Professional Documents
Culture Documents
1.1 Contracts Summary 70211new
1.1 Contracts Summary 70211new
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
Common law
Legislation (Trade Practices Act, Fair Trading Act, Sale of Goods Act, etc.)
International law
o Vienna Convention on the international sale of goods
o UNIDROIT Principles of International Commercial Contracts
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
A unilateral contract is between one person and the world Carlill v Carbolic Smoke Ball.
A bilateral contract is an offer between distinct parties.
What is an offer?
An offer is the final statement by the offeror to the offeree to which the offeror is content to be
contractually bound. It is only acceptable if it shows a definite consideration, an intention to be bound
and certainty in its terms Australian Woollen Mills v Commonwealth.
An offer must be communicated/knowledge of the offer is essential
An offer must be communicated by the offeree Fitch v Snedaker.
An offer must be in the mind of the acceptor when he accepts the offer R v Clarke.
Offeree must be aware of the offer Fitch v Snedaker.
Special offers
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
Terminating an offer
An offer can be accepted until it is revoked, rejected or it lapses.
Revocation
Before acceptance, youre good Byrne and Co v Leon Van Tienhoven and Co.
o Must be communicated (Postal Rule does not count for revocation) Byrne and Co v
Leon van Tienhoven and Co.
o Can be indirect Dickinson v Dodds.
o For unilateral offers, revocation must be in the same form as the offer Shuey, Executor
v United States.
Where there has been substantial performance, generally, cant be revoked (should be given
reasonable opportunity to complete) Errington v Errington.
o Except where performance is in accepting, not in completing the contract Mobil Oil
Australia Ltd v Lyndel Nominees Pty Ltd.
Rejection
Terminates the offer.
o Rejection need not be explicit (a counter offer is a rejection) Hyde v Wrench.
Last shot v Synthesis approaches Butler Tool Co v Ex-Cell-O Corp.
o Request for further information is not a counter-offer Stevenson, Jaques and Co v
McLean.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
Lapse
Effluxion of time.
o If a reasonable amount of time expires, the offer does too Ramsgate Victoria Hotel Co
Ltd v Montefiore.
Death of the offeror generally causes the offer to lapse Reynolds v Atherton.
o Unless the offeree does not know of the death and the contract does not require the
personal services of the deceased offeror Carter v Hyde.
Failure of a condition precedent will lapse an offer Gilbert J McCaul (Australia) Pty Ltd v Pitt
Club Ltd.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
2(c) Consideration
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
10
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
11
lOMoARcPSD
3(b) Privity
Privity states that a contract is between the promisee and the promisor, and that no other person has
rights under this contract Price v Easton.
Exceptions to the rule of Privity:
Trident principle
Privity may no longer exist (building insurance covered contractors, sub-contractors sued)
Mason | Wilson
o Privity may not apply to insurance, and insurance should cover relevant third parties
Toohey
o Privity did not apply to insurance
Gaudron
o Defendant was unjustly enriched, therefore third party should be able to claim
Dean
o Via equitable trust
Brennan and Dawson dissenting
o Privity should still exist, use available equitable concepts
Has had limited pick up (Jones v Bartlett), but is good law regarding insurance (Winterton v Hambros)
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
12
lOMoARcPSD
Topic 4: Illegality
A court will not allow a cause of action based on an illegal act ex turpi causa non oritur actio.
If a court finds illegality, there are four possible outcomes:
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
13
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
14
lOMoARcPSD
Reasonableness is construed strictly here so as to be no more than is necessary to protect the legitimate
interest of the party imposing the restraint. This is judged by geographical and time limitations.
The assessment of reasonableness is made at the time of agreement Lindner v Murdoks Garage.
NSW Restraints of Trade act s4(1) restraints of trade are valid to the extent where they are no
against public policy. The court may make a non-reasonable restraint of trade reasonable s4(3).
Contracts regulating trade: solus clauses
A contract regulating trade is with regards to solus (or, exclusive dealing) clauses.
For a solus agreement to be valid, the above elements must be valid, as well as Esso Petroleum Ltd v
Harpers Garage (Stourport) Ltd:
The onus of establishing reasonableness is on the party benifitting (but this is easily discharged if
they had agreed to this term);
There is commercial justification for both parties to enter into the contract; and,
There is no obvious injury to the community.
