1
Q
Carlill v Carbolic Smoke Ball Co.
A
- Carbolic placed advertisement offering to pay £100 to anyone contracting influenza after using smoke ball.
- Carlill used smoke ball as per instructions and then contracted influenza. She sued for £100.
- In defence Carbolic said it did not intend to enter into a binding agreement. Just puffery.
She accepted offer by buying the product and using it in accordanace to directions.
2
Q
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Limited
A
- UK legislation prohibited the sale of listed poisons except under supervision of a registered pharmacist.
- Boots was a pharmaceutical retailer. Opened a self-service shop. Customers would take products off the shelf and take it to check out.
- Near check out was a registered pharmacist who was authorised to stop sale of any particular item.
- Boots charged with offence against legislation because sale occurred when the customer picked product from the shelf.
Court said no, the price on the shelf is an invitation to treat.Taking the goods to the till is you making an offer and them ringing it up is the business accepting.
3
Q
Stevenson v McClean
A
- Saturday – M to S – “I will sell iron to you at 40 s per ton, offer open until Monday”.
- Monday Morning – S to M – “Please wire whether you would accept 40 s for delivery over 2 months, or if not, longest time you could give”.
- Monday 1:25pm – M to S – “Already sold iron to someone else.”
- Monday 1:34pm – S to M – “I accept offer.”
Note: 1:34 message sent to M before S received 1:25 message from M.
First is an offer.
Second is not acceptance as they are adding additional conditions. It could be a counteroffer but could also be seeking clarification.
An offer and a counter-offer both have to be clear and unambiguous. As the second is not clear and unambiguous it could be argued that it is therefore a request for information. This is what court concluded. Therefore, Stevenson accepted McLean’s offer.
4
Q
Patterson v Dolman
A
- On 11th May Dolman sends two identical letters, one to Patterson, the other to a third party.
- The letters offer to sell a particular stack of hay.
- On 14th May third party sends letter accepting offer.
- On 15th May Patterson sends letter accepting offer.
- On 16th of May both letters of acceptance received by the Dolman.
- Dolman sells to third party.
- Patterson sues for breach of contract.
Postal rule wont invalidate any acceptances… Even though both of the acceptances were posted on different days the postal rule wont invalidate either…
5
Q
Frampton v McCully
A
- Frampton a Solicitor and trustee of property held in trust for Moir.
- McCully gave a written offer for the purchase of the property to Moir.
- Moir accepted the offer subject to Framptons approval.
- Frampton’s approval was never given.
- McCully sued for breach of contract.
Contractual problem Moir had was that he accepted “subject to” which means that there was a condition to acceptance and so there was no acceptance…
6
Q
Keller v Holderman
A
- K gave H a cheque for $300 for an old watch.
- Watch was worth $15.
- Bank declined to honour cheque (No funds)
- H sued claiming breach of contract.
Report of the case says that there was no intention. $15 watch and paying $300 – something is up there. The surrounding circumstances of the deal can have a lot to do with telling what kind of deal it was and how serious it was – whether it was meant to be legally binding.
7
Q
Jones v Padavantton
A
- P and J mother and daughter.
- Daughter living in USA she had a good job that she enjoyed.
- Mother offers to maintain Daughter if she will return to live in UK and study for admission to the bar.
- Daughter agrees to give up her job in USA and go to UK and commences studies.
- Agreement varies and Mother provides house.
- Dispute between Mother and Daughter something about a boy.
- Mother seeks to have daughter evicted.
Argument could be that it is a domestic dispute/arrangement and so is not legally binding. It is not a normal business deal as it would not happen in a business. The daughter needed to look for evidence that there was the intention for it to be binding, to get around the domestic presumption.
Court concluded that the nature of the agreement did not have a commercial nature and it was not intended to be binding.
8
Q
Simpkin v Pays
A
- Grandmother (Pays), granddaughter and close family friend (Simpkins) lived in the same house.
- They regularly entered a competition in a local newspaper.
- Entries were sent in under the name of Pays.
- All three contributed to the costs of postage and other expenses related to entering the competition.
- It was clearly understood that if they should win, the winnings would be divided evenly between the three of them.
- Eventually they won a sum of money, but pays refused to share.
- Simpkins sued.
