Full disclosure… yeah sure!
This is going to be the first of a four part post series on the foundations of basic contracts. There are other forms of contracts that can be formed in different ways but we can deal with those later.
What is a Contract?
In its most simple state, a contract is nothing more than an agreement between the parties involved in that agreement that something(s) will be done or not done. This agreement can be formed in many ways but all contracts are either formal or informal in their creation and execution. There are normally, and for our examples in this series, four foundational elements that need to be in-place for a formal contract to be established.
1. Full disclosure
2. Mutual consideration
3. Terms and conditions
4. Evidence of intent
In their basic form all contracts need to meet all of the above fundamentals in order for a contract to be formed.
What is Full Disclosure?
We can look at full disclosure as the “all cards on the table” element of a contract. This being the need in business transactions to tell the “whole truth” about any matter which the other party should know in deciding to be bound by or enter into a contract.
One great example of full disclosure can be when you go to buy a used car from a car dealership. You would normally ask if the car has any history of accident damage or some other form of failure that would, under normal circumstance, deter or influence the buyers decision on purchasing that specific car. Without going in to specifics of prior knowledge and implied knowledge, the dealership has a duty of care to know the history of the vehicle it is selling. After all, how can a salesman provide the potential purchaser with a honest history of the vehicle if he/she hasn’t performed some level of due diligence?
So you purchase a car based on the fact that the dealership never disclosed that the car had once been an insurance write off, only to find a week later that the car sat in two pieces on your driveway was this once written off wreck. What do you do?
Well before you can do anything you need to know what you have or rather in this case, don’t have.
In this example, the car dealership has a duty of care to make it known to the purchaser that the car had once been written off, especially if the dealership was aware of this fact prior to the purchase. Now it could be argued that the dealership may not have known and thus had plausible deniability, but in our example we will go with the fact that the dealership knew the cars history.
What the dealership failed to do was to provide full disclosure to the potential purchaser that the car was once written off.
Why We Need Full Disclosure
Without full disclosure being given there can be no meeting of the minds or to word it differently no fully informed agreement to contract. If we do not know the full truth and facts that pertain to a potential contract then nobody can claim that you were presented with all the facts and thus had the opportunity to make an informed decision if you wanted to be bound by contract to the terms and conditions based on all the information being given freely to you.
There are some very common examples of when full disclosure is not given and therefor any claim of contract based on that disclosure are null and void.
Store Entry Conditions
We’ve often seen people at the exit of stores such as JB HI-FI, Target or BigW who want to look inside your bags as you leave their store. They claim that it is a condition of entry into their store that you allow this… but did you really agree to this and how do they prove you did?
They will point to sheet of A4 paper stuck to the wall near to the store entrance and claim that you agreed to be searched as a condition of entry… but did you see that notice? How does the person standing at the exit know for sure that you ever saw that notice and that you agreed to it? How does you standing in the store signify you agreeing to anything or that you were given full disclosure of the conditions of entry?
Lets imagine that you are German lets say and you are on holiday in Australia… but speak or read no English. How can a piece of paper stuck to a wall be evidence that you received, understood and acknowledged your consent to the contents of that piece of paper? Obviously it can’t and never would.
As a demonstration of personal rights I never, as in never allow these people to look inside any bags I may be carrying when I leave these stores. When they try to stop me by claiming they can do so as a condition of entry, I remind them that I’m not entering the store I’m leaving it, and carry on walking. Once outside the store if they continue to harass me I politely remind them that I’m not in their store and why do they think their claim has any authority over me. I’ve never had my bags checked… not once.
You cannot be searched by these people without your consent regardless of what they say.
Private Parking Notice
The very same example of how full disclosure is not freely given is with private parking notices that we see popping up all over the place.
A few months back now I parked my car in the underground visitor parking area of the Oracle building in Broadbeach on the Gold Coast. I park there often as I visit friends who live in that building. Now one day while there a parking attendant from a private corporation called Traffic Monitoring Services (TMS) presented my car with a Traffic Monitoring Services (TMS) Non-Compliance Breach Notice.
This is taken directly from their website:
Traffic Monitoring Services believes the secret lies in the signage!
By erecting clear signage in your car park you can educate drivers to believe parking is only permitted for whom it is intended.
We provide clear and compelling signage that informs drivers who is authorised to park in your car park. The signage makes it clear that by entering the car park they are accepting the terms and conditions that are on display.
Failure to accept these conditions means the intruder is in breach of a contract and damages can be sought by way of our non-compliance breach notice.
Offending vehicles will receive an non-compliance breach notice and a follow-up letter to explain how and why they were in breach of the car park contract. The penalty will be a set fee enforceable by law.
So by now you will be well aware from posts here and our Beating Banks & Debt Collectors Guide, that like all people who make claims, the claimant always mess things up for themselves by the use of their own words.
Looking at the lines above we see words such as believes, lies, clear, believe and breach of contract. Now as this post is about contracts we will just concentrate on this claim of “breach of contract“. So I ask you this… where, when, why and how was full disclosure presented to the vehicle on entry to that car park? Read their own words, “Offending vehicles will receive an non-compliance breach notice“… not the driver or owner. Now if we presume they mean to imply that the clear signage is for a human to read, then
1. the signage wasn’t clear if I never saw it
2. if I never saw it then there can be no claim of full disclosure
3. no full disclosure then no contract
4. no contract means no breach of contract
I filled in those sections with PRIVATE. In the notes/details section I told them that there was no lawful contract they could enforce but if they thought there was, to send it to the address they had on file for me and I’d consider their claim from then. Their failure to provide the contract would result in charges of $499 per requirement of action from me.
Not heard from them yet… I wonder why?
Ask yourself any question regarding the contracts you are in… absolutely any question… if you cannot find the information contained within the application or Terms and Conditions… you need to question if you were given full disclosure or not.
Did the bank lend you money from its own assets?
Did the bank create money from the conversion of a promissory note I presented them?
Do you have answers to just those two simple questions…?