Professional Documents
Culture Documents
39
28/5/07 9:12 AM
Definition of offer:
A promise to do, or refrain from doing something (by the offeror) upon
condition that the other party (the offeree) agrees to do or refrain from
doing something else.
Heydon JA
o It relevant to ask, can agreement be inferred? Can Mutual
assent manifested? would reasonable person in the
position of plaintiff/defendant think there was a concluded
bargain?
FACTS:
HELD:
D liable
FACTS:
HELD:
Courts distinguished this case from case where parties left one
essential term out to be decided at a later date (and took steps
towards deciding = contract
Peter Sadler
Contract Law
Privy Council
FACTS:
HELD:
No contract
2. Invitation to Treat
Invitation to treat is an invitation to others to come forward and make me
an offer. It signals a readiness to receive offers. Situations of invitation to
treat:
UK Court of Appeal
FACTS:
HELD:
Peter Sadler
Contract Law
Auctions
o Auctioneers call for bids is just an invitation to treat
o Bid is an offer, accepted at the fall of the hammer
Tenders
o Call for tenders is an invitation to treat not an offer
o Spencer v Harding (1870) LR 5 CP 561
o unless stated in the call to tender that they would accept
the highest option
o Harvela Investments Ltd v Royal Trust Co of Canada
Ltd [1986] 1 AC 207
Peter Sadler
Contract Law
UK Court of Appeal
FACTS:
HELD:
Terminology
o The term offer does not always mean offer in a legal
sense i.e. Todays Special Offer would be an invitation to
treat
Peter Sadler
Contract Law
Cannot later try to enforce the contract at a later date when you
gain knowledge of its existence:
o Fitch v Snedaker 38 NY 248 (1868)
o Gave information without knowledge of reward but then
tried to claim reward at a later date. The plaintiff sued for
reward failed: actions were not referable to the offer
Offers are expected to be made with some care so they are not
bound to obligations they cannot meet. The offerors liability will
depend upon the way in which the terms of the offer are
construed:
o Patterson v Dolman [1908] VLR 354
Peter Sadler
Contract Law
Occur when two parties send each other offers to one another at
the same time. These offers are exactly or substantially the
same. This does not result in a contract.
o Tinn v Hoffman & Co (1873) 29 Lt 271
o Parties wrote an offer to one another on same day with
exactly same terms. P tried to enforce no contract
Counter-Offer
Peter Sadler
Contract Law
6. Termination of Offers
Revocation
Communication of revocation
o No specific law just the offeree must become aware of it
even if that is via a third party
o Dickinson v Dodds (1876) 2 Ch d 473
o D offered to sell P some houses with the option open until
Friday. During the week D sold houses to a third party. P
heard of this from another source but tried to enforce
contract Failed, offeree can become aware of revocation
from a reliable source other than the offeror
o Offers to the world @ large are revoke in the same way
they are advertised: i.e. newspaper advert
Rejection
Lapse of time
Time can terminate offers:
o Where the offeror imposes a time limit in an express
stipulation
Peter Sadler
Contract Law
Change of circumstances
See frustration:
o Can be quite complicated if the contract did not clearly
stipulate use of the frustrating
subject to finance
Peter Sadler
Contract Law
o NB: The contract will have to be one that does not require
personal performance by the offeror i.e. if the offeror
had some unique skill the contract will not be enforceable
Accident
Loss of capacity
Peter Sadler
Contract Law
10
Acceptance p.71
28/5/07 9:12 AM
Definition of accepted:
Acceptance is the final unqualified assent to the terms of the offer, made
in the manner specified or indicated by the offeror. It can either be made
by action or by some implication of conduct.
Qualifications:
Acceptance must be communicated to be effective.
Boulton filled the order without telling Jones about the change of
owners.
HELD:
Peter Sadler
Contract Law
12
Mis-addressed
Mis-stamped
Incomplete address
Peter Sadler
Contract Law
13
2. Where the parties have reached final agreement on the terms of the
agreement & do not intend to alter their agreement, but want to defer
performance until it has been incorporated into a formal document
Peter Sadler
Contract Law
14
HELD:
The parties had not reached finality and the contract was not
enforceable. It still had to pass Camerons solicitors and
presumably they would have altered it quite substantially.