Presumption is that it is domestic but the agreement itself have a Business nature as it sounds like a partnership. With two or more people entering into a little enterprise with a view to profit (sharing assets and expenses).
9
Q
Paulger v Butland Industries Ltd
A
- Paulger a director of Dingwall & Paulger Limited (DPL).
- DPL in financial difficulties.
- Sale of DPL business expected to realise enough to pay all DPL creditors
- Paulger writes to creditors asking them wait until sale complete and funds available. Debts would be paid within 90 days.
- “the writer personally guarantees that all due payments will be made”.
- Before 90 day period ends DPL goes into receivership. Total owed $7,000,000
- Butland (unsecured creditor of DPL) sues Paulger.
Was in a business situation with a clear intention to be bound.
Paulger gave evidence that when he wrote that he never intended it to mean that he would be personally liable. He thought that the scheme would bring up enough money to pay them all.
The court accepted that evidence and said that he never intended it to be a guarantee. But it isnt a subjective assessment and therefore he is liable as he gave the impression to the rest of the world. Opened him up to all the claims for his personal stuff.
10
Q
Thomas v Thomas
A
- Mr Thomas dies. Matrimonial home is in his name.
- Before he died he verbally expressed desire that Mrs Thomas should be allowed to live in the house.
- Executors agreed to Mrs Thomas remaining in the house provided she paid the nominal sum of £1 per annum.
- Mrs Thomas agreed but before a deed could be drawn up the executors changed their minds and refused to go through with the arrangement.
- Mrs Thomas sued.
Executors have a duty to the beneficiary of the estate and so if they went through with this then the beneficiaries would be able to sue them for losses to the estate.
Executors had promised Mrs Thomas the right to continue to live in the property and she had promised to pay £1 per annum and executors decided that this was not enough but the
11
Q
Eastwood v Kenyon
A
- Sarah (a child) sole heiress to father’s estate.
- Eastwood was her Guardian. He spent his own money for Sarah’s education and for maintenance of her estate.
- When Sarah became of age, she promised to repay Eastwood.
- Sarah gets engaged to Kenyon.
- Before marriage Kenyon promises Eastwood that he will repay.
- After marriage, estate vests in Kenyon but he refuses to repay Eastwood.
- Eastwood sues for breach of contract.
Eastwood was trying to give something that he had already given in the past. He was gifting. It wasn’t dependent on Sarah doing anything and she didn’t give him anything in return. With no consideration it is a gift. Later on when Kenyon and her are saying they will pay there is nothing left for Eastwood to give.
Exception is where the past act was done at the promisors request. There is no evidence that Sarah had. There must be evidence that the parties at the time had understood that the act would be remunerated. Payment or conferment was legally enforceable.
12
Q
Steadman v Steadman
A
- The parties (husband and wife) separated.
- They came to agreement on the settlement of matrimonial property and issues of maintenance.
- The terms were:
o Wife would surrender her interest in the matrimonial home
o Wife would not pursue claims for appears of maintenance
o Husband would pay to wife £100 in lieu of maintenance
o Husband would pay £1,500 for wife’s share in equity in the matrimonial home. - Husband paid £100.
- Husbands solicitor prepared a deed of transfer for the wife’s share of matrimonial home for her to sign.
- Wife refused to sign
- Husband sued saying his actions were part performance.
By paying £100 the husband is doing his part – he is part performing the contract. He already owed her the maintenance payments so was he paying this because he was contractually bound or because he owed it?
13
Q
T.A. Dellaca Ltd v PDL Industries Ltd
A
- PDL owned land in Westport with an industrial building on it.
- The property was leased to the local council. The term of the lease was due to expire in 15 months’ time.
- The council in turn subleased the property to small businesses. A large part of the building was vacant. – To encourage the growth of businesses in Westport.
- DL operated a business in Westport, but was looking for bigger premises. The vacant space in the building was ideal, although it would be necessary to spend a large amount of money on the premises before they could use it.
- DL was reluctant to take a sublease from the council and spend money on the premises when the lease only had 15 months to go.
- DL contacted PDL to discuss the possible purchase of the property.
- After some negotiations the parties entered into an oral agreement for the sale and purchase of the property for $55,000.
DL then: - Took a sublease of the vacant premises from the council
- Commenced arrangements to insure the property with information provided by PDL.
