ANSWER OUTLINES

MISREPRESENTATION 1. Grounds for complaint Id!ntif" t#! misl!adin$%d!c!pti&! stat!m!nt' [plaintiff] may wish to complain about: a) Statement 1 b) Statement 2 c) Statement 3 (as many as applicable) (. Ar! t#! oral stat!m!nts t!rms of t#! contract%r!pr!s!ntation%puff!r" or form t#! )asis of a collat!ral contract* It must be determined whether the statement/s were terms or representations ! statement before a contract may be a puff" term" representation or collateral contract# In the circumstances" a specific statement that $$$$$$$$ %oes beyond mere sales tal&# 'owe(er" the intention of the parties must also be considered" by loo&in% at ( Oscar Chess): i# )he words and conduct of the parties * if the statement is important in the minds of the parties" it is probably a term+ ii# If there is a lon% inter(al between the statement and the conclusion of the contract the statement is probably a term+ iii# If it is an oral statement not reduced into writin%" it is probably not a term+ i(# If one party is in a better position to ascertain the truth of the statement it is probably a term+ (# If the statement ma&er has control of the information" it is probably a term# )hrou%h balancin% these factors" the statement(s) seems not to be promissory but rather merely somethin% said to induce the contract to be formed# +. W!r! t#!r! an" actiona)l! misr!pr!s!ntations )" ,d!f!ndant-* El!m!nts [plaintiff] would need to show. a' /als! stat!m!nt of past or !0istin$ fact , Identify each statement as either (one or more): o statement of future intent o statement of opinion o statement of law o silence o puff# )' Addr!ss!d to t#! r!pr!s!ntor )" t#! r!pr!s!ntor c' 1!for! or at t#! tim! 2#!n t#! contract 2as mad! d' W#ic# 2as int!nd!d to and did induc! t#! r!pr!s!nt!! to ma3! t#! contract 1

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intention to induce -eliance by representee o )he representee must rely upon the statement made by the representor# )he onus is on the representee to pro(e that they relied on the statement ( Gould v Vaggelas)# o ! person is not obli%ed to ta&e steps to (erify the statement * a representee is entitled to ta&e the representor at their word (-ed%r(e ( 'urd) o ! representation need not be the sole or decisi(e inducement" but it needs to be material to the decision to enter the contract ( Edgington v Fitzmaurice)# o ! person cannot be induced by act by a statement addressed to someone else (.ee& ( /urney) o -ules rele(ant to reliance/inducement in Gould v Vaggelas which are: , 0otwithstandin% that a representation is both false and fraudulent" if the representee does not rely upon it" they ha(e no case , If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into a contract there arises a fair inference of fact that they were induced to do so by the representation , )he inference may be rebutted" for e1ample" by showin% that the representee (plaintiff)" before they entered into the contract" either: o 2as possessed of actual &nowled%e of the true facts and &new them to be true o 3ade it plain that whether they &new the true facts or not they did not rely on the representation

)herefore" [plaintiff] can show at least [number] innocent misrepresentations# Innoc!nt misr!pr!s!ntation )his occurs where the representor has been neither fraudulent nor ne%li%ent# )here is no common law ri%ht to dama%es for innocent misrepresentation (-ed%ra(e ( 'urd)# [.laintiff] only has the ri%ht to rescind the contract# 4. W!r! t#! stat!m!nts fraudul!nt or n!$li$!nt* /raudul!nt misr!pr!s!ntation !re [statements] fraudulent )o be fraudulent" [defendant] would need to ha(e made the statement: (Derry v Peek) 1. 5no2in$l"6 or (. Wit#out )!li!f in its trut#6 , [def] won4t be %uilty of fraud unless [plaintiff] can pro(e that [def] did not honestly belie(e the representation to be true in the sense in which he understood it (!&erheim ( 5e,3are) +. R!c3l!ssl"7 not carin$ of 2#!t#!r it is tru! or fals! [.laintiff] can reco(er dama%es in the tort of deceit and the contract is (oidable in e6uity and common law# 2

'owe(er" the ri%ht to rescind is lost if a bona fide 3 rd party ac6uires interest in the %oods# N!$li$!nt misr!pr!s!ntation 2here: a' )' c' 8ut" of car! 1r!ac# of dut" 8ama$! 2#ic# is not too r!mot!

[.laintiff] can reco(er dama%es in tort if [def] owes the representee a duty of care ('edley 7yrne)" howe(er" this now e1tended to: , , , 2hen a person %i(es info/ad(ice about a serious matter where the spea&er realises/ou%ht to realise he is bein% trusted and+ It is reas in the circumstances for the other person to act on the info/ad(ice )he spea&er comes under a duty to e1ercise reas care (389 ( :(att)

[.laintiff] can reco(er dama%es in tort for ne%li%ence" in addition to ha(in% a ri%ht to rescind (Redgrave v Hurd)# 9. W#at r!m!di!s ar! a&aila)l! to ,plaintiff-* i' Innoc!nt misr!pr!s!ntation r!m!d" : r!scission' ii' N!$li$!nt misr!pr!s!ntation r!m!d" : dama$!s in tort and contract &oida)l! in !;uit"' iii' /raudul!nt misr!pr!s!ntation r!m!d" : contract &oida)l! in common la2 and !;uit" and dama$!s in tort for d!c!it' !s in contract" dama%es in tort are only reco(erable if the plaintiff can pro(e that the loss was caused by the misrepresentation" and that the loss was not too remote# )he traditional test for establishin% causation in contract and in tort is the ;but for4 test# )hat is" the loss would not ha(e occurred but for the breach or wron% of the defendant# 'owe(er" where there are multiple causes of the loss" the 6uestion of causation is based on whether as a matter of ;common sense4 and policy" the defendant materially contributed to the plaintiff4s loss (March v tramare)# In tort" remoteness is %enerally %o(erned by the reasonable foreseeability test" that is if it is <ust the &ind of dama%e that was li&ely to occur: !agon Mound "#o $% I/ N!$li$!nt Misr!pr!s!ntation: the court will be concerned with whether the loss caused by the statement was reasonably foreseeable in the circumstances# I/ /raudul!nt Misr!pr!s!ntation: all losses that flow directly from the misrepresentation will be reco(erable# It is unclear whether the losses must also be reasonably foreseeable: Gould v Vaggelas# )herefore" [plaintiff] may reco(er all reasonable losses: $$$$$$$$$$$$# 3

=# Ar! an" limits to r!c!ssion applica)l! OT/* (only discuss the ones rele(ant to the problem) a) Affirmation * decides to continue with contract despite the misrepresentation ( Coastal Estates v Melevende) b) Laps! of tim! , ri%ht to rescind must be e1ercised within a reasonable time of disco(ery of the falsity of the statement or they may be ta&en to ha(e affirmed by conduct (&ea' v (nternational Galleries) c) Impossi)ilit" of r!stitutio in inte%rum * 2here parties cannot be substantially restored to their pre,contractual positions ()tali v *ruger) d) T#ird part" ri$#ts #a&! int!r&!n!d * where an innocent third party ac6uires an interest in the sub<ect matter of the contract (Mc*enzie v McDonald) e) E0!cution of t#! contract * only a(ailable for innocent misrepresentation ( eddon+s case) * if a contract has been fully e1ecuted then can4t rescind" howe(er there is !ust authority that Seddon4s rule does not apply to contracts for the sale of %oods (8eason .ty 8td ( .rincess >arm) )herefore" [plaintiff] can/cannot rescind the contract dependin% on $$$$$$$$ (identify rele(ant problematic limits)# <. 8o!s t#! ACL apply* Go t#rou$# misr!pr!s!ntation und!r statut!' 2as it a pri(ate sale etc or did it occur in trade/commerce S!c 1= A>L Sec 1? states that: ;a corporation shall not in trad! or comm!rc!" en%a%e in conduct that is misl!adin$ or d!c!pti&! or is li&ely to mislead or decei(e4# 1' >orporation * business relationship in(ol(ed 'owe(er" a ;person4 will also fall under sec 1? because of sec = !98 (' Trad! or comm!rc! * normally" the conduct of any corporation will be conduct in the course of trade or commerce# ;)rade or commerce4 has been %i(en a wide interpretation and co(ers most commercial transactions ( O+,rien v molonogov) e% a commercial arran%ement" commercial elements to a transaction +' En$a$! in conduct * includes conduct (e% a statement) that contains or con(eys a misrepresentation as well as doin% or refusin% to do any act# )herefore it catches statements (li&e puffery and predictions) and omissions which includes silence (Demagogue v Ramensky) (loo& at common law misrep for conduct under !98) 4' Misl!ad or d!c!i&! * ob<ecti(e test is applied which as&s ;would that statement ordinarily mislead an ordinary member of the community 4 !n actual intention to mislead isn4t necessary ('en<o In(estments ( 9ollins 3arric&(ille) R!m!di!s. In<unction * sec 5ama%es * sec -escission * sec

