Contract Law Condensed Notes PDF

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AGREEMENTOffer and Acceptance Smith v Hughes – Blackburn J; subjective intention does not matter + but what a reasonable person in the shoes of the offeree would believe is being offered = objective approach  OT Africa Lines v Vickers – mistake in offer  need to ask if the offeree ought to have k...

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AGREEMENT

Offer and Acceptance  

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Smith v Hughes – Blackburn J; subjective intention does not matter + but what a reasonable person in the shoes of the offeree would believe is being offered = objective approach OT Africa Lines v Vickers – mistake in offer  need to ask if the offeree ought to have known that the appearance of the offer was mistaken = on the facts OTAL did not ought to have known Pharmaceutical v Boots Cash Chemist – product on a shelf with a visible price is not an offer = invitation to treat Robinson v Hemachandra – CA, William Young J; applied objective approach + language & content of the document the vendor signed suggested a binding document creating a contract = the offer was accepted Brogden v Metropolitan Railway – narrow point = offeree’s conduct amounts to acceptance of the terms of the offer Airways Corp v Geyserland – NZHC, qualification to the objective approach = may not apply if the offeror knows the offeree is not intending to accept  no contract Lee v Sayers – NZ, offer can only be accepted by the offeree Tinn v Hoffman – cross-offers = no contract if the offer was the same terms  contract needs offer & acceptance Kennedy v Thomassen – acceptance is once it is delivered not just signed + exception – dead person cannot accept an offer Adams v Lindsell 1818 – posting rule = acceptance by letter is complete upon posting (exception to general rule) Carlill v Carbolic Smoke Ball Co. – unilateral contract = acceptance by performance R v Clark – to accept the reward of a unilateral offer it needs to be in your mind when performance is undertaken Butler Machine Tools Co v Ex-Cell-O Corporation – document has to be considered as a whole + attempted acceptance was a counter offer but returning of the acknowledgment form was final acceptance (battle of the forms) Boulder Consolidated v Tangaere – look at whether parties intended to be bound by agreement not offer and acceptance

Revocation   

Payne v Cave – offer can be revoked anytime before acceptance Sommerville v Rice – NZ, revocation must be communicated to be effective Mobil Oil Australia v Lyndel Nominees – revocation of unilateral offers = court can prevent an offeror from revoking an offer in some situations  no universal rule

Lapse of time 

Kean v Dunfoy – no express stipulation for how long an offer is open for = will lapse after a reasonable time

Change in circumstances 

Dysart Timbers v Neilson – offer may be terminated from a fundamental change in circumstances on which it was based

Unqualified assent   

An unqualified agreement to the terms of the offer Hyde v Wrench – when a counter offer is made = a rejection of the original offer Reporoa Stores v Treloar – NZ, majority – second sentence changed to terms of the settlement date = a counter offer; dissenting – focused on word “accordingly” = (objective approach) no intention to change the terms meaning intention was to accept the offer

Requests for further information  

Stevenson v Mcleon – asking for further information = not rejection but an inquiry Powierza v Daley – NZ, inquiry for more information = “asking the vendor about accepting a different deposit more likely a request for information”

Waiver of communication 

CC v Telecom Mobile – NZCA, waived right to receive communication of acceptance of the offer when sending a letter outlining the terms and conditions upon acceptance

Prescribed mode of communication 

Allbrite Industries v P&C Gill Contractors – two rules = 1) where the prescribed mode of acceptance was mandatory; 2) merely indicated acceptance can be by not less advantageous mode  this case was a mere indication and contract was formed

Electronic communication of acceptance 

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CCLA 2017 s 207 – purpose o S 209 – interpretation o S 213 – time of dispatch  information system means system for producing, sending, soring etc. electronic communications o S 214 – time of receipt o S 217 – time of communication of acceptance of offer Petterson v Gothard – uncertainty about requirement for designation + accepts the email correspondence between two parties + suggests threshold for a sender to prove a “designation” would not be high