15 years is a long time (longer than reasonable/necessary for stability and economic prosperity of the
benefiting party) Amoco Australia Pty Ltd v Rocca Bros Engineering Pty Ltd.
Now, the court can read down the solus clause to a reasonable time.
TPA s45 prohibits agreements that substantially lessen competition except when it applies to
employment, partnership or sale of business (TPA s 51(2)).
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
15
lOMoARcPSD
Sale of Business
A purchase of a business is a purchase of capital and goodwill, thus some restraint of trade is
reasonable.
But, it has to be reasonable in terms of the following Butt v Long:
Geographical area
Duration
Type of business (e.g. has to be limited, not cant engage in any competing business
Nordenfelt v Maxim Nordenfelt Guns and Ammunitions Co Ltd)
Specific wording
Consideration paid for the restraint
Context of the agreement
The need for business certainty
Personal Service
E.g. If you get fired, you cant work in this field for 6 months in my area.
This is commonly held not to be in the best interest of the person restricted or society at large.
BUT, they can be used to restrict freedom to use sensitive information where:
It is for the protection of trade secrets/confidential trade information Forsters and Sons Ltd v
Suggett; or,
It is for the protection of trade/consumer connections (only current customers Drake
Personnel Ltd v Beddison).
And they can be used to reasonably restrict work where working in that area might lure clients away
Fitch v Dewes.
For contractors, restraint of trade is only ok where it is to ensure availability, not for disallowing others
to use expertise Schroeder (A) Music Publishing Co Ltd v Macaulay.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
16
lOMoARcPSD
Illegal as formed
Illegal as performed, where a factor associated with performance renders the contract illegal.
Express prohibition
A statute may declare a contract made in contravention of it illegal and unenforceable Re Mahmoud
and Ispahni. Is the intention of parliament to absolutely prohibit this type of contract?
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
17
lOMoARcPSD
Implied prohibition
Where a statute does not discuss the status of contracting in its regard, the court must look to the
parliaments intention.
Courts dont like implying contractual prohibitions, but they can be found if the court finds that the
parliament did intend to interfere with the parties contractual rights. The court will look to:
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
18
lOMoARcPSD
Consequences
Where it is illegal as formed, the contract will be void ab initio Re Mahmoud and Ispahani ex turpi
causa non oritur actio. This is subject to in pare delicto, property already transferred will not be returned
unless:
There is a mistake of fact David Securities Ptry Ltd v Commonwealth Bank of Australia.
Where relief is available independent of the contract (via bailment) Bowmakers
o Unless bailment itself is illegal Thomas Brown v Fazel Deen.
Where there is an independent statutory cause of action Ison v Australian Wheat Board.
Where restitution may be available
o A claim of quantum meruit.
Where false statements/duress are involved George v Greater Adelaide Land Development Co
Ltd.
Where a contract is not illegal as formed, but illegal as performed Marles v Philip Trant.
Where the transferor repents before substantial performance occurs Clegg v Wilson.
Now the high court is more liberal, saying that you can allow a claim of return of property unless
Nelson v Nelson:
The statute expressly indicates the intention of parliament is to make the contract
unenforceable at all times
Non-enforcement is proportionate to the seriousness of the unlawful act
Non-enforcement is necessary to protect the object of the legislation
The statute by implication discloses an intention that the sanction under statute is not to be
the sole sanction (i.e. a further punishment is allowed for)
I.e. if the punishment allotted in the legislation sufficiently protects the objective of the legislation,
the contract need not be illegal.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
19
lOMoARcPSD
Doctrine of severance
Where there is a term that is void, a court may find that it is severable if:
The illegality is minor and does not taint the whole contract;
The severed term is not a substantial part of the consideration Waytt v Kreglinger;
And it does not leave the contract meaningless.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
20
lOMoARcPSD
5(a) Misrepresentation
A misrepresentation is an untrue statement (occurring before or at the time of making the contract) that
induces the representee to enter the contract. The 5 elements are set out below and, though old
English cases are used to derive them, they were confirmed by the HC in Gould v Vaggelas.
Representation was made by the representor to the
representee either directly or indirectly.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
21
lOMoARcPSD
Representation is false
The statement must be false, but this is an evidentiary issue Krakowski v Eurolynx.