Finality.
Whether parties have reached finality (arrived at the final agreement on
which they wish to be bound) is decided by examining on the parties
intention either by their language and/or inferred from their conduct.
Kirby P summarised this in Geebung Investments v Varga
Investments (1995) 7 BPR 14,551
Peter Sadler
Contract Law
15
Essentially:
o As the Queensland Supreme Court stated in Commercial
Bank of Australia v G H Dean & Co Pty Ltd [1983] 2
Qd R 204
HOWEVER:
The courts will uphold contracts if possible They will always try to do
justice by seeking out the intention of the parties and upholding the
Peter Sadler
Contract Law
16
Incomplete Contracts
Same notion as above, courts will seek justice for the parties but
will not add essential terms.
Agreements to Agree
Generally not enforceable nothing to enforce
Peter Sadler
Contract Law
17
Meaningless Statements
read as a whole.
An action to dismiss the contract in regards to this contract will
fail if the meaningless clause can be severed without affecting
the substance of what was agreed.
Revocation of Acceptance
Acceptance can be revoked provided the revocation is communicated to
the offeror before acceptance.
Revocation & The Postal Rule
Peter Sadler
Contract Law
18
Conversely the courts would no let the offeror act on the recision
and then later try to enforce the postal acceptance.
Peter Sadler
Contract Law
19
28/5/07 9:12 AM
Lead-In
(A) & (B) were married, and subsequently split. During the marriage (A)
promised (B) a seaside villa in Tuscany if (B) promised to park on the left
side of the garage. (B) did this and now wishes to enforce the contract for
the seaside villa in Tuscany. Advice (B)?
TEST:
NB:
It looks at the situation in which the parties are placed and asks:
Would reasonable people regard the agreement as one in which
was intended to be binding.
Determined upon
o What was decided;
o Surrounding circumstances;
o Wording of the agreement;
o Effect of the agreement upon parties; and
o Have parties acted as though bound by the agreement
Merritt v Merritt [1970] 1 WLR 1211
allowance.
Domestic agreement courts will not enforce
Hogan, ex-Labor Premier of Victoria was refused reendorsement by the partys state executive and was
Peter Sadler
Contract Law
21
FACTS:
HELD:
arrangement.
o This case highlights the courts changed presumed stand
point for commercial and domestic arrangements (also
Ermogenous). Courts now morel likely to sit in the middle
and consider objectively commercial or domestic.
Peter Sadler
Contract Law
22
HELD:
Peter Sadler
Contract Law
23
to be binding.
Nyulasy v Rowan (1891) 17 VLR 663
o Defendant verbally offered to purchase shares from
plaintiff. Defendant later refused to buy them stating it was
all a joke. Evidence was adduced showing the plaintiff and
a number of others had taken him seriously.
o Held that there was a legally binding contract
Peter Sadler
Contract Law
24
This agreement does not give rise to any legal relationship, nor
does it intended by the parties that legal consequences shall flow
from it.
o This clause denies the existence of a contract and will be
upheld by a court.
The clause must be clear, although one or both of the parties may intend
to make it an agreement in honour, this must be manifestly apparent by
their words. Courts will disregard words used and look at surrounding
circumstance to ascertain intention if any ambiguity. (no adequate
citation)
Peter Sadler
Contract Law
25
Consideration p.111
28/5/07 9:12 AM
Lead-In
When (A) makes a promise to (B), (B) MUST do something in return.
Otherwise that promise will not be enforceable.
Definition:
Lord Dunedin adopted Pollocks definition (from Pollock on Contracts, 8th
ed, p.175) in Dunlop v Selfridges [1915] AC 847
Joint Promisees:
Peter Sadler
Contract Law
27
Timing of Consideration
Consideration may be executory, executed but not past:
HELD:
Also cite:
o Roscorla v Thomas (1842) 3 QB 234; 114 ER 496
Peter Sadler
Contract Law
28
TEST:
o The act was done at the promisors request;
o The parties understood that the act was to be remunerated
by the conferring of a benefit (such as a subsequent
payment) in exchange for it; and
Peter Sadler
Contract Law
29
TEST:
o The claim on which the action was based was reasonable.