Interim agreements    

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Parties may agree but not intending to be bound = subject to a contract Carruthers v Whitaker – no contract = when there is an agreement in writing because parties were not intending to be bound at that point France v Hight – look at language of the agreement to discern if they intended to be bound to a contract without signing it Fletcher Challenge Energy v ECNZ 2002 – considers intention of parties together rather than one alone + objective approach concerning what the parties have said to one another + not interested in subjective intention of the parties Oracle NZ v Price Waterhouse 2010 – no contract when negotiations happen before entering into full agreements until all issues have been settled

AGENCY

Actual authority 

Hely-Hutchinson v Brayhead – the principal is only bound when the agent is acting within their authority (can be implied or express) + this case was implied authority

Contracting with third parties 

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Southwell v Bowditch – disclosed principals: disclosed agents are not a party to the contract that is formed between the third party and the principal + they will not be liable under the main contract Siu Yin Kwan v Eastern Insurance Co – undisclosed agency: Five principles set out by Lord Lloyd: o 1) undisclosed principal may sue & be sued on a contract made by an agent acting within his scope of authority – contract can be formed between principal and third party even when undisclosed o 2) the agent must intend to act upon the principal’s behalf when entering a contract o 3) the agent of an undisclosed principal may sue & be sued on the contract o 4) any defence that the third party may have against the agent is also available against the principal o 5) the terms of the contract may expressly or impliedly exclude the principal’s right to sue & liability to be sued + the contract or circumstances may show that the agent is the true principal even when their intention was to act on behalf of the principal

Acting without actual authority 

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Freeman v Buckhurst Park Properties – As per Lord Diplock: o Actual authority – an agency relationship between principal and agent which can bind the principal in contract with a third party o Apparent authority – depends on the relationship between the principal and the third party & the representation made by the principal to the third party (that the agent or another has authority to act on the principal’s behalf) o Representation which creates apparent authority – company can do this = appointing someone as managing director – this is the representation of conduct Savill v Chase Holdings – no actual authority to bind Chase Corp (parent company or Chase Holdings) + S not successful in showing CC has been bound by the agreement = the representation holding out must have authority as well China Pacific SA v Food Corporation of India – necessity: Lord Diplock; the situation the parties were in created this agency of necessity + master of the ship could bind the owner of the cargo even when there was no actual authority + “arises only when salvage services by a third party are necessary for the preservation of the cargo”

Ratification

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Point 1: when the agreement was first entered into it must be made on the principal’s behalf o Keighley, Maxsted & Co v Durant – not an effective ratification = when the agent entered into the contract he was not intending to do so on behalf of anyone else Point 2: principal must have had capacity to enter into the contract at the time the agreement was reached o Boston Deep Sea Fishing v Farnham – French company could not ratify the agreements entered into by England + at the time France was occupied by Germany = alien enemy to England and they could not contract with alien enemies  principal did not have the capacity to enter at that time Statutory reform: s 182 Pre-incorporation contracts may be ratified – reverses the common law rule above

Warranting authority 

Collen v Wright – an agent breaches warranty of authority when they claim they have authority but do not = they are liable

Termination of agency    

Agreement – agent and principal can agree + terms can set out the end Renunciation – one of the two parties renounce their agency Operation of law – can end by insanity, death + bankruptcy Agency coupled with an interest – related to property law = interest in property requiring an agency relationship for the interest to be properly enjoyed

INTENTION TO CREATE LEGAL RELATIONS

Domestic and social arrangements 

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Fleming v Beevers – NZ; Tipping J, presumption of commercial transactions = willingness to create a legally enforceable relationship + presumption of family arrangements = not often intention to create legally enforceable agreements  BUT, each case can turn on the facts + look at the intentions from an objective view and all the facts to determine the intention of the parties Parker v Clark – EngHC; actions of writing and selling the house turned this on its facts = contractual relationship Jones v Padavatton – nothing in writing, turned on its facts = no contract formed + similar facts to Parker v Clark was the significant step of the daughter moving to England to study Mabon v Conference of the Methodist Church of NZ – NZCA; rule in the church’s constitution = no intention to create legal relations

