First Principles of Business Law - Oxford University...

First Principles of Business LawA Blended Learning Approach

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ABOUT CCH AUSTRALIA LIMITED

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National Library of Australia Cataloguing in Publication DataLambiris, Michael, 1950 —First Principles of Business Law7th editionIncludes indexISBN 978-1-922215-55-0First edition ..................... February 2008 Fourth edition .................. January 2011Reprinted ............................... June 2008 Fifth edition ..................... January 2012Second edition .................. January 2009 Sixth edition ..................... January 2013Third edition ..................... January 2010 Seventh edition ................ January 2014

Publisher’s noteThe publisher advises that Acts and Regulations in this publication are not the authorised official versions of those Acts or Regulations. In their preparation, however, the greatest care has been taken to ensure exact conformity with the law as enacted or gazetted.

Important disclaimerBrief statements of principle, case summaries and selected extracts from legislation cannot give a fully accurate or complete statement of the law. The contents of this publication are only intended to be introductory and of a broad explanatory nature. No person should do any act, or fail to act, or make any decisions based on the information in this publication without first obtaining full advice from a qualified professional person. The authors, publisher and any person associated with marketing this publication are not responsible for any error or omission in this publication, and expressly disclaim all immediate and consequential liability to any person who, whether wholly or partly, acts in reliance on the information in this publication.

Commonwealth legislation reproduced© Commonwealth of Australia (2014)All Commonwealth legislation herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation and judgments. In particular, section 182A of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing. Requests should be addressed to Commonwealth Copyright Administration, Attorney-General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600, or posted at http://www.ag.gov.au/cca.© Copyright reserved Australian Law Courseware Pty Ltd. ABN: 82111741658PO Box 401, Avondale Heights VIC 3034, AustraliaEmail: [email protected], Fax: (613) 9378 3561, www.ALCware.comAll rights reserved. No part of this work covered by copyright may be reproduced or copied in any manner of by any means without the prior written permission of the copyright holder.Printed in Australia by McPherson’s Printing Group

First Principles of Business Law_PAGES.indd 2 28/11/13 12:11 PM

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CCH AUSTRALIA LIMITEDGPO Box 4072, Sydney, NSW 2001

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Book Code: 39707AISBN: 978 1 922215 55 0

First Principles of Business LawA Blended Learning Approach

2014

Michael LambirisLaura Griffin

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AUTHOR ACKNOWLEDGMENTS

The authors wish to thank all those who have contributed to the production of this new edition of the First Principles of Business Law materials.

In particular, the expertise, enthusiasm and helpfulness of everyone at CCH Australia are gratefully acknowledged.

Special acknowledgment is also due to the many students who, over the years, have contributed to the development of First Principles of Business Law materials by means of their constructive comments and often insightful questions.

CCH ACKNOWLEDGMENTS

CCH Australia Ltd wishes to thank the following team members who contributed to this publication:

Managing DirectorBas KniphorstEditor-in-Chief, Law and BusinessScott AbrahamsPublisherAdriana GiomettiBooks CoordinatorMele AlouaEditorsTali Budlender Rufina CheungProduction Team LeaderRafiza Abd AzizSub-editorKwan Yi LeongIndexerGraham ClaytonMarketing Manager, BooksLauren MaCover DesignerMathias Johansson


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HOW TO USE THE FIRST PRINCIPLES OF BUSINESS LAW MATERIALS

The First Principles of Business Law (FPBL) textbook and eStudy modules offer a blend of technologies and resources to help you learn business law.

The textbook explains the fundamental topics of business law clearly and concisely. Each chapter provides an easy-to-follow narrative and a framework that builds understanding in careful steps. The basic principles are illustrated and amplified by over 200 summaries of decided cases. There are selected extracts from relevant legislation. Technical words and phrases are clearly explained. Tables, diagrams, flowcharts and indexes are also included. The textbook is useful as an adjunct to lectures and tutorials, for writing assignments, for revision purposes and as a resource in open-book examinations.

The eStudy modules provide a further dimension to your learning experience. There is an interactive module for each chapter of the textbook. The modules provide hundreds of carefully sequenced questions, exercises and short case studies. You will receive instant feedback as you answer questions. The modules will also help you to gain a proper understanding of how the law works in everyday situations. They will help you to develop your ability to apply the law realistically and appropriately. It may be useful to work through the modules with a friend, discussing the examples and answers until you are sure you understand them. You can go over the questions as often as you like, at your own speed and at your preferred time, until you have learned the fundamental concepts of business law.

With a little experimentation, you will soon discover how to use the FPBL materials to your advantage.


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HOW TO DOWNLOAD THE ESTUDY MODULES

The eStudy modules (for Windows and Mac OS) can be downloaded and installed on your computer. You should read these instructions carefully.

• Download the installation package from the ALC webpage at www.ALCware.com. Choose between the PC version and the Mac version.

• Read the installation instructions at www.ALCware.com before you install the software onto your computer. Make sure that your computer satisfies the minimum technical requirements.

• The FPBL software is copy-protected. When you first start up the FPBL program on your computer, you will be prompted to register your installation. Follow the on-screen prompts, using the licence number on the inside cover of this book.

• Your licence number can only be used once, to register an installation on one computer. To register additional installations of the FPBL software, you can purchase a new licence from www.ALCware.com.

• WARNING: Reformatting your computer will destroy your registration and you will not be able to re-register a new installation with your original licence number. You should read the terms and conditions of the FPBL licence at www.ALCware.com before reformatting your computer. However, as long as you do not reformat your computer, you can remove the installation and reinstall the software on the same computer without losing your registration.

• If you have any problems installing, registering or running the FPBL software, please see the troubleshooting section at www.ALCware.com.

• If you need further help, you can email [email protected].


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CONTENTS

Alphabetical index of topics xiiiTable of cases xxxixTable of selected law report series xlixGlossary liii

Chapter 1: Government and law in Australia1. Introduction 12. The concept of law 13. Law as a regulator of behaviour 24. “Law” and “justice” 35. The classification and organisation of law 46. The anatomy of law 47. The development of Western European legal systems 68. The establishment of the Australian Commonwealth, states and territories 89. The structure of government in Australia 910. The organs and powers of Australian governments 1011. Questions to consider 18

Chapter 2: Legislation1. Introduction 192. The legislative powers of the Australian legislatures 203. The legislative process in outline 244. The structure of an Act 275. Citing and finding legislation 306. Interpreting legislation 317. Applying legislation to resolve cases 358. Questions to consider 36

Chapter 3: Case law1. Introduction 372. Basic procedure in a court 393. Law reports 414. Information in law reports 415. The structure of a judgment 466. Citing and locating a law report 477. The system of courts in Australia 488. The doctrine of precedent restated 499. Binding and persuasive precedents 5010. The ratio decidendi of a case 5211. The process of using case law 5312. Questions to consider 54


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Chapter 4: Finding law on the internet1. Introduction 552. Sources of law 553. Electronic databases 574. Finding Australian legislation and cases by name 595. Using simple search terms to find legislation and cases 596. Boolean searching 607. Advanced techniques for searching 618. Finding legal databases 629. Questions to consider 63

Chapter 5: Making a contract1. Introduction 652. The essential elements of contract formation 68 2.1. Intention to be legally bound 68 2.2. Either execution of the contract in a deed, or the exchange of consideration 77 2.3. The element of agreement 863. Capacity to contract 984. Privity of contract 1015. Promissory estoppel 1036. Establishing the existence of a contract 1067. Questions to consider 107

Chapter 6: The contents of a contract1. Introduction 1092. Terms, opinions, puffery and representations 1113. Express and implied agreement to terms 1154. Proving the existence of agreed terms 1245. Terms imposed (implied) by law into all contracts 1276. Terms imposed (implied) by law to fill gaps in particular kinds of contract 1317. Terms imposed (implied) by legislation regarding the quality of goods 1388. Determining the contents of a contract 1469. Questions to consider 147

Chapter 7: Performance and breach of contract1. Introduction 1492. Interpreting the terms of a contract 1513. Discharge of contractual obligations by performance 1564. Breach of contract 1595. Assessing the seriousness of a breach of contract 1646. The consequences of a breach of contract 1687. Risk and frustration 1688. Establishing a breach of contract 1769. Questions to consider 177


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Chapter 8: Remedies for breach of contract1. Introduction 1792. Common law remedies 180 2.1 An award of damages for breach of contract 180 2.2 Termination of performance 1883. Equitable remedies 200 3.1 Orders of specific performance 200 3.2 Injunctions 2024. Statutory remedies 204 4.1 Remedies provided by state and territory sale of goods legislation 2055. Agreed remedies 206 5.1 Terms of the contract that create or modify remedies 2066. Choosing an available remedy for breach of contract 2087. Questions to consider 209

Chapter 9: Avoiding a legal transaction1. Introduction 2112. Duress 2133. Undue influence 2164. Unconscionable dealing 2195. Mistake 2226. Misrepresentation 2267. Illegal contracts 2288. Other circumstances 2329. Invalidating a legal transaction 23310. Questions to consider 234

Chapter 10: Consumer protection in Australia1. Introduction 2352. Protection against misleading conduct 2393. Protection against unconscionable conduct 2474. Protection against unfair terms in contracts 2505. Protection against unfair business practices 2526. Statutory guarantees in consumer transactions 2547. Unsolicited consumer agreements 2588. Safety standards 2609. Applying the Australian Consumer Law 26410. Questions to consider 265

Chapter 11: The law of agency1. Introduction 2672. Agency relationships 2683. Obtaining authority to act as an agent 269 3.1. Express grants of authority 269 3.2. Authority granted by implication 270 3.3. Apparent authority 271


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4. Ratification of unauthorised Acts 2735. An agent’s duties to their principal 2756. A principal’s duties to their agent 2807. An agent’s contractual liability to third parties 2828. Acquisitions and dispositions of property by an agent 2879. A principal’s liability for harm caused by their agent 28810. Agency by operation of law 29011. Termination of agency 29112. Applying the law of agency 29413. Questions to consider 295

Chapter 12: The scope of tort law1. Introduction 2972. Trespass to land 2993. Trespass to chattels 3014. Conversion 3025. Detinue 3036. Assault 3047. Battery 3058. False imprisonment 3069. Private nuisance 30710. Liability for animals 30811. Deceit 30912. Defamation 31113. Negligence 31214. Vicarious liability 32815. Establishing liability for Negligence 33016. Questions to consider 331

Chapter 13: The tort of Negligence1. Introduction 3332. The element of a duty of care 334 2.1. Limiting the scope of Negligence 334 2.2. The importance of identifying particular kinds of conduct and harm 334 2.3. The duty to prevent foreseeable harm from occurring 336 2.4. The necessity for a recognised “duty situation or relationship” 341 2.5. Immunity from liability 3573. The element of a breach of the duty of care 357 3.1. Discharging a duty of care 357 3.2. Proving a breach of a duty of care 3684. The element of causation of harm 370 4.1. Actionable kinds of harm 370 4.2. Establishing the causal link between the breach of the duty of care and harm 372 4.3. Liability for foreseeable consequences only 3785. Defences 381


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5.1. Contributory negligence 381 5.2. Assuming the risk of harm 3826. Establishing liability for Negligence 3857. Questions to consider 386

Chapter 14: Remedies in tort1. Introduction 3872. Compensatory damages 390 2.1. Compensatory damages for personal injury 390 2.2. Compensatory damages for wrongful death 395 2.3. Compensatory damages for harm to property 3963. Non-compensatory damages 3984. Injunctions 4005. Restitution 4016. Other remedies 4017. Claiming damages in tort law 4038. Questions to consider 404

Chapter 15: Business organisations in Australia1. Introduction 4052. Sole traders 4073. Trusts 4084. Partnerships 412 4.1. Creating a partnership 412 4.2. Assets, rights and liabilities of a partnership 415 4.3. Management of a partnership 416 4.4. Ending a partnership 418 4.5. Limited partnerships 4195. Joint ventures 4206. Companies 421 6.1. Creating a company 421 6.2. Types of company 423 6.3. Company names 424 6.4. Members, directors and the secretary of a company 424 6.5. Management of a company 425 6.6. Raising capital for a company 429 6.7. Assets and liabilities of a company 430 6.8. Supervision of a company 433 6.9. Winding up a company 433 6.10. Public companies 4347. Choosing a business organisation 4368. Questions to consider 437

Chapter 16: Selected legislative provisions1. Introduction 4392. Australian constitutions 4403. Communication by email 446


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4. Consumer protection 4495. Equitable rules of contract construction 4806. Frustrated contracts 4817. Interpretation of legislation 4838. Sale of goods 4859. Third party rights under insurance contracts 49210. Tort law 492


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ALPHABETICAL INDEX OF TOPICS

AActs Interpretation Act 1901 (Cth) ......................................................................484Ad hoc implied terms .................................................................................120–123Administrative law.................................................................................................5Agency ..................................................................................................................5Agreed remedies

terms that create or modify ..................................................................206–207Ambiguous contracts .........................................................................................125Anticipatory breach ...........................................................................................164Assault

conduct causing fear of physical assault ........................................................304expectation of immediate physical contact required .....................................304remedies .......................................................................................................305

Australasian Legal Information Institute (AustLII) database ..........................57–58Australian Competition and Consumer Commission ........................................236Australian Consumer Law .................................................................................236

administration .............................................................................................236“consumer” ..................................................................................................237enforcement of provisions ............................................................................238overall structure ...........................................................................................237penalties for contraventions .........................................................................239provisions ....................................................................................................232

Australian Consumer Law and Fair Trading Act 2012 (Vic) ........................481–483Australian Securities and Investments Commission ...........................................433Available remedies

choosing ......................................................................................................208Avoiding legal transactions

after made void ............................................................................................212different circumstances ................................................................................211duress

economic harm...............................................................................214–215effect of ..........................................................................................213–214harm to property ....................................................................................216threats or infliction of physical harm ......................................................213

illegal contracts ............................................................................................228change in public policy ...........................................................................230grounds of public policy .................................................................228–230statutory illegality ...........................................................................230–232

invalidating ..........................................................................................211–212misrepresentation

deliberate ........................................................................................226–227


