Contract Laws ANU PDF

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Contract Laws ANU Examinable ...

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Acceptance The Objective Approach to Acceptance: -

looks at the external manifestation of consent, disregarding private state of mind of the offeree; See if reasonable person would believe that offeree is assenting; (Toll) o

Taylor v Johnson (1983) 151 CLR 422

3 Options of Acceptance 1. Accept the offer o Contract forms upon acceptance  Taylor v Johnson (1983) 151 CLR 422 o Acceptance is unqualified assent to terms of an offer  o

Quadling v Robinson & Anor

Acceptance must be communicated 

Felthouse v Bindley (1862)142 ER 137

Must be a consensus between parties 2. Propose new terms (counter-offer) o Offeree suggesting new terms is a counter offer o



Mere requests are not counter offers (count as acceptance)

o

Mere errors contained in the statement of acceptance is not a counter offer (acceptance)



 3.

Tuner Kempson v Camm [1922] VLR 498

o

Dunlop v Higgins (1848) 9 ER 805 (delivery)

Carter v Hyde (1923) 33 CLR 115

Reject the offer

Requirements -

-

The acceptance must correspond to the offer o Failure to accept exactly  counter-offer (no acceptance) o If offeree misdescribes the offer + clear intention to accept  not fatal (look at other factors, acceptance)  Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 Offeree must be aware of the offer to accept o o

-

Crown v Clarke (1927) 40 CLR 227 (jail) Fitch v Snedakar 388 NY 248 (1886);

The acceptance must be communicated o

Latec Finance v Knight [1969] 2 NSWR 79

Communication can be waived by offeror i. May treat doing of act as effective acceptance ii. May treat dispatch of acceptance by particular method as effective, even when not received  Carlill Silence cannot be acceptance o

-

o o o

-

Felthouse v Bindley (1862) 142 ER 1037 (horse, auctioneer) Allied Marine Transport Ltd v Vale do Rio Doce Navegacao S.A. (The Leonidas D) [1985] 1 WLR 925 Empirnall Holdings (verbally engaged architects) (3 reasons)

Acceptance by conduct o o o

Farmer’s Mercantile Union v Coade (1921) 30 CLR 113 Brogden v Metropolitan Railway Co (1877) 2 AC 666 Empirnall Holdings Pty Ltd v Machon Paull Partners (1988) 14 NSWLR 523

o o

Acceptor must have authority to do so  Powell v Lee Offeror can prescribe an exclusive method/s for the communication 

o

Adams v Lindsell

Where it might be reasonably inferred that stated means is not the only method of acceptance, other methods may be valid  George Hudson v Holdings (1973) 128 CLR 387

The Postal Rule: -

Acceptance once in post Only relevant if post is contemplated and intended as a method of acceptance o o

-

Bad weather does not affect time of acceptance o

-

Dunlop v Higgins (1848) 1 HLC 381

Applies to any non-instantaneous communication method o

-

Tallerman and Company Pty Ltd Nathan’s Merchandise (Victoria) Pty Ltd 98 CLR 93 (tal trick by post) See Henthorn v Fraser

Schib Packaging SrL v Emrich Industries Pty Ltd [2005] VSCA 236

Displaced: o where condition that receipt of identical signed contract was required 

By requirement that acceptance be sent by registered post

o

by the intentions of the parties  Schib Packaging by instantaneous communication  Entores v Miles Far Eastern Corp [1955] QB 327



o

-

Nunin Holdings

o

Elizabeth City Centre v Corralyn

Emails o o

Large corporations: emailing system  time of receipt (auto-reply) Private: no emailing system  time of recipient reading. 

Electronic Transaction Acts

Implied Terms Three Categories 1. Terms implied to give efficacy to a contract based on the facts of case o Gap-fillers, must be what contract actually means;  o o

 o

o

Heinmann v The Commonwealth (1938) 38 SR (NSW) 691

More detailed/comprehensive  less chance that someone missed something; As implied, unable to determine with certainty, the limits of obligation 

-

Commonwealth Bank v Barker [2014] HCA 32

Contract still effective without implication Onus of proof on party who wants term implied

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

5 Requirements (Set out in B.P Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 52 ALJR 20)

1. Reasonable and equitable  Must be fair between Party A/B 

Byrne v Australian Airlines (1955) 185) CLR 410

2. Necessary to give business efficacy  Necessary to make the contract workable according to presumed intention of parties  Look at terms of contract/other evidence o



State of NSW v Banabelle Electrical (2002) 54 NSWLR 503

Must impose balanced benefits/risks between parties as intended 

Moorcock

3. Obvious, ‘it goes without saying’  Ask: would the parties have readily agreed to the proposed implied term in negotiations 

Codelfa

4. Capable of clear expression  Term must be clear and precise 5. Must not contradict any express term of contract 2. Terms implied by Law o Certain default rules are implied upon certain standard relationships; o This class of contracts necessarily must have this implied term  o

