the instant case, the effect of the variation agreement has to be adjudged in view of the variation clause in the agreement. The initial agreement had following clauses:

            Duration of the contract:         Two years/24 months.

            Price of the bauxite:                $ 400/tonne

            Amount of bauxite to be supplied:     5000 tonnes/month

            Period of concession:              three months for each shipment.

            First eight months of the contract ran very smoothly but thereafter, Townsville sought variation in the terms of the agreement and the same were agreed upon by CML. These terms were:

            For the payment of same price supply of 7500 tonnes of bauxite would be made per month for payment of the same amount. Apart from that a concession of three months would be extended to a period of six months meaning that for a shipment of January, payment would be made in the month of June. The final requirement as per the new variation clause agreement, CML would act as a guarantor with respect to an unsecured loan worth 4 6 million that Townsville has secured from Cairns for the remaining period of the contract (original contract).

            In the month of March, when the price of bauxite fell further down to $ 250 per tonne but the price of aluminium did not fall any further. Assuming that Townsville sought further reduction of price of bauxite but CML did not accede to the requests, as Townsville refused to take delivery of bauxite, the course of action to be taken by CML depend upon the terms of the contract.

            In this regard, it is submitted that the price agreed upon in the first agreement was fixed @ $ 400/tonne and this was done despite volatile market conditions. Again when the variation agreement was entered into between the parties, even then the market conditions were volatile and the amount of bauxite to be supplied was enhanced to 7500 tonnes per month. It has to be borne in mind that none of the agreements had any option for change or alteration of price of bauxite and as such Townsville does not have any legal right to refuse to take delivery of the bauxite as per the terms and conditions of the agreement between the two parties.

The remedy that CML has against Townsville is to file a suit for the specific performance of the contract entered into between the two parties. CML can bring action for damages against for breach of contract by Townsville. Even though CML can bring an action seeking damages against Townsville for breach of contract, sadly there is no specific provision that CML can resort to for the purpose of mitigation of losses while suing Townsville. However, CML can argue before the court that Townsville was not being truthful and diligent in performing its part of obligations under the first agreement and then under the variation agreement as well causing severe losses to CML which CML is rightly and legally entitled to receive from Townsville. This is perhaps one way in which losses of CML can be mitigated while suing Townsville for damages.

Law assignment help is provided by assignment help at reasonable prices. The assignment help provides help to students seeking help in Law  subject. They often find  difficulty in  law areas like Tort Law, Corporation Law, Public issues law and Land Law. Experts at Assignment Help have tremendous experience in providing Law assignment help. Get the opportunity now to interact with them at www.myassignmenthelp.co.uk or www.myassignmenthelp.com