ILLEGAL >ONTRA>TS 1' Is t#! contract ill!$al* Identify whether the contract is ille%al: a) by statute+ or b) on the %round of public policy (if there is no statute" then ille%al on %rounds public policy) Ill!$al )" statut! 1# Is t#!r! an !0pr!ss statutor" pro#i)ition* pre(ents the contract from bein% formed e%# enterin% into contracts without a license) 2# Is t#!r! an impli!d statutor" pro#i)ition* pre(ents the conduct" not the contract bein% formed) , 2hether contract is ille%al is a 6uestion of its construction ( t -ohn hi..ing v -ose.h Rank) , -ele(ant factors in determinin% implied statutory prohibition: a) 2here the purpose of imposin% the penalty is to: i# Increase re(enue * contract probably le%al (9ope ( -owlands) ii# .rotect the public * contract probably ille%al (.retorius ( 3uir @ 0eil) b) 2hether scope and purpose of statute will be sufficiently ser(ed by penalties imposed and incon(enience to public life if t#! contract is held to be (oid (First Chicago v /ango) c) !ny incon(enience to public or commercial life (as opposed to the parties of the contract) if t#! contract is held to be (oid (First Chicago v /ango) 4. Is t#! contract ill!$al as form!d or p!rform!d* -ele(ant 6uestion is: , 2as there a way this particular contract could ha(e been performed without brea&in% the prohibition If no * contract ille%al as form!d If yes * contract ille%al as p!rform!d 9. W#at?s t#! !ff!ct of t#! ill!$alit"* , e0 tur.i causa rule applies * therefore" where a breach of an ille%al contract occurs" there is no action on the contract a(ailable ( Holman v -ohnson) , if ille%al as form!d" e0 tur.i causa rule applies to both parties and none of the parties can sue on the contract , if ille%al as p!rform!d" e0 tur.i causa rule only applies to the %uilty party+ the innocent party may claim a remedy as usual @. E0c!ptions to !0 turpi causa , four e1ceptions to the e0 tur.i causa rule where a remedy may be obtained" includin% restitutionary claims (#elson v #elson)# )hese include: 1' 9laimant i%norant or mista&en as to t#! factual circumstances (not the law) which made the contract ille%al ()m1assador Re'rigeration v 2rocadero ,uilding and (nvestment Co) , 7ut where contract ille%al as form!d" then both parties are ta&en to ha(e intended to brea& the law 5

If a party s#ould #a&! 3no2n somethin%" then this doesn4t fall within the e1ception (' Statute renderin% contract ill!$al is to prot!ct class of which plaintiff is a member (*iriri Cotton Co v De3ani) , 'owe(er" it is insufficient if the statute is passed not for the protection of a particular defined %roup as a class but for the benefit of the %eneral public as a whole: ) Cold tores v Electricity 2rust o' )ustralia# +' Ille%al a%reement was induced by defendant4s fraud" oppression or undue influence (!illiams v ,ayley)# 4' -epentance * ille%al purpose has not been carried into effect e% ( Payne v McDonald) , Onl" applied to ille%ality at common la2 <. /l!0i)l! approac# appl"* , If conduct doesn4t fall within the e1ception to e1 turpi causa then the fle1ible approach may apply , )his approach especially related to restitution of money /transfer prop (0elson ( 0elson) and applies to both ille%ality under statute and common law (>itA%erald ( 8eonhardt) , 3odern courts are more reluctant than in the past to imply ille%ality Ill!$al und!r common la2 contra&!n!s pu)lic polic"' 1# At common la2 contracts ma" )! ill!$al on t#! $rounds of )!in$ contrar" to pu)lic polic": Holman v -ohnson# , ! number of heads of policy ha(e been reco%nised and" althou%h the list is re%arded as finite" !ustralian courts ha(e adopted a fle1ible approach to the heads: Fitzgerald v &eonhardt# (. Id!ntif" 2#ic# A#!ad? of pu)lic polic" t#! contract falls into a) 9ontract to commit a crime or tort (Co3an v Mil1ourn) b) 9ontracts to defraud the re(enue (Miller v *arlinski) c) 9ontracts pre<udicial to the administration of <ustice ( ) v Hayden) d) 9ontracts tendin% to corrupt public officials ( !ilkins v Os1orne) e) 9ontracts pre<udicial to national security or forei%n relations ( ) v Hayden) f) 9ontracts promotin% se1ual immorality (Pearce v ,rooks) 3# In this case" the contract is ille%al at common law on the %rounds of $$$$$$$$$(state authority) B# )his would be the most appropriate head" althou%h there may be other heads that could be referred to" such as contracts to $$$$$$$$# +' Eff!ct , apply steps B"C"="D" ? from ;Ille%al under Statute4

PER/ORMAN>E AN8 1REA>B i' Is ,plaintiff- !ntitl!d to t#! amount claim!d or an" part t#!r!of* 2hether [plaintiff] may reco(er the balance of the contract price or any part thereof depends upon: 1# )he nature of the contract+ 2# )he nature of the obli%ation(s)+ and 3# )he de%ree of performance which was rendered 1. W#at is t#! natur! of t#! contract )!t2!!n t#! ,plaintiff- and ,d!f!ndant-* Is t#! contract di&isi)l!' 5ifferent types of contract: 1# ! di(isible contract" which is one in which the consideration and payment thereof is apportioned accordin% to the wor& to be done ( teele v 2ardiani)# 2# ! lump sum contract" which is one which pro(ides for the payment of a specific sum on completion of specific wor& (Hoenig v (saacs)# I/ 8ICISI1LE: )his contract is most li&ely a di(isible contract because the consideration and payment is apportioned accordin% to the wor& to be done# Ef the total contract price [Ftotal]" [amount 1] was apportioned to be paid on completion of [part 1]" [amount 2] to be paid on completion of [part 2]" and [amount 3] on completion of [part 3]# (If di(isible" split up into the ;parts4 and label them as ;part 14" ;part 24 etc# then %o throu%h the followin% for each part * ie# whether or not entire and what le(el of performance for each part/sta%e of the wor&) I/ NOT 8ICISI1LE LUMP SUM'. ! lump sum contract pro(ides for payment of a specific sum at the completion of specific wor& ('oeni% ( Isaacs) 'ere" this contract is not di(isible# 3erely ha(in% amounts allocated to different sta%es of the wor& does not suffice# )he [number] sta%es of wor& do not coincide with the [number] payments by [defendant]# (. W#at ar! t#! natur! of t#! o)li$ations* Ar! t#!" !ntir! O)li$ations* I/ 8ICISI1LE. !s a di(isible contract" each of the parts should be considered separately to determine whether they are entire obli%ations# !n entire obli%ation is one which pro(ides that e1act performance of the contract is a condition precedent to payment (Cutter v Po3ell)# 'ere" $$$$$$$# I/ NOT 8ICISI1LE. !n entire obli%ation is one which pro(ides that e1act performance of the contract is a condition precedent to payment ( Cutter v Po3ell)# 'ere" $$$$$$$#

N1. In this re%ard" statin% that an amount is due on ;completion of all wor&4 does not ma&e full and complete performance a precondition to payment ( Hoenig v (saacs)# )he performance obli%ation here is therefore not entire# +. Bas t#!r! )!!n !0act7 su)stantial or partial PER/ORMAN>E of t#! o)li$ations* I/ 8ICISI1LE. /enerally spea&in%" performance must be e1act# In this case" [part 1/2/3 etc] was e1actly performed# 'owe(er" there was not e1act performance of the [part 1/2/3] or [part 1/2/3] sta%es# If 8i&isi)l! and Not Entir!. [part 1/2/3] were not e1actly performed" howe(er" they were not entire obli%ations and [plaintiff] may claim substantial/partial performance ('oeni% ( Isaacs)# 2here there has been substantial performance the contractor is entitled to the contract sum as a debt" but is sub<ect to a counter,claim or set,off for the cost of remedyin% any defect in performance (Hoenig v (saacs)# If 8i&isi)l! and Entir!. [part 1/2/3] re6uired e1act performance because those obli%ations were entire# 2hen an obli%ation is entire" reco(ery of the contract price can only occur when there has been e1act performance ('oeni%) I/ NOT 8ICISI1LE. /enerally spea&in%" performance must be e1act# In this case" $$$$$$$# If 8i&isi)l! and Not Entir!: 'owe(er" where an obli%ation is not entire then the plaintiff may claim substantial/partial performance (Hoenig v (saacs)# In such a case" the contractor is entitled to claim the full contract price sub<ect to a counter,claim or set,off for the cost of remedyin% any defect in performance (Hoenig v (saacs)# If 8i&isi)l! and Entir!. 2here the obli%ation to perform is entire the contract price is only reco(erable if the plaintiff has performed the contract e1actly accordin% to its terms# If the performance is defecti(e (substantial) or only partial the plaintiff will not be entitled to any part of the contract price# 'owe(er" [plaintiff] may be entitled to reco(er dama%es or a 6uantum meruit (restitutionary claim) in certain circumstances# SU1STANTIAL PER/ORMAN>E. 5epends upon two factors: a' T#! natur! of t#! d!f!cts6 and )' T#! r!lati&! cost of r!m!d"in$ t#! d!f!ct compar!d to t#! contract pric!. [.!-) 1/2/3 etc] 'ere" the defects were $$$$$$$$$$# )he cost of remedyin% these defects is [amount 1] plus [amount 2] plus [amount 3]+ or [total cost of remedyin%] compared to a contract price of [contract price]" that is" $$$G# In Hoenig v (saacs+ the defects in a reno(ation contract were minor# )he comparati(e cost of remedial measures was only about <D of the contract price# )he court held that there was substantial performance# In contrast to ,olton v Mahadeva+ where the installation of a water heatin% system resulted in fumes bein% emitted" the system not wor&in% properly and the premises bein% made uninhabitable# )he cost of rectification was between on!Et#ird and on!E;uart!r of the contract price# )he court held that there had not )!!n substantial performance# 8