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negligent ........................................................................................227–228“representations” .....................................................................................226

mistakecases where no objective agreement because of mutual mistake .......222–223cases where there is objective agreement, but based on common error ....223common mistakes going to quality of subject matter ......................224–225concept ...................................................................................................222“objective conditionality” ...............................................................223–224unilateral mistakes ..........................................................................225–226

particular “vitiating” circumstances in Australian legislation .........................213provisions of Australian Consumer Law .......................................................232unconscionable dealing

disadvantage of spouse who guarantees a partner’s debts .................220–221“good conscience” ...................................................................................219weaker party — knowledge of disadvantages ..................................219–220weaker party — taking advantage of .......................................................219

undue influencegeneral controlling influence — none .....................................................219general controlling influence — presumption .........................................217general controlling influence — proof ....................................................218relationships that give rise to controlling influence .........................216–217

when relief may be refused ...........................................................................212

BBait advertising..................................................................................................252Battery

conduct resulting in physical contact ...........................................................305remedies .......................................................................................................306

Binding precedents ..............................................................................................51Boolean searching

connectors do not create phrases ..............................................................60–61using connectors to specify relationships between search terms ......................60

Breach of contract .....................................................................................149–150agreed remedies

terms that create or modify .............................................................206–207assessing seriousness

innominate terms ...........................................................................166–168relative importance of terms ...........................................................164–165warranties and conditions ...............................................................165–166

choosing available remedy ............................................................................208consequences

enforcement of undischarged obligations ................................................168different scenarios ........................................................................................150discharge of contractual obligations by performance

performance — divisible contracts..................................................158–159


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performance — reciprocal duties ....................................................157–158performance — terms implied by operation of law .................................157voluntary performance ...................................................................156–157

divisible contracts ........................................................................................151equitable remedies

contracts — for things that are freely available ................................201–202contracts — requiring performance of personal services ..........................200contracts — requiring performance over extended period ...............200–201injunctions .....................................................................................202–204limited availability of specific performance .............................................200performance that would cause undue hardship .......................................202

establishing ..................................................................................................176identifying different kinds ....................................................................159–164interpreting terms

commercial realism .........................................................................152–153contractual behaviour .............................................................................153intention of parties .................................................................................152limiting or excluding liability..........................................................154–156ordinary, natural meaning of words ................................................151–152

performance as only way to discharge contractual obligations ......................151process in court determining what terms mean ............................................150remedies ...............................................................................................179–180

plaintiff choosing remedy they prefer ......................................................180remedies, common law

availability of damages as remedy ............................................................180compensatory nature of damages ............................................................181damages following failure of efforts to mitigate .......................................187damages for consequential loss........................................................184–185damages for distress or disappointment ..........................................185–186damages for immediate (direct) loss ........................................................184damages for wasted expenses ...................................................................183duty to mitigate losses ....................................................................186–187no damages without loss .................................................................187–188pre-estimates of damages ........................................................................181purpose of damages ........................................................................182–183

risk and frustrationdistinguishing .................................................................................168–169frustrated contracts legislation ........................................................172–175frustration ......................................................................................169–172risk .........................................................................................................169

some treated more seriously than others ...............................................150–151statutory remedies ........................................................................................204

provided by state and territory sale of goods legislation ...................205–206termination of performance .........................................................................188

availability ......................................................................................189–191


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decision whether to terminate or not is binding ......................................199different types of breaches ..............................................................191–198effect on contract ............................................................................198–199not for non-fundamental breaches ..........................................................191

terms determining duties of performance .....................................................149Business law ..........................................................................................................5Business name

distinctiveness ..............................................................................................424inclusion of Pty and NL ...............................................................................424

Business organisationschoosing ......................................................................................................436companies

administration of Corporations Act ........................................................433appointment of liquidator ......................................................................434Australian Securities and Investments Commission ................................433concept of directors ................................................................................425concept of members ...............................................................................424creation by registration ...................................................................421–422debts — liability for ...............................................................................430debts — securing repayment ..................................................................431directors .................................................................................................425directors — duties ..........................................................................425–426directors — payment ..............................................................................428directors — single...................................................................................428floating charges .......................................................................................431insolvency .......................................................................................430–431legal capacity ..........................................................................................429legal identity of registered company ........................................................422liability for debts ....................................................................................423listed ......................................................................................................435name — distinctiveness ..........................................................................424name — inclusion of Pty and NL ...........................................................424powers of management ...........................................................................425profits — distribution ............................................................................430profits — taxation ..................................................................................430proprietary and public ............................................................................424public — advantages ..............................................................................434public — conversion from private ..........................................................434public — regulation ...............................................................................434public — special provisions ....................................................................434statutory rules of governance ..................................................................428using to run a one-person business .........................................................424winding up — compulsory .....................................................................434winding up — voluntary ........................................................................433

different kinds of structures available ...........................................................405


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xvii Alphabetical index of topics

joint venturesconcept ...........................................................................................420–421distinguished from partnerships ..............................................................421rights and duties .....................................................................................421

partnershipsagency powers of partners .......................................................................417changing membership ............................................................................419contributions by partners........................................................................415dissolution ..............................................................................................420dissolving .......................................................................................418–419do not have own legal identity ................................................................415employment of workers ..........................................................................418formalities ..............................................................................................414general and limited .................................................................................414legal liability of partners .........................................................................416legislation ...............................................................................................414liability in tort and criminal law .............................................................417limitation on size ....................................................................................415limited — legal liability of partners ........................................................420limited — registration ............................................................................420limited — structure ................................................................................419participation in management ..................................................................416partners’ duties to each other ..................................................................418right of partners to share assets and profits ..............................................415taxation requirements .............................................................................416

regulation of business names ................................................................405–406sole trader

employees ...............................................................................................407entitlement to profits ..............................................................................407formalities ..............................................................................................407GST collection .......................................................................................408legal rights and liabilities ........................................................................407ownership and management ...................................................................407raising capital .........................................................................................407transforming business structure ..............................................................408use of identifying numbers .....................................................................408

sources of law ...............................................................................................405trusts

concept ...................................................................................................408creation ..................................................................................................409distribution of income ............................................................................411duties .....................................................................................................409legal liability ...........................................................................................411legislation ...............................................................................................409ownership of assets .................................................................................409


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taxation requirements .............................................................................411trustee as beneficiary ...............................................................................411using as structure ............................................................................408–409

CCase law

basic court procedurecivil and criminal cases .............................................................................39original hearings and appeals ..............................................................39–40

binding and persuasive precedentsbinding .....................................................................................................50persuasive .................................................................................................50

citing and locatingcitation conventions .................................................................................47component parts of citation ......................................................................47finding......................................................................................................48

common law and equity ...........................................................................38–39court system in Australia

hierarchies ..........................................................................................48–49jurisdiction ...............................................................................................48no separate courts of common law and equity ..........................................48

doctrine of precedent restatedelements .............................................................................................49–50

judges power to make laws .......................................................................37–38law reports

collections ................................................................................................41example ..............................................................................................43–46importance ...............................................................................................41structure .............................................................................................41–42terms and phrases .....................................................................................43

process of using ..............................................................................................53ratio decidendi of case

identifying ................................................................................................52obiter dicta ................................................................................................52

structure of judgment ..............................................................................46–47Categories of law ...................................................................................................4Caveat emptor ....................................................................................................138Civil law ................................................................................................................5Civil Liability Act 2002 (NSW) .................................................................493–499Collateral contracts ............................................................................................126Common law ................................................................................................38–39

no separate court ............................................................................................48Commonwealth of Australia Constitution Act 1900 (Cth) ............................440–445Companies

administration of Corporations Act .............................................................433


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xix Alphabetical index of topics

appointment of liquidator ............................................................................434Australian Securities and Investments Commission ......................................433concept of directors ......................................................................................425concept of members .....................................................................................424creation by registration.........................................................................421–422debts — liability for .....................................................................................430debts — securing repayment ........................................................................431directors .......................................................................................................425directors — duties ................................................................................425–426directors — payment ...................................................................................428directors — single ........................................................................................428floating charges ............................................................................................431insolvency ............................................................................................430–431legal capacity ................................................................................................429legal identity of registered company .............................................................422liability for debts ..........................................................................................423listed ............................................................................................................435name — distinctiveness................................................................................424name — inclusion of Pty and NL ................................................................424powers of management ................................................................................425profits — distribution ..................................................................................430profits — taxation ........................................................................................430proprietary and public .................................................................................424public — advantages ....................................................................................434public — conversion from private ................................................................434public — regulation .....................................................................................434public — special provisions ..........................................................................434statutory rules of governance ........................................................................428using to run a one-person business ...............................................................424winding up — compulsory ..........................................................................434winding up — voluntary..............................................................................433

Competition and Consumer Act 2010 (Cth) ................................................449–480Conditional agreements.................................................................................73–75Conditions ................................................................................................165–166Constitution Act 1975 (Vic) .......................................................................445–446Constitutional law .................................................................................................5Constitutional monarchy ....................................................................................10Consumer protection

applying Australian Consumer Law .............................................................264Australian Consumer Law ............................................................................236

administration of ....................................................................................236enforcement of provisions ...............................................................238–239overall structure ......................................................................................237

“consumer” ..........................................................................................237–238existence pre-2011 ...............................................................................235–236


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against misleading conductapplication to natural persons, artificial persons and information

providers ...........................................................................................246conduct must be “in place or commerce” ................................................244definition................................................................................................240disclaimers ......................................................................................242–243intention as to evidence ..................................................................242–243“misleading conduct” ..............................................................................240no intention required .............................................................................241prohibition .....................................................................................239–240remedies for breach of s 18 .....................................................................247

safety standardsdangerous goods — bans ........................................................................261dangerous goods — recall ...............................................................261–262enforcement ...........................................................................................263information standards.............................................................................262liability of manufacturers for safety defects .....................................262–263notice of death, injury or illness ..............................................................262regulation of dangerous products ....................................................260–261safety warning notices .............................................................................262setting ....................................................................................................261

statutory guarantees in consumer transactionscontracts for services ...............................................................................258guarantee of acceptable quality ...............................................................255guarantee of availability of spare parts and repairs ...................................256guarantee of correspondence with description ........................................255guarantee of correspondence with samples ..............................................255guarantee of good title and quiet possession ...........................................256guarantee of suitability for consumer’s purpose .......................................255guarantees of express warranties ..............................................................256liability of manufacturers ................................................................257–258preventing exclusion of basic obligations ........................................254–255remedies .........................................................................................256–257

against unconscionable conductadditional circumstances giving rise to ............................................248–249enforcement ...........................................................................................250prohibited ..............................................................................................247scope with Australian Consumer Law .............................................247–248

against unfair business practicesbait advertising .......................................................................................252enforcement ...........................................................................................254false or misleading statements .................................................................252harassment or coercion ...........................................................................254misleading conduct as to nature of goods or services ...............................252multiple pricing ......................................................................................254


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xxi Alphabetical index of topics

offering gifts or prizes .............................................................................252pyramid schemes and referral selling ...............................................253–254regulation ...............................................................................................252unsolicited cards .....................................................................................253unsolicited goods ....................................................................................253wrongly accepting payment ....................................................................253

against unfair terms in contractsdefinition................................................................................................251enforcement ...........................................................................................251identifying regulated contracts ........................................................250–251of no legal effect .....................................................................................251regulation of terms .................................................................................250

unsolicited consumer agreementscompliance with request to leave ............................................................259enforcement ...........................................................................................260identifying ......................................................................................258–259no waiver of rights permitted ..................................................................260obligation on supplier to provide supplied information ..........................259regulating marketing by suppliers to consumers in home ........................258restricted times for calls ..........................................................................259written copy to be supplied ....................................................................259

Consumer protection law ......................................................................................5Contra proferentem .....................................................................................154–155Contract law .........................................................................................................5Contracts

capacityavoidance of certain contracts by minors ................................................100circumstances involving limited capacity ................................................100legislative provisions regarding minors ....................................................100mentally disabled persons .......................................................................100minors ..............................................................................................98–100persons with full power to bind themselves ...............................................98

contentsdefinition................................................................................................109freedom of ..............................................................................................109proving terms .........................................................................................110terms becoming ......................................................................................110things said during negotiation becoming term ........................................110treating all terms as equally important ............................................110–111

definition .......................................................................................................65determining contents ...................................................................................146discharging of duties ......................................................................................66enforcement ...................................................................................................66essential requirements of formation ................................................................67

acceptance by conduct ........................................................................96–97


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acceptance by email ............................................................................93–95acceptance by fax or telex .........................................................................93acceptance by post ....................................................................................92advertisements and displays generally not offers ..................................89–90agreements between friends ................................................................71–73agreements reached in commercial context ...............................................73alternative ways of satisfying second requirement......................................77conditional agreement ............................................................73–75, 88–89consideration — bilateral and unilateral contracts ..............................80–81consideration — compromise as ...............................................................84consideration — must be of some value ...................................................78consideration — performing act as .....................................................81–82consideration — practical benefit as .........................................................83consideration — types ........................................................................78–79counter offers ...........................................................................................92expiry and withdrawal of offers .................................................................91extent of agreement needed ......................................................................86formal agreements executed in deed..........................................................77identifying those to whom an offer is made ..............................................91illusory promises .................................................................................86–87inferring intention to be legally bound ...............................................68–71informal agreements and need for exchange ..............................................77letters of comfort ................................................................................75–77promise made to third party as consideration .....................................84–85reaching agreement by means of offer and acceptance ...............................89silence or inaction not valid as acceptance ..........................................97–98

establishing existence ...................................................................................106express and implied agreements to terms

agreement to terms contained in written documents ......................118–119delivery notes as contractual documents .........................................119–120further requirements for a term implied ad hoc ...............................120–122limitations on the evidence that may be led to prove terms implied ad hoc ...