Peter Sadler
Contract Law
30
CLASSIC RULE:
o If all the promisee has undertaken to/not to do, is what
they were already under a pre-existing obligation to the
promisor to/not to do then the act or forbearance cannot
be good consideration.
o Stilk v Myrick (1809) 2 Camp 317; 170 ER 1168
Peter Sadler
Contract Law
31
Recent UK developments:
o 1991 UK Court of Appeal: Williams v Roffey Bros &
Nicholls (Contractors) [1991] 1 QB 1
Peter Sadler
Contract Law
32
o The reasoning behind the old existing duty rule in Stylk &
Myrick was a concern about giving in to parties who used
threats of non-performance to extract payments & benefits
additional to those provided for under the original terms of
the contract. This can now be largely dealt with in
economic duress.
Yes
NB:
Peter Sadler
Contract Law
33
Peter Sadler
Contract Law
34
28/5/07 9:12 AM
Lead-In
(A) has made a promise to (B) with consideration & not typically
enforceable at law. (B) has relied on (A)s promise to their detriment.
Definition of Estoppel:
Lord Denning in Moorgate Ltd v Twitchings [1976] QB 225 at 241:
FACTS:
P leased a block of flats from D for 99 years annual rent of
2500.
In 1940, due to war, they could not sublet many flats P agreed
to reduce rent to 1250 annually.
HELD:
Action succeeded.
Australian Adoption:
Peter Sadler
Contract Law
36
FACTS:
On the 21st October 1983 a draft agreement for lease was sent
to the Mahers solicitors. Amendments to this agreement were
discussed, and Waltons solicitors were advised that Maher had
started to demolish the old buildings.
Walton, with full knowledge that Maher was demolishing the old
buildings, advised their solicitors to go slow on exchanging
contracts.
HELD
Peter Sadler
Contract Law
37
Test:
Brennan J outlined a test for promissory estoppel in Waltons Stores v
Maher ():
NB:
come with clean hands. It follows that
Remedies/Relief available:
The courts will award the minimum required to rectify what the
courts identify as the detriment the promisee has suffered.
o The courts will identify which form of relief is more
appropriate:
Relief equivalent to enforcement of the promise; or
Peter Sadler
Contract Law
38
Peter Sadler
Contract Law
39
Privity p.178
28/5/07 9:12 AM
Lead-In
(B) enters a contract to paint (A)s fence in consideration for (A) paying
(C) $1,000. (B) paints (A)s fence then leaves town. (A) refuses to pay
(C). Can (C) enforce the contract between (A) and (B)?
No!
Definition:
The Doctrine of Privity
Only an original party to a contract may sue, or be sued on it.
Exclusion Clauses
Exclusion Clauses can be constructed to protect a 3rd party.
Test:
Peter Sadler
Contract Law
41
Applies to
o Trusts
o Agency
o Assignments
Peter Sadler
Contract Law
42
28/5/07 9:12 AM
Lead-In
(A) breeches a term of the contract they have with (B). The court will
establish if the breeched term is a condition, warranty or innominate term
by looking at its essentiality.
Test of Essentiality:
Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd
(1938) 38 SR (NSW) 632 at 641:
Conditions
Conditions are terms that go to the heart of the contract. If breeched,
render the performance of the contract substantially different from what
was agreed.
Remedy
o Innocent party can terminate contract (& be released from
any further contractual obligations)
o Damages
Warranties
A warranty is a minor term of the contract, a breech of this does not
render the contract substantially different.
Bettini v Gye (1876) 1 QBD 183
o D contracted to use P (Bettini) a singer for 3 months. P
undertook (inter alia) to be in London 6 days before the
Remedy
o Only remedy available is damages for any loss or
inconvenience
o right to terminate
NB:
Peter Sadler
Contract Law
44
Peter Sadler
Contract Law
45
28/5/07 9:12 AM
Lead-In
(B) is disputing a contract with (A). Although the contract is reduced to
writing, (B) is arguing that what was written and signed is not a true
reflection of their agreement & a statement was left out. (B) must prove
the following:
Time.
Reduction to writing.
Importance.