I/ >LOSER TO (9E++D. )his case seems closer to the Hoenig &ind of situation# 9onse6uently" in this case it seems there has been substantial performance of the obli%ation [or obli%ation under particular di(isible part]# [.laintiff] is entitled to reco(er a portion of the contract price" sub<ect to set,off or counter,claim for the $$$$$$$ defect# I/ >LOSER TO ++D or mor!: )his case seems closer to the ,olton &ind of situation [mention how difficult it would be to remedy to defect]# )here does not seem to ha(e been substantial performance# [.laintiff] is therefore not entitled to payment under the contract for its partial performance of the obli%ation [or obli%ation under particular di(isible part]# 4. Is t#!r! an" ot#!r comp!nsation a&aila)l! in RESTITUTION ;uantum m!ruit' for partial p!rformanc!* t#!r!for! in r!$ards to t#! party in breach' [.laintiff] may be entitled to somethin% for partial performance of the obli%ation [or in relation to each di(isible part]# 'owe(er" for there to be a claim for partial performance in restitution" the contract must ha(e been terminated (Pavey 4 Matthe3s v Paul) [see below for whether the contract has been (alidly terminated]# ! party may reco(er some measure of payment for partial performance in two circumstances: a' W#!r! t#! r!ason for partial p!rformanc! is t#at t#! ot#!r part" pr!&!nt!d furt#!r p!rformanc! as an alt!rnati&! to dama$!s for )r!ac# of contract ): Planche v Col1urn" )utomatic Fire .rinklers v !atson , this is/is not a(ailable on the facts# )he reason that [plaintiff] only partially performed was/was not because [defendant] stopped/pre(ented further performance# )' W#!r! a )!n!fit #as )!!n conf!rr!d at t#! !0p!ns! of t#! plaintiff and 2#!r! it 2ould )! unFust to allo2 t#! d!f!ndant to r!tain t#at )!n!fit (.a(ey @ 3atthew ( .aul) , the three ways of showin% that a benefit has been conferred is that: i# the defendant r!;u!st!d t#! s!r&ic!s+ ii# the defendant fr!!l" acc!pt!d the ser(ices+ or iii# the defendant incontro&!rti)l" )!n!fit by the ser(ices# Request , [party in breach] will/may ha(e difficulty in pro(in% that the [party not in breach] re6uested ser(ices which ha(e only been partly performed# Free Acceptance , In this case [party in breach] will/will not ha(e freely accepted the lesser performance because $$$$# Incontrovertible benefit , Incontro(ertible benefit may be clearly shown where the defendant con(erts the ser(ices into money# )he better (iew is that [the party in breach] can/cannot claim a 6uantum meruit# NOTE. 8ama$!s for t#! part" NOT in )r!ac#. 9

! party who is not in )r!ac# under a contract where ser(ices ha(e been pro(ided will be a)l! to s!!3 comp!nsation for the wor& performed# )he party may elect to see& compensation on the basis of either ( )utomatic Fire .rinklers Pty &td v !atson): a) a 6uantum meruit+ or b) dama%es# )he party will not )! !ntitl!d to )ot# dama$!s and a ;uantum m!ruit (,altic hi..ing Co &td v Dillon) and will need to elect between the remedies 9. TERMINATION : Was t#! part" !ntitl!d to t!rminat! and claim dama$!s* (only if it is a li(e issue) NOTE. See below for more in,depth termination !n innocent party will be able to terminate a contract where there has been: a' 1r!ac# of an !ss!ntial t!rm (2ram3ays )dvertising v &una Park)+ )' Suffici!ntl" s!rious )r!ac# of an int!rm!diat! t!rm (,unge Cor. v 2rada0)+ c' R!pudiation )" t#! ot#!r part" to t#! contract. hevill v ,uilders &icensing ,oard# /or Ess!ntial T!rm 2here one ne party would not ha(e entered in the contract unless assured of the strict / substantial performance of the term and the other party &nows/ou%ht to &now of this (!ssociated 0ewspapers ( 7an&s)# ! breach of an essential term enables the party not in breach to
terminate and/or claim dama%es

/or Int!rm!diat! T!rm Is the term capable of a (ariety of breaches and has the breach depri(ed the innocent party of substantially the benefit of the contract ('on% Hon% >ur Shippin% ( Hawas&i) If breach serious * innocent party entitled terminate contract and/claim dama%es ('on% Hon% ( Hawasa&i) /or REPU8IATION -epudiation occurs when a party: a' E&inc!s an int!ntion7 !0pr!ssl" )" 2ords%impli!dl" )" conduct to no lon$!r )! )ound )" t#! contract or+ (8aurinda ( 9apalaba)
)' Indicat!s cl!arl" an ina)ilit" to p!rform (Shel(ill ( 7uilders 8icensin% 7oard)

c' W#!r! t#!r! #as )!!n an anticipator" )r!ac# , innocent party can terminate immediately or wait for the time of performance * so can either accept the repudiation or wait for time of performance and then it would be breach of an essential term 'owe(er if they wait the other party may actually be able to %o throu%h with performance and the party cannot rely on the pre(ious anticipatory breach and claim dama%es (>oran ( 2i%ht) 10

:1amples of repudiation include: 1) Lat! pa"m!nt coupled with p!rsist!nt )r!ac#!s of other terms of a l!as! (.ro%ressi(e 3ailin% 'ouse ( )abali) 2) E0pr!ss r!fusal to perform ('ochester ( 5e la )our) 3) Impli!d r!fusal to perform (8aurinda ( 9apalaba .ar& Shoppin% 9entre) B) UnFustifia)l! int!rpr!tation of contract (8una .ar& ( )ramways !d(ertisin%) C) Wron$ful t!rmination of contract (7raidotti ( Ild 9ity .roperties) =) 9ommencement of proc!!din$s (8ombo& ( Supentina) D) Ina)ilit" to perform (>oran ( 2ri%ht) )he rules for when a party must be ready and willin%/not wholly and finally disabled include: , 2here obli%ations are not d!p!ndant and concurr!nt (sale of land and %oods) [terminatin% party] does not n!!d to s#o2 t#!"?r! r!ad"7 2illin$ and a)l! , 2hen an anticipator" )r!ac# [terminatin% party] must only show that at the time of performance they were not 2#oll" and finall" disa)l!d (not substantially incapable) from performin% the contract * proof of this at the time of the anticipatory breach enables [terminatin% party] to terminate * howe(er" if they wish to claim dama$!s they must pro(e on the balance of probabilities that they 2ould #a&! )!!n r!ad"7 2illin$ and a)l! on the date for completion , If the )r!ac# occurs at t#! tim! for p!rformanc! of the contract the terminatin% party must be r!ad" 2illin$ and a)l! at the time of performance# !n innocent party who is not able to show they are ready willin% and able may not terminate the contact (>oran ( 2i%ht) /or T!rmination 1!caus! of 8ELAG IN PER/ORMAN>E If time is of !ss!nc! , [innocent party] is entitled to terminate for breach of time stipulation immediately (7un%e ( )rada1) , )ime is of the essence where: a) )he contract !0pr!ssl" stipulat!s ('arold 2ood 7ric& 9o ( >erris) b) Surroundin% circumstanc!s%su)F!ct matt!r ma3! it imp!rati&! t#at t#! a$r!!d dat! )! pr!cis!l" o)s!r&!d (7un%e 9orp ( )rada1, dates for performance in commercial contracts will %enerally be treated by the common law as essential where they relate to substanti(e obli%ations under the contract ) c) )erms of the contract are such that tim! is of t#! !ss!nc! s#ould )! inf!rr!d (2acal In(estments ( 'urley) , In the sale of land contract payment of a deposit on time is prima facie essential so failin% to pay on time will be breach of an essential term 7rien ( 5wyer)