The representee is part of a class of people who may use the information Commercial Banking
Company of Sydney v RH Brown and Co; or,
The representor knew that the information was likely to be passed on Pilmore v Hood).
70211
It doesnt have to be the whole reason, as long as it is one of the factors that influenced the
decision of the representee, it counts Edgington v Fitzmaurice.
It doesnt matter if the defendant had an opportunity to discover the truth Redgrave v Hurd.
o Unless they take that opportunity and rely on their own research rather than the
representation Attwood v Small.
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
22
lOMoARcPSD
Remedies
If the above is established, the contract is voidable and the representee has the right to rescind. It may
also be used as a defence against specific performance. Further damages are available in cases of
fraudulent and negligent misrepresentation, but not innocent misrepresentation.
Extra damages for fraudulent misrepresentation
A fraudulent misrepresentation is deliberate, has no belief in the truth of the statement, is knowingly
misrepresenting or is reckless as to the statements truth Thomas Witter Ltd v TBP Industries Ltd |
Derry v Peek.
This allows the contract to be rescinded; or for tortious damages under deceit to be sought, with
damages amounting to the difference between the market value and the contract value plus
consequential loss Toteff v Antonas. If the representee affirms (instead of rescinding) the contract,
they may still seek tortious damages S Gormley and Co Pty Ltd v Cubit.
Extra damages for negligent misrepresentation
When the representor has a duty of care, which he breaches with a misrepresentation, further damages
may be sought against him via negligence Hedley Byrne and Co Ltd v Heller and Partners Ltd.
Damages in cases of innocent misrepresentation
If the misrepresentation was innocent, no damages apart from a defence to specific performance or
rescission are available.
Statutory intervention
The trade practices and fair trading acts apply to change the rules of misrepresentation slightly (for
corporations and persons respectively).
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
23
lOMoARcPSD
5(b) Mistake
The court is unlikely to grant relief on the grounds of mistake, since mistake is often subjective.
A mistake may be one of fact or law David Securities Pty Ltd v Commonwealth Bank of Australia, as
allowed for in Classic International Pty Ltd v Lagos.
If a mistake is found in common law, the contract is void ab initio. If there is a mistake at equity, then
equity may refuse specific performance, declare the contract voidable or rectify the contract.
Common mistake
A common mistake occurs when both parties enter into a contract under the same mistaken belief that
a certain situation exists or that a relevant fact is correct McRae v Commonwealth Disposals
Commission.
Common mistake at common law
For a contract to be void under common law, the mistake must be fundamental; via res extincta, res sua
(the subject matter does not exist, or the purchaser already owns the property) or a mistake as to the
subject matter.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
24
lOMoARcPSD
There are arguments as to whether or not a common mistake at equity must be to subject matter Solle
v Butcher says quality is fine, Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd suggests
that a mistake must render the contract fundamentally different. In Queensland, the matter is decided:
mistake must be fundamental Australia Estates Pty Ltd v Cairns City Council.
Equity may also rectify the contract where the contract does not accurately reflect the nature of the
agreement. If rectification is available, the mistaken segment will be replaced with one that accurately
reflects the agreement. It deals only with what was agreed upon and what was written, not intention
Frederick E Rose (London) Ltd v William H Pim Junior and Co Ltd | Pukallus v Cameron. For rectification
to be obtained, the following must be established:
Mutual mistake
A mutual mistake occurs when parties make different mistakes, i.e. they are at cross purposes and
there is no consensus ad idem. The contract will be void, since the parties did not reach contract on the
same subject matter.
Mutual mistake at common law
An objective test, if it is not possible to prefer one meaning over the other, the contract is coid for
mistake Raffles v Wichelhaus. The contract will be enforced if a reasonable person interprets the
contract according to what one of the parties alleges it means Goldsborough Mort and Co Ltd v Quinn.
Mutual mistake in equity
Equity usually doesnt touch mutual mistake; sometimes equity will interfere will interfere (refusing
specific performance) where there is injustice or undue hardship.
Unilateral mistake
Where one of the parties is mistaken, and the other party is aware of the mistake, or should have been
aware of it, given the circumstances. Either to a term of the contract, or to the parties, but it must be
fundamental.
Unilateral mistake at common law
Unilateral mistake may be as to terms or identity.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
25
lOMoARcPSD
Non innocent party was aware or ought to have been aware of the mistake (objective
test).
