1
Q
Acceptance DEFINITION
A
Unqualified assent to the terms of an offer, creating a binding contract.
2
Q
Duress DEFINTION
A
Unlawful pressure exerted on a party to force them into a contract.
3
Q
Frustration DEFINITION
A
An unforeseen event that renders performance of the contract impossible or radically different from what was contemplated.
4
Q
Implied term
A
A term not explicitly agreed to but read into the contract by the courts or by statute.
5
Q
Misrepresentation DEFINITION
A
A false statement of fact that induces a party to enter into a contract.
6
Q
Parol evidence rule DEFINITION
A
A rule that prevents extrinsic evidence from being used to vary or contradict the terms of a written contract.
7
Q
Privity of contract DEFINITION
A
The principle that only parties to a contract can enforce its terms.
8
Q
Repudiation DEFINITION
A
An act or statement indicating an intention not to perform contractual obligations.
9
Q
Rescission DEFINITION
A
Setting aside a contract and restoring the parties to their pre-contractual position.
10
Q
Termination DEFINITION
A
Bringing a contract to an end, either for breach, repudiation, or frustration.
11
Q
Undue influence DEFINITION
A
Unfair persuasion exerted by a dominant party over a weaker party.
12
Q
Unconscionable dealing DEFINITION
A
Taking advantage of a party’s special disadvantage to obtain an unfair advantage.
13
Q
Void contract DEFINITION
A
A contract that is not legally binding from the outset.
14
Q
Voidable contract DEFINITION
A
A contract that can be set aside by one of the parties due to a vitiating factor, such as misrepresentation or undue influence.
15
Q
Warranty DEFINITION
A
A less important term of a contract, breach of which only gives the innocent party the right to claim damages.
16
Q
What are the three elements of a valid contract?
A
- Completeness: All essential terms have been agreed upon by the parties.
- Certainty: The language used to express the terms is clear and unambiguous.
- Not anIllusory Promise: A promise that gives the promisor unfettered discretion as to whether to perform. It lacks consideration and renders the contract unenforceable.
17
Q
Define essential terms in a contract.
A
Essential terms are those necessary for the contract to function as intended by the parties.
Examples: Parties, subject matter, and price.
18
Q
When will a court imply terms into a contract?
A
● satisfied that the parties would have agreed to them had they considered the matter.
● established industry standards.
19
Q
Explain the construction of a contract.
A
● Construction involves interpreting the contract’s language to identify the terms and give effect to the parties’ intentions.
● It considers the language used, the circumstances addressed, and the commercial purpose of the contract.
20
Q
What is the significance of external standards in construing a contract?
A
● If a term is vague or uncertain, a court may refer to readily ascertainable external standards to add clarity.
● Examples: Industry standards, market practices.
● Key Case: Biotechnology Pty Ltd v Pace (1988)
21
Q
What happens when a contract term is incapable of any definite or precise meaning?
A
● The court will attempt to give the term a reasonable meaning based on the contract as a whole and the parties’ intentions.
● If the term remains irremediably obscure, the contract may be void for uncertainty.
Key Case: Whitlock v Brew (1968)
22
Q
Define an illusory contract.
A
● A contract where one or both parties have no legal obligation to perform.
● This typically arises when a promise is made with unfettered discretion, rendering it illusory.
23
Q
How can an implied minimum obligation save an apparently illusory contract?
A
●A court may imply a minimum obligation on a party even if the express terms give them broad discretion.
● For example, a clause requiring “satisfactory” performance may imply an obligation to act honestly and reasonably.
●THIS IS LIKE WITH THE KATS CAFE CASE IT COULD BE IMPLIED BY THE SERVING OF FOOD AS AN ESTABLISHMENT THAT THE FOOD WOULD BE EDIBLE AND WOULD NOT CAUSE HARM TO THE OFFEREE
● ALSO CAN ASSUME THAT WHEN THE CAFE SAID TO HANG YOUR COATS ON THE HOOK AND KAT SAID SHE WOULD KEEP AN EYE ON IT AND IT WOULD BE SAFE THAT IT WOULDN’T BE DAMAGED OR STOLEN
Key Case: Meehan v Jones (1982)
24
Q
What are the consequences of an incomplete, uncertain, or illusory contract?
A
● An incomplete contract (missing essential terms) is void.
● An uncertain or illusory term may be unenforceable or, if essential, may render the entire contract void.
● The court may sever the offending term and enforce the rest if possible.
25
Completeness DEFINITION
All essential terms agreed upon.
26
Certainty DEFINITION
Terms expressed clearly.
27
Essential Terms DEFINITION
Necessary for the contract to function.
28
WHAT IS THE EFFECT OF Implied Minimum Obligations
May save apparently illusory contracts.
29
Elements of Undue Influence
1. Influence: The defendant had the capacity to influence the plaintiff.
2. Exercise of Influence: The influence was actually exerted.
3. Causation: The exertion of influence caused the plaintiff to enter into the contract.
Thorne v Kennedy (2017): Clarifies the elements of undue influence, particularly causation.