If time is NOT of !ss!nc! 11

'ere" as time is not of the essence" [def4s] failure to perform is a breach of an inessential term# 7efore [plaintiff] is able to terminate they must ser(e notice of completion# ! notice is re6uired where 1' )he contract do!sn?t sp!cif" date for completion
, , 2here con doesn4t specify date and reasonable time is e1press/implied then time is not of essence in common law/e6uity (9annin% ( )emby) [plaintiff] must wait for reasonable time before they %i(e notice

)he notice should pro(ide further time for performance and if this not complied with then can term (8ouinder ( 8eis) (' 9ontract do!s sp!cif" date for completion 2here there is a specified date and time is not of the essence then the innocent party can imm!diat!l" ser(e notice %i(in% further reasonable time for completion >ailure to complete on the further date enables [plaintiff] to terminate

In each case" the notic! must contain: a' !d(ice of obli%ation to be performed )' >i1 reasonable time for performance c' 0otice that failure to comply %i(es rise to ri%ht to term (8aurinda ( 9apalaba) 'owe(er" the !0c!ption to t#! r!;uir!m!nt of a notic! is when the breach of non,essential time stipulation occurs where the delay is unreasonable and the delay amounts to repudiation (8aurinda ( 9apalaba)

@. If t#! ;u!stion as3!d 2#!t#!r 8AMAGES could )! sou$#t. /or dama$!s..... 1. Id!ntif" 2#!t#!r t#! contract 2as )r!ac#!d ! cause of action for breach will arise if one of the parties fails to perform one or more obli%ations under that contract# In this case the defendant breached the contract# o !98 sec =J , warranty that ser(ices rendered with due care and s&ill

(. Bas ,plaintiff- suff!r!d loss* Id!ntif" t#! loss!s suff!r!d' 8ama$!s ma" )! r!co&!r!d for. Loss of profit or &alu! !0p!ctation loss' : (alue of e1pectancy which the contract created is reco(erable * measure of loss is difference between contract price and the (alue of the sub<ect matter of the contract 12

Wast!d !0p!nditur! r!lianc! loss' : if calculation of dama%es on basis of e1pectation loss will not accurately reflect the plaintiff4s loss" wasted e1penditure can be claimed o Loss of profit impossi)l! to calculat! * plaintiff4s e1penditure would be reco(erable where the e(idence indicates that the plaintiff was not %oin% to ma&e a profit on the contract but was not %oin% to ma&e a loss either (Common3ealth v )mann )viation) o Losin$ contract : plaintiff will be able to reco(er wasted e1penditure where they would ma&e no profit from the contract# 7ut the wasted e1penditure must be reduced by the amount which they would ha(e lost under the losin% contract (Common3ealth v )mann )viation) P#"sical inFur" E 5ama%es may be reco(ered for physical in<ury caused by breach of contract (Cullen v 2ra..ell)# Loss of opportunit" : dama%es for this are reco(erable (Common3ealth v )mann )viation) 8!la" in pa"m!nt of mon!" : dama%es may be reco(erable for the cost of borrowin% money to replace money paid away or withheld in conse6uence of the defendant4s breach (Hunger'ords v !alker) R!co&!r" for m!ntal distr!ss distr!ss and disappointm!nt' : dama%es for mental distress are not reco(erable unless one of the e1ceptions apply ( ,altic hi..ing Co v Dillon)# :1ceptions are: o breach of contract has caused personal in<ury to plaintiff ( Godley v Perry) o plaintiff suffered actual physical discomfort and incon(enience ( Ho11s v &ondon 4 outh !estern Rly Co) o ob<ect of contract was for pleasure and en<oyment or freedom from mental distress (Hey3ood v Hellers) Loss of r!putation , )here is :n%lish authority which has held that dama%es for loss of reputation or publicity are reco(erable where the contract e1pressly or impliedly promises publicity or enhancement to reputation ( Mar1e v George Ed3ardes "Daly+s 2heatre% &td)#

+. Carious limits #a&! )!!n impos!d on t#! r!co&!r" of loss for )r!ac# of contract. 4. >ausation : did ,d!f!ndant-?s acts caus! t#! loss* 1ut for t!st * loss would not ha(e occurred but for the defendant4s breach ( March v tramare) >ommon s!ns! approac# * where there was more than one cause of loss" as a matter of common sense" was [defendant4s] act a cause of the loss ( March v tramare) In relation to the $$$$$$$" it mi%ht be that the chain of causation may be bro&en by an inter(enin% clause (&ondon -oint tock ,ank v MacMillan)

9. R!mot!n!ss : 2as t#! loss suff!r!d )" ,plaintiff- not too r!mot!* 13

-emoteness is determined in accordance with the rule in Hadley v ,a0endale" that is" dama%e will not be too remote if it can be reasonably considered to: a) aris! naturall" accordin$ to t#! usual cours! of t#in$s from the breach# In !ustralia" this has been interpreted as ;not unli3!l" to r!sult? or ;sufficiently li&ely to result4 (,urns v M)# )utomotive ")ust% Pty &td) (1st lim))+ or b) be such as may reasonably be supposed to ha(e been cont!mplat!d as a pro)a)l! r!sult of t#! )r!ac# because it arises from sp!cial facts &nown to both parties at the time they made the contract# , In addition to special &nowled%e it is necessary either: i# for the defendant to ac;uir! t#! 3no2l!d$! from t#! plaintiff ii# for the plaintiff to 3no2 t#! d!f!ndant is poss!ss!d of t#! 3no2l!d$! at the time the contract is entered into 2hiche(er limb the dama%e falls under" the parties need only to contemplate the t"p! of loss incurr!d7 not t#! full%pr!cis! !0t!nt of t#! loss : H Parsons "&ivestock% v 5tterly (ngham 4 Co# @. W#at is t#! ;uantum of dama$!s* )he ob<ect of dama%es is to place the innocent party in the position as if the contract was not breached (Ro1inson v Harman) )herefore" state the rele(ant losses and the 6uantum of dama%es the plaintiff will recei(e (e%# salary for four wee&s) <. Miti$ation /eneral principle is that the plaintiff must ta&e reasonable steps to miti%ate a%ainst their loss ( hindler v #orthern Raincoat) Enus is on the defendant to pro(e that the plaintiff did not miti%ate a%ainst their loss (2C (ndustrial Plant v Ro1ert+s 6ueensland ) .laintiff only re6uired to ma&e reasonable steps to miti%ate * no need to ta&e steps that are costly or e1tra(a%ant (Metal Fa1rications v *elcey) 3ay need to consider: o Should the plaintiff enter into or ne%otiate a further contract with the defendant o !re reductions or increases in the amount of loss ta&en into account o Should the plaintiff purchase a substitute in the mar&et 5o the limitations on the miti%ation principles apply i# Anticipator" )r!ac#: the duty to miti%ate does not arise until there is an actual breach of contract or an anticipatory breach that is accepted as a repudiation of the contract ( hindler v #orthern Raincoat Co)# ii. A$r!!d dama$!s claus!s Ar! t#!s! claus!s li;uidat!d dama$!s claus!s or p!nalti!s* If applica)l!' )he contractin% parties may a%ree what sum shall be payable by way of dama%es in the e(ent of breach# If the sum so fi1ed is a %enuine pre,estimate of loss" it will be accepted by the court and awarded as Kli6uidated dama%esL# 2hether a sum is a 14

penalty or li6uidated dama%es does not depend on any particular e1pression or label used (such as penalty or li6uidated dama%es)# Instead" it is ;u!stion of construction to be decided on the terms and inherent circumstances of each particular contract" Fud$!d as at t#! tim! of t#! contract rat#!r t#an t#! tim! of )r!ac#. >actors which the court ta&es into account in d!t!rminin$ 2#!t#!r a particular claus! is a p!nalt"" include * (Dunlo. Pneumatic 2yre Co v #e3 Garage): 1' )he )ar$ainin$ po2!r of the parties (' )he int!ntion of the parties +' 2hether the stipulation sum is cl!arl" in !0c!ss of t#! $r!at!st possi)l! loss that mi%ht be e1pected to follow from the breach 4' )he pr!sumption that the stipulated sum is a penalty if it is payable on the occurrence of one or more se(eral e(ents" some of which will result in serious" others only triflin% loss (5unlop) !lso: It will be a p!nalt" if t#! sum stipulat!d is !0tra&a$ant and unconsciona)l! in amount compared to the %reatest possible loss that could ha(e resulted from the breach# It will be a penalty if the breach consists of a failure to pay money" and the sum stipulated is %reater than the sum that should be paid# )here will be a presumption that it is a penalty when a sin%le sum is payable on the occurrence of one or more or all of se(eral e(ents" some of which mi%ht result in serious loss and others only triflin% loss# It is no o)stacl! to it )!in$ a $!nuin! pr!E!stimat! t#at t#! circumstanc!s ma3! pr!cis! pr!E!stimation almost impossi)l!. ! clause construed as a penalty 2ill )! &oid and un!nforc!a)l! )" !it#!r part"# )he clause is struc& down and the innocent party will be l!ft to pro&! t#!ir loss in t#! usual 2a" ie causation" remoteness and miti%ation (!4- (nvestments &td v ,unting)# =. >onclusion : t#! plaintiff 2ill t#!r!for! )! a)l! to r!co&!r list r!co&!ra)l! t#in$s' EHUITA1LE REME8IES 1. Id!ntif" 2#!t#!r t#! contract 2as )r!ac#!d ! cause of action for breach will arise if one of the parties fails to perform one or more obli%ations under that contract# In this case the defendant breached the contract# (. Sp!cific p!rformanc! Specific performance is a discretionary remedy * orders a party to force a party to perform a contract or perform obli%ations that are unperformed Specific performance a(ailable where dama%es are an inade6uate remedy (Dougan v &ey) 15