- Obtained from PDL the name of their solicitor for the purposes of progressing the sale.
- Spent $10,000 on improvements to the premises.
- Surrendered the lease for their existing premises.
None of what DL did was to do with the contract and so were not an act of part performance and so there was no step in the performance of contractual obligation and so they lose the case on that point.
All of the Acts of reliance would have been relevant to the 3rd part of the test had it got that far. Doctrine gets into equity and that is to do with 3rd step.
14
Q
Tweede v Atkinson
A
- Tweedle was about to marry Guy’s daughter
- Guy and Tweedle’s father agreed that each would pay £100 to Tweedle to give the couple a start.
- It was also agreed that Tweedle could sue for these sums.
- Before he paid his £100 Guy died.
- Tweedle sued Atkinson (Guy’s executor)
Tweedle is suing Guy’s estate. Tweedle Senior could sue Guy’s estate as he is a party for a breach of contract for £100. Tweedle Senior has lost nothing from the contract so he could sue but his damages would be nothing. The fact that the two parties, Tweedle Senior and Guy agreed that Tweedle Junior could sue was irrelevant as he was not a party to the contract.
15
Q
Dunlop Pneumatic Tyre Co. Ltd v Selfridge & Co. Ltd
A
- Dunlop had contract for sale of tyres with Dew & Co.
- Terms of contract included:
o Dew would not sell tyres at less than list price unless to trade customers.
o If Dew sold to trade customers, they would get trade customers agreement not to sell at less than list price. - Selfridge bought tyres from Dew and sold at less than list price.
- Dunlop sued Selfridge
Selfridge is a third party to Dunlop and Dew’s contract. Dunlop was assuming that they would enforce the contract against Selfridge but it was the contract between Dew and Selfridge that had been breached.
Dunlop could sue Dew on the basis of their contract but Dew had complied with his contractual obligation so there would be nothing to sue for.
16
Q
Morrow & Benjamin Ltd v Whittington
A
- MB a firm of stockbrokers
- In 1985 W was 15 and through family connections MB knew his age.
- In 1985 W began buying and selling shares through MB.
- In 1986 and 1987 MB permitted W to purchase shares on credit.
- In 1986 MB asked W for assurance of his credit worthiness. W told MB he had $10,000. – MB accepted this.
- Apart from that one enquiry there were no other credit checks done by MB.
- At the time of the 1987 crash his account was in debt in the sum of $35,000.
- MB demanded payment of the amount owed but W did not pay.
- MB realised shares bought on W’s account. This reduced the debt to $30,250.55.
- MB sued W.
It’s the time that you make the contract that is the key time. All W has to say is that he was 15 at the time of the contract and MB has to prove that the contract was fair and reasonable.
Court said there was nothing unfair about the way the contract was entered into.
At the end of the day they knew that W was relying on the resale of shares to pay for his purchases and because of the chaotic nature they ignored it and still let W continue and so the contract was not reasonable.
Because they would not prove that the contract was fair and reasonable the contract was not enforceable and so MB has to wear the debt.
17
Q
Scott v Wise
A
- Scott had 3 legitimate daughters and 1 illegitimate daughter
- In May 1978 Scott entered into a series of contracts whereby his farm was sold at Government valuation to a trust for the benefit of his 3 legitimate daughters and their families with an interest free mortgage repayable on demand and a lease back arrangement and an option to a grandson to purchase the farm at a later stage. Etc. etc.
- The details of the transactions were all worked out by Scott’s solicitor and accountant.
- In September 1978 was diagnosed as suffering from senile dementia.
- Scott by his guardian ad Litem sought a declaration that the transactions be set aside because Scott did not at the time have contractual capacity due to unsoundness of mind.
First made a will that gave part of the farm to his illegitimate daughter, but then made another new will not including her. The legitimate daughters would benefit from the farm being put into trust as it would mean that he could not change his mind and change his will again to include the other daughter.
Medical diagnosis was that he had it while he was signing all of the contracts earlier that year in May. Did he understand what he was doing when he entered into the contract? Court accepted that he didn’t understand all of the details but that is what lawyers and accountants are for. He just had to have a general understanding of the nature and the effect that was going on. Court found that as a fact he did have a general understanding of the contracts. It was also found that the 2nd part, it was quite clear that he was suffering from the disease at the time of the contracts but even if you were living quite close to him it wouldn’t have been noticeable.