Commercial agreements  

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Edwards v Skyways – QB; commercial relationship almost always contractual in nature + onus is on the party to show there was no ITCLR Rose and Frank v Crompton 1925 – HoL; an honour clause stating there is no ITCLR = no contract + honour clause was effective for the overarching supply contract from being formed Gifts: Esso Petroleum v Customs and Excise Comrs – the free coin was contractual + there was commercial intention behind them, and the tax was payable in respect to the value of the coins + coins gave commercial advantage and attract customers Mere Puff: Carlill v Carbolic Smoke Ball Co. – Smoke Ball argued giving the 100pounds was mere puff = no because they had deposited 1000pounds into a bank to show their sincerity

CERTAINTY AND COMPLETENESS

General approach 

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WCC v Body Corporate 51702 – Tipping J; general position is for there to be a contract the parties must have reached a consensus on all the terms and an objective means of sufficient certainty by which these terms may be determined Fletcher Challenge Energy v ECNZ – Blanchard J o 1) intention to be immediately bound o 2) must be certainty as to the essential terms of the contract o Points yet to be agreed upon = not yet intending to be bound in contract

Incompleteness and vagueness 

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Fletcher Challenge Energy v ECNZ – Incompleteness: document where the parties were not intending to be bound, 1 term = to be agreed + 2 term = not agreed o Obiter: court could decide when and whether delivery could be economic + had to be an objective standard Scammel v Ousten – HoL, 1941; Vagueness: no contract as the relevant term was to vague Nicoline v Simmonds – EngCA; Vagueness: contrasted to Scammel where the term was essential for the contract + here the term is not essential so the contract could continue without the term

The means of reaching an agreement  

A-G v Barker Bros – NZCA; Richmond P sets out an objective process by which the amount could be determined Money v Ven-Lu-Ree Ltd – Cooke P; agreeing to a sale by valuation is itself sufficiently certain that the court will enforce it as it is an objective approach and the court can determine a price. Richardson J; parties agreed to sell these shares on valuation and this is an objective measure that the court can apply and can determine an amount

Agreements to agree  

Fletcher Challenge Energy – authority for the point of agreements to agree – obiter on if the parties were intending to be bound WCC v Body Corporate 51702 – to much uncertainty about what “good faith” required the council to do + contract not formed due to uncertainty

CONSIDERATION

Requirement of consideration 

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Traditional definition – enforcing a promise by bringing an action in respect of a breach of that promise; you had to show consideration of that promise. A promise on its own could not be enforced on its own; had to show that in exchange of the promise they were giving something to benefit the promisor or something to detriment the promisee. Modern approach – the idea that the contract is a bargain and each part is paying a price for the exchange of what the other party is bringing.

Adequacy 

Thomas v Thomas – EngHC; court will not enquire into the adequacy of consideration + peppercorn rental: giving a party permission to rent the land by writing up a peppercorn payment which is a nominal amount

Sufficiency/insufficiency of consideration   

Idea of sufficiency – must be valid consideration Executed consideration – performance already performed at the time the contract was entered into Executory consideration – promise for future performance

Forbearance  

Hamer v Sidway – 1891; forbearance from acting is good consideration + agreeing not to do something is good consideration + forbearance from Nephew to Uncle = contract formed Couch v Branch Investments – NZ 1980; a person promising to forbear from bringing a suit to sue, believes the suit is okay = good consideration

Collateral contracts  

This is entering into another contract Shanklin Pier v Detel Products – KB; entering into a separate contract = good consideration

Discretionary promise 

Clyne v Final Touch – NZHC; discretionary promises = not good consideration + this case had good consideration but is authority for the opposite

Past consideration 

Re McArdle – EngCA; past consideration = not good consideration

Public duty 

Black White and Grey Cabs v Reid – 1980; promising to do something when you are already under a statutory obligation = not good consideration + promising to do something more = good consideration