AND
To be incorporated into contract statement will have to negate
the parol evidence rule by proving 1/4:
o Contract is partly written, partly oral.
o Term is implied (by some trade usage, custom or prior
dealings).
o Term is implied (by statute).
o Contract is ambiguous or uncertain.
ALTERNATIVELY
o (B) can show that (A)s statement created a collateral
contract to induce (B) to enter the primary contract.
Term or Representation:
Definition
A Representation
Time of statement
o Time lapsed between statement being made and contract
being finalised can be relevant
o Routledge v McKay [1954] 1 All ER 855
Reduction to writing
o As in Routledge v McKay (), after the statement was
made, a contract was drawn up. The more certain and
complete the contract, and the addition of an entire
agreement clause (), the less likely the statement is to be
a term. This is even more so if the contract is purpose
written and not just a standard form agreement.
Peter Sadler
Contract Law
47
Importance of statement
o If the representee makes it known that a particular fact is
of great importance and of the representor then asserts
that the statement is true, the statement will probably be
considered a contract.
o Bannerman v White (1861) 142 ER 685
Peter Sadler
Contract Law
48
This exception only comes into effect when it is, or should have
been, clear to both parties that the express terms were not
complete.
Peter Sadler
Contract Law
49
Peter Sadler
Contract Law
50
meaning.
Cite: Akot v Rathmines Investments [1984] 1 Qd R 302
extrinsic evidence (brochure) showed which apartment was
the one they bought
Collateral Contracts
Peter Sadler
Contract Law
51
To address statements that lie in the grey area between terms and
representations the courts treat such statements as collateral contracts. It
is a contract entered into to induce a party to enter the main contract.
Peter Sadler
Contract Law
52
Peter Sadler
Contract Law
53
28/5/07 9:12 AM
Lead-In
(A) has breached a contract with (B). (A) is now relying on an exclusion
clause to limit/exclude their liability. How can (B) negate the exclusion
clause?
This issue appears a lot in dry-cleaning cases
Test:
Courts have traditionally treated exclusion clauses with dislike.
Before enforcing
Adequate Notice:
A document will be contractual in nature if:
Non-Contractual Documents
Require actual notice before effective
actual notice = the proferens specifically brings the existence of the
clause AND its contents to the attention of the other party. This is done
prior to contracting.
Peter Sadler
Contract Law
55
Contractual Documents
Require either constructive notice or actual notice
constructive notice = the proferens takes reasonable steps to bring the
existence of the clause AND its contents to the attention of the other
party. This is done prior to contracting.
reasonable steps question of fact.
o Must do what is necessary to give notice to the class of
persons you are contracting with. If the proferens is aware
of any disabilities of the other party he must make
adequate extra steps.
Peter Sadler
Contract Law
56
Effect of Signature
Documents that require signature a generally contractual in nature and
the courts will rarely help someone that has signed a document they have
not read.
As Scrutton LJ said in LEstrange v Graucob [1934] 2 KB 394:
[1951] 1 KB 805
Pleas of non est factum hard to show!
o The document signed must be radically different from what
the person thought they were signing.
o The signer was not careless in signing without checking the
documents contents.
Cite: Petelin v Cullen (1975) 132 CLR 355
Peter Sadler
Contract Law
57
Cite:
o Henry Kendall & Sons v William Lillco & Sons Ltd [1969]
2 AC 31
o McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125
Peter Sadler
Contract Law
58
Misrepresentation p.279
28/5/07 9:12 AM
Lead-In
In the course of pre-contractual negotiations for a block of land (A) told
(B) that the block is very fertile and improvable. (B) bought the block of
land and discovered that it was not very fertile at all. The statement does
not fit the requirements to be implied as a term in the contract, what is
(B)s next course of action?
Dimmock v Hallet (1866) LR 2 Ch App 21
Try to show that the representation was more than salesmans puff or a
statement of opinion but = actionable misrepresentation must show:
Contingent on degree the factual matrix fits these criteria one of the
following actionable misrepresentations will be triggered:
Innocent Misrepresentation
o Rescission
Negligent Misrepresentation
o *Damages in the tort of negligence
o Rescission
Fraudulent Misrepresentation
o *Damages in the tort of deceit
o Rescission
* Damages are not sought in tort law because the representation has not
been incorporated as a term in the contract. Since the representation is
not part of the contract there is no breach, and subsequently no cause for
action in contract law.
