Contract law cases for Cancellation PDF

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Contract law cases for cancellation that outlines the facts, issue, and conc...

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Cancellation cases Entitlement to cancel Frost v Knight (1872) Facts

Mr Knight promised to marry Miss Frost when her father died. Knight changed his mind and said that he would not marry her once he died. As the father was still alive, he had not yet breached the contract, yet Frost still sued for breach of contract.

Issue

Was Miss Frost able to sue for breach of contract even though the contract had not yet been breached?

Conclusion

As Knight had demonstrated intention to breach the contract, it is inevitable that a marriage would not eventuate. If she was allowed to cancel the contract, she could move on to find someone else. Would have been a waste of time and resources to require the injured party to stick to the contract, when the breach is clearly going to occur. Parties should be able to redirect their resources elsewhere.

Repudiation Synge v Synge 1894 Facts

Defendant promised to leave property to the plaintiff, if the plaintiff agreed to marry him. After the marriage the defendant transferred the title of the property to a third party in an effort to avoid the transfer. The ex-wife later sued in an attempt to recover damages for the property.

Issue Conclusion

Had there been a breach of contract? 1. As the defendant had put the property out of his power in an effort not to perform the contract there had been a breach and the plaintiff had an immediate right to recover damages

2. As the marriage occurred on the basis of the specific piece of property, the plaintiff may have a claim to it over those who may claim under the previous owner Schmidt v Holland (1982) Facts

Schmidts signed a standard form agreement for the sale and purchase of land with the Hollands. The Scmidts decided not to buy the property and bought another one. The deposit had not been paid and the Holland’s sold the house for $1500 less than the previous agreed upon price. The Schmidts sued the Hollands for the real estate against commission.

Issue

Did this amount to repudiation?

Conclusion

The Hollands conduct of failure to pay deposit, buying another house, failure to settle on agreed date, abandonment of transaction did amount to repudiation. Note; as the Hollands had not notified the Schmidts of the acceptance of their repudiation, there was no basis for the claims of damages.

Starlight enterprises ltd v Lapco enterprises ltd (1979) Facts

Lapco was to deliver travel bags at $3 each. After delivering some of the bags, Lapco believed, erroneously, that the contract allowed them to increase their prices, Lapco wrote Starlight advising them of the new price Starlight claimed that Lapco had repudiated the contract and cancelled it. Lapco realeised the error and offered to supply the rest of the bags at $3 but Straight insisted the contract was over.

Issue

Did Lapco’s conduct amount to repudiation?

discussion

Their conduct did not manifest an intention to not to commit to the obligations of their contract. They also stated that they were intending to

increase their production in order to supply the amount that S required. Whilst they did indicate that they were unwilling to continue supplying at the lower price, when viewed objectively by the reasonable person, this did not amount to init not to be bound to the contract at all. Judge did not think that L made it clear that they were unwilling to provide further bags if the new price was not accepted. The second letter indicates that they were doing what they could to avoid another price increase, indicating that they believed that they were entitled to increase the price. Kumar v Station properties ltd (2015) Facts

Investors where offered the opportunity to invest in for an apartment complex The complex was completed in 2008, the same year as the global financial crisis which resulted in a reduced value of the units, even though the investors thought that the would and Station were unable to find third party investors. Station required investors to pay the full price of the units which the investors did not expect when they invested in the property. After the investors refused to pay, Station claimed that the investors had repudiated the contract as there was a clause requiring them to pay if on sale did not occur Properties cancelled the contract and sued for damages.

Issue

Did Kumar (investors) repudiate the contract?

Conclusion

Under the contract, Station properties were required to provide furniture packages and have a management contract in place to make the sale of units easier, therefore Station properties had breached their contract terms. Station properties had breached the contract prior to Kumar, therefore Kumar may be entitled to cancel if they are found to be essential terms. Were the terms essential?