122–123notice of terms that are not immediately available ..........................117–118objective agreement ................................................................................115officious bystander test ...........................................................................120terms agreed by implication ad hoc .........................................................120terms agreed to by reference ...................................................................117terms are final when contract is created ..........................................116–117

how legally enforceable ..................................................................................65importance of legally enforceable agreements ...........................................66–67making ..........................................................................................................67objective approach to ascertaining facts ....................................................67–68power to bind themselves .........................................................................65–66privity ..........................................................................................................101


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xxiii Alphabetical index of topics

agency and .............................................................................................103exceptions .......................................................................................102–103personal nature of contractual obligations ...............................................101

promissory estoppel .............................................................................104–105doctrine ..................................................................................................103ordinary .........................................................................................103–104

proving existence of agreed termsambiguous contracts and parol evidence rule ..........................................125collateral contracts and parol evidence rule .....................................126–127displacing presumption that contract is wholly written ...................124–125mistakes and parol evidence rule .............................................................126parol evidence rule..................................................................................124written and oral contracts .......................................................................124

relationship with agreements ..........................................................................66terms, opinions, puffery and representations

identifying terms ....................................................................................111innominate terms ...................................................................................114options distinguished from terms ...................................................111–112puffery distinguished from terms ............................................................112relative importance of particular terms ...........................................113–114representations distinguished from terms ........................................112–113

terms imposed by law in all contractsuniversally implied terms ................................................................127–131

terms imposed by law to fill gaps in particular kinds of contractgeneric implied terms .....................................................................131–138

terms imposed by legislation regarding quality of goodscaveat emptor ..........................................................................................138exclusion of generic terms by agreement .........................................144–145merchantable quality ......................................................................138–141sales by sample ...............................................................................143–144suitability of goods for buyer’s purpose ...........................................142–143

Conversion ........................................................................................................302remedies .......................................................................................................303

Corporations law ...................................................................................................5Criminal law .........................................................................................................5Crown .................................................................................................................11Custom .................................................................................................................2

DDeceit

deliberate fraud ............................................................................................309intention of wrongdoer ................................................................................310necessity of proving loss ...............................................................................310

Defamationdefences .......................................................................................................312


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identification of person defamed ..........................................................311–312protection of reputation ...............................................................................311requirement of publication...........................................................................312

Detinue .............................................................................................................303remedies .......................................................................................................304

Directorsconcept of ....................................................................................................425duties ...................................................................................................425–426payment .......................................................................................................428single ...........................................................................................................428

Divisible contracts .............................................................................................151performance of.....................................................................................158–159

Duresseconomic harm ....................................................................................214–215effect of ................................................................................................213–214harm to property..........................................................................................216threats or infliction of physical harm ............................................................213

EElectronic law ......................................................................................................55

advanced techniques for searchingbrackets ....................................................................................................62proximity operators ............................................................................61–62truncation ................................................................................................61wildcards ..................................................................................................61

Boolean searchingconnectors do not create phrases .........................................................60–61using connectors to specify relationships between search terms .................60

databasesAustralasian Legal Information Institute (AustLII) .............................57–58

finding legal databases ....................................................................................62finding legislation and cases by name

using index to find known Act ..................................................................59using index to find known law report .......................................................59

sources of lawclassification and organisation of legal materials ..................................55–56

using simple search terms to find legislation and casesadjacency ..................................................................................................60key words and phrases ........................................................................59–60overcoming limitations .............................................................................60

Electronic Transactions Act 2000 (SA) .........................................................446–448English law ........................................................................................................7–8Equitable remedies

contracts for things that are freely available ..........................................201–202contracts requiring performance of personal services ....................................200


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xxv Alphabetical index of topics

contracts requiring performance over extended period .........................200–201injunctions ...........................................................................................202–204limited availability of specific performance ...................................................200performance that would cause undue hardship.............................................202

Equity .................................................................................................................39no separate court ............................................................................................48

FFalse imprisonment

means of constraint ......................................................................................307possibility of escape ......................................................................................307unlawful deprivation of liberty .....................................................................306

False or misleading statements ...........................................................................252Floating charges.................................................................................................431Four corners rule .......................................................................................155–156Freedom of contract ..........................................................................................109

GGeneric implied terms

bailment contracts ...............................................................................132–133delivery of goods sold ...........................................................................135–136doctor/patient contracts .......................................................................131–132goods sold that were identified by description ......................................134–135inspection of goods sold .......................................................................137–138payment for goods sold ................................................................................136regarding ownership and quiet possession of goods sold .......................136–137

Gifts or prizes ....................................................................................................252Goods Act 1958 (Vic) .................................................................................487–491Government and law in Australia

anatomy of law ................................................................................................4classification and organisation of law

categories of law .........................................................................................4making law manageable ..............................................................................4

concept of law ..............................................................................................1–2development of Western European legal systems

English law .............................................................................................7–8Roman law .............................................................................................6–7

establishment of Australian Commonwealth, states and territoriesAustralian states and territories ...................................................................8establishment of Commonwealth of Australia .............................................8European settlement in Australia ................................................................8government of the Australian colonies ........................................................8

how law regulates conduct ...............................................................................2organs and powers of Australian government

courts .................................................................................................14–16


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Crown ................................................................................................11–12executive ...................................................................................................12how judges decide cases ......................................................................16–17law-related powers and responsibilities ................................................10–11legislatures ................................................................................................13political parties .........................................................................................16resolving conflicts arising from shared legislative powers ...........................14

relationship between law and justice ............................................................3–4structure of government

constitutional arrangement of the territories .............................................10constitutional monarchy ...........................................................................10constitutions of Commonwealth and states ..........................................9–10local government ......................................................................................10representative democracy ..........................................................................10

terms and phrases that describe law ..............................................................4–6

HHarassment or coercion .....................................................................................254Head of state .......................................................................................................11Hidden defects ..........................................................................................162–163High Court of Australia ................................................................................14–15

IIllegal contracts .................................................................................................228

change in public policy ................................................................................230grounds of public policy ......................................................................228–230statutory illegality ................................................................................230–232

Inferior courts ...............................................................................................15–16Injunctions

nature of ......................................................................................................400types of ................................................................................................400–401

Innominate terms ..............................................................................................114 166–168

Insolvency .................................................................................................430–431Insurance Contracts Act 1984 (Cth) ....................................................................492Intermediate courts .............................................................................................15International law ...................................................................................................5Internet. see Electronic lawInterpretation of Legislation Act 1984 (Vic) .................................................484–485

JJoint ventures

concept ................................................................................................420–421distinguished from partnerships ...................................................................421rights and duties ..........................................................................................421


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xxvii Alphabetical index of topics

Jurisprudence ........................................................................................................5

LLate performance ......................................................................................163–164Law of agency

acquisitions and dispositions of propertyapparent authority of mercantile agent in possession of goods ................287on behalf of principal .............................................................................287made without authority ..........................................................................287

agent’s contractual liability to third partiesauthority to perform principal’s obligations ............................................286misleading conduct ................................................................................286negligence or deceit ................................................................................286non-existing principals ...........................................................................283not liable when principal disclosed .........................................................282right of undisclosed principal to enforce transaction ...............................285warranty of authority ..............................................................................286when principal not disclosed ..................................................................284

application ...................................................................................................294duties to principal

act in accordance with good faith ...........................................................277acting personally .....................................................................................276exercise care and skill ..............................................................................277exercise discretion appropriately .............................................................276keeping money separate ..........................................................................279keeping proper accounts .........................................................................279performing tasks in accordance with instructions....................................275seeking clarification of ambiguous instructions .......................................276

obtaining authority to act asapparent .........................................................................................271–273authority granted by implication ....................................................270–271express grants of authority ..............................................................269–270

by operation of lawagency of necessity ..................................................................................290

principal’s dutiesindemnify for losses and liabilities ..........................................................282payment of agreed fees ............................................................................280reimbursement for expenses ....................................................................280

principal’s liability for harm causedliability of principal and agent for misleading conduct ...........................289in tort law for agent’s action ...................................................................288

ratification of unauthorised actsno ratification by “undisclosed” principal .......................................274–275no ratification of invalid transactions ......................................................275principal’s right to ratify .................................................................273–274


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relationshipsbasic .......................................................................................................268

“representation” ...................................................................................267–268termination

different ways of ending .................................................................291–293types of questions .........................................................................................268useful concept ..............................................................................................267

Law reportscollections ......................................................................................................41example ...................................................................................................43–46importance ....................................................................................................41structure ..................................................................................................41–42terms and phrases ...........................................................................................43

Legal authorities ....................................................................................................6Legal capacity ....................................................................................................429Legal concepts .......................................................................................................5Legal meanings ......................................................................................................6Legal principles .....................................................................................................5Legal rules .............................................................................................................6Legislation

see also names of specific legislationoverview...............................................................................................439–440

Act structure .......................................................................................26–30applying to resolve cases ...........................................................................35aspects which need explaining ............................................................19–20Australian constitutions ..........................................................................440citing and finding

finding ..........................................................................................30–31how cited ............................................................................................30

communication by email ........................................................................446consumer protection ...............................................................................449definition..................................................................................................19equitable rules of contract construction ..................................................480frustrated contracts .................................................................................481interpretation .........................................................................................483interpreting

why meaning is not always clear ....................................................31–34legislative process

understanding ...............................................................................23–26legislatures existing in Australia ................................................................20powers of the legislatures

Commonwealth government .........................................................21–23state governments................................................................................20territories ............................................................................................21

sale of goods ...................................................................................485–486


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third party rights under insurance contracts ............................................492tort law ...........................................................................................492–493

Letters of comfort ..........................................................................................75–77Liquidator

appointment of ............................................................................................434Local government ................................................................................................10

organs and powers..........................................................................................16Lower courts .......................................................................................................16

MMerchantable quality .................................................................................138–141Misleading conduct

application to natural persons, artificial persons and information providers ................................................................................................246

conduct must be “in place or commerce” .....................................................244disclaimers ...........................................................................................242–243intention as to evidence .......................................................................242–243no intention required ...................................................................................241prohibition ..........................................................................................239–240remedies for breach of s 18 ...........................................................................247

Misrepresentationdeliberate .............................................................................................226–227negligent ..............................................................................................227–228“representations” ..........................................................................................226

Moral and religious laws ........................................................................................2Multiple pricing ................................................................................................254

NNational law ......................................................................................................2, 5Natural laws ..........................................................................................................2Negligence

causation — legislative provisions ................................................................326causation — other factors affecting ..............................................................326causation — remoteness of harm .................................................................327defences

harm caused in part by plaintiff ’s own Negligence ..................................381legislative provisions ...............................................................................382legislative provisions — governing assumption of risk ............................383risk of harm in recreational activities ......................................................384

element of breach of duty of careburden (onus) of proof ...........................................................................368circumstances that justify drawing in inference .......................................369deciding what reasonable person would do to avoid harm ......................362drawing reasonable inferences from known facts .....................................368justifiability and policy considerations ....................................................367


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other factors that may be attributed to reasonable person .......................360practicality of avoiding harm ..................................................................365probability of harm ................................................................................363reasonable person with special expertise ..........................................358–359reasonable steps to prevent harm required.......................................357–358seriousness of harm .................................................................................364

element of causation of harmactual ......................................................................................................370assessing full extent .................................................................................376causation — is question of fact ...............................................................372causation — legislative provisions ...........................................................373form of lost opportunity .........................................................................370liability under eggshell skull rule .....................................................380–381multiple independent causes ...................................................................375new intervening causes ...........................................................................377no liability for kinds of harm that were not foreseeable ...........................379no liability unless consequences were reasonably foreseeable ...................378omissions that cause ...............................................................................377physical and purely economic .................................................................370single and combined causes ....................................................................374trivial ......................................................................................................370

element of duty of careabnormal plaintiffs .................................................................................347different categories of conduct and harm ........................................334–335employees ...............................................................................................351factors indicative of duty relationship in unusual cases............................343foreseeability of harm .............................................................................336foreseeability of psychiatric harm ....................................................340–341foreseeability of real risk of harm ....................................................338–339limiting existence ............................................................................341–343misstatements — causing economic loss .................................................353misstatements — liability passed on to third parties ...............................354objective foreseeability required ..............................................................337occupiers ................................................................................................351product liability ......................................................................................350reasonable person in position of defendant .....................................337–338recognised duty situations and relationships ...........................................347relationships subject to special rules ........................................................347rescuers ...................................................................................................348restricting liability ..................................................................................334special rules if harm suffered is purely economic .............................344–345statutory authorities................................................................................349unborn plaintiff ......................................................................................352who might foreseeably be harmed ...........................................................339

essential elements .........................................................................................334


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essential requirements for establishing liability .....................................313–326establishing liability .....................................................................................385identifying different types of conduct and harm ...........................................313remedies .......................................................................................................327scope ....................................................................................................312–313sources of law ...............................................................................................333

Non-compensatory damagesaggravated ....................................................................................................399contemptuous ..............................................................................................398exemplary ....................................................................................................398legislative provisions .....................................................................................400nominal .......................................................................................................398

Non-performance ......................................................................................159–160

OObiter dicta..........................................................................................................52Officious bystander test .....................................................................................120Opinions ...................................................................................................111–112

PParol evidence rule ............................................................................................124

ambiguous contracts ....................................................................................125collateral contracts ...............................................................................126–127mistakes .......................................................................................................126

Partial performance ...................................................................................160–161Partnerships

agency powers of partners ............................................................................417changing membership ..................................................................................419contributions by partners .............................................................................415dissolution ...................................................................................................420dissolving .............................................................................................418–419do not have own legal identity .....................................................................415employment of workers................................................................................418formalities ....................................................................................................414general and limited ......................................................................................414legal liability of partners ...............................................................................416legislation.....................................................................................................414liability in tort and criminal law ...................................................................417limitation on size .........................................................................................415limited

legal liability of partners .........................................................................420registration .............................................................................................420structure .................................................................................................419

participation in management .......................................................................416partners’ duties to each other .......................................................................418


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right of partners to share assets and profits ...................................................415taxation requirements ..................................................................................416