30
Types of Undue Influence:
● Actual Undue Influence: Proven by evidence showing the defendant's actual influence over the plaintiff.
● Presumed Undue Influence: Arises from certain relationships where influence is presumed, such as solicitor-client or doctor-patient. The burden shifts to the defendant to rebut the presumption.
31
Remedies for Undue Influence:
Rescission: The contract is set aside, and the parties are restored to their pre-contractual position.
32
What is repudiation in contract law?
1. UNWILLINGNESS OR INABILITY
2. EXPRESS OR IMPLIED
● Repudiation occurs when a party demonstrates an unwillingness or inability to perform their contractual obligations.
● It can be express (explicitly stating they won't perform) or implied (conduct showing they can't perform).
33
What is a notice to perform?
● A notice to perform is a formal communication given to a party in breach, demanding performance within a specified time.
34
What are the requirements for a valid notice to perform?
1. Specific Time: The notice must specify a reasonable time for performance.
2. Clarity: It must clearly state that time is of the essence, or that failure to comply will entitle the aggrieved party to terminate.
35
Define election in contract law.
● Election is the choice made by the aggrieved party when faced with a breach of contract.
● They can choose to affirm the contract or terminate it.
36
What is required for an election to be effective?
● The aggrieved party must act unequivocally, demonstrating a clear and unambiguous choice.
● This can be through words or conduct.
37
Can an election be revoked once made?
NO
38
What are some examples of conduct that may indicate an affirmation of the contract?
● Accepting or insisting upon receiving performance from the other party.
● Continuing to perform acts contemplated by the contract.
39
What is the effect of affirmation of a contract?
● The aggrieved party loses their right to terminate the contract for that breach.
● They are still entitled to claim damages for the breach.
40
What are some examples of vitiating factors that may allow for rescission of a contract?
● Mistake
● Misrepresentation
● Duress
● Undue influence
● Unconscionable dealing
● Breach of fiduciary duty
● The rule in Yerkey v Jones
41
What are some bars to rescission?
● Affirmation of the contract by the aggrieved party.
● Lapse of time.
● Third-party rights intervening.
● Impossibility of restoring the parties to their original positions.
● Time Stipulations: Terms specifying a time for performance are generally considered essential. **(CANT RESCIND FOR BREACH OR REPUDIATION BEFORE THE TIME OF PERFORMANCE HAS ARRIVED)**
42
RELEVANCE OF KNOWLEDGE OF FACTS TO ELECTION
Knowledge of the facts giving rise to a right to terminate is sufficient for an election, even if the party is not aware of their legal right to terminate
43
What is a misrepresentation of fact?
* It must be a representation of an existing or past fact.
* **Puffs, opinions, future intentions, and representations of law **are excluded.
* It encompasses both untrue information and unsound advice.
* A statement or promise about a future event is not untrue simply because the event didn't happen.
44
When can a statement or promise about something happening in the future be considered a misrepresentation?
A misrepresentation can be established if there was no intention to fulfill the promise at the time it was made.
45
What happens in the absence of a positive misrepresentation in business dealing ?
The caveat emptor rule applies, meaning the buyer is responsible for checking the condition or quality of goods before purchasing.
46
What are some examples of creating a false impression?
- A statement can be literally true but create a false impression by telling only a half-truth.
- Events occurring after the statement is made but before the contract is entered into may change the statement's characterisation.
- A representation believed to be true when made may be falsified by later events known to the representor.
- A representation believed true when made may later be discovered as false by the representor.
47
48
What is a fiduciary relationship?
- It's a relationship based on trust and confidence, where one party (fiduciary) has a duty to act in the best interests of the other party (beneficiary).
- It creates a duty of disclosure on the fiduciary.
- If a fiduciary enters a contract with the beneficiary, they must provide "most ample disclosure of everything".
- This duty extends beyond disclosing material facts to giving advice about entering the contract's wisdom.
- Failure to give sound advice can be as much a breach of duty as failing to disclose material facts.
49
3 types of fraudulent misrepresentation
It's a false statement made:
1. Knowingly
2. Without belief in its truth
3. Recklessly, careless whether it's true or false
49
When is fraudulent misrepresentation established?
1. REALISES OR OUGHT TO REALISES
2. INTENDS TO OR IS LIKELY TO ACT ON IT
It's established when the speaker:
Realises or ought to realise that the recipient intends to or is likely to act on the statement for a matter of consequence.
49
What happens if the representor intends to induce reliance by the representee?
The courts infer that the representee was indeed induced to rely on the misrepresentation.
50
What are the two elements of duress?
Pressure induced the plaintiff to enter the contract (causation)
Pressure went beyond what the law considers legitimate (illegitimate)
51
What factors are considered when assessing whether pressure induced the plaintiff into a contract?