And if you cant prove any of this whack them with s.52 of the Trade
Practices Act in fact it might be better to do that first!
Peter Sadler
Contract Law
60
Cite: Griffiths CJ (at 577) & Isaacs J (at 584) in W Scott Fell &
Co Ltd v Lloyd (1906) 4 CLR 572
5 Exceptions:
Statements of Fact
The representation must be a statement of fact:
a statement of opinion
Peter Sadler
Contract Law
61
4 Exceptions
where the representor never held the opinion in the first place
(i.e. where they lied)
where the facts were not equally known by the parties AND an
opinion was given by one who should have known the facts or
who was in a far stronger position to assert the facts. See:
o Esso Petroleum v Mardon [1976] QB 801
Peter Sadler
Contract Law
62
Peter Sadler
Contract Law
63
Fraudulent Misrepresentation
TEST:
Lord Herschell in Derry v Peek (1889) 14 App Cas 337:
Remedies
Damages in the tort of deceit
Rescission ( for rescission discussion)
Innocent Misrepresentation
Usually occurs when a representor makes a honest, but misleading
statement
Peter Sadler
Contract Law
64
Remedies
Rescission
Rescission
Rescission aims to put the party back exactly (under common law) or a
close as possible (in equity) to their previous positions.
The party hoping to rescind the contract must give notice to the
other party of their intentions to do so
o If the other party absconds notice is no required
If a 3
rd
Peter Sadler
Contract Law
65
Remedies
Damages
Peter Sadler
Contract Law
66
Mistake p.253
28/5/07 9:12 AM
Lead-In
(A) agrees to sell (B) their car. (A) has two cars, a Ferrari and a Volvo. (B) pays the money
and goes to collect the Ferrari, but finds that he has bought the Volvo. What can (B) do?
Definition: Mistake
When a contract has been entered into because one or more of the
parties are under a misapprehension about something forming the basis
of their agreement, it can be argued that there is no true consent
(mutuality), and consequently no binding contract.
a mistake of fact
a mistake of law
o Cite: David Securities v Commonwealth Bank of
Australia (1992) 175 CLR 353
a mistaken motive
o Cite: Bell v Lever Bros Ltd [1932] AC 161
2) Mutual Mistake
3) Unilateral Mistake
Common Mistake
Res Extincta the thing has perished
Peter Sadler
Contract Law
68
If the subject matter of the contract ceased to exist at the time the
contract was entered into, there can be no contract.
Common Mistake
when reducing a contract to writing (Rectification by the courts)
If parties reach an agreement, draw up a contract, but then mistakenly
forget to include a term the court can write one in.
Mutual Mistake
TEST:
If the court finds against the mistaken party, and some sense
can be read into the contract, it will be upheld.
Peter Sadler
Contract Law
69
Unilateral Mistake
(I see it as negligent/fraudulent misrepresentation of a term of a contract
as opposed to a statement in negotiations of a contract)
Unilateral mistake as to the terms of an offer
TEST:
AND
The true meaning of the agreement reasonably ascertained by
a third party overhearing the negotiations.
Cite: Taylor v Johnson (1983) 151 CLR 422
Unilateral mistake as to the identity of the other party
Common law rarely assists in declaring such contracts void. However:
TEST:
The party (B)s offer was only intended for party (A) and that
(A)s identity (for quality, trade relations) was of vital importance
That party (B) took reasonable steps to ensure that party (A)
was the person being dealt with.
o Failure usually occurs in face to face transactions where
the presumption is greatest you intended to deal with the
person you dealt with.
That (B) was aware, or should have been aware, of the offerors
true intentions
Cite:
Peter Sadler
Contract Law
70
Iff (if and only if) the mistake goes to the heart of the contract
(something fundamental), it will be declared void ab initio.