Performance and breach of contract. see Breach of contractPersuasive precedents ...........................................................................................50Political parties ....................................................................................................16Primary sources of law .........................................................................................56Private nuisance

degree of interference required .....................................................................307right to peaceful use and enjoyment of property ..........................................307

Privity ...............................................................................................................101agency and ...................................................................................................103exceptions ............................................................................................102–103personal nature of contractual obligations ....................................................101

Promissory estoppel ...................................................................................104–105doctrine .......................................................................................................103ordinary ...............................................................................................103–104

Property law ..........................................................................................................5Property Law Act 1974 (Qld) .............................................................................480Puffery ..............................................................................................................112Pyramid schemes .......................................................................................253–254

RRatio decidendi of case

identifying .....................................................................................................52obiter dicta .....................................................................................................52

Referral selling ...........................................................................................253–254Remedies ...................................................................................................179–180

common lawavailability of damages as remedy ............................................................180compensatory nature of damages ............................................................181damages following failure of efforts to mitigate .......................................187damages for consequential loss........................................................184–185damages for distress or disappointment ..........................................185–186damages for immediate (direct) loss ........................................................184damages for wasted expenses ...................................................................183duty to mitigate losses ....................................................................186–187no damages without loss .................................................................187–188pre-estimates of damages ........................................................................181purpose of damages ........................................................................182–183

compensatory damagesassessing for lost earnings ........................................................................392assessing loss in cases of harm to property ...............................................396awarded as lump sum .............................................................................391common law principles governing compensation for personal injury ......390consequential losses flowing from damage to property ............................398


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costs of repairs to and restoration of property .........................................397general and special ..................................................................................390legislative limits on compensation claimable ...........................................392legislative provisions ...............................................................................390loss of financial support ..........................................................................395non-pecuniary harm ...............................................................................394pecuniary harm ......................................................................................392“personal injury” .....................................................................................390statutory rights for wrongful death .........................................................395survival of deceased person’s claim for personal injury suffered

before death ..............................................................................395–396taking account of other benefits received ................................................394

injunctionsnature of .................................................................................................400types of ...........................................................................................400–401

non-compensatory damagesaggravated ..............................................................................................399contemptuous ........................................................................................398exemplary ...............................................................................................398legislative provisions ...............................................................................400nominal ..................................................................................................398

other types ...........................................................................................401–402plaintiff

alternatives to bringing action against wrongdoer ...................................389bringing action .......................................................................................387seeking from more than one defendant ...........................................388–389

plaintiff choosing remedy they prefer ...........................................................180restitution

distinguished from compensation ...........................................................401instances of unjust enrichment ...............................................................401

Representations .........................................................................................112–113Representative democracy ....................................................................................10Research tools ......................................................................................................56Risk and frustration

distinguishing ......................................................................................168–169frustrated contracts legislation ..............................................................172–175frustration ............................................................................................169–172risk...............................................................................................................169

Roman law ........................................................................................................6–7

SSafety standards

dangerous goodsbans ........................................................................................................261recall ...............................................................................................261–262


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enforcement .................................................................................................263information standards ..................................................................................262liability of manufacturers for safety defects ...........................................262–263notice of death, injury or illness ...................................................................262regulation of dangerous products .........................................................260–261safety warning notices ..................................................................................262setting ..........................................................................................................261

Sales by sample ..........................................................................................143–144Secondary sources of law .....................................................................................56Sole trader

employees ....................................................................................................407entitlement to profits ...................................................................................407formalities ....................................................................................................407GST collection ............................................................................................408legal rights and liabilities ..............................................................................407ownership and management ........................................................................407raising capital ...............................................................................................407transforming business structure ....................................................................408use of identifying numbers ...........................................................................408

Statutory guarantees in consumer transactionsacceptable quality .........................................................................................255availability of spare parts and repairs ............................................................256contracts for services ....................................................................................258correspondence with description ..................................................................255correspondence with samples .......................................................................255express warranties.........................................................................................256good title and quiet possession .....................................................................256liability of manufacturers .....................................................................257–258preventing exclusion of basic obligations ..............................................254–255remedies ...............................................................................................256–257suitability for consumer’s purpose ................................................................255

Statutory remedies .............................................................................................204provided by state and territory sale of goods legislation ........................205–206

Substantial performance ............................................................................161–162Suitability of goods for buyer’s purpose .....................................................142–143Superior courts ....................................................................................................15

TTermination of performance ..............................................................................188

availability ...........................................................................................189–191decision whether to terminate or not is binding ...........................................199different types of breaches ....................................................................191–198effect on contract .................................................................................198–199not for non-fundamental breaches ...............................................................191

Tort law .................................................................................................................5


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assaultconduct causing fear of physical assault ..................................................304expectation of immediate physical contact required ................................304remedies .................................................................................................305

batteryconduct resulting in physical contact ......................................................305remedies .................................................................................................306

comparison with criminal law ......................................................................298conversion ...................................................................................................302

remedies .................................................................................................303deceit

deliberate fraud ......................................................................................309intention of wrongdoer...........................................................................310necessity of proving loss ..........................................................................310

defamationdefences ..................................................................................................312identification of person defamed ....................................................311–312protection of reputation .........................................................................311requirement of publication .....................................................................312

detinue ........................................................................................................303remedies .................................................................................................304

establishing liability .....................................................................................329false imprisonment

means of constraint ................................................................................307possibility of escape ................................................................................307unlawful deprivation of liberty ...............................................................306

how obligations created ................................................................................297liability for animals

damage done — cattle ............................................................................308damage done — dogs .............................................................................308damage done — other domesticated animals ..........................................308damage done — wild animals .................................................................308

liability for wrongful conduct that causes harm ....................................298–299nature of obligations ............................................................................297–298negligence

causation — legislative provisions ...........................................................326causation — other factors affecting .........................................................326causation — remoteness of harm ............................................................327essential requirements for establishing liability ................................313–326identifying different types of conduct and harm .....................................313remedies .................................................................................................327scope ..............................................................................................312–313

private nuisancedegree of interference required ................................................................307right to peaceful use and enjoyment of property .....................................307


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sources .........................................................................................................298trespass to chattels

circumstances that amount to .................................................................301remedies .........................................................................................301–302wrongful interference with moveable property ........................................301

trespass to landno trespass where implied consent given .................................................300protection of interest in real property .....................................................299remedies .................................................................................................300voluntary intrusion required ...................................................................300

vicarious liabilityemployees and independent contractors .................................................328employees and independent contractors — distinguishing ......................328responsibility for harm caused by another’s acts or omissions ..................328

Tort of Negligence. see NegligenceTrespass

to chattelscircumstances that amount to .................................................................301remedies .........................................................................................301–302wrongful interference with moveable property ........................................301

to landno trespass where implied consent given .................................................300protection of interest in real property .....................................................299remedies .................................................................................................300voluntary intrusion required ...................................................................300

Trustsconcept ........................................................................................................408creation ........................................................................................................409distribution of income .................................................................................411duties ...........................................................................................................409legal liability ................................................................................................411legislation.....................................................................................................409ownership of assets .......................................................................................409taxation requirements ..................................................................................411trustee as beneficiary ....................................................................................411using as structure .................................................................................408–409

UUnconscionable conduct

additional circumstances giving rise to .................................................248–249enforcement .................................................................................................250prohibited ....................................................................................................247scope with Australian Consumer Law ..................................................247–248

Unconscionable dealingdisadvantage of spouse who guarantees a partner’s debts ......................220–221


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“good conscience” ........................................................................................219weaker party

knowledge of disadvantages ............................................................219–220taking advantage of .................................................................................219

Undue influencegeneral controlling influence

none .......................................................................................................219presumption ...........................................................................................217proof ......................................................................................................218

relationships that give rise to controlling influence ...............................216–217Unfair business practices

bait advertising ............................................................................................252enforcement .................................................................................................254false or misleading statements ......................................................................252harassment or coercion ................................................................................254misleading conduct as to nature of goods or services ....................................252multiple pricing ...........................................................................................254offering gifts or prizes ..................................................................................252pyramid schemes and referral selling ....................................................253–254regulation ....................................................................................................252unsolicited cards ..........................................................................................253unsolicited goods .........................................................................................253wrongly accepting payment ..........................................................................253

Unfair terms in contractsdefinition .....................................................................................................251enforcement .................................................................................................251identifying regulated contracts .............................................................250–251of no legal effect ...........................................................................................251regulation of terms .......................................................................................250

Universally implied termscooperation ..........................................................................................127–129good faith ............................................................................................129–131

Unsolicited cards ...............................................................................................253Unsolicited consumer agreements

compliance with request to leave ..................................................................259enforcement .................................................................................................260identifying ...........................................................................................258–259no waiver of rights permitted .......................................................................260obligation on supplier to provide supplied information ................................259regulating marketing by suppliers to consumers in home .............................258restricted times for calls ................................................................................259written copy to be supplied ..........................................................................259

Unsolicited goods ..............................................................................................253


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VVicarious liability

employees and independent contractors .......................................................328distinguishing .........................................................................................328

responsibility for harm caused by another’s acts or omissions .......................328Voluntary performance

sale of generic goods ....................................................................................156sale of specific goods ............................................................................156–157

WWarranties .................................................................................................165–166Winding up

compulsory ..................................................................................................434voluntary .....................................................................................................433

Wrongly accepting payment ..............................................................................253


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xxxix

TABLE OF CASES

Reference is to page. References to case summaries are in bold.

AAdamson v Motor Vehicle Insurance Trust (1957) 58 WALR 56 ...................... 361Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem

[2009] HCA 48; (2009) 239 CLR 420, .....................................325, 372–373Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216 ............................... 227–228Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 .................................. 130Allcard v Skinner (1887) 36 Ch D 145 ............................................................ 217Associated Newspapers Ltd v Bancks [1951] HCA 24; (1951)

83 CLR 322........................................................................113, 165–166, 189Australia & New Zealand Bank Ltd v Ateliers de Constructions

Electriques de Charleroi [1966] 1 NSWR 19; [1967] 1 AC 86 ........... 270–271Australian Broadcasting Commission v Australasian Performing

Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 ...................... 153Australian Competition & Consumer Commission v CG Berbatis

Holdings Pty Ltd [2000] FCA 2; (2000) 96 FCR 491 ........................ 247–248Australian Knitting Mills Ltd v Grant [1933] HCA 35; (1933)

50 CLR 387........................................................................................ 139–140Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987)

162 CLR 479.............................................................................................. 351Australian Securities and Investments Commission (ASIC) v Adler

(No 3) [2002] NSWSC 171; (2002) 168 FLR 253 ..................................... 426

BBaldry v Marshall [1925] 1 KB 260 ................................................................. 143Balfour v Balfour [1919] 2 KB 571 .................................................................... 69Ballantyne v Phillott [1961] HCA 17; (1961) 105 CLR 379 .............................. 84Baltic Shipping Company v Dillon (The Ship Mikhail Lermontov)

[1993] HCA 4; (1993) 176 CLR 344 ................................................. 185–186Banque Brussels Lambert SA v Australian National Industries Ltd

(1989) 21 NSWLR 502 .......................................................................... 76–77Barton v Armstrong [1973] 2 NSWLR 598; [1975] 2 All ER 465 ................... 214Bathurst Regional Council v Local Government Financial Services

Pty Ltd (No 5) [2012] FCA 1200 ....................................................... 356–357Behrens v Bertram Mills Circus Ltd [1957] 2 QB 1; [1957] 1 All ER 583 ....... 309Bertram, Armstrong & Co v Godfray (1830) 12 ER 364 ................................. 276Bettini v Gye (1876) 1 QBD 183 .....................................................114, 166, 191Black v Smallwood [1966] HCA 2; (1966) 117 CLR 52 .......................... 283–284Blackham v Haythorpe [1917] HCA 21; (1917) 23 CLR 156 .................. 277–278Blyth v Birmingham Waterworks Co (1856) 11 Exch 781 ................................357


OUP ANZ SAMPLE

FIRST PRINCIPLES OF BUSINESS LAWxl

Bolton Partners v Lambert (1889) 41 Ch D 295 .............................................. 274BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977]

UKPCHCA 1; (1977) 180 CLR 266 .................................................. 120–121Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 ................................... 132Brinkibon Ltd v Stahag Stahl und Stahlwarenhandels-gesellschaft mbH

[1983] 2 AC 34; [1982] 1 All ER 293 .......................................................... 93British Westinghouse Electric and Manufacturing Co Ltd v Underground

Electric Railways Co of London Ltd [1912] AC 673 .................................. 188Brooke v Bool [1928] 2 KB 578 ............................................................... 388–389Buckenara v Hawthorn Football Club Ltd [1988] VR 39 ................................. 203Bugge v Brown [1919] HCA 5; (1919) 26 CLR 110 ................................ 288–289Burger King Corp v Hungry Jack’s Pty Ltd [2001] NSWCA 187 ............. 130–131Burns, Philp & Co Ltd v Gillespie Brothers Pty Ltd [1947] HCA 3;

(1947) 74 CLR 148 ............................................................................ 290–291Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986)

161 CLR 653...................................................................................... 186–187Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004)

218 CLR 592...................................................................................... 243–244

CCaledonian Collieries Ltd v Speirs [1957] HCA 14; (1957) 97 CLR 202 ......... 366Campomar Sociedad Ltd v Nike International Ltd [2000] HCA 12;

(2000) 202 CLR 45 .................................................................................... 241Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales

(Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321 ................... 413–414Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 .............68–69, 80–81, 91, 96Cassidy v Daily Mirror Newspapers Ltd [1929] 2 KB 331 ....................... 311–312Caterson v Commissioner of Railways [1973] HCA 12; (1973)

128 CLR 99........................................................................................ 338–339Causer v Browne [1952] VLR 1 ............................................................... 118–119Cehave NV v Bremer Handelsgesellschaft mbH [1976] QB 44;

[1975] 3 All ER 739 ...........................................................166–167, 189–190Chapman v Hearse [1961] HCA 46; (1961) 106 CLR 112 ...................... 336–337Clarkson Booker Ltd v Andjel [1964] 2 QB 775; [1964] 3 All ER 260 .... 284–285Cockerill & Ors v Westpac Banking Corporation [1996] FCA 1143;