18
Q
Dandoroff v Rogozinoff
A
- D & R were formerly in business together. D bought R out of the business.
- R and another person wanted D to sign an agreement in which D was to pay $50,000 by a specified date or $120,000 if the payment was late.
- In return D was to get 100% ownership of the business (which he already had).
- D did not want to sign, so he was held from behind, and the agreement pushed in front of him to sign.
- D signed and then left. A short time later he collapsed in the street and was taken to hospital. Diagnosis, severe psychological stress.
Contractual problem – past consideration – What was R meant to give? His share in the business but he had already given that. D had already bought him out but he was wanting to get bought out a second time.
‘Held from behind’ was clearly intended to frighten him and was assault. They had not actually hit him but it was enough to give him psychological stress.
Held that D was held under duress to sign the contract and then passed onto the police.
19
Q
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd
A
- Contract for Construction of a Ship.
- Price fixed it US$30,950,000 payable in 5 instalments.
- After first instalment paid, US$ devalued by 10%.
- HC claimed 10% increase for next four instalments.
- NOS had a charter for the ship which was very lucrative but it relied on the ship being ready on time.
- HC threatened to Halt construction if the additional 10% not paid.
- NOS despite its legal rights suggested arbitration but this was rejected by HC.
- NOS reluctantly agreed to the increase rather than lose the charter.
- 9 months after the ship was delivered NOS commenced proceedings to recover the additional 10%.
20
Q
Shivas v Bank of New Zealand
A
- Mrs S was one of the trustees of a family trust settles by Mr S.
- Mr S’s company had loan finance with BNZ. As the amount of loan finance increased, BNZ insisted on further security, failing which they would call up the loans.
- After some negotiations Mrs S agreed to enter into a guarantee and to grant a mortgage over the family home (owned by the trust)
- Subsequently Mr S’s company defaulted. BNZ called up on the guarantee.
- Mrs S sued claiming inter alia duress.
Use the test to see (both tests):
Was there pressure amounting to coercion (by the bank but can be third persons if the other party knows that there is a third person and are using them to pressure).
There is no evidence at the time that she protested to the bank.
No for 2 and 3 and 4.
She may have felt that she had no other choice. You can argue it either way because we haven’t been given the details.
Step 2: Bank is placing pressure on Mrs S by threatening not to give husbands company a loan if she doesn’t sign guarantee. Can this be seen as illegitimate pressure? Bank not doing anything illegal and so when you are legally entitled to be doing something you can’t be seen as being illegitimate.
She doesn’t succeed in step 2.
21
Q
Atlas Express Limited v Kalco Ltd
A
- K small business importing basketware.
- K entered into contract with AEL for delivery of products to various retailers at rate of £1-10s per carton.
- AEL later suggested minimum charge per load of £440. K refused.
- AEL truck arrived to get goods for delivery. Driver had instructions that either K agreed to minimum charge or driver was to refuse to take goods.
- If K chose not to agree, would be in breach of Contracts with retailers, and could lose business. Therefore agreed.
- But K refused to pay the minimum charge claiming duress.
1. Yes k did protest
2. No didn’t have time to do anything as they were faced with an immediate ultimatum.
3. No, no time
4. Yes refused to pay.
So Yes to being coerced: Pressure amounting to coercion.
Was the pressure illegitimate. Yes, because Atlas were threatening to breach contract by not delivering goods. Yes… to duress.
22
Q
Re Craig
A
- C was 84 when his wife died.
- Within 2 months he employed M as his secretary and companion.
- Craig relied on M for advice on financial matters and to keep affairs in order. M became his confidant.
- Over the period of the next 6 years until his death he gave gifts totalling $28,000 to M.
- After C’s death the beneficiaries under his will sued M to recover the gifts.
She was employed to do certain types of work and a gift of that magnitude was not in the normal course of action.
23
Q
Contractors Bonding Ltd v Snee
A
- Snee was the mother of Savage.
- Savage owned shares in a bonded travel agency, Marco Polo Travel Ltd.
- Marco Polo had a bond to the Travel Agents association of New Zealand Inc.
- CBL provided the $50,000 bond for Marco Polo, secured by caveats registered on the homes of the shareholders of Marco Polo.