- Whether the plaintiff protested
- Availability of reasonable alternatives
- Whether the plaintiff took quick steps to set aside the contract after entering it
52
What is the relationship between the seriousness of a threat and a plaintiff's expected response?
The more serious the threat, the less the plaintiff is expected to protest and the fewer alternatives they'll likely have.
53
What are the three categories of pressure considered illegitimate for relief purposes?
1. Threat to harm a person: If threats contributed to the decision to sign, relief is available.
2. Threat to harm property: Unlawful detention, seizure, or threatened damage to goods falls under duress in contract law.
3. Threat to infringe a person's legal rights (economic duress): Courts assess if a modification was genuinely renegotiated or resulted from illegitimate pressure.
54
What are the two ways to establish undue influence?
1. Through the circumstances of the particular transaction.
2. By presumption based on the relationship between the parties.
55
What must the facts show to prove undue influence?
The transaction resulted from actual influence over the plaintiff's mind, preventing it from being considered a free act.
56
What is NOT required for undue influence?
Illegitimate pressure or a threat is not required. (more like manipulation and taking advantage)
57
When can undue influence be presumed?
1. The person is in a specific relationship (e.g., parent-child, solicitor-client).
2. The transaction gives a "substantial benefit" to another.
3. The transaction can't be explained by "ordinary motives" or the parties' relationship.
58
Which relationships DO NOT have a presumption of undue influence?
- Accountant (or financial adviser) and client
- Fiancé and fiancée
- Husband and wife
59
When does the doctrine of unconscionable dealing operate?
1. The plaintiff was under a special disability when entering the transaction, creating an absence of reasonable equality between them.
2. The disability was sufficiently evident to the defendant, making it unfair for them to procure or accept the plaintiff's assent.
60
What are some examples of special disadvantages?
Poverty
Need
Sickness
Age
Infirmity of body or mind
Drunkenness
Illiteracy
Lack of education
Lack of assistance or explanation when needed
Emotional dependence, in combination with other factors
61
What are the two types of knowledge relevant to unconscionable dealing?
- Actual knowledge: The defendant was aware of the plaintiff's special disability.
- Constructive knowledge: The defendant was aware of facts that would lead a reasonable person to know about the disability.
62
How can the presumption of unconscionable dealing be rebutted?
- Showing that the transaction terms are fair.
- Demonstrating that the victim was referred to an independent adviser.
63
When does a delay in performance lead to a breach of contract?
A delay in performance gives rise to a breach of contract and a right to terminate when time is of the essence.
64
What happens when time is NOT of the essence in a contract?
A term will be implied requiring performance within a "reasonable time," as established in Reed v Moorland Timber (1946).
65
What is considered a repudiation of a contract concerning time stipulations?
A breach of a time stipulation is considered a repudiation of the contract, as established in Lombard North Central v Butterworth (1987).
66
In what types of contracts are courts most likely to consider time as being "of the essence"?
Courts are more likely to view time as essential in commercial contracts like the sale of goods, as demonstrated in United Scientific Holdings v Burnley Borough Council (1978).
67
How are terms specifying a time for shipment or delivery of goods usually interpreted?
Such terms are commonly construed as essential, as seen in Harrington v Browne (1917).
68
Can an aggrieved party gain a right to terminate for delay even when time is not essential?
Yes, they can gain this right if the delay amounts to a repudiation of the contract, as illustrated in Louinder v Leis (1982).
69
What are the requirements for a valid notice to remedy a breach?
The notice must:
1. Specify a time for performance
2. Allow a reasonable time for performance
3. Clearly convey that time is of the essence or that non-compliance grants the aggrieved party the right to terminate
70
What is the obligation of the party issuing the notice to remedy a breach?
They must be ready and willing to perform their obligations when issuing the notice, as decided in W&R v Birdseye (2008).
71
What happens if a party fails to comply with a notice to remedy a breach?
- It amounts to an unreasonable delay, even for non-essential time stipulations.
- This can lead to an inference of repudiation and grant the right to terminate, as per Louinder v Leis (1982).
72
Can a breaching or repudiating party force the aggrieved party to terminate the contract?
No, the aggrieved party always has the option to affirm the contract, as established in Automatic Fire Sprinklers v Watson (1946).
73
What are the consequences of affirming a contract after a breach?
- The aggrieved party retains the right to claim damages for losses caused by the breach.
- They are still liable to perform their obligations under the contract.
- They must show they were ready and willing to perform at the time of the breach (except for anticipatory breach repudiation).
- Courts readily infer readiness and willingness unless there's evidence to the contrary, as it's unfair to expect performance when the other party won't perform.
74
What happens to acquired rights when a contract is terminated?
Acquired rights are not discharged, as per McDonald v Dennys (1933). This includes the right to recover payment for any performed part of the contract.
75
When does an actual breach occur?
An actual breach occurs when there is:
1. A breach of an essential term
2. A serious breach of an intermediate term
3. A breach of an inessential term that amounts to repudiation (requiring readiness and willingness to perform at the time)
76
What is required of the aggrieved party in cases of anticipatory breach?