In Equity
Where a contract cannot be declared void in the common law
sense:
o There must be a common misapprehension
o It must be of a fundamental nature
o The party seeking to have the contract set aside must not
be at fault
o It must be unconscionable to let the other party benefit
from the mistake
o There must be no possibility of a 3rd parties rights being
prejudiced
THEN:
o The contract is voidable not void.
o The contract may be rescinded by the mistaken party or
the contract may be set aside by a court on such terms as
it sees fit.
o This right is limited where it is not possible to put the
parties back in the position they were in
lapse of time
Peter Sadler
Contract Law
71
Peter Sadler
Contract Law
72
DUiU p.313
28/5/07 9:12 AM
D Duress,
Ui Undue Influence,
U Unconscionability.
Lead-In
(A) threatens to get fresh on (B)s cousin unless (B) enters a contract to
buy (A)s potatoes. Duress
(A) had been given a cottage by (B). (B) was uneducated and heavily
dependent on (A) for help. (B) now seeks to rescind the contract and give
the cottage to his son instead of (A). Undue Influence
(B) has entered into a contract with (A) in which there is an extremely
harsh and onerous clause. (B) is a migrant with poor English and business
skills. Unconscionability
DURESS
Duress in law must consist of such pressure as would cause a reasonable
person, exercising that ordinary degree of firmness that the law demands
of us all, to do something that he or she would not do otherwise.
OR
Threat of Violence
AND
AND
Threat of Imprisonment
Common Law
o Threats of warranted imprisonment
Peter Sadler
Contract Law
74
OR
Contract is voidable
o Binding on both until he coerced party elects to bring it
to an end
o Restitution of all money and goods transferred under the
contract
Damages
o There has been no breach?
o Most likely use Tort
Tort of Intimidation
Duress of Goods
OR
Threatens to do so.
Peter Sadler
Contract Law
75
Economic Duress
Economic Duress is a new & developing legal avenue
The test for economic duress is the same as duress to the person
except the pressure exerted is economic rather than physical.
o The questions the court asks are
AND
HELD:
Peter Sadler
Contract Law
76
UNDUE INFLUENCE
The courts have been very careful not to set defined limits to the
situations in which undue influence can be pleaded.
TEST:
OR
Presumption:
Cases which indicate that requisite undue influence can originate are (2):
1) A relationship of trust and influence (automatic presumption of
influence)
o Brothers
Cite: Armstrong & Armstrong (1873) 8 Ir Eq R1
Other Relationships
o Just have to show a relationship with a high level of trust
Peter Sadler
Contract Law
77
Rescission
o Contract set aside in equity and the parties restored to the
positions they occupies before the contract.
o Must bring the action within a reasonable amount of time.
UNCONSCIONABILITY
The common law will not come to ad of someone that freely enters into a
bargain hoping or expecting that its harsher terms will not be activated.
Peter Sadler
Contract Law
78
common law
equity!
AND
AND
Deane J, in HC of Australia
FACTS:
Peter Sadler
Contract Law
79
HELD:
The guarantee was set aside, it had been entered into as a direct
result of the banks unconscionable conduct could not be
enforced.
Mere disadvantage
Examples of susceptibility:
o Age, Poverty, Need, Sickness, Infirmity, Drunkenness,
Illiteracy, Lack of Education
Ratification
Affirmation
Acquiescence
Peter Sadler
Contract Law
80
Illegality p.349
28/5/07 9:12 AM
Lead-In
(A) enters a contract to do backyard plastic surgery to (B). Plastic surgery
is express forbid by legislation. (A) botched the job, but it still asserting
that (B) pay. (A) & (B)s contract is illegal, does (B) have to pay?
Definition: Illegality
An illegal agreement is invalid and unenforceable. Principal based on
maxim: ex turpi causa non oritur actio (no action arises from a base
cause).
How do you know if a contract is illegal?
Statute Law will prevent the contract.
OR
ASK
What was parliament trying to achieve with this Act?
What is trying to stop, the contract or the performance of?
Does it render this contract illegal? Or is there just a penalty?
Consideration sets from above (2):
1)
o Implied prohibition:
Peter Sadler
Contract Law
82
2)
o Illegal as performed
booze.
It is illegal when (B) uses the still to make
bootlegged booze.
Peter Sadler
Contract Law
83
Effect of Illegality
If the contract is illegal as formed
The contract is void (ex turpi rule)
Peter Sadler
Contract Law
84
OR
First, the courts look at the (4) exceptions provided for contracts
illegal as formed
Peter Sadler
Contract Law
85
Void Contracts
Certain contracts are simply not allowed
Gaming Contracts
o Illegal bookkeepers seeking to uphold debts.