(1996) 142 ALR 227 .................................................................................. 215Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982]

HCA 24; (1982) 149 CLR 337 ..................................................123, 169–170Cohen v Cohen [1929] HCA 15; (1929) 42 CLR 91 ................................... 69–70Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983)

151 CLR 447.............................................................................................. 220Commercial Banking Company of Sydney Ltd v RH Brown & Co

[1972] HCA 24; (1972) 126 CLR 337 ............................................... 310–311Commissioner of Railways (WA) v Stewart [1936] HCA 51; (1936)

56 CLR 520........................................................................................ 371–372


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xli Table of cases

Commonwealth Bank of Australia v TLI Management Pty Ltd [1990] VR 510 ................................................................................................... 75–76

Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594 .................................................................................. 245

Connor v Stainton (1924) 27 WALR 72 .......................................................... 162Cook v Cook [1986] HCA 73; (1986) 162 CLR 376 .......................................361Cooper v Fisken (1912) 18 ALR 155 ....................................................... 282–283Coulls v Bagot’s Executor & Trustee Co Ltd [1967] HCA 3; (1967)

119 CLR 460.............................................................................................. 101Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59;

(1999) 200 CLR 1 .............................................................................. 349–350Currie v Misa (1875) LR 10 Ex 153 ....................................................................78

DDaniels (formerly practising as Deloitte, Haskins & Sells) v Anderson;

Hooke v Daniels; Daniels v AWA Ltd (1995) 37 NSWLR 438; (1995) 118 FLR 248 ................................................................................... 427

David Jones Ltd v Willis [1934] HCA 47; (1934) 52 CLR 110 ............... 140–141Davis Contractors Ltd v Fareham Urban District Council [1956]

AC 696; [1956] 2 All ER 145 ..................................................................... 171Derry v Peek (1889) 14 App Cas 337 ....................................................... 227, 310Donoghue v Stevenson [1932] AC 562; [1932] All ER 1 .........314–315, 342, 350Dougan v Ley [1946] HCA 3; (1946) 71 CLR 142.................................. 201–202

E“E” v Australian Red Cross Society, Re; Australian Red Cross Society

New South Wales Division and Central Sydney Area Health Service [1991] FCA 603; (1991) 31 FCR 299 ................................................ 367–368

Eley v Positive Government Security Life Assurance Co Ltd (1875) 1 Ex D 20 ........................................................................................... 428–429

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 ..................................................................................... 97–98

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 ................................................................................ 72–73

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg) [1997] HCA 8; (1997) 188 CLR 241 ................................................. 320, 355

Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117 ............................................................................... 73–74

Evans v Balog [1976] 1 NSWLR 36 ................................................................. 397Expo Aluminium (NSW) Pty Ltd v WR Pateman Pty Ltd (1990)

ASC ¶55-978 .............................................................................................. 142

FFibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943]

AC 32; [1942] 2 All ER 122 ....................................................................... 172


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FIRST PRINCIPLES OF BUSINESS LAWxlii

Finch Motors Ltd v Quin (No 2) [1980] 2 NZLR 519 ............162–163, 194–195Fitzgerald v FJ Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215 ....... 231Flowfill Packaging Machines Pty Ltd v Fytore Pty Ltd (1993)

Aust Torts Reports ¶81-244 ........................................................................ 303Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964]

2 QB 480; [1964] 1 All ER 630 ..................................................269, 272–273Froom v Butcher [1976] QB 286; [1975] 3 All ER 520 ................................... 382Fry v Oddy [1999] 1 VR 557 ................................................................... 415–416

GGarcia v National Australia Bank Ltd [1998] HCA 48; (1998)

194 CLR 395.............................................................................................. 220Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999)

ATPR ¶41-703; [1999] FCA 903 ....................................................... 249–250George Wills & Co Ltd v Davids Pty Ltd [1957] HCA 6; (1957)

98 CLR 77.................................................................................................. 141Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33; (2003)

214 CLR 269...................................................................................... 340–341Goldsbrough Mort & Co Ltd v Quinn [1910] HCA 20; (1910)

10 CLR 674................................................................................................ 223Government of Newfoundland v The Newfoundland Railway Co (1888)

13 App Cas 199 .......................................................................................... 159GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986)

40 NSWLR 631 ............................................................................................74Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002)

211 CLR 540.............................................................................................. 344Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003]

QB 679; [2002] 4 All ER 689 ............................................................. 224–225Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161 .........................394

HHackshaw v Shaw [1984] HCA 84; (1984) 155 CLR 614 ................................351Hadley v Baxendale (1854) 2 CLR 517; [1854] 9 Exch 341 ..................... 184, 185Hamilton v Lethbridge [1912] HCA 20; (1912) 14 CLR 236.................... 99–100Hamilton v Nuroof (WA) Pty Ltd [1956] HCA 42; (1956)

96 CLR 18.......................................................................................... 351–352Handbury v Nolan (1977) 13 ALR 339 ...........................................111, 154–155Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991)

22 NSWLR 298 ......................................................................................... 216Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 ..................... 323–324Haynes v G Harwood & Son [1935] 1 KB 146; [1934] All ER 103 ................. 348Heaven v Pender (1883) 11 QBD 503 ............................................................. 341Henry v Thompson [1989] 2 Qd R 412 .................................................. 399–400Henthorn v Fraser [1892] 2 Ch 27 ..................................................................... 92


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xliii Table of cases

Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 ................................................................................. 151–152

Hochster v De la Tour (1853) 118 ER 922 .......................................164, 196–197Hoenig v Isaacs [1952] 2 All ER 176 ................................................161, 193–194Hole v Hocking [1962] SASR 128 ........................................................... 325–326Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409 .......163–164, 195–196Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 ...................... 47, 329Holloway v McFeeters [1956] HCA 25; (1956) 94 CLR 470 ................... 368–369Hope v RCA Photophone of Australia Pty Ltd [1937] HCA 90; (1937)

59 CLR 348................................................................................................ 125Hunter v Canary Wharf Ltd [1997] AC 655; [1997] 2 All ER 426 .................. 371

IImbree v McNeilly; McNeilly v Imbree [2008] HCA 40; (2008)

236 CLR 510......................................................................324, 327, 361–362Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989]

QB 433; [1988] 1 All ER 348 ............................................................. 119–120Ipex Software Services Pty Ltd & Ors v Hosking [2000]

VSCA 239 ..................................................................................82–83, 87–88

JJC Williamson Ltd v Lukey & Mulholland [1931] HCA 15; (1931)

45 CLR 282................................................................................................ 201JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970)

119 CLR 435...................................................................................... 126–127Jobling v Associated Dairies Ltd [1982] AC 794; [1981] 2 All ER 752 .... 376–377Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113 ................................. 218Jolley v Sutton London Borough Council [2000] 3 All ER 409 ........................ 380

KKavanagh v Akhtar (1998) 45 NSWLR 588 ............................................. 379–380Keighley, Maxsted & Co v Durant [1901] AC 240 .......................................... 275Khan v Miah [2001] 1 All ER 20; [2000] 1 WLR 2123 ........................... 412–413Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd

[2007] HCA 61; (2007) 233 CLR 115 ...............................167–168, 190–191Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350;

[1967] 3 All ER 686 ................................................................................... 184

LLamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 ............................. 398–399Leaf v International Galleries [1950] 2 KB 86 .................................................. 224Lee v Lee’s Air Farming Ltd [1961] AC 12; [1960] 3 All ER 420 ............. 422–423L’Estrange v F Graucob Ltd [1934] 2 KB 394 .................................................. 115Levi v Colgate-Palmolive Pty Ltd (1941) 41 SR (NSW) 48 ...................... 347–348


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LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (Australasia) Ltd (1956) SR (NSW) 81 ................................................................................. 144

Liaweena (NSW) Pty Ltd v McWilliams Wines Pty Ltd (1991) ASC ¶56-038 .............................................................................................. 157

Lindner v Murdock’s Garage [1950] HCA 48; (1950) 83 CLR 628 ................. 229Lintrose Nominees Pty Ltd and Others v King [1995] 1 VR 574 ..................... 279Lloyd v Grace, Smith & Co [1912] AC 716 ............................................. 417–418Lumley v Wagner (1852) 42 ER 687 ........................................................ 200, 204Lynch v Lynch (1991) Aust Torts Reports ¶81-142; (1991)

25 NSWLR 411 ................................................................................. 352–353

MMahoney v Lindsay (1980) 33 ALR 601 .......................................................... 197March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991)

171 CLR 506......................................................................374–375, 377–378Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524 ................... 170Master Education Services Pty Ltd v Ketchell [2008] HCA 38;

(2008) 236 CLR 101 ......................................................................... 231–232Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 ................................. 74McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933)

48 CLR 457........................................................................................ 198–199McFarlane v Hall (1882) 16 SALR 126 .................................................... 156–157McHale v Watson [1966] HCA 13; (1966) 115 CLR 199 ............................... 360McNamara v Duncan (1971) 26 ALR 584 ............................................... 305–306McRae v Commonwealth Disposals Commission [1951] HCA 79;

(1951) 84 CLR 377 .................................................................................... 183McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd

[1980] FCA 159; (1980) 33 ALR 394 ........................................................ 240Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571 ........................... 129–130Merritt v Merritt [1970] 2 All ER 760; [1970] 1 WLR 1211 ....................... 70–71Mitor Investments Pty Ltd v General Accident Fire & Life Assurance

Corp Ltd [1984] WAR 365 ........................................................................ 277Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2;

(2001) 202 CLR 351 .......................................................................... 281–282Moorhead v Brennan (t/as Primavera Press) (1991) 20 IPR 161 ............... 121–122Mount Isa Mines Ltd v Pusey [1970] HCA 60; (1970) 125 CLR 383 ...... 337–338Murphy v Brown (1985) 1 NSWLR 131 ................................................. 396–397Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 ................................ 83–84Myer Stores Ltd v Soo (1991) Aust Torts Reports ¶81-077; [1991]

2 VR 597 ............................................................................................ 306–307

NNewington v Windeyer (1985) 3 NSWLR 555 ................................................ 300Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894]

AC 535 ............................................................................................... 229–230


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North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705; [1978] 3 All ER 1170 ............................................ 214–215

OO’Brien & Anor v Smolonogov & Anor (1983) ATPR ¶40-418;

[1983] FCA 305 ................................................................................. 244–245O’Dea v Allstates Leasing System (WA) Pty Ltd [1983] HCA 3;

(1983) 152 CLR 359 .................................................................................. 181Olley v Marlborough Court Ltd [1949] 1 KB 532; [1949]

1 All ER 127 ....................................................................................... 116–117Oscar Chess Ltd v Williams [1957] 1 All ER 325 ..................................... 112–113Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd

(The Wagon Mound (No 1)) [1961] AC 388; [1961] 1 All ER 404 ............................................................................... 381, 378–379

PPalsgraf v Long Island Railway Co (1928) 248 NY 339 ............315–316, 339–340Pao On v Lau Yiu Long [1980] AC 614; [1979] 3 All ER 65 ................. 81–82, 85Paris v Stepney Borough Council [1951] AC 367; [1951] 1 All ER 42 ............. 365Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982]

HCA 44; (1982) 149 CLR 191 ...................................................................242Partridge v Crittenden [1968] 2 All ER 421 ................................................. 89–90Pearce v Brooks (1866) LR 1 Exch 213 ............................................................ 230Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204.... 302–303Performance Cars Ltd v Abraham [1962] 1 QB 33; [1961]

3 All ER 413 ....................................................................................... 375–376Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 .........317–318, 345Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982)

149 CLR 537....................................................................75, 88–89, 128–129Pharmaceutical Society of Great Britain v Boots Cash Chemists

(Southern) Ltd [1953] 1 QB 401 .................................................................. 90Phillips v Ellinson Brothers Pty Ltd [1941] HCA 35; (1941) 65 CLR 221 ....... 158Pitt Son & Badgery Ltd v Proulefco [1984] HCA 6; (1984)

153 CLR 644...................................................................................... 132–133Placer Development Ltd v Commonwealth [1969] HCA 29; (1969)

121 CLR 353.......................................................................................... 86–87Price v Easton (1833) 4 B & Ad 433; (1833) 110 ER 518 ............................... 102Pukallus v Cameron [1982] HCA 63; (1982) 180 CLR 447 ............................ 126

RR v Clarke [1927] HCA 47; (1927) 40 CLR 227 ......................................... 96–97Radford v de Froberville [1978] 1 All ER 33 .................................................... 182Raffles v Wichelhaus (1864) 2 H&C 906 ................................................. 222–223Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571 ....................... 280–281Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; [1942] 1 All ER 378 .......... 278


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FIRST PRINCIPLES OF BUSINESS LAWxlvi

Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479 ....................... 323, 359Romeo v Conservation Commission of the Northern Territory [1998]

HCA 5; (1998) 192 CLR 431 .................................................................... 364Rootes v Shelton [1967] HCA 39; (1967) 116 CLR 383 ................................. 383Roscorla v Thomas (1842) 3 QB 234; (1842) 114 ER 496 ................................ 79

SSalomon v A Salomon & Co Ltd [1897] AC 22 ....................................... 431–432Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd

[1974] HCA 40; (1974) 131 CLR 634 ....................................................... 199Scarborough v Sturzaker (1905) 1 Tas LR 117 ............................................. 98–99Schellenberg v Tunnel Holdings [2000] HCA 18; (2000) 200 CLR 121 ... 369–370Secured Income Real Estate (Australia) Ltd v St Martins Investments

Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 .......................................... 128Shaddock & Associates Pty Ltd v Parramatta City Council (No 1)

[1981] HCA 59; (1981) 150 CLR 225 .......................................319, 353–354Sharman v Evans [1977] HCA 8; (1977) 138 CLR 563 ................................... 391Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 .............. 187Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199; [1994]

1 All ER 213 ....................................................................................... 285–286Skelton v Collins [1966] HCA 14; (1966) 115 CLR 94 ................................... 394Solle v Butcher [1950] 1 KB 671 ......................................................................225Steele v Tardiani [1946] HCA 21; (1946) 72 CLR 386 ....................160–161, 193Stephenson v Waite Tileman Ltd [1973] 1 NZLR 152 ..................................... 381Stilk v Myrick (1809) 2 Camp 317; (1809) 170 ER 1168 ...................................83Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 ........................ 343–344Swain v Waverley Municipal Council [2005] HCA 4; (2005)

220 CLR 517...................................................................................... 366–367Sydney Corporation v West [1965] HCA 68; (1965) 114 CLR 481 ........................