They must also be ready and willing to perform at the time of the anticipatory breach, as established in DTR Nominees v Mona Homes (1978).
77
What constitutes sufficient knowledge for an election?
Knowledge of the facts giving rise to the right to terminate is enough, rather than awareness of the right itself, as per Sargent v ASL Development (1974).
78
Is a party required to elect immediately?
No, they are not, as decided in Sargent v ASL Development (1974).
79
What happens if an aggrieved party doesn't make a choice within a reasonable time?
They may be considered to have affirmed the contract, as established in Champtaloup v Tomas (1976).
80
Can a party rescind a contract later if they initially affirmed it and the breach continues?
Yes, they are not precluded from doing so, as per Ogle v Comboyuro Investments (1976).
81
How should the fact of election be communicated to the breaching party?
It's enough for the fact of election to come to their attention, as determined in Wood Factory v Kiritos (1985). This can even be through an unauthorized broker or intermediary, as in Vitol SA v Norelf (1996).
82
What is the consequence of breaching s 18 of the Australian Consumer Law (ACL)?
The party misled is entitled to damages to compensate for their loss, as per s 236 of the ACL.
83
What is the definition of misleading conduct?
Conduct is "misleading" if it has the capacity to lead into or cause errors, as established in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988).
84
Can silence be considered misleading?
Yes, silence or failure to speak can be misleading if there is an "expectation of disclosure" by the recipient. However, the silence must be deliberate to contravene the section, as stated in s 2(2).
85
How are statements about future matters governed under the ACL?
They are governed by s 4, which is an evidentiary provision. It states that a future statement is misleading if the person making it lacks reasonable grounds.
86
What are the two ways to analyze whether a promise about future conduct is misleading?
1. By deriving implied representations of current fact from the promise.
2. Considering whether the promise implies a representation that it will be honored.
87
What is the distinction between a promisor's intention and capacity to perform in relation to misleading conduct?
While a contractual promise can easily imply a representation of the promisor's intention to perform, it's much harder to argue that it implies a representation of their capacity to perform. This was determined in Concrete Constructions Group Ltd v Litevale Pty Ltd.
88
How does the ACL interact with the parol evidence rule?
If a contract is entirely written, the terms override any inconsistent pre-contractual promises, and the parol evidence rule prevents using extrinsic evidence to alter the written terms. However, a party misled by a pre-contractual promise may seek a remedy under the ACL if they can establish that the promise was misleading.
89
Can the terms of a resulting agreement overcome the potentially misleading nature of a pre-contractual promise?
Yes, in Wedgewood Road Hallam (No 1) v Diamond, Bell J found that the agreement's terms could negate the potentially misleading nature of a prior promise
90
Do statements of opinion constitute misrepresentation?
Not necessarily. An identifiable expression of opinion only conveys that the opinion is held and perhaps has a basis. If these conditions are met, even an erroneous opinion doesn't misrepresent anything, as seen in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984).
91
How is causation determined in misleading or deceptive conduct cases?
The approach is based on the statute's purpose, which is to provide relief for those who suffered loss due to contravening conduct.
The question isn't what the applicant would have done without the misrepresentation.
Instead, it's about what needed to happen for the principal to avoid engaging in misleading conduct.
92
Can exclusion clauses be used to avoid liability for misleading or deceptive conduct?
They are unlikely to succeed, as such clauses cannot override the statutory prohibition against misleading or deceptive conduct, as established in Bowler v Hilda Pty Ltd (1998).
93
Does the lawfulness of a threat automatically make the pressure legitimate?
No, even lawful threats can be illegitimate, as per R v Attorney General for England and Wales.
94
What are the requirements for lawful act duress?
1. There must be a threat, not just a request.
2. There should be no reasonable or justifiable connection between the pressure and the demand it supports, as decided in Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2013).
95
Can blackmail or threats to prosecute be considered duress?
Yes, examples include:
- A blackmailer's threat to report a crime to the police, as seen in Universe Tankships Inc of Monrovia v International Transport Workers Federation (1983).
- A promise to pay an allegedly owed sum in exchange for not pursuing prosecution.
96
When is impropriety found in relation to threats to prosecute?
It can be found in an agreement (express or implied) to drop the prosecution in return for a promise to repay the money, as in Scolio Pty Ltd v Cote (1992).
97
Are parties obligated to provide further supplies or credit facilities?
Not necessarily. A party may be entitled to refuse further contracts, especially when there are concerns about the other party's ability to fulfill their obligations. This was seen in CTN Cash and Carry Ltd v Gallaher (1994), where the defendant genuinely believed the goods were at the plaintiff's risk and the plaintiff owed them money.
98
What is the stance of Australian courts on lawful act duress?
Some Australian courts acknowledge the possibility of lawful act duress, as in Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2013).
(this is the main judgement) in Thorne v Kennedy, the High Court declined to address whether duress requires an unlawful act or if lawful act duress adds anything to the doctrine of unconscionable conduct.