- In 1986 the shareholders approached CBL to negotiate a refinancing arrangement. It was agreed that CBL would release the caveats in return for a guarantee by Snee with a mortgage over her home as security.
- CBL sent the form of Guarantee to Marco Polo for execution by Marco Polo and Snee.
- Savage took guarantee to Snee for signature. She signed.
- At the time Snee was suffering from the effects of alcohol and drug abuse.
- The following month CBL forwarded a mortgage to Marco Polo’s solicitors for Snee to sign.
- Savage took the mortgage to Snee. Snee went to see her solicitor with Savage on two occasions. The solicitor advised her not to sign. But savages influence prevailed and she signed.
- 2 years later Marco Polo failed
- CBL had to pay on the bond and then sought to recover under the guarantee and the mortgage.
- Snee issued proceedings to prevent the sale of her home alleging undue influence.
Can we prove the first element? Snee was influenced by Savage, not the other party in the contract. Need to establish whether CBL had anything to do with (even just knowing that Savage would) the influence from Savage.
Snee failed at this point as there was no evidence to a connection.
Influence was exercised as she appears to have been resistant the obvious pressure that Savage had her under.
Was it undue? This is almost a value judgement. She was getting nothing from the situation, she was really just getting negative effects from signing. It was only positives for Savage. So is undue.
Would the transaction have happened if Savage hadn’t exercised his influence, no because there was nothing in it for Snee. Snee had to be convinced to sign.
24
Q
Commercial Bank of Australia v Amado and Anor
A
- The Amadios were elderly migrants (living in Australia) from Italy who were unfamiliar with written English.
- Their son controlled a company that banked with CBA.
- The company had an overdraft, which was increasing.
- The bank had been selectively dishonouring cheques of the company to make it look as if the company was solvent. – Fraud.
- The bank was prepared to continue with the overdraft if it was secured and provided it was cleared within a short time.
- The son asked the Amadios to execute a guarantee secured by a mortgage over their home.
- The son told them that the liability would be limited to $50,000 and would be for 6 months only. This was not the effect of the documents that were drawn up by the bank.
- Neither the bank nor the son told the Amadios about the precarious financial position of the company.
- The bank was aware that the Amadios had been misinformed as to the effect of the documents, but said nothing.
Language, possibly illiteracy, age.
25
O'Connor v Hart
- Jack O’Connor as trustee entered into a contract for the sale of 3 blocks of farmland owned by a trust near Waimate to Hart.
- At the time of entering into the contract Jack O’Connor was suffering from mental incapacity, but it was not obvious.
- Prior to entering into the contract discussions had been going on with members of the O’Connor family about the sale of the land to Jack’s nephews.
- Jack was not happy with this proposal, and had his own discussions with Hart about the possibility of leasing the property.
- Hart indicated to Jack’s solicitor that he would prefer to purchase the property and asked it the solicitor could put that proposal to Jack.
- The solicitor drafted an agreement whereby the price was to be determined by a valuer.
- The solicitor took the agreement to Jack who signed.
- Members of the O’Connor family who were beneficiaries of the trust issued proceedings challenging the sale. Shortly afterwards Jack died. The case continued.
Lacked mental capacity and so was at a disadvantage because he was suffering from a mental disorder (even if it wasn’t apparent?).
The other party has to know about the disadvantage but they did not. Even though there is no way there is special disadvantage still consider the third option (victimization) all part of a complete analysis.
Was Hart taking advantage of the problem? Did he victimize the old man? No, as he was not aware of the mental disorder and the formula that Hart agreed to was not one where he was obviously advantaged. Heart didn't go and make the offer to the old man. He went to the solicitor so the solicitor talks to O’Connor and is getting independent legal advice and so no way Hart could be taking advantage.
Court found the contract was valid.
26
Nicols v Jessup
- Jessup lived in a property adjacent to a property owned by Nicols.
- Nicols proposed a right of way along the strip and Jessup’s driveway. This allowed better access to his land.
- After some discussions Jessup agreed but appeared to go hot and cold on the matter.
- Jessup was 60 years old, unintelligent, and muddleheaded. She was ignorant when it came to property matters. – finding of fact by the judge.
- The consideration was grossly inadequate. (mutual rights of way of no benefit to Jessup) – becomes relevant what consideration is in these situations. (it did count as consideration but the fact that it is of no value to her is taken into account).