o 9ontracts for sale of land * dama%es not ade6uate because e(ery bloc& of land is uni6ue ()dderly v Di0on) o 9ontracts for the sale of personalty * some contracts for personalty may be specifically enforced where the item of personalty is uni6ue (i#e# not readily a(ailable on the open mar&et or only obtainable throu%h incon(enience and difficulty to the plaintiff o 9ontracts for sale of specific %oods * contracts for the sale of %oods custom built or rare articles may be specifically enforced (s C3 ale o' Goods )ct 789: (Ild)) +. InFunction /rant of in<unction is a discretionary remedy * order for a party to refrain from doin% an act to restrain a breach of contract or a threatened breach of contract In<unction is a(ailable where dama%es are an inade6uate remedy Interlocutory in<unction maintains the status 6uo until the trial starts TERMINATION 1G AGREEMENT 1. Natur! of ori$inal contract (. Natur! of su)s!;u!nt a$r!!m!nt )he complete dischar%e of all contractual obli%ations must be distin$uis#!d from t#! &ariation or partial disc#ar$! of an a%reement by the parties# )he (ariation of a contract will lea(e the ori%inal contract on foot but modify some particulars" whereas a dischar%e terminates all contractual obli%ations# o Is t#! su)s!;u!nt a$r!!m!nt a &ariation or disc#ar$! and su)stitution* ! purported (ariation will be a dischar%e when the a$r!!m!nt is inconsist!nt to t#! !0t!nt t#at it $o!s to t#! root of t#! ori$inal contract (Morris v ,aron)# 2hether the a%reement between the parties is a dischar%e or (ariation appears to be a ;u!stion of d!$r!! and int!ntion (2allerman 4 Co Pty &td v #athan+s Merchandise "Vic% Pty &td )# I/ >ONTRA>TUAL 8IS>BARGE. )here are re6uirements for a (alid dischar%e by a%reement# !n e1istin% contract may be dischar%ed by a further contract between the parties# )he usual re6uirements of contract formation will apply to the contract of dischar%e: Effer and acceptance: ,P Re'inery "!estern.ort% Pty &td; 9onsideration N1. )he pro(ision of consideration will not )! a pro)l!m 2#!r! n!it#!r part" #as p!rform!d t#!ir o)li$ations. 'owe(er" where one party performs their obli%ations" fresh consideration will be re6uired unless the a%reement is in the form of a deed ()tlantic hi..ing 4 2rading &td v &ouis Drey'us 4 Co)# 9lear intention to brin% the parties4 obli%ation to an end: Fitzgerald v Masters# )here can also be an a%reement to dischar%e a contract and not replace it R!;uir!m!nts of 2ritin$. 16

)he contract can be dischar%ed by oral a%reement but if an oral a%reement dischar%es the written contract and substitutes a fresh contract then no enforceable contract at all (3orris ( 7rown)

I/ CARIATION If contract is re6uired to be in writin% (%uarantees" sale of land) then any (ariation will be unenforceable unless it4s in writin% (!ust .ro(incial !ssociation ( -o%ers) +. Eff!ct on t#! >ontract :1plain the effect this will ha(e on the contract TERMINATION 1G /RUSTRATION i' Bas t#! contract )!t2!!n ,pff- and ,d!f- )!!n frustrat!d* 1. G!n!ral T!st )he test for frustration is whether" without the fault of either party" performance of the contract has become radically different from that contemplated ( Codel'a Construction v tate Rail )uthority o' # !)# (. 8o t#! occurr!nc!s fall 2it#in on! of t#! common instanc!s of frustration* )here ha(e been a ran%e of occurrences which potentially could amount to frustratin% e(ens" namely: (list the occurrences) a# 8!struction or una&aila)ilit" of su)F!ct matt!r : well reco%nised frustratin% e(ent: 2aylor v Cald3ell# N1. )he destruction must occur before the contract is already frustrated# b# 8!at# % sic3n!ss % incapacit" of a part" * may frustrate a contract: immons v Hay# 2hether sic&ness renders a contract somethin% radically different depends on: (Carmichael v Colonial ugar) i# 0ature and probable duration of the sic&ness (compared to duration of contract) ii# 0ature and terms of the contract c# /ailur! of t#! )asis of t#! contract * a contract may be frustrated where an e(ent (that the parties a%reed to be the basis of the contract) does not occur: *rell v Henry N1. must be the true basis of the contract and not mere co,incident d# M!t#od of p!rformanc! impossi)l! : a super(enin% e(ent (e%# in<unction) may render the contemplated method of performance impossible: Codel'a# (8oo& at whether the contract can be performed by the planned date notwithstandin% the reduction in time allowed for performance) e# E0c!ssi&! d!la" * ! super(enin% e(ent may ha(e the capability of frustratin% the contract by causin% e1cessi(e delay in performance such as to render performance somethin% radically different from what was ori%inally underta&en: -ackson v Maritime 5nion (nsurance# i# 2hether a delay in performance will render a contract frustrated will depend on the probability of the len%th of delay as compared to the time 17

left to run on the contract" which performance mi%ht ha(e been e1pected to ha(e been completed (Pioneer hi..ing &td v ,2P 2io0ide &td)# ii# )wo approaches: 1# assessment of commercial probabilities 2# ;wait and see4 (e%# stri3!) iii# N1. if businesspersons assessed the contract as ha(in% been frustrated" it is immaterial if subse6uently the e(ent no lon%er e1ists or has affect (Em1iricos) f# Sup!r&!nin$ ill!$alit" : arises either by: i# 9han%e in the law: contract frustrated if law chan%es to prohibit further performance (Coo.er v #eilson) ii# 9ontractin% with the enemy: if war brea&s out" any contract with a national of the other country will be rendered ille%al and thus frustrated (Hirsch v <inc Cor.) %# >ontracts conc!rnin$ land , if there is a radical chan%e in the circumstances between these times that pre(ents the (endor from transferrin% the le%al estate to the purchaser" the contract will be frustrated# i. Sal! of land ii. L!as! of land iii# N1# sale of land includin% a buildin% which is destroyed+ also may better fit within destruction of sub<ect matter cate%ory +. 8o an" limits on frustration appl"* If the %eneral test for frustration was considered to be satisfied" the limits on frustration need to be considered" namely: 1# :1press contractual a%reement 2# Super(enin% e(ent foreseeable 3# Super(enin% e(ent induced by one of the parties N1. )he mere fact that the super(enin% e(ent renders performance of the contract more onerous or e1pensi(e will not mean that performance has become ;radically different4 from that ori%inally underta&en (2he Eugenia)# 4. Eff!ct of frustration* )he effect of frustration is that the contract automatically comes to an end at the date of frustration: Hir=i Mul=i v Cheong /ue teamshi.# 8oss lies where it falls but unconditionall" accru!d ri$#ts and lia)iliti!s r!main unaff!ct!d : MacDonald v Denneys &ascelles" )ut conditionall" ac;uir!d ri$#ts and lia)iliti!s and all futur! ri$#ts and lia)iliti!s ar! disc#ar$!d# 0either party is entitled to dama%es after frustration# )hus" the loss arisin% from the dischar%e lies where it falls unless there has been a total failur! of consid!ration: Fi1rosa ) v Fair1airn# 'ere" $$$$$$# N1. 2or& done under the contract after frustration ma" )! claim!d on a quantum meruit )asis (Codel'a)" if it conferred a benefit on [defendant] at [plaintiff]4s e1pense" and for it to be un<ust for that benefit to not be restored s!! ;uantum m!ruit' State what amount(s) will be reco(ered# 18