Commonwealth Bank v Barker [2014] HCA 32

Implied on the basis of other considerations 

Lister v Romford Ice [1957] AC 555

3. Terms implied by custom or usage

Implied term of good faith (?) -

Comparable to Common law duty to cooperate

-

Fair dealing, fidelity

-

Breach “good faith” is acting in “bad faith”

o o o

Butt v McDonald Renard Contructions v Minister for Public Works (1992) 26 NSWLR 187 Jobern Pty Ptd v BreakFree Resorts (Victoria) Pty Ltd & Ors [2007] FCA 1066

Applying: - As a universal term; - Generic term in particular class of contract o

Renard

-

Where parties have unbalanced bargaining power

-

Evading the spirit of the bargain

o o

Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (2005) VSCA 228 Pacific Brands

- Intentions of parties may be relevant Copied off slide notes: • How might an implied term of good faith apply? • Reasonableness and fair dealing: Renard; Alcatel; Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 • Cooperation (unreasonably uncooperative): Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 • Proper purpose: Burger King Corporation v Hungry Jacks Pty Ltd [2001] NSWCA 187 • Capricious and extraneous purpose = improper purpose. Also see: Esso per Buchanan JA [para 28]; Garry Rogers per Finkelstein J. • Legitimate interests: Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 • If there is the pursuit of legitimate commercial interests and there is no MOTIVE to harm the other party, then this does not amount to “bad faith”: Far Horizons Pty Ltd v McDonalds Australia Pty Ltd; Burger King Corp v Hungry Jacks Pty Ltd • Loyalty to the contract: South Sydney District Rugby League Football Club Ltd

Express Terms -

Explicitly included in the contract by parties, mostly as obligations

Incorporation by Signature Where written memorandum is signed, the signing party is bound by the contents of the agreement; o Must not be fraud/misrepresentation  L’Estrange v Graucob [1934] 2 KB 394 - A signature constitutes representation; o Stronger where signature is under written request to read then sign; o Extends beyond the immediate parties, (i.e. any reader of contract)  Toll (FGTC) Pty Ltd v Alphapharm Pty Ltd [2004] 211 ALR 342 Exceptions 1. Where doc does not appear to have contractual effect; -

o

DJ Hill v Wright [1971] VR 749 (Docket/Receipt specifically)

2. Where the person who relies on the exemption clause misrepresents the clause or its effect o

Curtis v Chemical Cleaning & Dyeing Co (Misrep.  width of clause)

3. Where signor pleads non est factum “this is not my deed” (do not understand what you’re signing; o Very limited class;  Those who through no fault of their own/are unable to have any understanding of the purport of a particular document.  

Petelin v Cullen Saunders v Anglia Building Society [1971] AC 1004 (contrasting 1st case, auntie no glasses)

Incorporation by Notice Actual Notice: - Brought to attention of other party; o doc is non-contractual in nature e.g. ticket/receipt. Constructive Notice: - Everything reasonably done to bring to attention e.g. signage o Doc is contractual in nature  sufficient Reasonable Sufficiency of Notice (Parker v South East Railway (1877) 2 CPD 416) 1. Party B must be able to view terms before/when contract is formed o o

Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 Olley v Marlborough Court [1949] 1 KB 532 (/at)

2. Terms must be contained in document that is intended/appear to have contractual effect o

Causer v Brown [1952] VLR 1 (appear)

3. Party A must take reasonable steps to bring it to attention of Party B; o Unusual clauses should have special attention drawn to it e.g. red ink/bold   

Thornton v Shoe Lane Parking Interfoto Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2015] QSC 290

Incorporation by Course of dealings -

Long period of relationships  no deviation o Balmain New Ferry Co v Robertson (1906) 4 CLR 379 When doc appears to be complete contract  100% of express contractual terms; o When part oral/written  100% in both; o Can use surrounding circumstances/extrinsic evidence in part oral/written contracts 

Masterton Holmes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234

Parol Evidence Rule: a way of cutting out obligations - Can only be used for written contracts 1. The exclusion of extrinsic evidence that would add or subtract from the terms of the written contract and o Covers all extrinsic evidence such as oral communications and earlier written drafts of contract etc.  Codelfa Constructions v State Rail Authority (1982) 149 CLR 337 2. The exclusion of evidence that might otherwise have assisted the court in interpreting or construing the contract Exceptions to P.E.R a. To clarify an ambiguity b. To identify the subject matter of the contract c. To identify the parties to the contract

Construction GATEWAY - Extrinsic evidence is admissible to assist in the interpretation of contract if language is ambiguous/has multiple meanings; - When multiple meanings, look at objective surrounding context + parties’ intention in context o

Codelfa Construction Pty Ltd v State Rail Authority (NSW)

Generally -

Priority: discerning meaning best with intention of parties; 2nd Priority: maintain validity of contract

-

Uncertainty is last resort

o o

-

ABC v APRA (1973) 129 CLR 99 Meehan v Jones (1982) 149 CLR 571

Approach terms from reasonable commercial bystanders’ (not legal) perspective o o

Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] A.C. 740 Toll v Alphapharm

Construction test

(Peppers Hotel v Hotel Capital)