The investors were told they were not outright buyers but were there to facilitate SP being able to borrow from the bank. SP proposed the furniture to make the sale easier and the management was essential. The courts also found that the terms were essential as Kumar was reliant on the on SP to decide what was needed for the units to be onsold. Management fundamental to the form of investment and to out of town investors. As the appellants in this case would have declined to enter into the contract without these terms, they were deemed to be essential. Test form Kumar 1. To determine whether a term is essential to the cenceleig party, would the party have been more probable to decline to enter into the contract if the term had not been written in. 2. This question must be answered by objective contextual appraisal. Notes: The mere fact that a party has adopted views that it is shown or accepts were wrong does not mean that the party is manifesting an intention not to perform its obligations under the contract. If it is clear that the party accept the contract and were simply erroneous is the beliefs, the party should not be held to have reputed the contract Parties to a contract may have different beliefs to the terms of the contract and this dispute may not amount to an intention not to fulfill the contract By contrast, if a party recently refuses to perform the contract unless the other party accept incorrect terms, inconsistent with the contract or on the mistaken view, there was never an enforceable contract, then that party may well have been found to have repudiated

the contract Cancelling party must be ready, willing and able to perform.

Mana Property Trustee Ltd v James Development Ltd Facts

Mana property contracted to sell land to James development. The land was undeveloped. At the time of the contract the boundary for the sale of land had not yet been determined but the contract said the sale would be for 4.7161 hectares of land and a clause in the contract said that the final area must be no less than 4.7150 hectares The actual area turned out to be 4.6990 hectares. JD gave them notification of claiming that the minimum was an essential term to them. Mana disputed their right to cancel and sued.

Issue

Was clause 18.3 an essential term to James?

Conclusion

The Supreme Court assessed if the clause was essential to do this they assessed the wording and context of the clause and the purpose of the clause and the case. Language - Imperative, strong but the wording alone does not firmly indicate it as an essential term. Consider the overall context of the case alongside the language. Context of the case - Sale of high value land with a potential to be subdivided and sold. The size of land was dependent on the ability to subdivide. Therefore it is likely that JD would have a provision in the contract to protect against this Was found that this was an essential term in the contract for James development.

MacIndoe v Mainzeal Group Ltd

Facts

Mainzeal Group entered into a contract with MacIndoe to buy a title in a building project. MacIndone was unable to pay the first installment for the initial 35% of the purchase price. Mainzeal gave notice to the appellants that time was of the essence of contract for the sale of the overdue payment. McIndoes further failure to pay prompted Mainzela to cancel the contract and brought proceedings for damages against the defendants.

Issue

Was the cancellation valid?

Conclusion

The notice was considered reasonable due to the amount of time they had given them to pay the missed payments. Unless the contract expressly or impliedly states that time is of the essence, the other party cannot cancel the contract merely because the other party does not fulfill the obligation on time. Why did the failure to pay have substantial consequences? Involved a significant amount of money that allowed them to finance the property. Failure to pay reduced the contract benefits to Mainzeal and increased their burden.

Aerial Advertising Co v Batchelors Peas [1938] Facts

In 1938, Batchelors Peas rented an aerial advertisement attached to the plane, there was a provision in the contract that stated that the pilots needed to call everyday before they flew, they forgot to do this for two days. One of those days was on november 11th, Armitage day for commemoration of WW1 and the pilot flew over the town during a moment of silence leading to complaints to Batchelar Peas and threats to boycott the product. BP cancelled the contract based on the breach Whilst the term was not a substantial or major breach the consequences where catastrophic

Issue

Was the breach substantial enough to warrant cancellation?

Conclusion

Substantial is not defined in statute, should be something more than trivial but each case must be considered on its own facts and have regard to nature of the contract and of its subject matter and to all the circumstances of the case. Substantially matter of fact, degree and impression Incapable of arithmetical analysis Objective analysis.

Sharplin v Henderson [1990] Facts

Sharplin purchased a Tauranga orchard from Henderson. After the sale it was found that the real estate agent had misrepresented that 900 trees belonged to the property but they did not causing a misrepresentation of 25%

Issue

Was the misrepresentation a substantial breach of contract

Conclusion

The misrepresentation was a significant enough breach to amount to cancellation.