99
What is the consequence of a contract being affected by duress?
The contract becomes voidable at the plaintiff's discretion, meaning they can choose to enforce or rescind it, as established in Barton v Armstrong (1973).
100
What is the difference between termination and rescission?
Termination: Ends future obligations while preserving past rights and obligations.
Rescission: Undoes the contract from the beginning, restoring parties to their pre-contractual positions.
101
Why can't there be a claim for damages for breach of contract in rescission?
Because in such situations, there is no contract to breach, as stated in Alati v Kruger (1955).
102
What happens when the guilty party prevents the victim from communicating their intention to rescind?
The victim can demonstrate their intention to rescind through overt means other than direct communication.
103
What are the options available to a representee in cases of misrepresentation?
1. Sue for damages for breach of contract (warranty), but this precludes rescission for misrepresentation.
2. Sue for damages for deceit, seeking the difference between the price paid and the property's fair value at the time of the contract. This affirms the contract.
3. Rescind the contract and claim the purchase money back with interest, plus damages for any losses incurred while running the business. This requires restoring what was received under the contract.
104
What is the key question when determining damages for misrepresentation?
What would the representee have done if the misrepresentation hadn't been made?
105
When is affirmation not inferred?
When the victim's knowledge or independence is still affected by the vitiating factor, such as ongoing duress, undue influence, or unawareness of the misrepresentation's falsity.
106
What happens when an innocent misrepresentation becomes a term of the contract?
The representee's remedies are limited to contractual rights (damages for breach of warranty or termination for breach of condition) and they can't rescind in equity for misrepresentation.
107
Can a mistake be a reason to void a contract?
Yes, but the mistake must be fundamental, making the contract unworkable or unconscionable to enforce.
108
What are the requirements for a mistake to be considered grounds for voiding a contract?
- Fundamental nature: The mistake must make the contract unworkable or unconscionable.
- Not the plaintiff's fault: The mistake should not be due to the plaintiff's carelessness.
109
Can a mistake be considered misleading or deceptive conduct or misrepresentation?
Yes, some mistakes can fall under those categories.
110
Is subjective intent relevant in contract formation?
Generally, no. Signing a document signifies objective agreement to its contents.
111
What is the effect of a unilateral mistake (non est factum) at common law?
The contract is void ab initio, meaning it never had legal effect.
112
When does non est factum apply?
When the signed document is radically different from what the signer thought they were signing.
113
What are the elements of non est factum?
1. The signer must be unable to read or understand the contract.
2. They must be subjectively mistaken about the legal effect of the instrument.
3. They must be unable to comprehend the legal instrument.
114
What are some reasons for inability to read or understand a contract that may support a non est factum claim?
Blindness
Illiteracy
Incapacity
Temporary inability (e.g., being under the influence of drugs)
115
When does a right to payment for debt arise in a contract?
It arises when the related obligation is properly performed.
116
What needs to be assessed when determining a right to payment for debt?
Nature of obligations: Entire (full performance required) or divisible (partial performance allows partial payment).
Level of performance: Exact performance required or substantial performance sufficient.
117
When does debt accrue, even if a contract is later terminated due to the other party's default?
Debt accrues once the payment right arises, as established in GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited (2003).
118
When specifically does debt accrue?
Debt accrues only when the related obligation is properly performed.
119
What should be determined when reviewing a contract for debt actions?
1. Whether it's an entire or divisible contract.
2. Whether the obligations require exact or substantial performance for debt to accrue.
120
What are entire contracts?
Contracts where all obligations must be fully completed for payment to be due, as seen in Cutter v Powell (1795).
121
What are divisible contracts?
Contracts where each part acts as a "mini-contract," allowing for staged payments as each obligation is completed, as in Steele v Tardiani (1946).
122
What happens in an entire contract if there's a failure to perform part of the obligations?
The entire payment can be withheld, as demonstrated in Pordage v Cole (1669).
123
What do entire or lump-sum clauses often indicate about the required level of performance?
They often require exact performance, as payment is due only upon completing the entire job as specified.
124
What do divisible contracts with segmented obligations and payments suggest about the level of performance?
They suggest that substantial performance may be sufficient for each segment.
125
What is exact performance?
It requires strict adherence to the contract's precise terms, and even minor deviations may prevent a party from claiming payment, as seen in Arcos Ltd v EA Ronaasen & Son (1933).
126
What is the de minimis non curat lex principle?
It states that trivial or insignificant deviations don't invalidate performance, like a tiny excess quantity delivered in Shipton Anderson & Co v Weil Brothers.
127
What is substantial performance?
It allows for minor deviations from the contract terms if the essential purpose is achieved. The performing party can claim payment, but it may be reduced for defect costs, as in Hoenig v Isaacs (1952).
128
What are some examples of cases where substantial performance was NOT met?