Mistaken identity, has to be a fundamental error, the character or worthiness of a person is
irrelevant. The following must be made out:
o The identity was of critical importance to the formation of the contract;
o The mistaken party intended to deal with someone other than the other party; and
o The other party knew or ought to have known about the error.
o Further:
Where the meeting is face to face, it is difficult to rebut intention to contract
Lewis v Avery | Phillips v Brook.
When the contracting is done at a distance, it is easier to rebut the presumption
of intention Cundy v Lindsay.
Non Est Factum, or this is not my deed Petelin v Cullen.
o The claimant belonged to a relevant class who is:
Blind/illiterate, and relies on others for advice; and who,
Through no fault, was unable to understand the nature of the contract.
o The claimant signed the document believing it to be radically different to the one
signed; and,
o Where there are innocent persons involved, that the mistake was not due to laziness or
carelessness.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
26
lOMoARcPSD
5(c) Duress
Duress vitiates consent; it is illegitimate pressure exerted by a dominant party to coerce a weaker party
into the contract, and that the weaker party loses the freedom to choose whether or not to enter into
the contract.
If proven, the contract is voidable at the option of the weaker party; rescission and restitution may be
possible. There may be further damages available in tort.
S60 of the TPA and s55 of the FTA forbid harassment and coercion. Here, damages under s82 or a
court order under s87 will be available. Contracts Review Act s9(2)j) regarding unjustness and unfair
tactics.
Duress to the person
Duress to the person requires actual or threatened violence (or confinement) to the innocent party, a
close relative, or an associate. This unlawful act must be aimed at obtaining consent; it must be a
contributing factor to the decision to consent Barton v Armstrong. The accused party has to prove
that they did not use duress.
TPA S53A(2) | FTA s45(2) prohibits physical force or harassment when it has to do with the sale etc. of
land.
Duress of goods
Duress of goods requires that one party unlawfully seizes, detains, damages or destroys the goods of
the other, or threatens to, in order to procure consent Occidental Worldwide Investment Corp v Skibs
A/S Avanti (The Siboen and the Sibotre) | Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
27
lOMoARcPSD
Economic duress
Economic duress occurs when a threat is made by the dominant party to prejudice the innocent partys
economic interest with the view to procuring consent.
Threatening to breach existing contracts is enough North Ocean Shipping Co Ltd v Hyundai
Construction Co Ltd (The Atlantic Baron).
Elements as in Pao On v Lau Yiu Long: commercial pressure can render the contract voidable where the
innocent party does:
Crescendo Management Pty Ltd v Wespac Banking Corporation suggests that for duress to be
established:
The applied pressure must actually induce the innocent party to enter into contract News
Limited v Australian Rugby Football League Ltd; and,
The pressure must be beyond what the law believes is legitimate.
What is illegitimate pressure? Unlawful threats or unconscionable conduct (=/ unconscionable conduct
in equity) amount to illegitimate pressure. Unconscionable here means pressuring the plaintiffs
consent rather than what the defendant did Ford Motor Company of Australia Limited v Arrowcrest
Group Pty Ltd. This view was criticised by Kirby J in Equiticorp Finance Ltd (in liq) v Bank of New Zealand.
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
28
lOMoARcPSD
If no recognised fiduciary relationship exists, there may be a special relationship on the balance of the
following Johnson v Buttress:
If a relationship is proven, the stronger party has to prove that he did not unduly influence the weaker
party, e.g. by Lloyds Bank Ltd v Bundy:
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
29
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
30
lOMoARcPSD
70211
Wife did not understand the purport and effect of the transaction;
Wife did not gain any benefit;
No independent advice given.
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
31
lOMoARcPSD
Statutory intervention
70211
TPA:
o
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
32
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
33
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
34
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
35
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
36
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
37
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
38
lOMoARcPSD
7(b) Agreement
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
39
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
40
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
41
lOMoARcPSD
7(e) Frustration
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
42
lOMoARcPSD
Topic 8: Remedies
8(a) Contract remedies
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
43
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
44
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
45
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
46
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
47
lOMoARcPSD
70211
Contracts
Verspreiden niet toegestaan | Gedownload door Essay Fixer (essayfixer@yahoo.com)
48