Date post: | 07-May-2017 |
Category: |
Documents |
Upload: | lowry-guetta |
View: | 213 times |
Download: | 0 times |
Contract Law
Interpretation & Actions
Integrating Business Perspectives
May 3, 2023 2
Essential Elements of a Contract There are SIX essential elements of a valid
contract: Agreement (offer & acceptance) Intention Consideration Capacity Consent Legality of object
May 3, 2023 3
Privity of Contract
The doctrine of privity means that as a general rule you can only sue or be sued in contract IF you are a PARTY to the contract.
Beswick v Beswick compare to Donoghue v Steveson in tortNot applied to contracts of insurance
May 3, 2023 4
Before the Contract
Once a contract has been created, the basis of the contract (the details) are called terms
Most statements that are made BEFORE the contract has been entered into cannot be terms of the contract mere “representations”
• may be able to sue for misrepresentation
May 3, 2023 5
Misrepresentation A statement of fact that induces a person into
making a contract.
If a term in the contract, sue for BREACH of contract. Oscar Chess Ltd v Williams
If a representation, sue for misrep or s52 TPA
May 3, 2023 6
Misrepresentation If the statement is NOT a term then the
contract will not be VOID, but maybe VOIDABLE.
There are different types of misrep: Fraudulent misrep
• Derry v Peek Negligent misrep
• Hedley Byrne Ltd v Heller & Partners Ltd Innocent misrep
Maybe statutory actions and remedies
May 3, 2023 7
Terms Terms in a contract can be classified in a
variety of ways: Express or Implied Conditions or Warranties
Watch out for collateral contracts a subsidiary contract to the main contract:
• Van den Esschert v Chappell• JJ Savage & Sons Pty Ltd v Blackney
May 3, 2023 8
Express Terms
The actual terms which were expressly (explicitly stated) by the parties
If oral, the words that were used court can determine
If the contract is in writing court will interpret
May 3, 2023 9
Implied Terms The terms may be implied from various
sources: court to give “business efficacy”
• The Moorcock• Codelfa Contruction v NSW State Rail Authority
by custom or trade usage by statute
• ss17-20 SGA 1893 (NSW) • Consumer Guarantees ss 51-64 Australian
Consumer Law (ACL) (Cth)
May 3, 2023 10
Parole Evidence Rule Where a contract is reduced into writing
and it is the entirety, it is presumed that all terms are included and evidence of other statements are not terms. Mercantile Bank of Sydney v Taylor
Exceptions: trade custom, local usage, technical terms,
identity of the parties, to show fraud/duress etc
May 3, 2023 11
Conditions & Warranties All contractual terms can be divided into
conditions• essential term of the contract• breach entitles the innocent party to rescind
(terminate) the contract immediately and sue for damages
warranties• all the other terms• innocent party can ONLY sue for damages
Associated Newspapers v Bancks
May 3, 2023 12
Exemption Clauses Contracts may include clauses which
attempt to restrict a party’s right to sue for breach of contract and to exclude or limit all liability.
Must be part of the contract Shoe Lane Parking Ltd
Strictly construed against the party using it Consumer protection under TPA and
Contracts Review Act 1980 (NSW)
May 3, 2023 13
Lack of True Agreement If a contract was entered into by a fraud or
misrepresentation, the contract maybe avoided.
Generally bound by mistakes unless: common mistake
• McRae v Cth Disposals Commission• Leaf v International Galleries
mutual mistake unilateral mistake
• non est factum Petelin v Cullen
May 3, 2023 14
Duress
At common law actual or threatened violence
forces you to enter into the contract maybe economic
North Ocean Shipping v Hyundai
May 3, 2023 15
Undue Influence Under equity improper use of a superior position, to
influence someone in a contract Examples:
parents to children and guardian to ward trustee to beneficiary or doctor to patient solicitor to client or religious adviser to devotee
Geelong Building Society v Thomas
May 3, 2023 16
Unconscionable Conduct General rule that there is no relief if a contract is unfair
or harsh against one party even signing it without reading the contract
• L’Estrange v Graucob
But where there is a superior bargaining power to impose harsh terms, the court may set aside a contract for unconscionability Commercial Bank v Amadio ss51AA, 51AB & 51AC TPA 1974 (Cth) Contracts Review Act 1980 (NSW)
May 3, 2023 17
Termination of Contract
Contracts can be terminated in a number of different ways normally this process is called “discharge”
The most common method for a contract to be terminated is performance
May 3, 2023 18
Discharge by Agreement
Contracts my be discharged by mutual discharge release substituted agreement
May 3, 2023 19
Discharge by Frustration
An event outside the parties control may cause the contract to be frustrated so that it cannot be performed. Davis Contractors Ltd v Fareham Council
• “Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because of the circumstances..”
Frustrated Contracts Act 1978
May 3, 2023 20
Discharge by Breach If there is a breach of a condition, the
contract can be terminated immediately and sue for damages. The innocent party MAY chose to treat the
breach as a warranty rather than a condition If there is a breach of a warranty, then the
contract must continue BUT damages may be paid.
May 3, 2023 21
Discharge by Breach
The contract needs to be repudiated anticipatory breach
• where the contract is unperformed and one party renounces the contract, the innocent party can treat the contract as discharged and sue for damages.
The innocent party may elect to continue the contract
• this might result in higher damages
May 3, 2023 22
Discharge by Law
The operation of the law, may automatically discharge a contract
bankruptcy• personal insolvency
illegality
May 3, 2023 23
Remedies in Contract If there is a breach of contract, there are a
variety of common law, equitable and statutory remedies.
The main remedies are: damages specific performance injunctions restitution
There are time limitations on legal actions
May 3, 2023 24
Classes of Damages
There are six classes of damages: ordinary nominal exemplary liquidated unliquidated penalty
• not a genuine pre-estimate of loss
May 3, 2023 25
Damages
Damages, as far as money can, is to put the innocent party in the same position as if the contract had been performed. Compensation for the loss of benefits
• onus of proof on plaintiff if cannot prove loss of profit may recover
expenses
May 3, 2023 26
Damages Damages must not be too remote
Hadley v Baxendale (1854) Victoria Laundry (Windsor) Ltd v Newman
Industries (1949) Parsons v Ingham (1978)
Duty to mitigate loss
Damages not available for disappointment, inconvenience or injured feelings.
May 3, 2023 27
Limitations of Actions
Limitations Act 1969 (NSW)
6 years for simple contracts & torts 12 years for formal contracts & recovery of land 30 years for recovery of Crown land
Time runs from date action can commence
May 3, 2023 28
Specific Performance a court order requiring a party to perform
the obligations under the contract discretionary equitable remedy mostly used for land or unique goods will not be granted if
damages are adequate for personal services where supervision would be needed
May 3, 2023 29
Injunctions a court restraining a person from doing a
wrongful act, such as breaching a contract a discretionary equitable remedy court limits use if will not be effective
interlocutory (interim) injunctionsfinal injunctions
may be granted under statute, as well as equity
May 3, 2023 30
Restitution a remedy imposed independently of the contract based upon the concept of “unjust enrichment”
so the defendant must restore money or benefits to the innocent party
examples: where money paid and total failure of consideration money paid under mistake of lawrecovery of reasonable remuneration for work done
(quantum merit) - for as much as earned