Bolton v Mahadeva (1972): A faulty heating system emitting fumes didn't meet substantial performance as it failed to fulfill the contract's primary purpose.
129
What is a key requirement for substantial performance?
The completed work must be reasonably fit for its intended use, as determined in Cordon v Lesdor (2010).
130
What are the payment obligations for different levels of performance?
1. Partial performance: No payment required from the customer.
2. Substantial performance: Potentially acceptable depending on the contract's interpretation. If acceptable, the customer must pay but can deduct for minor defects.
3. Exact performance/de minimis non curat lex: The customer is obligated to pay.
131
Explain the concept of "completeness" in contract formation.
Parties must agree on enough essential terms for a contract to be formed.
The law can imply some terms, so not every single detail needs to be explicitly stated.
132
What are "essential terms" in a contract?
- Terms necessary for the contract to function as the parties intended.
- They vary depending on the type of contract.
Examples:
Sales: Buyer, seller, item being sold, price.
Leases: Subject matter, parties, rent, start date, duration.
133
When will a court imply terms into a contract?
Only if they believe the parties would have agreed to it.
More likely in simple contracts with established industry standards.
134
According to Hall v Bust, what are the three essential elements of a contract?
Parties
Subject matter
Price
135
What does the Sale of Goods Act s13(2) say about price?
If the price isn't determined, the buyer must pay a "reasonable price."
What's "reasonable" is a matter of fact determined on a case-by-case basis.
136
What is an "agreement to agree"?
When parties agree to determine an essential term at a later date.
137
Are "agreements to agree" enforceable?
Generally no, as they are considered open-ended and incomplete.
Booker Industries v Wilson Parking confirms this.
138
How can parties make an agreement to agree enforceable?
By appointing a third party (e.g., arbitrator) to determine the term, eliminating uncertainty.
139
What is the key principle for determining the meaning of commercial contract terms? (certainty)
A reasonable businessperson's understanding of the terms.
Consider: language used, circumstances, commercial purpose, context, market.
140
When might a court refer to external standards to clarify a contract term?
When the term is vague, uncertain, or illusory.
If a readily ascertainable external standard exists, the court may use it to add clarity.
Example: Industry standards.
141
What did the court in Hillas & Co Ltd v Arcos Ltd say about determining uncertain terms?
Courts can use the principle of "reasonableness" to determine essential terms not explicitly defined in the contract.
142
What are the limits of a court's ability to uphold an agreement?
Courts won't overly "spell out" missing terms that parties failed to agree on.
They also won't clarify terms that are hopelessly obscure.
143
What is the test for determining whether a term is too uncertain?
Is the language so obscure and lacking definite meaning that the court can't determine the parties' intentions? (objectively)
Difficulty understanding a term doesn't automatically mean it's ambiguous.
144
Explain the key takeaway from Council of the Upper Hunter v Australian Chilling.
A contract with multiple possible meanings or outcomes isn't automatically void.
If it's capable of a meaning, the court will determine the proper interpretation based on the parties' intentions.
145
What is an illusory contract?
A contract that appears to create obligations but where one or more parties have no real legal obligation to perform.
146
What issue did Biotechnology v Pace raise about illusory contracts?
Whether a promise to provide a benefit implies a promise to bring that benefit into existence. In this case, the court found no such implied promise.
147
How does Meehan v Jones deal with subjective satisfaction clauses?
ubjective satisfaction clauses (e.g., subject to finance) are not automatically illusory.
They imply an obligation to act honestly and reasonably in trying to fulfill the condition.
148
What are the consequences of an incomplete contract?
The contract is void.
It is not legally binding, and parties can seek restitution.
Example: ANZ v Frost
149
What are the consequences of uncertain or illusory terms?
The term is unenforceable (at minimum).
If the term is essential, the entire contract may fail.
Restitution may be possible if one party has already performed.
Courts may sever the offending term and enforce the rest if possible.
Examples:
Scammell & Nephew v Ouston (uncertain term, contract failed)
Placer Development v Commonwealth (illusory promise, contract failed)
Biotechnology v Pace (only the equity scheme promise was unenforceable, rest of the contract stood).
150
What does the Conveyancing Act 1919 (NSW) s54A require for contracts involving land?
Contracts for the sale or disposition of land (or interests in land) must be in writing and signed by the party to be charged (or their authorized agent).
151
What are the consequences if s54A is not met?
convenyancing act
The contract is unenforceable, but not void.
The court can't compel performance, but the contract is valid if performed.
152
What types of transactions does s54A apply to?
conveyancing act
Sales and other dispositions of land (including leases and mortgages).
"Disposition" has a broad meaning, including conveyances, vesting instruments, declarations of trust, etc.
153
What are the requirements for "evidence in writing" under s54A?
conveyancing act
A signed contract is ideal.
Alternatively:
"Some memorandum or note thereof" containing all essential terms and the signature of the party to be charged.
This could include unsigned contracts, correspondence, cheques, forms.