...........................................................................................117–118, 155–156

TTabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8;

(2009) 236 CLR 272 .......................................................................... 182–183Taylor v Crossman (No 2) [2012] FCAFC 11; (2012) 199 FCR 363 ............... 246Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422 ................. 47, 59, 63, 226Teen Ranch Pty Ltd v Brown (1995) AILR ¶5-036; (1995)

11 NSWCCR 197 ........................................................................................ 72Thomas v Thomas (1842) 2 QB 851; (1842) 114 ER 330 ................................. 78Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402 ...................... 392–393Toll (FCCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004)

219 CLR 165...................................................................................... 115–116Tooth v Laws (1888) 9 LR (NSW) 154 ............................................................ 272Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988]

HCA 44; (1988) 165 CLR 107 .......................................................... 102–103


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xlvii Table of cases

Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93; [1961] 2 All ER 179 ....................................................................................... 171–172

Twentieth Century Fox Film Corp & Anor v The South Australian Brewing Co Ltd & Anor [1996] FCA 1484; (1996) 66 FCR 451 ....... 242–243

VVan den Esschert v Chappell [1960] WAR 114 ........................................ 124–125Van Gervan v Fenton [1992] HCA 54; (1992) 175 CLR 327 .................. 393–394Varley v Whipp [1900] 1 QB 513 ....................................................135, 160, 192Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 ............. 358

WWakeling v Ripley (1951) 51 SR (NSW) 183 ..................................................... 71Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988)

164 CLR 387...................................................................................... 104–105Warner Bros Pictures Inc v Nelson [1937] 1 KB 209; [1936]

3 All ER 160 ....................................................................................... 203–204Watt v Rama [1972] VR 353...............................................................................47Waverley Council v Ferreira (2005) Aust Torts Reports ¶81-818;

[2005] NSWCA 418 ..........................................................321–322, 362–363Western Districts Developments v Baulkam Hills Shire Council

[2008] NSWSC 770; (2008) 160 LGERA 422 ................................... 346–347Wilson v Lombank Ltd [1963] 1 All ER 740 ................................................... 301Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004]

HCA 16; (2004) 216 CLR 515 ..................................................318, 345–346

YYorke & Anor v Lucas Pty Ltd [1985] HCA 65; (1985) 158 CLR 661 ............ 242Yorke & Anor v Treasureway Stores Pty Ltd & Anor (1983)

ATPR ¶40-336; [1983] FCA 16 ......................................................... 289–290Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15;

(2003) 212 CLR 484 .......................................................................... 409–410

ZZanker v Vartzokas (1988) 34 A Crim R 11 ............................................. 304–305


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OUP ANZ SAMPLE

xlix

TABLE OF SELECTED LAW REPORTS SERIES

A&E Adolphus and Ellis’s Reports, QB 1834–1840. ABC Australian Bankruptcy Cases. 1929–1964.AC Law Reports, Appeal Cases. 1891 onwards. ACLC Australian Company Law Cases.ACLR Australian Company Law Reports.ACSR Australian Corporations and Securities Reports.ACTR Australian Capital Territory Reports (in Australian Law

Reports). AILR Australian Industrial Law Review.AIPC Australian Intellectual Property Cases. 1982 onwards. AITR Australian Income Tax Reports.AJR Australian Jurist Reports. 1870–1874. ALJ Australian Law Journal. 1927 onwards. ALJR Australian Law Journal Reports.ALLR Australian Labour Law Reporter.ALMD Australian Legal Monthly Digest. 1967 onwards. Argus LR Argus Law Reports. 1895–1973.ALR Australian Law Reports. 1973 onwards. ALT Australian Law Times. 1879–1928.ANZ Insurance Cases Australian and New Zealand Insurance Cases. AR (NSW) Industrial Arbitration Reports (NSW).ATD Australasian Tax Decisions.All ER All England Law Reports. 1936 onwards. App Cas Law Reports, Appeal Cases. 1876–1890. AR (NSW) Arbitration Reports (New South Wales).ASC Australian Consumer Sales and Credit Law Reporter. ATC Australian Tax Cases.ATPR Australian Trade Practices Reports. 1974 onwards. Aust Torts Reports Australian Torts Reports.Austn Digest Australian Digest.

B&Ad Barnewall and Adolphus’s, KB 1830–1834. B&Ald Barnewall and Alderson’s, KB 1817–1822. B&C Barnewall and Creswells, KB 1822–1830. BCL Building and Construction Law.BPR Butterworths Property Reports.Beav Beavan’s Reports, Rolls Court. 1838–1866. Bing Bingham’s Reports, CP 1822–1834.

CAR Commonwealth Arbitration Reports.CB (NS) Common Bench, New Series. 1856–1865.


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FIRST PRINCIPLES OF BUSINESS LAWl

CLR Commonwealth Law Reports. 1903 onwards.ConvR (NSW) Conveyancing Law and Practice (New South Wales). CPD Common Pleas Division. 1875–1880.C&P Carrington and Payne’s, NP 1823–1841. Ch Law Reports, Chancery. 1891 onwards.ChD Law Reports, Chancery Division. 1876–1890. ChApp Chancery Appeals. 1865–1875.Cr App R Criminal Appeal Reports.

DCR (NSW) District Court Reports (NSW). DLR Dominion Law Reports.

E&B Ellis & Blackburn, QB 1852–1858. E&E Ellis & Ellis.EB&E Ellis, Blackburn & Ellis. ER English Reports.Ex Exchequer Reports. 1848–1856. Ex D Exchequer Division. 1875–1880.

F3d Federal Reporter, Third Series.FCR Federal Court Reports. 1984 onwards. FedAppx Federal Appendix.FLR Federal Law Reports. 1956 onwards. F Supp Federal Supplement.

H&C Hurlstone and Coltman’s Exchequer. 1862–1866. H&N Hurlstone and Norman’s Exchequer. 1856–1862. HLC House of Lords Cases (Clark). 1847–1866.

IAS Industrial Arbitration Service. ICR Industrial Court Reports.IIB Industrial Information Bulletin.IPR Intellectual Property Reports. 1982 onwards. IR Industrial Reports. 1982 onwards.IRLR Industrial Relations Law Review.

KB King’s Bench.KB English Law Reports, King’s Bench. 1901 onwards. Knox Knox’s Reports (New South Wales).

LCC (NSW) Land Appeal Court Cases (NSW). LGR (NSW) Local Government Reports (NSW). LGRA Local Government Reports of Australia. LJ Ch Law Journal Reports. Chancery.LJ Ex Law Journal Reports. Exchequer.


OUP ANZ SAMPLE

li Table of selected law reports series

LJKB Law Journal Reports. King’s Bench. LJPC Law Journal Reports. Privy Council. LJQB Law Journal Reports. Queen’s Bench.LLR Lloyd’s List Law Reports. 1919 onwards.LR (NSW) Law Reports. New South Wales. 1880–1900.LR (No) HL Law Reports. English and Irish Appeals (House of Lords). LR (NSW) Eq Law Reports. NSW Equity. 1880–1900.LR App Cas Law Reports. Appeal Cases. 1876–1890. LRCP Law Reports. Common Pleas. 1865–1875. LR Eq Law Reports. Equity. 1865–1875.LR Ex Law Reports. Exchequer. 1865–1875.LR Ex D Law Reports. Exchequer Div. 1876–1880.LRPC Law Reports. Privy Council, Appeal Cases. 1865–1875. LRQB Law Reports. Queen’s Bench. 1865–1876.LSJS Law Society Judgment Scheme (South Australia). LT Law Times. 1843 onwards.LT (NS) Law Times. New Series, from 1859. LT (OS) Law Times Reports (Old Series). LTJo Law Times Journal.LW Land and Valuation Court Reports (NSW).Legge Legge’s Supreme Court Cases, New South Wales.

1825–1862.Lloyd’s Rep Lloyd’s List Reports. 1951 onwards.

M&W Meeson and Welsby’s Exchequer. 1836–1847.Moo Moody.Moo KB Moore (King’s Bench).Moo PC Moore’s Privy Council Cases. 1836–1862.

NSWLR New South Wales Law Reports. 1825–1900. NSWLR New South Wales Law Reports. 1970 onwards. NTLR Northern Territory Law Reports. 1992 onwards.NTR Northern Territory Reports. 1978 onwards, in Australian

Law Reports. NZLR New Zealand Law Reports. 1883 onwards.

P Probate Division. 1891 onwards. PD Probate Division. 1875–1890.

QB Queen’s Bench Reports. 1841–1852.QB Law Reports. Queen’s Bench. 1891 onwards. QBD Law Reports. Queen’s Bench. 1876–1890. QGIG Queensland Government Industrial Gazette. QJPR Queensland Justice of the Peace Reports. QLR Queensland Law Reports. 1876–1878.


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FIRST PRINCIPLES OF BUSINESS LAWlii

QSCR Supreme Court Reports (Queensland). 1860–1881. QSR State Reports (Queensland). 1902–1957. QWN Queensland Weekly Notes. 1902 onwards.Qd R Queensland Reports. 1958 onwards.

RPC Reports of Patent Cases.

SAIR South Australian Industrial Reports.SALR South Australian Law Reports. 1865–1892, 1899–1920. SAPR South Australian Planning Reports.SASR South Australian State Reports. 1921 onwards. SCR (NSW) Supreme Court Reports, New South Wales. 1862–1876. SCR (NS) (NSW) Supreme Court Reports (New South Wales). SCR (Can) Supreme Court Reports (Canada).SJ Solicitors’ Journal. 1857 onwards.SR (NSW) New South Wales State Reports. 1901–1970.

TLR Times Law Reports. 1855–1952.Tas LR Tasmanian Law Reports. 1905–1940.Tas SR Tasmanian State Reports. 1941 onwards.

US United States Reports.

VLR Victorian Law Reports. 1875 onwards. VR Victorian Reports. 1957 onwards.

W&W Wyatt and Webb’s Victorian Reports. 1861–1863. WAIG Western Australia Industrial Gazette.WALR Western Australian Law Reports. 1898–1959. WAR Western Australian Reports. 1960 onwards. WCBD (WA) Workers’ Compensation Board Decisions (WA).WCR (NSW) Workers’ Compensation Reports (NSW). 1926 onwards. WLR Weekly Law Reports. 1953 onwards.WN Weekly Notes, England. 1866–1952.WN (NSW) Weekly Notes, New South Wales. 1884–1970.WW&A’B Wyatt, Webb and A’Beckett’s Victorian Reports.

1863–1869.WW & A’B (E) Wyatt, Webb and A’Beckett’s Victorian Reports (Equity).

1863–K.


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liii

GLOSSARY

This glossary contains some of the terms and phrases commonly encountered in the study of business law. To look up additional legal terms, use the online legal dictionary at http://dictionary.law.com.

ab initio. (Latin) From the beginning.accused. A person charged with a criminal offence.acquittal. A finding that an accused is not guilty of an offence they have been

charged with.action. A proceeding in a court.Act of Parliament. A law made by parliament; a statute.adversarial system. A legal system in which each party presents and argues its case

against the opposing party. The judge does not play an active role in conducting the case.

advocacy. The act of presenting arguments before a court on behalf of a party involved in litigation.

allege. To claim or state that something is true when it has not yet been proven.analogy. A form of reasoning in which a similarity between two or more events,

situations or things becomes the basis for inferring other similarities between them.appeal. An application to a higher court to review the decision of a lower court. appellant. A person who appeals to a higher court against the decision of a lower

court. appellate jurisdiction. The authority of a court to hear and decide an appeal case.authoritative court. A higher-ranking court whose previous decisions are binding

on a lower court in the court system.

bankruptcy. (1) The status of a person formally declared unable to pay their debts in full. (2) The process by which the property or assets of a bankrupt person are distributed among their creditors. Note: The term “bankruptcy” is applied only to natural persons; a company is said to “go into liquidation”.

barrister. A legal practitioner whose main function is to present cases on behalf of clients in law courts and tribunals.

Bill. A document containing the provisions of proposed legislation.bill of lading. A document issued by a shipping company recording particulars of a

contract for carriage of goods by sea.breach. The violation of a legal obligation. In contract law, a party is in breach of

contract if they fail to carry out a term of a contract properly. In tort, a party breaches their duty of care by failing to take reasonable care when a duty of care is owed.

capacity. The ability to acquire legally binding rights or duties.


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case. (1) A civil or criminal proceeding in a court of law. (2) The arguments made in support of a party’s claim or defence during legal proceedings.

case law. Law established by judicial decision making.cause of action. (1) The legal basis of a claim, action or case. (2) The circumstances

giving rise to a right to bring a legal action.charge. A formal accusation by the police against a person they suspect has

committed a crime. charter. A written instrument issued by a monarch or government granting rights

and privileges to a person or other body, such as a university or corporation.civil law. (1) Law based on Roman legal principles. (2) Law governing disputes

between private persons such as in contract or tort, as distinct from criminal law. (3) The laws of a particular nation or state.