9. TERMINATION* (Enly if this is applicable) If" on the other hand" the contract was not frustrated then the 6uestion will be whether [defendant] had a ri%ht to terminate the contract# [5efendant] would ha(e this ri%ht where at least one of the followin% occurred: 1# 1r!ac# of an !ss!ntial t!rm (2ram3ays )dvertising v &una Park)+ 2# Suffici!ntl" s!rious )r!ac# of an int!rm!diat! t!rm (,unge Cor. v 2rada0)+ 3# R!pudiation )" t#! ot#!r part" to t#! contract: hevill v ,uilders &icensing ,oard# )he definition of essentiality is that one party would not ha(e entered the contract unless assured of a strict or substantial performance of the term and the other part &nows or ou%ht to &now: 2ram3ays v &una Park# 'ere" [innocent party] ma&es it clear it would not ha(e entered into this contract unless assured of completion by $$$$$$$# ! breach of an essential term enables the party not in breach to terminate and/or claim dama%es# [innocent party] ri%htly terminated immediately for failure to perform by $$$$$$$# OR )he failure to $$$$$$$$ is presumably a breach of an essential term * [5efendant] would not ha(e entered into the contract unless assured of a strict or substantial performance of the promise to $$$$$$$ and [plaintiff] &nows or ou%ht to &now of that fact: 2ram3ays v &una Park# !n ina)ilit" to p!rform also amounts to a r!pudiation of t#! contract # )his would seem to occur as$$$$$$# )his would enable [defendant] to elect whether to terminate or affirm the contract# N1. )he fact that a part" su)s!;u!ntl" r!$ain!d t#! a)ilit" to p!rform 2ould )! irr!l!&ant# [innocent party] would be entitled to dama%es in the amount of any additional cost it incurred to pay for $$$$$$$$ (e%# supplies from another caterer)# )ermination do!s not disc#ar$! an" ri$#ts or lia)iliti!s accru!d unconditionall" prior to t#! dat! of t!rmination7 )ut do!s disc#ar$! conditionall" ac;uir!d ri$#ts and lia)iliti!s and an" futur! o)li$ations. McDonald v Dennys &ascelles# MISTA5E 1. Is t#! contract &oid for mista3!* 3 types of mista&es: 1. >ommon mista3!: both ma&e same mista&e (. Mutual mista3!: both ma&e different mista&e (cross,purposes) +. Unilat!ral mista3!. one party is mista&en and other party &nows or ou%ht to &now 'ere" there has been a [common] [mutual] [unilateral] mista&e because $$$$$$$#

IF Common Mistake >ommon La2* (oid at common law where contract is res e0tincta and res sua

19

1) Res extincta un&nown to both praties" the su)F!ct matt!r of t#! contract no lon$!r !0ists so that the contract is impossible to perform and is accordin%ly (oid (Dell v ,easley)########frustration N1. distin%uish from an ad(enture and warranty 2) Res sua : un&nown to both parties" the )u"!r or t#! l!ss!! of t#! prop!rt" is alr!ad" t#! o2n!r of t#at prop!rt" (,ell v &ever ,ros) * contract is (oid because seller/lessor has nothin% to sell/lease N1. mista&e as to 6ualities/attributes does not (oid the contract ( vanosio v Mc#amara) E;uit" contracts (oid at common law for mista&e also re%arded as (oid in e6uity ( ,ell v &ever ,ros)# )wo e1ceptions where e6uity will inter(ene 1) Rescission * may declare the contract voidable 2#!r! t#! common mista3! r!lat!s to t#! fundam!ntal natur! or 6uality of the sub<ect matter and the party alle%in% mista&e is not at fault ( olle v ,utcher)# )hree elements to set aside for common mista&e: a) 9ommon misapprehension b) Ef a fundamental nature c) !bsence of fault on party see&in% rescission N1. usual limits to rescission apply 2) Rectification * to rectify a common mista&e in the recordin% of a written a%reement" the followin% must be shown (Maralinga v Ma=or Enter.rises) 1. T#!r! 2as a prior conclud!d a$r!!m!nt and t#! parti!s t#!n !rron!ousl" r!cord t#at a$r!!m!nt in a 2ritt!n docum!nt * it seems that it is sufficient if the parties can use other means to pro(e the common intention" includin% pre, and post, contractual facts (# ! Medical De'ence 5nion &td v 2rans.ort (ndustries (nsurance Co &td )+ or (. T#!r! is !&id!nc! or Acon&incin$ proof? t#at t#! 2ritt!n docum!nt do!s not $i&! !ff!ct to t#! parti!s? common int!ntion or t#at t#! docum!nt diff!rs from t#! parti!s? common int!ntion t#!r!for! not amountin$ to a conclud!d a$r!!m!nt AN8 +. A bona fide innoc!nt' t#ird part"?s ri$#ts ar! not pr!Fudic!d mith v !ones'. N1. relief not denied simply because did not read the contract prior to si%nin% it: Coset #o 7> v ,lago=evic+ also note circumstances where rectification will be refused and the limits Onus * hea(y onus of proof on the party see&in% rectification of the instrument IF Mutual Mistake >ommon La2* 9ourt must try to assi%n a meanin% as to what the parties had a%reed * that is how would a reasonable person understand the contract ( mith v Hughes) 1) T#! contract 2ill )! &oid at common la2 if impossi)l! for a r!asona)l! t#ird part" to pr!f!r on! m!anin$ o&!r t#! ot#!r: Ra''les v !ichelhaus# 2) W#!r! t#! parti!s? a$r!!m!nt ma" )!ar a particular m!anin$ o)F!cti&!l"7 t#at m!anin$ 2ill )! imput!d to it "oulahan'7 and t#! contract $i&!n t#at m!anin$' is &alid and )indin$ on )ot# parti!s (Golds1orough)# E;uit" Since e6uity %enerally follows the law" where the common law assi%ns a meanin%" that meanin% will also be assi%ned in e6uity ( 2am.lin v -ones) IF #nilateral Mistake 20

2here on! part" is mista3!n and t#! ot#!r 3no2s7 or ou$#t to 3no2 of t#! mista3! (Hartog v Collin 4 hields+ mith v Hughes)# )he appropriate test is the ob<ecti(e test and that in applyin% such a test" the contract is not (oid at common law ( 2aylor v -ohnson)# 'owe(er" the contract may be (oidable where the conduct of the party not mista&en amounts to Ksharp practiceL ( condut that may be unethical)(2aylor v -ohnson) >ommon la2* )here is no remedy for a unilateral mista&e e1cept in special cases of a' mista3!n id!ntit" )' non est factum. )herefore" the common la2 do!s not r!nd!r a contract &oid for unilat!ral mista3! unl!ss on! of t#! t2o !0c!ptions can )! pro&!d (2aylor v -ohnson)#

Mistaken Identity

2here one party claims to be mista&en as to the identity of the other party" the a%reement will be (oid where: 1. At t#! tim! of t#! appar!nt a$r!!m!nt7 t#! id!ntit" of t#! ot#!r part" 2as mat!rial $oulton v !ones' E it may be rele(ant whether parties contract face to face or at distance * presumption is that there4s a contract when parti!s d!alin$ fac! to fac! (.hillips ( 7roo&s 8td) E 2hat is needed to r!)ut t#! pr!sumption is dependent upon the circum but %enerally: a' 0eed to show that the contract was not with the person in front of them )' )he true identity of the person was material (8ewis ( !(ery)# (. T#!r! 2as an int!ntion to contract7 not 2it# t#! ot#!r part"7 )ut 2it# a s!parat! !ntit" Cundy v Lindsay' E a plea of mista&en identity will succeed only where two distinct entities in(ol(ed (Hin%s 0orton 3etal ( :drid%e) +. T#is int!ntion 2as 3no2n or ou$#t to #a&! )!!n 3no2n to t#! ot#!r part" )he effect of a unilateral mista&e as to identity is to r!nd!r t#! contract &oid (Porter v &atec Finance "6ld% Pty &td)# )herefore" in no circumstances will a third party dealin% with a ro%ue (who is in on the scam) ac6uire %ood title in %oods that the ro%ue may ha(e obtained under a contract formed by mista&en identity# 'owe(er" lost ri$#t to r!scind if innoc!nt t#ird part" ac;uir!s int!r!st in su)F!ct matter# ! contract may also be (oid for mista&en identity where a plaintiff does not want to contract with someone but is decei(ed by a ro%ue into doin% so ( aid v ,utt)# 21

%on &st Factum >ommon la2* 2here one party alle%es document si%ned was of a wholly different nature to which he intended to si%n In order to plead non est 'actum" three conditions are necessary: 1. )he claim must )!lon$ to t#! class of p!rsons a)l! to r!co&!r und!r t#! pl!a. Ie the class of persons who ar! a' una)l! to r!ad )!caus! of )lindn!ss or illit!rac" and who must rely on the ad(ice of others re%ardin% what they are si%nin% or )' 2#o t#rou$# no fault of t#!ir o2n ar! una)l! to und!rstand t#! purport of t#! docum!nt e% defecti(e education" illness or innate capacity: aunders v )nglia ,uilding ociety# (. )he claimant must show that the document 2as si$n!d in t#! )!li!f t#at it 2as radicall" diff!r!nt from what in fact it was# +. )s against innocent .ersons" the failur! of t#! claimant to r!ad and und!rstand must not )! du! to car!l!ssn!ss on #is part (Petelin v Cullen) )here is a hea(y onus on the person see&in% to rely on the plea ( Petelin v Cullen)# 2here the plea is successful" the contract is (oid ab initio" therefore no titl! pass!s to the ro%ue and any t#ird part" int!r!sts 2ould )! d!f!at!d (for e1ample" p% 13? I @ ! if a successful plea then no title to the car would ha(e past and Stanley could reco(er the car from the student)# En the other hand" 2#!r! t#! pl!a is not !sta)lis#!d7 t#! ri$#t to r!scind t#! contract is still limit!d )" t#! limitations on t#! ri$#t to r!scind * hence" the ri%ht must be e1ercised promptly (e#%# before a third party4s ri%hts ha(e interfered)#