154
What are the essential terms that must be in writing for: (a) Sale of land (b) Lease of land
(a) Sale of land:
Parties
Price
Property
Other key promises (e.g., deposits, settlement period)
(b) Lease of land:
Parties
Property
Rent (price)
Other key promises
Term (duration)
155
What is a collateral contract?
- A separate contract that exists alongside the main contract.
- One party makes a promise that induces the other party to enter into the main contract.
156
What are the essential elements of a collateral contract?
- The collateral contract must be made before the main contract.
- The statement must be promissory, not just a representation.
- There must be consideration for the collateral promise (usually entering into the main contract).
- The collateral contract must be consistent with the terms of the main contract.
157
What is the test for determining whether a collateral contract exists?
An objective test: Would a reasonable person in the parties' positions have understood the statement as a binding promise intended to induce entry into the main contract?
158
What happened in Crown Melbourne v Cosmopolitan Hotel?
The court found that a statement about being "looked after at renewal time" was not promissory enough to create a collateral contract.
159
What is the consequence of a breach of a collateral contract?
- The promisee can sue for damages or specific performance.
- The promisee cannot terminate the main contract.
- The breach of the collateral contract doesn't affect the main contract's validity.
160
What are the two parts of the parol evidence rule?
- Prevents extrinsic evidence that adds to, varies, or contradicts the written terms of the contract.
- Limits evidence used to explain the meaning of the written terms.
161
When does the parol evidence rule not apply?
When the contract is only partially in writing.
162
Why is the parol evidence rule important?
- It promotes certainty and stability in contracts.
- It prevents parties from later trying to change the terms of their agreement by introducing evidence of prior negotiations or understandings.
163
What case is this from: A person is bound by the terms of a signed document, even if they haven't read or understood them.
L'Estrange v Graucob?
164
What are the exceptions to the rule in L'Estrange v Graucob?
1. Misrepresentation: If the contents of the document were misrepresented.
2. Non est factum: If the signer was fundamentally mistaken about the nature of the document.
3. Equitable grounds for setting aside the contract: For example, unconscionable conduct or undue influence.
4. Non-contractual documents: If the document or circumstances mislead the signer about its significance.
165
What is incorporation by notice?
When a business tries to incorporate terms into a contract by giving notice to the other party, rather than using a signed document.
166
What are the requirements for incorporating terms by notice?
Time of notice: Notice must be given before the contract is formed.
Knowledge of notice: If the party knows terms are available but doesn't read them, they are still bound.
Reasonable notice: Notice must be clear and in a form likely to come to the party's attention.
167
What is incorporation by a course of dealings?
When terms from previous contracts between parties are incorporated into a new contract, even if the usual requirements for incorporation haven't been met.
Applies when the parties' history of dealings shows a willingness to be bound by those terms.
Henry Kendall & Sons v William Lillico & Sons
168
When can a statement made during negotiations be a term of the contract?
1. If it's a promissory statement (a warranty), the innocent party can sue for breach of contract.
or 2. If it's not a term (a mere representation), there might be remedies in equity.
169
What are some factors courts consider when deciding if a statement is a term? (like the case of kat's cafe)
Importance of the statement to the parties.
Words used (e.g., "guarantee").
Relative expertise of the parties.
Timing of the statement.
Whether the statement was written down.
170
3 types of terms
Conditions: Essential terms, breach of which entitles the aggrieved party to terminate and/or claim damages.
Warranties: Less important terms, breach of which only entitles the aggrieved party to claim damages.
Intermediate Terms: The right to terminate depends on the gravity of the breach.
Case Example: Hongkong Fir Shipping v Kawasaki Kisen Kaisha: Establishes the category of intermediate terms.
171
reasons for termination
- Termination by Agreement: Parties can agree to terminate.
- Termination for Breach: Breach of a condition or a sufficiently serious breach of an intermediate term.
- Termination for Repudiation: Where one party evinces an unwillingness or inability to perform their obligations.
- Termination for Frustration: Where an unforeseen event makes performance impossible or radically different from what was contemplated.
172
What are the principles for implying a term on the basis of a custom?
In Con-Stan Industries of Australia Ply Lid u Norwich interbur Insurance Austal Pty Ltd, the High Court (Gibbs CI, Mason, Wilson, Brennan and Dawson JI) outlined the following principles for implying a term on the basis of custom:
1. "The existence of a custom or usage that will justity the implication of a term inoa contract is a question of fact".
2. While it need not be "universally accepted", "there must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract".
3. "A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement"
4. "A person may be bound by a custom notwithstanding the fact that he [or she] had no knowledge of it".
173
BP refinery formula for implying a fact
(1) it must be reasonable and equitable;
(2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;
(3) it must be so obvious that "it goes without saying";
(4) it must be capable of clear expression;
(5) it must not contradict any express term of the contract.
174
What is a tripartite collateral contract?