CJ. Abbreviation of Chief Justice, used in law reports. Note also: Judge (J); Judges (JJ); and Judge of Appeal (JA).

committal hearing. A hearing before a magistrate to decide whether there is sufficient evidence for a jury to possibly convict a person accused of a criminal offence.

common law. (1) Law derived from custom and judicial decisions (as distinct from statutory law). (2) The law of England (as distinct from Roman civil law). (3) The law developed and applied by the common law courts in England (as distinct from the law developed by courts of chancery, known as equity).

company (or corporation). A legal entity created by registration under the Corporations Law. A company can acquire legal rights and duties in its own name, separately from its members.

compensation. A payment of money to compensate for loss or injury.condition. (1) An important contractual term. (2) A specified limitation or restriction.constitution. The basic laws according to which a state is organised and governed. contravention. A failure to comply with a rule.court. A forum for deciding disputes according to the law, presided over by a judge

or magistrate.court order. A command or direction given by a court or tribunal.creditor. A person to whom money or some other legal obligation is owed by a debtor. crime. Conduct that is prohibited and penalised by the state to protect community

interests.

damages. An amount of money paid because of a breach of a legal obligation.debt. Money or some other legal obligation owed to a creditor.debtor. A person who owes money or some other legal obligation to a creditor.deceit. (1) A deliberate misrepresentation. (2) The tort of making a false statement.deduction. A process of reaching a conclusion by following logical steps; in

particular, by first stating general propositions or rules and then applying these to specific facts.

defendant. A person against whom a civil case is brought by a plaintiff.delegated legislation. Law made not directly by a parliament but by some other

person or body under the authority of a statute. Examples are regulations and statutory rules made by government ministers.


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lv Glossary

discharge. (1) To bring an obligation to an end by performing the relevant duties. (2) To release a party from an obligation that would otherwise require performance.

disclaimer. A clause limiting or excluding a liability which might otherwise exist.dissenting judgment(s). A judgment in an appeal case in which one or more judges

disagree with the decision of the majority.distinguish. A process or technique used in legal reasoning to avoid following a

precedent by pointing out material differences between the facts of the two cases.doctrine. A set of related and consistent rules that give effect to a legal principle or policy,

for example, the doctrine of precedent, the doctrine of unconscionable dealing. document of title. A document establishing rights of ownership to property, for

example, a bill of lading.duty of care. A legal obligation to take care in relation to another person or

their property.

election. (1) A choice between alternatives, for example, different legal remedies. (2) Process for choosing members of a government.

equity. Rules of law favouring notions of fairness and justice as developed in the Court of Chancery in England.

equitable. In accordance with justice and fairness.estoppel. The loss of the right to rely on particular facts when the person who wishes

to do so has previously acted in a way that contradicts those facts.ethics. A code of conduct, based on notions of moral correctness, intended to guide

the behaviour of individuals or members of a group.excise. A tax on the production of goods or supply of services.exclusion clause (or exemption clause). A term in a contract excluding a liability

that would otherwise exist.execute. (1) To carry out; complete; make effective. (2) To sign a legal document as

a deed under seal.extinguish. To put an end to; discharge; render ineffective.extrinsic evidence. Evidence that assists the interpretation of a document but which

comes from a source outside the document itself (compare intrinsic evidence).

forum. A place in which a dispute, debate or proposal may be heard, for example, a law court.

fraud. Conduct intended to deceive another person.freedom of contract. The right of contracting parties to enter into binding agreements

on terms negotiated and agreed between themselves without outside control.frustration. The effect on a contract when supervening events make performance

impossible.

good faith. Honesty of purpose; openness.government gazette. A publication containing government notices, proclamations,

public service appointments, etc.Governor. The Queen’s representative as head of government of the Australian states.


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Governor-General. The Queen’s representative as head of the government of the Commonwealth of Australia.

guarantee. A legally binding promise to be liable for a specified thing.

headnote. A short summary of a case at the beginning of a law report.heads of agreement. A document drawn up during contractual negotiations

outlining the major points on which agreement has so far been reached and the matters on which the parties have agreed to negotiate in the future. Generally, heads of agreement are not intended to be contractually binding.

indemnity. An undertaking by one party to compensate another party for loss or damage suffered or expenses incurred with regard to a specific event.

induction. A process of reasoning by which a general conclusion or principle is drawn from experience or experimental evidence.

infringe. To act contrary to; contravene; violate.injunction. An order issued by a court to prevent a likely or threatened breach

of law.inquisitorial system. A legal system in which the judge plays an active role in the

investigation and conduct of a case (compare adversarial system).insolvency (bankruptcy). A company being unable to pay debts as and when they

fall due.insurance. A contract in terms of which the insurer promises to indemnify the

insured person against a specified risk of loss or harm.intrinsic evidence. Evidence from within a document that assists in the interpretation

of that document (compare extrinsic evidence).

J. Abbreviation in law reports of Judge or Justice. Note also: Judges (JJ); Judge of Appeal (JA); and Chief Justice (CJ).

jurisdiction. The authority of a court to hear certain matters, make orders or impose penalties.

jury. A body of persons chosen at random from the general public to assist in a trial by listening to the evidence presented and deciding questions of fact.

justice. (1) Title given to a judge of a Supreme Court, the Federal Court or the High Court of Australia. (2) Ensuring that each person receives what they are properly due under the law.

laissez-faire. (French) A policy of minimal government regulation.law report. A published record of a case decided by a court.lease. A contract in terms of which a lessor grants a lessee the right to use the lessor’s

property for a period of time.legislation. A law enacted by a legislature.limitation clause. A clause limiting the extent of a legal liability that might

otherwise exist.


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lvii Glossary

liquidation. Process whereby the assets of an insolvent company are sold by a court-appointed liquidator, after which the proceeds are distributed among the company’s creditors.

litigation. The process of taking a dispute to court.loan. The giving of a thing or money by a lender to a borrower for use or consumption

by the borrower, on the condition that the thing or an equivalent thing will be returned to the lender by the borrower.

majority judgment. The decision of the greater number of judges deciding an appeal case.

maxim. A general principle or truth expressed in a brief form of words (for example, “he who seeks equity must do equity”).

misrepresentation. A statement that is untrue.mistake. A belief in something that is untrue.mitigation of loss. Steps taken to minimise the extent of damage or loss that would

otherwise occur.mortgage. The designation of particular property as security for the repayment of a

loan, giving the mortgagee the eventual right to sell the property to recover the unpaid debt.

negligence. (1) Carelessness. (2) Failure to take reasonable care to avoid foreseeable harm to somebody to whom a duty of care is owed.

nuisance. Interference with another person’s enjoyment, comfort or convenience.null. Of no validity; invalid.

obiter dicta. (Latin) Words in a reported judgment which are not part of the essential judicial decision (compare ratio decidendi).

objective. Based on externally observable evidence, as opposed to internal (subjective) thoughts, beliefs or understandings.

obligation. A duty to give or do something.offence. Behaviour contrary to the criminal law.offeree. A person to whom an offer to contract is made.offeror. A person who makes an offer to contract.onus of proof. The burden or responsibility of leading evidence to establish

particular facts.original jurisdiction. The authority of a court to hear a case that has not previously

been heard by any other court.originating motion. A method of commencing legal proceedings.overrule. The process whereby a court with appellate jurisdiction decides that an

earlier decision is wrong and should not be followed.

parent company. A company that controls one or more subsidiary companies.parol evidence rule. A rule whereby evidence is not admitted to add to, vary or

contradict a written contract that appears on its face to be a complete record of the agreement.


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party. A person, group or organisation who takes part in a legal transaction or proceeding.

per curiam. (Latin) By the whole court.plaintiff. The person who brings a civil case against the defendant.precedent. A previous judicial decision which provides an authoritative rule to be

followed in later similar cases.privity of contract. The doctrine that excludes anyone from acquiring rights or

duties under a contract to which they are not a party.Privy Council. The highest court in the English court hierarchy.proclamation. A notice published in the Government Gazette, which states the date

on which an Act of Parliament will come into operation as law and which also notes the Governor-General’s or Governor’s consent to such legislation.

promisee. A person to whom a promise is made.promisor. A person who makes a promise.

ratio decidendi. (Latin) That part of a reported case which is essential to the judicial decision reached; the principle applied to decide a case.

rectification. The process of correcting a legal document that contains an error.regulation. Subsidiary rules made by a person or body under an authority given

by legislation.remedies. The means by which the courts provide relief to a plaintiff whose legal

rights have been infringed or are likely to be infringed.representation. A statement of fact that is not intended to be a legally binding promise.repudiate. To deny; to disavow; to treat as at an end.rescission. A remedy in terms of which a contract is made void as from its beginning

(ab initio).reserve powers. The sovereign powers of the head of Australian governments that

have not been given over to other organs of government.respondent. The person against whom a case is taken on appeal by an appellant.restitution. The relief granted to a person at whose expense another person has been

unjustly enriched.restitutio in integrum. (Latin) Restoration (putting back to) to a previous position.rule of law. The principle that no person or body is above the law, in particular, that

governments must observe the established law of the state.

sanction. A penalty or punishment imposed for a breach of the law.solicitor. A general legal practitioner.stare decisis. (Latin) The decision stands. This is the principle that underlies the

doctrine of precedent.statute. An enactment of a legislature, also called legislation.subjective. Based on an individual’s internal thoughts, beliefs or understandings, as

opposed to externally observable (objective) facts.subsidiary. A company which is under the control of a parent company.sue. To bring an action in civil law.supervening event. An event which changes the previously existing circumstances.


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lix Glossary

third party. A person who is not a party to a legal proceeding or transaction.title. A legal right to the ownership of property.tortfeasor. A person who is in breach of tort law.trespass. A tort concerning the wrongful interference with another’s person, goods

or land. trial. The initial hearing of a civil or criminal case (as distinct from appeal

proceedings). tribunal. Generally, a body that decides disputes.trust. An arrangement whereby one person holds or controls property for the benefit

of another person.

unconscionable. Against the dictates of good conscience; contrary to what is generally known as right and proper.

vis-à-vis. (French) In relation to.void. Without any legal effect; not legally valid or binding.voidable. Initially valid but subject to being made void, normally by means of an

order issued by a court or tribunal.

warranty. In contract law, a contractual term which is not of fundamental importance. More generally, a guarantee.

without prejudice. A phrase used in the course of negotiating or attempting to negotiate the settlement of a legal claim. Anything said or done “without prejudice” cannot later be used as evidence in legal proceedings.

wrong. An act in breach of civil or criminal law.


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CHAPTER 1

GOVERNMENT AND LAW IN AUSTRALIAIn this chapter: The concept, nature and purpose of law; law as a tool of social regulation; the relationship between law and justice; how the law is classified and organised; key legal terms and concepts; the origins of Australian law; the structure of the Commonwealth of Australia; organs of Australian government and their law-making powers (the Crown, legislatures, the executive, the courts).

1. INTRODUCTIONMost students of business law have not studied law before. For them, it is a new field with many strange concepts and a language all of its own. For students from another country who are studying business law in Australia, the difficulties are multiplied because the government and laws in their own country may be different from those found in Australia. It is important, therefore, to ensure that some foundational facts, ideas and terminologies are well explained and understood at the start.

This chapter aims to explain those essential things. The concept of law, and its nature and purpose are analysed and explained. The way in which laws are classified and organised is set out. The origins of Australian law are described. The relationship between government and law is explained. The organs of government in Australia are described and their law-making functions outlined. An understanding of these matters is essential to the chapters that follow.

2. THE CONCEPT OF LAW

Different kinds of lawEveryone in a modern society will have some idea of what law is and how it works. But not everybody will have thought about the true nature of law or how best to define it. We can begin to understand what law is by saying that law provides authoritative rules for how we are to behave. However, this description is not quite precise enough. This is because there are different kinds of “law”. Reference is often made to concepts such as “natural laws”, “moral laws”, “laws of God”, “custom” and “national law”. What is the difference between these various kinds of law? The answer lies in how they are identified and how they are enforced.


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• Natural laws are those rules of conduct that accord with our realised experiences of the physical world. We obey these laws because, in our experience, that is how things work. An example is the natural responsibility of parents to look after their offspring. This law of nature can be widely disregarded only at the peril of the species.

• Moral and religious laws are rules of conduct derived from belief systems, sometimes recorded in authoritative texts, sometimes passed on by oral tradition. Such rules are obeyed as a matter of individual conscience or as part of a religious community. An example would be the dietary rules prescribed by particular religions.

• Custom consists of rules of conduct that have been established by long usage and are obeyed because of peer pressure, or because they are convenient. An example would be the rituals, music and clothing styles commonly associated with marriage ceremonies. Obeying such rules provides continuity with tradition and a sense of shared identity.

• National law is made up of those rules of conduct that the government of a country recognises and enforces as law. The key concept here is “rules recognised and enforced by the authority of the state”. If the government of a country lays down a rule of conduct and enforces it, then that rule becomes part of the national law. There may be some overlap between the rules of national law and the rules of other kinds of law. Many rules of conduct originate as customary, moral or natural laws, but become part of the national law when a government decides to adopt and enforce those same rules. For example, most religions prohibit the killing of one human being by another, and governments in most countries have adopted and enforce this same rule.

Each country has its own national law. As students of business law, we will be primarily concerned with the rules of national law and, unless otherwise specified, the word “law” in what follows is used to refer to the rules of national law that have been established and are enforced in Australia.

3. LAW AS A REGULATOR OF BEHAVIOUR

How law regulates conductRules of law regulate conduct in different ways. By prohibiting, punishing, permitting or rewarding specified conduct, and by assisting individuals to enforce their legal rights without resorting to force, the law modifies the behaviour of individuals in society in ways that benefit the greater community. We can think of this as the regulatory function of law.

• The law generally restricts the use of force by individuals and forbids unauthorised violence. This is the foundation of peace and good order in society.


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3CHAPTER 1 | Government and law in Australia

• Some laws prohibit and punish particular kinds of undesirable behaviour. For example, it is a rule of law that one person should not wrongfully take another person’s property. This is called theft or stealing. It is prohibited, and people who are caught stealing are punished by the state.

• Other laws permit or reward particular behaviour that the government thinks is desirable. For example, individuals are allowed by law to acquire private ownership of houses. They may be further encouraged to do so by laws providing financial assistance to homebuyers in the form of subsidies.

• The law also provides for the creation of rights and duties that can be enforced by an individual in court. The law provides appropriate remedies when rights are interfered with or when duties are not discharged. The creation of legally enforceable rights and duties allows individuals to plan for the future with reasonable certainty.