1'R!l!&ant class )he rele(ant class is restricted to those mentioned abo(e ie blind/illiterate etc )he class may include a forei%n person who is unable to spea& :n%lish (ery well ( &ee v )h Gee)+ or it may include one who is sufferin% from a mental incapacity" pro(ided that the effect of the incapacity is that the claimant is neither minded nor intendin% to si%n a document of that character or class (Gi11ons v !right)#

0ote: In an e1ceptional case" it was held that the class included a person of full capacity who had been misled by a trusted friend to belie(e that they were merely witnessin% the friend4s si%nature on hi%hly confidential documents that had material parts co(ered up ( &e3is v Clay)# (' Radicall" diff!r!nt 2hether a document is radically from what the si%ner thou%ht it to be is a 6uestion of fact to be determined sub<ecti(ely (Petelin v Cullen)# )he document must be A!ss!ntiall" diff!r!nt in su)stanc! or in 3ind from t#! transaction int!nd!d 4 (Gallie v &ee)# 'owe(er" the plea will not succeed where the document" while differin% from what the si%ner belie(ed it to be" is essentially the same ( aunders v )nglia ,uilding ociety)# 22

+' >ar!l!ssn!ss of claimant )his third element is only operati(e in some circumstances and refers to a mere failure to ta&e reasonable precautions in ascertainin% the character of a document before si%nin% it ( Petelin v Cullen)# 2here a document is si%ned with blan& spaces to be filled in at a later date" there may be an indication that the si%ner has been careless" thereby e1cludin% the plea" e(en thou%h the first two elements of belon%in% to a rele(ant class and belie(in% the document to be radically different ha(e been demonstrated# E;uit"* In e?uity" the contract ma" )! tr!at!d as &oida)l!7 it ma" )! r!ctifi!d or the remedy of specific performance may be withheld# a' Coida)l! contract. E;uit" 2ill s!t asid! t#! contract in the case of unilateral mista&e where the court is of the opinion that there #as )!!n As#arp practic!? * that is" it is unconscientious for parties to ha(e the le%al ad(anta%e they ha(e obtained by (irtue of the contract (2orrance v ,olton)# Special circumstances are ordinarily re6uired before it would be unconscientious for one party to enforce it a%ainst another party who was under a mista3! as to its t!rms or su)F!ct matt!r (2aylor v -ohnson)# )hree elements must be shown * (2aylor v -ohnson): 1. A part" !nt!rs into a 2ritt!n contract und!r a s!rious mista3! a)out its cont!nts in r!lation to a fundam!ntal t!rm (. T#! ot#!r part" is a2ar! or #as r!ason to )! a2ar! t#at circumstanc!s !0ist t#at indicat! t#! first part" is !nt!rin$ t#! contract und!r som! s!rious mista3! or misappr!#!nsion +. T#! ot#!r part" d!li)!rat!l" s!ts out to !nsur! t#at t#! first part" do!s not )!com! a2ar! of t#! !0ist!nc! of #is or #!r mista3! or appr!#!nsion 2hat amounts to ;sharp practice4 may depend upon the indi(idual circumstances of the case# ;Sharp practice4 is not limited to the formulation in 2aylor v -ohnson# E;uita)l! r!li!f ma" )! $rant!d 2#!r!&!r it 2ould )! unconsci!ntious or in!;uita)l! to #old t#! mista3!n part" to t#! contract# >or e1ample: Limits. Ence a%ain" the limits on t#! ri$#t to r!scind still op!rat! (i#e# affirmation" lapse of time" impossibility of restitutio in inte%rum" innocent third party ri%hts ha(e interfered)# )' R!ctification. :6uity may rectify a written document where only one party mista&enly belie(es that the document accurately reflects the parties4 a%reement and the party who is not mista&en en%a%es in unconsciona)l! conduct or As#arp practic!? (Riverlate Pro.erties &td v Paul)# )he elements for rectification are as follows * ( 2homas ,ates 4 on &td v !indham+s "&ingerie% &td): a' T#! plaintiff 2ron$l" )!li!&!s t#at t#! 2ritt!n docum!nt contains a particular t!rm or do!s not contain a particular t!rm 23

)' T#! d!f!ndant is a2ar! of t#! plaintiff?s 2ron$ )!li!f c' T#! d!f!ndant sa"s not#in$ to corr!ct t#! plaintiff?s 2ron$ )!li!f d' T#! mista3! !it#!r pro&id!s an ad&anta$! to t#! d!f!ndant or is a d!trim!nt to t#! plaintiff !lthou%h the elements are cast in terms of actual &nowled%e" it seems that it is sufficient if the defendant ;must ha(e &nown4 or ;stron%ly suspects4 that the plaintiff is ma&in% a mista&e (Misiaris v aydels Pty &td)# UN8UE IN/LUEN>E s!! ot#!r not!s for d!tail' Mndue influence in(ol(es one person who occupies a position of ascendancy or influence o(er another improperly usin% that position for the benefit of himself or someone else" so that the acts of the person influenced cannot be said to be his (oluntary acts (Nohnson ( 7uttress)# )here are said to be reco%nised classes of undue influence (!llcard ( S&inner) a. >lass 1. actual undu! influ!nc! )hese elements must be shown by the party see&in% to rely on the plea: 1. on! part" to t#! transaction #ad t#! capacit" to influ!nc! t#! ot#!r (. t#at influ!nc! 2as !0!rcis!d +. its !0!rcis! 2as undu!6 and 4. its !0!rcis! )rou$#t a)out t#! transaction (7an& of 9redit ( !boody) ). >lass (. pr!sum!d undu! influ!nc! 9lass 2!: reco%nised relationships 1. 3ost relationships in this cate%ory are widely reco%nised" such as: a. solicitor and cli!nt (3c.herson ( 2att) ). trust!! and )!n!ficiar" 5ou%an ( 3ac.herson) c. doctor and pati!nt (7ar,3ordecai ( 'illston) d. parent and child (.hillips ( 'utchinson) i# does not apply to child ,O parent ii# do!s not appl" if c#ild is !mancipat!d from par!nt (8amotte ( 8amotte) !. spiritual ad&is!r and d!&ot!! (0orton ( -elly) f. man and fiancI (Pamet ( 'yman) 9lass 27: class!s attractin$ pr!sumption )his can arise in any relationships where fiduciar" c#aract!ristics are seen (Nohnson ( 7uttress) )he court loo&s at: a' standard of int!lli$!nc!7 !ducation7 c#aract!r7 p!rsonalit"7 a$!7 stat! of #!alt#7 an" )lood r!lations#ips7 lac3 of !0p!ri!nc! in )usin!ss affairs of claimant )' l!n$t# of ac;uaintanc!s#ip and intricacy of their business affairs c' str!n$t# of c#aract!r and p!rsonalit" of the dominant party d' the opportunit" afford!d t#! dominant part" to influ!nc! t#! claimant in )usin!ss affairs (Mnion >idelity 24

( /ibson) e% ban&er and customer relationship does not arise a presumption of undue influence under class 2!" but may do so under class 27 (0ational 2estminster 7an& ( 3or%an) In either of the classes" the pr!sumption can )! r!)utt!d. 7y pro(in% that the trustin% party: 1. 3n!2 and und!rstood 2#at t#!" 2!r! doin$6 and (. 2as actin$ ind!p!nd!ntl" of an" influ!nc! arisin$ from t#! asc!ndanc" (8ancashire 8oans ( 7lac&) R!m!di!s )he contract is r!nd!r!d &oida)l!" therefore enablin% rescission of the contract# )he usual limits on recission apply# If the ri%ht to recsission is lost" court may still order e6uitable compensation (3ahoney ( .urnell)# 8URESS s!! ot#!r not!s for d!tail' If the entry into a contract by an innocent party is as a result of duress by the other party" the contract is (oidable by the innocent party (Seear ( 9ohen) !t common law" it is clear that actual or t#r!at!n!d &iol!nc! to the party of the contract" or their family or relati(es" constitutes duress (7arton ( !rmstron%) Economic 8ur!ss 5uress can also e1tend to threatened or actual harm to personal property ('aw&er ( 'elicopter) In terms of !conomic dur!ss" the court will as&: a. 2#!t#!r an" pr!ssur! induc!d t#! &ictim to !nt!r into t#! contract*6 and b# 2#!t#!r t#at pr!ssur! 2!nt )!"ond 2#at t#! la2 2ill count!nanc! as l!$itimat!* (9rescendo mana%ement ( 2estpac) 0o matter how e1treme the duress was" it will ha(e no effect on the contract if it had no material part to play in its formation (7arton ( !rmstron%) R!m!di!s Rescission @ !s a contract entered into under duress is (oidable" the principle remedy is rescission of the contract (0orth Ecean Shippin%)" howe(er" the usual limits to rescission are applicable Restitution "?uantum meruit% * may be applicable and the usual rules apply" namely" that: a) the contract must be at an end (terminated)# b) )hen can reco(er in restituion as moneys had and recei(ed ('aw&er ( 'elicopter) Damages , 3ay be a(ailable if duress causes dama%e or loss (Mni(erse )an&ships) 8ur!ss und!r statut! Sec ############# of the !98 prohibits the use of physical force or undue harassment by corporations when contractin% with a consumer KconsumerL is defined in s B )he >)! s CJ also prohibits the conduct by persons contractin% with consumers KconsumerL is defined in s = )he statutes allow a wider ran%e of remedies includin% in<unctions (Sec###########!98/Q? >)!)" 25

rescission" restituion and (ariation of the contract (sec#######!98/1JJ >)!)" and dama%es (sec#######!98/QQ >)!)#