Peter Sadler
Contract Law
86
Breach p.407
28/5/07 9:12 AM
Lead-In
(A) and (B) have a valid contract to paint a wall. (A) paints the wall with
only one coat and the underlying colour is still showing through. Does (B)
have to pay?
De minimis non curat lex: The law does not concern itself with
trifles.
Substantial Performance
Obstruction of Performance
Peter Sadler
Contract Law
88
o Extension
Tender of Payment
o Where one party is required to pay money, tender occurs
by the debtor offering the exact amount due. If that offer
is refused the debtor is NOT released from further
obligation.
o If they are subsequently sued, they need only file a
defence of tender, pay the money into the court and the
creditor will have to bear all costs of the action.
Peter Sadler
Contract Law
89
Damages if
o Breach of term: warranty, intermediate term or condition.
o Discharge of contract.
Test of essentiality
Peter Sadler
Contract Law
90
Explicitly:
o One party clearly informs the other that they will not do
what is required
Implicit:
o One party acts in a manor implying that they will breach,
or precluding possible performance of the agreement
Peter Sadler
Contract Law
91
Peter Sadler
Contract Law
92
Remedies
DAMAGES:
Peter Sadler
Contract Law
93
Actual & Anticipatory breach can entitle the innocent party to sue
for damages (at least where he or she has performed or is ready,
willing and able to perform his or her part of the contract).
DISCHARGE:
Peter Sadler
Exclusion clauses
Confidentiality clauses
Arbitration clauses
Contract Law
94
Frustration p.394
28/5/07 9:12 AM
HELD:
Doctrine of Frustration
Non haec in foedera veni = it was not this that I agreed to
Frustration cannot be established where:
Performance not impossible just more onerous or
inconvenient.
Peter Sadler
Contract Law
96
Peter Sadler
Contract Law
97
Impossibility = futility
o Performance, although possible, is futile, because the
mutually understood purpose of the contract can no longer
be achieved. The frustrating event must render the entire
underlying purpose of the contract.
o Krell v Henry [1903] 2 KB 740
enforce contract.
Courts found that contract had lost it purpose,
contract was predicated by a primary purpose to
watch the procession frustration.
Peter Sadler
Contract Law
98
Consequences of Frustration
WA is still bound by common law in regards to the effect of frustration
while other states have legislation.
Consequences @ Common Law
Up until the time frustration take effect the contract can still be enforced.
There are accrued rights & obligations.
Peter Sadler
Contract Law
99
Remedy p.419
28/5/07 9:12 AM
Definition:
o Nominal Damages
Torts:
Remedy will put the innocent party in a position they would have
been in before the tortuous action was inflicted.
Contract Law:
Remedy will put the innocent party in a position they would have
been in if the contract had been completed the expectation
principle.
o Robinson v Harman (1848) ()
o BUT/FOR Test:
in law damages are only recoverable for those losses that:
o Arise naturally from the breach
Peter Sadler
Contract Law
101
this.
o Where there was a breach of contract which had, as its
whole objective, the aim to provide relaxation, enjoyment
or relief from molestations Holiday Cases
Horse Racing
Beauty Contest
Divorce Arrangements
Peter Sadler
Contract Law
102
Peter Sadler
Contract Law
103
Burns v Man Automotive (Aust) Pty Ltd (1986) 161 CLR 653
COURT:
FACTS:
P sues D for:
o Expectation damages - Loss of profit (4 years)
o Actual Damages for mechanical repairs & towing etc
o Nervous Stress
HELD:
Other Remedies
Specific Performance
Equitable remedy is entirely at the discretion of the court.
Peter Sadler
Contract Law
104
Mandatory Injunction:
o Can enforce a term of the contract in isolation (Specific
performance will enforce the whole contract)
o Cite: Warner Bros v Nelson [1937] 1 KB 209
Restitution
It is restoring one party to a state prior to contracting.
Reasonable Remuneration
Quantum Meruit as much as he has earned
Peter Sadler
Contract Law
105