- The result of the right of way would be increase in property value for Nicols of $45,000, decrease in property value to Jessup of $3,000.
- Jessup did not receive any independent advice.
Special disadvantage: Age, unintelligent, muddleheaded, ignorant when it came to property matters, she signed the contract with her maiden name (so possibly trying to keep her options open).
Definitely got all of the things that are required for the first step.
Did he know about these disadvantages? Court said it must have been painfully obvious from the way she was mucking about. He also made all the arrangement for the deal himself. It is also such a silly idea that if anyone were to agree to it then its crazy so just the deal itself shows that he knew that she was at a special disadvantage.
Did he take advantage of her? He knew that he was getting all of the benefit and she was getting nothing, if not less than nothing.
Court found that he didn't actually do anything overtly wrong but he knew that she was at a special disadvantage and that was good enough to be passive victimisation. He knew that if he waited he might be lucky enough for her to sign the deal.
27
Bowkett v Action Finance Ltd
- Mr. and Mrs. B were elderly people who owned their own home jointly.
- They had never had a mortgage and were unfamiliar with mortgage documents.
- Their son Michael asked them to allow their house to be used as security for a loan to purchase his own home.
- Michael took the Bs to a solicitor’s firm to sign the mortgage documents. They spoke to a legal executive, Webley.
- The Bs were in unfamiliar surroundings, and felt that they were being rushed.
- The Bs did not know whether or not 25% interest rates (35% penalty rates) were normal or not.
A case that was never finally decided. Parties settled before it could go to Court properly.
- Webley expressed concern because the Bs could not afford to meet the payments themselves if Michael defaulted.
- Webley explained to them that if there was a default they could lose their home.
- Webley informed the Bs that she acted for Action Finance Ltd. She advised them to get independent legal advice.
- The Bs declined to get independent advice saying that they had faith in their son.
- The Bs signed the documents.
Webley is actively trying to get them to not sign.
Is it possible it was an unconscionable bargain?
1. Yes
2. Did the other parry know? Their lawyer was aware and what your agents know, you know. Webley from the way she was talking to them clearly knew.
3. Could be passive so could argue... Webley was actively trying to talk them out of it and told them to get indepenedent legal advice and they didn’t.
Court held it was arguable that B’s could succeed and so was going to go to Court but they settled.
28
New Zealand Motor Bodies Ltd v Emslie & Ors
- NZMB had coach building plants in Palmerston North and Christchurch. They wished to expand to Dunedin.
- Emslie and the other defendants were the shareholders in Emslie Consolidated Industries Ltd. (ECI).
- ECI was also in the business of coach building in addition to other business activities.
- In 1979 discussions began between NZMB and ECI about the possible merger of NZMB and the coach building part of ECI’s business.
- NZMB looked at the accounts of ECI for the 1978 and 1979 tax years. It showed a drop in profits from $131,674 to $73,623.
- This did not concern them because it was consistent with a downturn in the coach building industry generally.
Ors means others. Anor is one other person.
- ECI’s representatives were at this time of the view that for the 1980 tax year ECI would break even.
- NZMB requested a budget forecast from ECI.
- In April 1980 the ECI secretary in consultation with Emslie prepared the forecast. It prophesised a profit in the coach building department a net profit of $127,643.
- In May 1980 ECI informed NZMB that in fact ECI had not broken even as previously expected, but had suffered a $100,000 loss.
- They did not say that ECI was technically insolvent and that if NZMB did not proceed with the merger it had been decided to close down the coach building part of the business as the only way to save ECI.
- On the basis of the information available to them NZMB entered into an agreement with ECI and ECI’s shareholders which in effect resulted in the intended merger.
False statement of past or present fact: The prediction is a future fact. So there can’t be misrepresentation as it is in the future. Could argue that it is based on present information that justifies it being counted as misinterpretation. So if the prediction is completely wrong it must mean that the present facts were wrong and is it is misinterpretation.
Works for the other two issues. Way court viewed it was that the prediction had been made deliberately to help the sale because of the desperation of their situation.
29
Withal v MacPherson
- A purchaser prior to entering the contract commented that a particular part of the property would be suitable for a glasshouse.
- The agent of the vendor heard the comment but said nothing.