Affirmation White and Cater (Councils) Ltd v McGregor [1961] Facts

White and Carter were advertising contractors that agreed with McGregor to advertise for them for a period of three years. On the same day that the agreement was made McGregor wrote to cancel the contract. W and C refused this and continued to advertise for them for five months. McGregor refused to pay and the appellant sued for the whole amount of the contract.

Issue

Did W and C have a right to claim for the amount of the contract

Conclusion

Found that the appellant had the right to carry out the contract and claim for the rnite value of the contract. The innocent party had the right to affirm the contract.

Wilson v Hines (1994) Facts

The innocent party agreed to arbitration to sort out the issue.

Issue

Did the arbitration amount to affirmation.

Conclusion

The courts found that this did not amount to an instance on performance and affirmation did not occur.

Gray v Thomson [1922] Facts

The plaintiff entered into an agreement to purchase from the defendant a certain dwelling house for 575 pounds. The plaintiff knew the land was smaller than promised but still bought the land. He continued with the payments and demanded compensation for the misrepresentation and then he tried to cancel

Conclusion

The plaintiff was not entitled to cancel as he affirmed the contract.

Oxborough v North Harbour Builders LTD (2002) facts

Mr and Mrs Oxbrough contracted with North Harbour Builders to build a house in january of 1999 They were unsatisfied with the quality of the build and the progress being made. They commenced proceedings to; Specific performance and an interim order of preservation freezing the money they already paid to NHB as progress payments. The court dismissed both pleas and the next day proceeded to cancel.

Issue

Were they entitled to cancel or had they affirmed the contract by seeking the court order.

Decsion

Commencing proceeding does not usually on its own amount to affirmation Seeking specific performance may amount to affirmation If there had been a further breach after the affirmation, this would give rise to a fresh right to cancel.

They held that the two actions amounted to affirmation as they stated that there had been a complete failure of consideration. Schmidt v Holland (1982) Facts

Schmidts signed a standard form agreement for the sale and purchase of land with the Hollands. The Scmidts decided not to buy the property and bought another one. The deposit had not been paid and the Holland’s sold the house for $1500 less than the previous agreed upon price. The Schmidts sued the Hollands for the real estate against commission. The actions amounted to repudiation and the vendors were entitled to cancel. They failed to communicate their intention to cancel.

Conclusion

No valid cancellation occurred and the contract remained in place.

Kauri Developments ltd v Nicholson Facts

The breaching party was overseas and the cancelling party did not know their address Instead they sent a letter to the breaching parties lawyer.

Conclusion

The letter to the parties lawyer sufficed.

Restitution Worsdale v Poglase Facts

Worsdlae agreed to buy Poglase’s house. The contract price for the house was $60,000 and the contract provided that a deposit of 10% must be paid Worsdale paid the deposit but failed to settle. Poglese cancelled the contract and sold the house to a third party on the very day that he was meant to settle with Worsdale for the same price. Polglase suffered no loss and used part of the deposit to pay the commission for the agent leaving him with $4,000 extra

Worsdale believed that he was entitled to his deposit back. Issue

Was Worsdlae entitled to the deposit back alongside section 42(1)(b) - not automatic restitution.

Conclusion

Under section 42(1)(b), Worsdale is not entitled to automatic restitution. Under section 43, the court has the option to grant relief if they feel that it is just and practical. The courts found that it would not be just to do this in the present case. The purpose of the deposit is to provide security and if they fail to go through with the sale then they will lose out.

Garratt v Ikeda [2002] Facts

Garratt agreed to buy a residential property from Ikeda for $1.38 million and agreed on a deospit of 10%. He paid the first two payments but failed to pay the third one. Under the contract it was proved that timely payments are essential and he therefore had the right to cancel. Ikeda now had $50,000 which he was entitled to keep from Garratt A large portion of the deposit was due after the cancellation but was not paid and Ikeda sued for the rest of the deposit. Garratt disputed this claiming that the cancellation extinguishes this obligation.

Issue

Was Ikeda entitled to the money yet to be paid?

conclusion

As the condition was unconditionally existing. The court followed two previous cases that allowed the innocent parties to enforce obligations due before cancellation....