4. “LAW” AND “JUSTICE”

The relationship between law and justiceThe relationship between law and justice is an important one, but it is not simple. It is a relationship that has to take account of practicalities and realities that sometimes may be in conflict.

Justice as the objective of law

It has often been suggested that the ideal purpose of law is to achieve outcomes that are considered good and fair by the community. This is what the Roman Emperor Justinian meant when he said: “Law is the art of the good and the just”. It is the objective of achieving justice that morally underpins using the power of the state to enforce legal rules. And, on a practical level, a community will more willingly support and conform to laws that are considered just.

Of course, governments do not always make and enforce laws for good and just purposes. Governments can use their power to enforce unfair rules, for example, discriminatory laws, which favour one racial group or a particular gender. However, the fact that unjust laws exist from time to time does not diminish the validity of the idea that law ought to aim at achieving good and fair outcomes.

Balancing justice and predictability

One important aspect of modern law is that it can be discovered with a degree of clarity and certainty that makes its application predictable. This is very useful. If we can find out the rules that govern particular kinds of behaviour, then we can choose to act in accordance with those rules and avoid unwanted consequences. This means that law is most useful as a regulator of conduct if the rules are clear and their application predictable. Sometimes, however, situations arise where a rule


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of law that has worked well enough in the past does not seem to provide a fair or just outcome when additional or changed circumstances are taken into account. When this happens, the requirements of justice and predictability may conflict and the judges who apply the law may have to make difficult choices. Sometimes justice is given preference; in other cases certainty and predictability are seen as more important. The old adage “hard cases make bad law” is a reminder that treating too many cases as exceptional in the pursuit of justice can damage the predictability and certainty of the legal system.

5. THE CLASSIFICATION AND ORGANISATION OF LAW

Making law manageableIn a modern country, there are many thousands of legal rules. To make those rules manageable, orderly and locatable, they are classified, organised and collected in logical ways. Broadly speaking, each rule of law is classified as belonging to a particular category (or area) of law. These categories of law are named to indicate the nature of the rules grouped within them. The categories of law are arranged systematically, in accordance with widely accepted concepts, to provide an overall structure.

Categories of lawThere are many established categories (or areas) of law. Some of the more traditional ones may be familiar, for example, criminal law and contract law. Others may be less familiar, such as tort law or administrative law. The table below sets out some of the traditional categories of law and briefly describes the rules of law that are found within them. The basic categories will help you to put individual topics you study in business law into context and will help you to find particular rules of law when you need them.

6. THE ANATOMY OF LAW

Terms and phrases that describe the lawIn studying law, you will find references not just to “the law” as a whole and to “categories (or areas) of law”, but also to things such as “legal concepts”, “legal principles”, “legal rules” and “legal meanings”. These terms help to describe how law is structured and organised. Knowing what these terms mean will help you to understand legal materials.

• Categories (or areas) of law are a convenient way of grouping together particular laws which are considered to be related, usually by having regard to the type of situation or the type of conduct to which such laws refer. Examples are contract law, property law, tort law and business law.


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• Legal concepts are the ideas that determine the scope and nature of a particular category of law. For example, in contract law, there is the broad concept of “contract formation”, under which fall the more precise concepts of “agreement”, “intention to be bound” and “consideration”. Identifying and organising key concepts will enable you to build a mental framework of a specific area of law.

• Legal principles are the broad precepts that recognise and give effect to a particular point of view, value or policy. For example, in Australian law, the concept of contract formation is based in part on the principle that a contract is only made if the parties intend to be legally bound by their agreement. It is a further principle that an intention to be legally bound is ascertained objectively rather than subjectively.

Category of law Description

Criminal law The prohibition and punishment by the state of conduct considered harmful to the general community.

Civil law The creation and enforcement of private legal rights and duties between individuals. This category of law is very large, encompassing some of the other categories, such as contract law, tort law and property law.

Tort law Liability for harm wrongfully caused by one person to another person or to their property.

Contract law Private agreements that give rise to legally enforceable rights and duties.

Agency The use of a representative to acquire or discharge legal rights or duties.

Consumer protection law

Legal protections for consumers in their dealings with suppliers of goods or services.

Corporations law The creation, organisation and administration of companies.

Property law The acquisition and transfer of private rights in goods and land.

Administrative law Rules governing the processes of official decision making.

Constitutional law The organisation, powers and processes of government.

International law Agreements (treaties) between sovereign states or international custom.

National law Law as applied within the borders of a particular state.

Jurisprudence The science or philosophy of law.

Business law Rules that have a particular relevance to business activities, taken selectively from the more traditional categories of law, such as contract law, agency, tort law, banking law, insurance law, employment law, corporations law and tax law.


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• Legal rules provide the detailed mechanisms by which legal principles are given effect. Rules specify particular requirements or provide what should happen in specific situations. For example, there are many rules in contract law that specify the different ways in which agreement may be reached or what should happen if performance of an agreement becomes impossible.

• Legal meanings refer to the particular meaning or significance that words or phrases have in law. For example, in contract law, the words “party”, “consideration” and “frustration” have specific legal meanings that differ from their ordinary meanings.

• Legal authorities are the sources of particular legal principles, rules or meanings. For example, a legal rule may originate in a particular decision of a court or in an Act of Parliament.

7. THE DEVELOPMENT OF WESTERN EUROPEAN LEGAL SYSTEMS

The similarities in the laws of different countriesIt has been stated earlier in this chapter that the law of a particular country (the national law of that country) consists of the rules of conduct that are recognised and enforced by the government of that country. Why, then, are the laws of so many countries similar to each other? The answer is that the development of a complex and sophisticated system of legal rules is a slow and difficult task. It has not happened independently in every country. In fact, in Western Europe, the development of such legal systems has only happened twice, first in the Roman Empire and later in England. The first of these legal systems is known as Roman law (ius civilis Romanus). The second is known as English law (sometimes called common law). If you examine the laws of the states that make up the modern political world, you will find that most of them have either been derived from, or influenced to a significant extent by, one of these two legal systems (sometimes both). For that reason, a short explanation of the development and spread of Roman law and English law is necessary.

Roman lawRoman law began its development in 753 BC when Rome was established as a small city state. Over the next 1,200 years, as Rome expanded into a large and commercially active empire, its laws developed and grew until they became the most sophisticated or complex system of law the world had yet seen. In 533 AD, the Emperor Justinian decided that this vast body of law should be reorganised and collected in a Digest. This Digest, together with some other collections of law, are collectively known as the Corpus Iuris Civilis.

Not long before the completion of the Corpus Iuris Civilis, the western part of the Roman Empire was invaded by tribes from the north. In 476 AD, the Western


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Empire collapsed and Europe entered a period known as the Dark Ages. Roman law was largely forgotten for hundreds of years. Then, in the 12th century AD, copies of the Corpus Iuris Civilis were discovered in libraries in Italy. Scholars took a renewed interest in Roman law and knowledge of it quickly spread. As a result, Roman law became influential in the legal developments that took place in the emerging states of modern Europe. In particular, the Corpus Iuris Civilis served as the foundation for several new European codes of law: the French Code Napoleon of 1804, the Austrian code of 1811, the German code of 1889, and the Swiss codes of 1889 and 1907. In later years, these codes were used as models by countries outside of Europe. For example, the Code Napoleon was taken as the basis for the law of the French parts of Canada, the state of Louisiana in the USA and many countries in South America. The German code was the model for the law of Hungary, Brazil, Greece and Japan. Turkey has adopted the Swiss code. The Republic of South Africa, Sri Lanka, Zimbabwe and Scotland also have legal systems based on Roman law.

English lawEnglish law also has a long history, going back to the 12th century. Instead of adopting Roman law as other European countries had done, England chose to develop its own local laws and customs. Over the years, English common law (law that was “common” to all of England) became a complex system of law. England also became a powerful nation with a large empire and worldwide trade relations. When England colonised various parts of the world, English law was introduced as the law of those colonies. These legal foundations have, in the main, been retained since the colonies have become independent. This is what happened in Australia. For the same reasons, common law is also the foundational law of most of the states that make up the United States of America, the English speaking parts of Canada and many countries in Africa and Asia.

Because modern Australian law derives much of its content from English law, Australian law is similar to that of other countries that share the same heritage. Australian law is less similar to the law of countries that have received or been influenced by Roman or other legal systems. As with most common law countries, there are two main sources of law in Australia: cases (legal disputes) decided by courts and legislative Acts created by parliaments.

The extent to which either English or Roman law has been received, and the extent to which that law has been modified since its reception, vary markedly between countries. A good example is Malaysia, whose legal system contains substantial elements inherited from English law, but whose sources of law also include legislation enacted in Malaysia, local laws deriving from custom and Muslim law (the last-mentioned being applied only to Muslims in Syariah courts).

In Australia, the received English law, now considerably adapted and expanded since independence, exists alongside indigenous custom and law. Indigenous Australians, who occupied the land for tens of thousands of years before colonisation, lived in defined groups, each with their own laws and customs. These laws were not written


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down but were passed on orally to each generation and have survived to the present day. Indigenous law is particularly important in relation to family and community issues and land rights; less so in relation to commercial matters.

8. THE ESTABLISHMENT OF THE AUSTRALIAN COMMONWEALTH, STATES AND TERRITORIES

European settlement in AustraliaAustralia was inhabited by its aboriginal peoples for thousands of years before European settlement. European settlement of Australia began in 1788 when the British established the colony of New South Wales. Over the next 50 years or so, other colonies were established: Queensland, Victoria, Tasmania, Western Australia and South Australia.

Government of the Australian coloniesThough Britain initially ruled its Australian colonies directly, during the 1800s the colonies were allowed by Britain to become self-governing with general powers to administer, enforce and make new law. Specifically, each colony was given the general power “to make laws for the peace, welfare and good government of the colony”, but with some important restrictions: they could not make law that was inconsistent with laws made by the British parliament, and they could not generally make laws to operate outside their own borders.

Establishment of the Commonwealth of AustraliaThe Commonwealth of Australia was formed in 1901 after lengthy negotiation during the 1890s between the Australian colonies and Britain. The Commonwealth was established by the Commonwealth of Australia Constitution Act 1900, an Act of the British parliament. This Act contains both the detailed provisions of the constitution of the Commonwealth and the “covering clauses” that authorise the new arrangements for government in Australia.

The Australian states and territoriesAs part of the process of forming the Commonwealth of Australia, the colonies became “states”. The states are New South Wales (NSW), Queensland (Qld), South Australia (SA), Tasmania (Tas), Victoria (Vic) and Western Australia (WA). The Commonwealth of Australia is a confederation of states rather than a unitary state. Notwithstanding the formation of the Commonwealth, each new state retained the power to govern within its own borders, with responsibility for a wide range of matters. But they also agreed to give specified powers to a new federal Australian government, which would have responsibility for matters of national importance throughout the whole of the Commonwealth.


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In addition to the six states, there are 10 “territories” in the Commonwealth of Australia. The mainland territories are the Northern Territory and the Australian Capital Territory. The external territories are: Ashmore and Cartier Islands; Christmas Island; the Cocos (Keeling) Islands; the Coral Sea Islands; Jervis Bay Territory; Heard Island and McDonald Island; Norfolk Island; and the Australian Antarctic Territory.

9. THE STRUCTURE OF GOVERNMENT IN AUSTRALIA

Constitutions of the Commonwealth and the statesA “constitution” consists of the rules by which a state is formed and governed. The Commonwealth of Australia has its own constitution, and so does each Australian state. Australian constitutions are written documents, formally enacted as law. For historical reasons, the constitutional arrangements in Australia closely resemble the British model of government, from where they were directly received. This is often called the “Westminster” system of government, a name that refers to the site of the British parliament.

The constitution of the Commonwealth of Australia is contained in the British Commonwealth of Australia Constitution Act 1900. To change the provisions of this constitution requires obtaining the consent of the Australian voters in a national referendum.

The state governments have each enacted their own constitutions, acting in terms of a power granted to them by the United Kingdom parliament. An example is the Constitution Act 1975 (Vic). The relevant government can change state constitutions without the need for a special referendum.

AUSTRALIA

WesternAustralia

Queensland

New SouthWales

AustralianCapital

Territory

NorfolkIsland

Tasmania

Victoria

NorthernTerritory

SouthAustralia


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The Australian Commonwealth and state constitutions do not contain all the necessary rules of constitutional law and practice — there are many other important laws that regulate the more detailed aspects of government, including some unwritten rules and practices (conventions).

Constitutional arrangement of the territoriesThree of the Australian territories have been given the power of self-government by means of laws enacted by the Commonwealth (federal) government. The self-governing territories are the Australian Capital Territory (ACT), the Northern Territory (NT) and Norfolk Island (NI). Those territories that are not self-governing are governed directly by the Commonwealth government.

Constitutional monarchy in AustraliaThe head of the Commonwealth of Australia, and of the various states, is not democratically elected but is a hereditary monarch. At present the monarch is Queen Elizabeth II. Australia’s governments can be described as “constitutional monarchies”, a term which indicates that although a hereditary monarch is the head of state, the state is governed according to the rules and structures established by the constitution.

The self-governing territories do not have a constitutional monarch: they are headed by an administrator appointed by the Commonwealth government. The territories that are not self-governing are governed directly by the Commonwealth government.

Representative democracy in AustraliaAustralian governments are generally described as “representative democracies”. This means the governments are elected periodically, by winning the support of a majority of voters at an election. Between elections, the elected government “represents” the voters, making decisions and implementing policy on their behalf.

Local governmentsIn addition to the Commonwealth, state and territory governments, many regions of Australia have what are termed “local governments”. Local governments are responsible for a particular region or district within a state or territory, and exist in the form of municipal councils, regional councils or district councils.

10. THE ORGANS AND POWERS OF AUSTRALIAN GOVERNMENTS

The law-related powers and responsibilities of governmentsAustralian law does not remain unchanged for long; it constantly grows and changes in response to ever-changing circumstances. In Australia, laws are declared, created


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