- The particular piece of ground was not in fact part of the property being sold.
Rule is that if the other party says something that clearly shows that they misunderstand the situation you suddenly come under a duty to correct them.
If Witham had not said it out loud then the real estate agent would not have to have said anything but because W made the comment out now M had to correct it otherwise it was misinterpretation.
30
King v Wilkinson
- King was shown over property owned by Wilkinson by real estate agent.
- Property included a house, and apparently a paved car parking and turning area outside the garage, a garden and a stone gateway.
- The paved area, gateway, garden and the house were enclosed within a fence.
- King did not ask where the boundaries were.
- The real estate agent did not disclose that the paved area and gateway etc. was not part of Wilkinson’s property, but was leased from the adjoining land owner.
False statement? No? Was it material and inducing… Quite clear that it was the whole package that attracted them. Suffered a loss, yes they are owning a lease that they didnt want that take up part of the land. Certainly a misunderstanding of what the consideration is, but does that matter? Remember amount of consideration doesn’t matter. In NZ very few people have residential properties surveyed. The property itself a statement and it was a false statment. The way it was laid out gave a false interpretation that it was all part of one property.
31
Bisset v Wilkinson
- While negotiating a contract for the sale of a farm the vendor said the farm could carry 2,000 sheep.
- Both parties knew vendor had never run sheep on the farm.
- After purchase the purchaser discovered the farm could not carry 2,000 sheep.
Saying that it could carry 2000 sheep was an opinion and it was based off his knowledge of the farm but he had never run sheep before so what did he know? In the circumstances the purchaser knowing that W had never run sheep on the farm should have known not to rely of W’s word. No reasonable person would have believed W’s word.
32
Waken v RH & EA Jackson Ltd
- Vendor of a coffee bar stated to the purchaser during negotiations that the nearest competition was ½ a mile away.
- This at the moment was literally true.
- But vendor did not mention that another coffee bar was in the process of being set up a short distance away.
Clearly W was looking to buy based off competition and because J knew about the future competition it counts as a half-truth as the information was relevant to the purchaser. Might be compelled to divulge something very against what your interests. If the purchaser did not ask about the competition, then J wouldn't have had to tell him anything. But as soon as the question is asked you have to say everything.
33
With v Flannagan
- Sale and Purchase of a medical practice.
- Vendor said practice produced an income of £2,000 per annum, which at the time was true.
- Contract was not signed until 4 months later.
- In that time vendor was ill and used short term locums. Goodwill lost and practice became worthless.
- After purchase the purchaser sued vendor claiming misrepresentation.
- Vendor defended on the basis that the statement was true when it was made.
Doctor patient relationship… When the see that the person that they are used to isn’t there then they become uneasy and this is where the goodwill is lost. Used to be that you stayed with the same doctor until either you died or they did. Nowadays people are more mobile.
Court created a duty that if the representation has changed since then you have to be proactive and tell the potential purchaser.
34
Paradine v Jane
- Jane leased land from Paradine.
- Jane was dispossessed of land by invading army, so stopped paying rent.
- Paradine sued for rent.
35
Taylor v Caldwell
- Taylor hired a concert hall from Caldwell.
- Before the opening night the concert hall burnt to the ground.
- Taylor sued for breach of contract.
Found that neither party was at fault and there was an implied part of the contract that if there was a supervening event that compromised the contract then the contract would be immediately discharged.
36
Codelfa Construction Pty Ltd v State Railway Authority (NSW)
- Contract for excavation for underground railway.
- Work to be completed in 130 weeks.
- Both parties knew that this could only be done by 3 shifts per day 7 days per week.
- 3 months in, injunction granted preventing work at certain times.
- Alternative methods of work had to be used which cost a lot more.
- Codelfa sued claiming frustration.
37
National Carriers Ltd v Panalpina (Northern) Ltd
- Lease of warehouse for 10 years.
- 5 years on council closed road for 20 months. No access to warehouse.
- Tenant stopped paying rent claiming frustration.
38
Krell v Henry
- Lease of flat in Pall Mall for the purpose of viewing the Coronation.
- Coronation Postponed.
- Tenant refused to pay rent claiming frustration.
Both parties knew that there was only one purpose really and that purpose didn’t happen so the old lady had to pay the money back?