Existing contractual duty owed to promisor    

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Cook Island Shipping Co Ltd v Colson Builders – NZ; reflects the traditional position = CIS already obliged to do what it was promising = not good consideration Williams v Roffey Bros & Nicholls – do not need to look for a legal benefit of consideration, it is enough that the promisor contains a practical benefit Her Majesty’s Attorney-General for England and Wales v R – 2002; affirmed Williams v Roffey as law in NZ Antons Trawling Co v Smith – Baragwanath J; Applies Williams v Roffey = practical benefit + court does not need to look for consideration when talking about a variation of an existing contractual agreement Teat v Willcocks – 2014; Arnold J; we are attracted to the alternative view expressed by this court in Williams that no consideration be required provided the variation is agreed voluntarily & without legitimate pressure (not adopted just suggesting) + Teat did not get the benefit to leave the contract

Existing contractual duty that is owed to a third party 

NZ Shipping Co v M Sattherthwaite & Co – Lord Wilberforce; an agreement to do an act which the promisor is under an existing obligation to a third party to do may amount to valid consideration and does so in the present case

Part payment of a debt 

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Foakes v Beer – 1884; judgment debt (incurs interest) + Lord Selbourne; part payment of the debt was not valid consideration = Foakes still liable to pay the additional intertest payment + still stands as law in UK & NZ S 27A PLA 2007 ‘writing required for discharge of debt by acceptance of part in satisfaction’ o 1) acknowledgment in writing by a creditor or person authorised, of a receipt of a part of the creditor’s debt in satisfaction of the whole debt operates as a discharge of the debt o 2) this applies despite anything to the contrary in any rule of law  Exception to the rule in Foakes v Beer Homeguard Products v Kiwi Packaging – NZ; Mahon J; limit of the rule in Foaks v Beer = applies to part payment of a debt where there is no additional legal benefit + what matters irrespective of intent is the conduct of the creditor not debtor offering lesser amount but someone else: Hirachand Punamchand v Temple – Father paid debt off for son + there was a binding agreement sufficient to extinguish the debt because the arrangement was enforceable as it came from a third party not the debtor = father was not obliged to pay so he had good consideration

promissory estoppel 

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historical development: o Central London Property Trust v High Trees House – Eng. 1947; Denning J; courts can give remedy in respect to the promise even though no actual contractual remedy + restrictions on doctrine:  A) had to be a pre-existing contract between parties  B) action for promissory estoppel could only be used as a shield (defence) not a sword (separate claim itself) Rejuvenation of the doctrine: o NZ follows this approach… o Waltons Stores (Interstate) v Maher – 1988, Aus; Brenna J; to establish an equitable estoppel it is necessary for the plaintiff to prove that:  1) knowledge that there be reliance or intended  2) defendant induced assumption or expectation of this  3) the plaintiff acts or abstains from acting in reliance on the assumption  4) defendant knew or intended him to  5) plaintiff's action/inaction would cause detriment if assumption not fulfilled  6) defendant failed to avoid the detriment by fulfilling assumption Krukziener v Hanover Finance Ltd – 2008; Miller J; promise made in negotiations will not lead to an estoppel + equity does not intervene to satisfy the promise but to avoid the detriment Wilson Parking NZ v Fanshawe 136 – 2014; requirements for promissory estoppel in NZ: o 1) belief/expectation encouraged by the parties words/conduct – WP encouraged belief that it would waive right to first refusal in the buy back in the letter o 2) if that was b2) if that was by express representation then it must be clearly and unequivocally expressed – clearly expressed in the letter o 3) the other party reasonably relied upon the encouragement to its detriment – relied upon this by investigating the transaction further by putting more money into it then acquiring a loan (substantial reliance on that assurance) = detrimental to them o 4) unconscionable for the first party to depart from the belief/expectation – court held clearly unconscionable o Randerson J: point – remedies in these cases not limited to compensating for the detriment + court can give other remedies which would include giving the party who relied upon the promise what it would have gained had the promise not been broken = fulfilling the buy back agreement o Shield & Sword no longer law in NZ Homeguard Products v Kiwi Packaging - Promissory Estoppel not available with respect to a part payment of debt Collier v P&MJ Wright – striking out application + suggestion that promissory estoppel should be available to validate an agreement to accept part payment for settlement of a debt

TERMS OF THE CONTRACT

Definition 