A tripartite collateral contract involves three parties:
1. A promisor who makes a promise about the subject matter of the main contract to a promisee.
2. A promisee who enters into the main contract with a third party in reliance on the promisor’s promise.
3 The third party to the main contract.
175
How is a term classified as a condition or intermediate term?
● Condition: An essential term, the breach of which allows the innocent party to terminate the contract and/or sue for damages (Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938)).
● Intermediate Term: An inessential term capable of a variety of breaches, some serious and some trifling (Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007)). The right to terminate depends on the seriousness of the breach.
176
Can an exclusion clause in a contract with a third party protect someone who is not a party to the contract?
Yes, a third party may benefit from an exclusion clause if certain conditions are met (New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) ):
● The contract intends to cover the third party.
● The contract states that the contracting party acted on its own behalf and on behalf of the third party.
● The contracting party had authority from the third party to contract on their behalf.
● There are no issues with consideration moving from the third party.
177
How do courts interpret words like "whatsoever" or "howsoever caused" in exclusion clauses?
Words like "whatsoever" or "howsoever caused" in an exclusion clause suggest that the clause is intended to apply broadly, including to negligence claims (Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd (1973) and Rutter v Palmer (1922)).
178
What are the key elements of misleading or deceptive conduct under Australian Consumer Law (ACL) s 18?
● Conduct: Includes statements, puffs, predictions, and even silence where there is an "expectation of disclosure".
● Trade or Commerce: The conduct must occur in a trade or commerce context.
● Misleading or Deceptive: The conduct must have the capacity to lead into or cause error (Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988)).
179
What are the differences between unconscionable dealing and undue influence?
● Unconscionable dealing: Focuses on the defendant's exploitation of the plaintiff's special disadvantage.
● Undue influence: Centres on the quality of the plaintiff's consent and whether it was freely given, considering the defendant's influence.
180
What is an action for debt?
An action for debt is an independent cause of action to recover a sum of money due under a contract (Young v Queensland Trustees Ltd (1956)). The right to payment arises from proper performance of contractual obligations.
181
What are the limits to using surrounding circumstances when construing contracts?
There are limits to the extent to which the surrounding circumstances can be used as a legitimate aid in construing a contract.
The surrounding circumstances cannot be used to "depart from the ordinary meaning of the words used by the parties merely because [the court) regards the result as inconvenient or unjust".
182
What is the contra proferentem rule?
Where a clause is ambiguous, it should be resolved against the proferens, meaning the person who proffered or put forward the provision for inclusion in the contract.
183
What is the rule about excluding liability for negligence?
"Clear words are necessary to exclude liability for negligence".
184
What is privity of contract?
Privity of contract is a common law doctrine that states only parties to a contract can sue or be sued on it.
185
What happened in Coulls v Bagots (1967)?
In Coulls v Bagots, Mr. Coulls entered into a contract allowing a company to quarry stone from his property. The contract stated royalties would be paid to Mr. Coulls and Mrs. Coulls jointly. Though Mrs. Coulls was a signatory to the contract, the High Court held she was not a party to the contract because she wasn't expressly named as a party.
186
hat happened in Lederberger v Mediterranean Olives (2012)?
In Lederberger v Mediterranean Olives, the court considered whether a party was sufficiently identified in a contract. The court stated a reasonable person would determine who was a party by considering the wording of the contract and the information the parties had.
187
What are the exceptions to the privity rule?
1. Agency: If an agent enters into a contract on behalf of a principal, the principal (rather than the agent) is the party to the contract and can sue or be sued on it.
2. Trusts: A third-party beneficiary can sue to receive a benefit under a contract if they are a beneficiary under a trust. The trustee can sue the promisor on behalf of the beneficiary if the promisor fails to perform.
3. Himalaya clauses: These clauses in shipping contracts extend protection from liability to subcontractors involved in the transport of goods.
188
What happened in Trident General v McNiece (1988)?
In Trident General v McNiece, McNiece, a contractor, was sued by one of its employees for an injury. Blue Circle, the principal contractor, had an insurance contract with Trident. The insurance contract's definition of "Assured" appeared to cover McNiece. Though not a party to the insurance contract, the High Court held McNiece could sue on the contract.
189
What was the key principle from Trident General v McNiece?
The High Court in Trident v McNiece held that if it is clear the promisee intended to create a trust for the benefit of a third party, the court will recognize the trust, and the third party can sue on the contract.
law
flashcards
Decks in class (15)
# Cards
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CONTRACTS191
-
TORTS24
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PROCEDURE22
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EVIDENCE107
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EVIDENCE (NEW)198
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CIVIL PROCEDURE191
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ADMIN ON CALL126
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ADMIN JUDICIAL REVIEW349
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IPCL END OF SEM EXAM342
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IPCL (THINGS I KEEP GETTING WRONG)26
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ADMIN EXAM FINAL FLASHCARDS66
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IPL INTRO FLASHCARDS40
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INTERNATIONAL LAW66
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PIL STUDY GUIDE CARDS121
-
PIL EXAM FLASHCARDS342