39
Tsakiroglou & Co Ltd v Noblee Thorl GmbH
- Contract for the sale of 300 tons Sudanese Groundnuts.
- Terms of contract required seller to pay for delivery to Hamburg.
- Suez Crisis
- Alternative route around Cape of Good Hope over twice distance. And much more expensive.
Court held that the contract was not frustrated. Parties didn't talk about how the nuts would be delivered…
40
Maritime National Fish Ltd v Ocean Trawlers Ltd
- OT chartered trawler from MNF.
- Trawler could only use one kind of net.
- That net required licence.
- OT applied for 5 licenses for that kind of net.
- Ministry informed OT that it could only have 3 and asked OT to choose which of its vessels were to be licensed.
- OT chose other trawlers, then refused to pay charter claiming frustration.
You had a choice to which vessels you applied the licenses to. OT chose to not apply it to that vessel and so it is not a frustrating event as there was a choice.
41
Shotter v Westpac Banking Corp
- Shotter was a customer of Westpac and obtained loans for his horticultural development business.
- Shotter formed a business association with Villars a property developer.
- Villars owned a company Unicorn Holdings Limited. Shotter had no interest in this company.
- Shotter and Villars set up a new company, Unicorn Developments Ltd., to purchase a property in the Makerau Valley.
- The bank agreed to make an advance to Unicorn Holdings Ltd. Secured against the equity in this company.
It’s a mistake in the contract itself. Mistake is that he thought he wasn’t bound for the debts of the other company, but he was and he misunderstood it.
- The bank insisted on personal guarantees from Villars and Shotter.
- After the documentation was signed the bank advanced the money to Unicorn Holdings Ltd, which passed it on to Unicorn Developments Ltd wich purchase the Makerau Valley Property.
- Unicorn Holdings Ltd defaulted.
- The bank called up the guarantees for all sums owed by the Unicorn Holdings Ltd.
- Shotter commenced proceedings claiming amongst other things that he made a mistake when entered the guarantee because he thought it only applied in relation to the loan for the Makerau Valley property.
42
Ware v Johnson
- The parties entered into a contract for the purchase of a of a kiwifruit orchard.
- Both parties believed at that time that the orchard was capable of producing commercial quantities of fruit.
- In fact the orchard had been sprayed with an herbicide and the kiwifruit plants destroyed (This only became apparent after the contract was entered into.)
Mistake was that the condition of the trees was not great. Both parties assumed that the plants were good and healthy.
43
Dennis Freidman (Earthmovers) Ltd v Rodney County Council
- Contract for the construction of a new reservoir.
- Under the contract DF were required to carry out site investigation and submit tender accordingly.
- It was discovered during construction that sub soil conditions added to the costs significantly.
- DF attempted to get the council to pay the extra costs claiming common of mutual mistake.
Council mistake? Was probably nothing because they didn’t need to look at anything.
Who was required to take the risk of finding something that the parties hadn’t anticipated? The Earthmovers as they were required to carry out a site investigation. Council is saying that it is up to them to go and check it out.
44
Chapelton v Barry Urban District Council
- The council hired deck chairs to persons wishing to use them on the beach.
- Notice beside the deck chairs:
- Chapelton hired 2 chairs. He paid the attendant and was given 2 tickets. He glanced at them and put them in his pocket.
- He set up the chairs on the beach. When he sat on his chair, the canvas gave way (it was faulty) and he was injured.
- He sued for personal injury.
- The council’s defence was that liability was excluded by a clause printed on the ticket.
Was there actual notice of the clause? No, no evidence that he actually saw it there at all.
Should he have reasonably known that there was an exclusion of liability clause? He read the sign but that didn’t say anything. Was told that they would get tickets with the chairs and that those tickets would need to be retained. Makes it seem like the purpose of the tickets is simply to be checked at a later point. No indication that the tickets have any other significance. Chapelton didn’t know to read the ticket. It’s on the back so you’d have to flip it over and even then it is at the bottom and the wording above it reinforces the point of the sign. Almost like they are trying to hide it. It’s not good advertising to change this however to make the clause super obvious, extremely bad from a marketing point of view. But the law requires you to do anything you reasonably can to draw attention to it.
Court came to the conclusion that the council had not done enough by a long shot and so were found to be liable.
BLAW 212
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