COI8 >ONTRA>TS R!straint of trad! N1. 9o(enantee R plaintiff see&in% to rely on the restraint of trade (co(enantor R person sub<ect to the restraint) 1. 8o!s t#! r!straint of trad! fall 2it#in t#! am)it of s!c 49 A>L .rima facie" since [.laintiff company] is a corporation" it has breached sec BC in ma&in% an arran%ement/contract substantially lessens competition# 'owe(er" sec pro(ides the e1ceptions to s BC#

(. Is t#! r!straint of trad! &oid at common la2* 9lause $$$$$ imposes a restraint on [defendant]4s trade# !t common law" all restraints are prima facie (oid (#orden'elt v Ma0im #orden'elt) )he presumption will be rebutted and the restraint <ustified if it is shown to be reasonable both in the interests of the parties and in the interests of the public (#orden'elt)# )his is an ob<ecti(e test# )he onus is on the co(enantee to show that the restraint is reasonable between parties and on the co(enantor to show it is unreasonable in the public interest# -easonableness if ad<ud%ed as at the time the contract was made" not when the co(enantee see&s to enforce the restraint or any other time (&indner v Murdock+s Garage)#

+. Is t#! r!straint r!asona)l! in t#! int!r!sts of t#! parti!s* a' 8o!s ,plaintiff- #a&! a l!$itimat! int!r!st* )he co(enantee must ha(e a le%itimate interest: ( )moco case) o Sale of business * protect the %oodwill of the business: #orden'elt o :mployment contract * protect the %oodwill of the business (solicitation of clients/customers) (Peters )merican Delicacy v Patricia+s Chocolates and Candies)+ confidential information (secrets of the business/processes/products) (,acchus Marsh Concentrated Milk v -ose.h #athan ) o :nsurin% the stability of an industry/business: )moco case o .rotectin% e(en competition between teams in a sportin% lea%ue/association: ,uckley v 2utty o NOT purchasers of capital e6uipment: (C2 v ea Containers# )he le%itimate interest here is $$$$$$$$# 26

o N1. 9ourts tend to ta&e different attitudes to the assessment of the abo(e considerations dependin% on the type of contract# Sal! of 1usin!ss: -estrains in contracts for the purchase of a business are construed more liberally than" say" a co(enant in a master/ser(ant contract# )his is because the co(enant allows the purchaser to %et full price and the (endor to %et full (alue (#orden'elt)# Emplo"m!nt contract: 9ourts normally ta&e a more strict approach to restraints in employment than" for e1ample" business restraints (or in the sale of %oods) because often all a person has to sell is his or her labour ( chroeder v Macaulay)# )' 8o!s t#! r!straint $o no furt#!r t#an n!c!ssar" to prot!ct t#at int!r!st* )o show that a restraint is reasonable in the interests of the parties" it must %o no further than is reasonably necessary to protect the le%itimate interests of the co(enantee ( )moco case)# 2hen <ud%in% whether or not the restraint e1ceeds that needed to protect the le%itimate interest" the factors to be ta&en into account include: 5uration and %eo%raphical area of restraint * if it is a lon% duration" then the area must be small" and (ice (ersa (,utt v &ong) !cti(ities co(ered by the restraint * if co(ers unrelated acti(ities" li&ely to be unreasonable (#orden'elt v Ma0im #orden'elt) -elati(e bar%ainin% positions of the parties * rele(ant" but not conclusi(e whether co(enantee (relyin% on restraint) is in stron%er position ( ) chroeder Music Pu1lishing Co v Macauley) )he consideration paid in e1chan%e for the restraint * the more money paid for the restraint" the more reasonable (#orden'elt v Ma0im #orden'elt) 9onte1t of the contract * for e1ample restraint inserted in partnership a%reement by two e1perienced solicitors (,ridge v Deacons) 'ere" $$$$$$$$$$# )herefore" the balance may be in fa(our of the restraint bein%/not bein% reasonable in the interests of the parties# 4. Is t#! r!straint r!asona)l! in t#! int!r!sts of t#! pu)lic* In any e(ent" the restraint must also be reasonable in the interests of the public# I/ O/ IN8EPEN8ENT SIGNI/I>AN>E. .ublic interest often follows pri(ate interest" but may ha(e independent si%nificance: )moco case# )hat is the case here: re%ardless of whether it was in the interests of the parties" it could be ar%ued from at least a competition point of (iew it is not in the interests of the public in a small country town to restrict the number of a(ailable lawyers/doctors etc# (whate(er is applicable) to only one (or whate(er small number it is)# OTBERWISE. )herefore" because the restraint is unreasonable in the interests of the parties" it is therefore contrary to public policy# 9. If t#! r!straint is unr!asona)l!7 can t#! off!ndin$ claus! or part of t#! claus! )! s!&!r!d* 27

Se(erance * in an appropriate case" it may be possible to se(er the restraint to allow the remainin% part of the contract to be enforced ( 2homas ,ro3n 4 ons v Fazal Deen) o 9an you se(er part of the clause ()tt3ood v &amont) Is the clause di(isible )he promise must be di(isible ( )tt3ood v &amont) )he clause may be di(isible accordin% to the acti(ities co(ered# !lso" the clause may be di(isible in terms of duration and area# o 9an you se(er the whole clause itself ( O+&oughlin v O+&oughlin) I/ >LAUSE IN8ICISI1LE. )he whole contract will fall with clause [S] unless the clause itself can be se(ered# )o se(er the clause it must not be substantially the whole of the consideration# )his is/is not the case here# )he restraint may/may not therefore be se(ered from the rest of the contract" which remains/which does not remain on foot# N1. o Se(erance must alter the e1tent only and not the nature of the restraint (McFarlane v Daniell)# o )he court will not rewrite the clause" therefore the area or duration of the restraint cannot be reduced ()tt3ood v &amaont)# o 9lause $$$$ will ha(e no effect since it amounts to an attempt to abdicate to the court the responsibility for draftin% a (alid restraint ( &loyd+s hi.s Holdings v Davros)

<. >onclud! 2#at 2ill )! r!co&!r!d und!r o)li$ation or o)li$ation und!r !ac# part. Summar". 1. Is t#! contract di&isi)l!* If di(isible" split up into the ;parts4 and label them as ;part 14" ;part 24 etc (. Is t#! o)li$ation or !ac# o)li$ation und!r t#! di&isi)l! part' !ntir! or not !ntir!* :ntire * performance must be e1act 0ot entire * performance can be substantial (Hoenig v (saacs) +. E0act or su)stantial or partial p!rformanc! of t#! o)li$ations* :1act * contract price payable/cost of di(ision payable o 9omplete performance is a condition .recedent to payment of contract price o 7enefit e1pected by defendant results from en<oyment of all of the wor& <ointly o 9onsideration is not apportioned nor capable of apportionment ( Cutter v Po3ell) :1act performance * plaintiff entitled to contract price Substantial * test for substantiality (,olton v Mahadeva) o 0ature of defect o 9ost of rectifyin% defect compared to contract price Substantial performance * plaintiff entitled to contract price minus set off 28

.artial performance * cannot claim contract price" only alternati(e is ?uantum meruit

4. Is t#!r! an" ot#!r comp!nsation a&aila)l! in r!stitution* 'uantum meruit' TT Identify any parts that ha(e been only partially performed 3 elements (Pavey 4 Matthe3s v Paul) (1) 7enefit * has plaintiff pro(ided benefit to defendant Ser(ices performed re6uested by plaintiff Ser(ices freely accepted ( um.ter v Hedges) Incontro(ertible benefit ( teele v 2ardiani) (2) :1pense * was the benefit pro(ided at the plaintiff4s e1pense (3) Mn<ust enrichment * is it un<ust that the defendant retains the benefit

29