1. Ascertain the meaning from: o commercial bystander’s perspective; o with available contextual knowledge at the time. 

Peppers Hotel v Hotel Capital [2004] NSWCA 114

2. If commercial contract, find meaning that supports sensible commercial operation o

Codelfa Construction v SRA (1982) 149 CLR 337

3. If words unambiguous but unreasonable/unintended by parties, still have 100% effect 4. Can be presumed that parties intended contract to be reasonable. More unreasonable = less likely represents true intentions of parties. 5. If internally inconsistent, can depart from ordinary meaning to necessary extent to avoid inconsistency between term and remainder of terms. o

ABC v APRA

6. Construe commercial contracts fairly and broadly without being too astute or subtle in finding defects. 7. Where semantic/syntactical analysis suggests inconsistency with business common sense, contract must yield to business common sense. o i.e. do not be too pedantic about ‘or vs and’ etc.

Exclusion clauses -

-

terms that seek to exclude or limit liability 3 issues: a. is D liable? b. Is exclusion clause a term of the contract? c. Does exclusion clause cover relevant liability? If there is ambiguity with term and there is large imbalance of power between parties, construe meaning against more powerful party/favour less powerful party. o

Darlington Futures v Delcon (1986) 161 CLR 500

Approaches to Exclusion Clauses 1. Contra Proferentum – interpret clause against person trying to rely upon it 2. Deviation Cases – Party deviates from what is specified, he/she loses benefits of exclusion clause 3. Four corners rule – D’s non authorised or contemplated (in the contract) act causes loss to plaintiff, he/she loses benefits of exclusion clause 4. Negligence – For neg. to be covered by an exclusion clause, it must be clearly intended to be included in clause.

Unconscionable Conduct -

Developed to protect young, wealthy children from adults targeting them due to their youth and naivety.

-

Now: Where a party suffering from a special disadvantage, is allegedly taken advantage of. o Onus for disadv. on that party o Onus after disadv. exists is on other party, to prove the bargain was fair Must be some moral turpitude (predatory) in taking advantage of the peculiar disability of the other party o Main remedy is rescission  Others: damages, injunctions etc.

o

-

Earl of Chesterfield v Janssen (1751) 28 ER 32

U.C Test 1. A party to a transaction was under a special disability; o o

Louth v Diprose (1992) 175 CLR 621; Bridgewater v Leahy (1998) 194 CLR 457 Blomley v Ryan (1956) 99 CLR 362 (Special disability = poverty, need of any kind, sickness, age, sex, infirmity of body/mind, drunkenness, illiteracy/lack of education, lack of assistance or explanation where such is necessary.)

2. The special disability was sufficiently evident to the stronger party; o

Commercial Bank of Australia v Amadio (1983) 151 CLR 447

o

Knowledge cannot be aggregated

o

 ACCC v Radio Rentals Ltd Wilful ignorance is the same as knowledge  Commercial Bank of Australia Ltd v Amadio  Kakavas v Crown Melbourne Limited (2013) 298 ALR 35 (wealthy man, failed)

3. Other party must have taken an unconscientious advantage of the party with the special disability o

Louth v Diprose; Virginia Nemeth (by her tutor) v Australian Litigation Funders Pty Ltd [2013] NSWSC 529; Gel Custodians Pty Ltd v Dyer [2014] WASC 177.

o

Harsh dealings do not necessarily constitute unconscionable conduct. 

ACCC v CG Berbatis

Defences -

Demonstrate that the transaction is in fact fair, just and reasonable: Considerations: 1. The money paid by stronger party to weaker party; 2. The existence of independent advice; 3. The ability of the weaker party to fully comprehend transaction; 4. Stronger party had no knowledge of weaker party’s weaknesses o

Commercial Bank of Australia v Amadio (1983) 151 CLR 447

Undue Influence -

Exploitation of a relationship of influence Allows court to reverse transaction involving unconscionability from the relationship of the parties; o Focus on the nature of the relationship, not necessarily on the conduct of stronger party

-

Courts will take into account age and existence of independent legal advice

-

Will look at evidence of relationship

-

Where religious belief  gift of kindness/love/pure mind, can be undue influence if giftor made gross error of judgement, obvious to objective outsider

 o o

o

Edith White v Judith Liane Wills [2014] NSWSC 1160

Powell v Powell [1900] 1 Ch 243 (Step-mother/s.daughter) Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810

Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810

-

Where borrower has engaged in undue influence upon 3rd party, lender is alos tainted by association

-

In Class 2B cases, P must show relationship of trust and dependence THEN burden shifts to D to show gift was out of love/kindness and of pure mind

o

o o

-

Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 Daunt v Daunt [2015] VSCA 58 (Gift must be well-understood act/Donor must have free judgement)

Presumption can be rebutted by proper actions of donee, e.g. advice on independent legal advice etc. o

-

Yerkey v Jones

Westmelton v Archer and Schulman [1982] VR 305

When determining Nature of transaction, focus on: o Is it a gift? o Is it substantially disadvantageous? o Does it involve most or all of assets? 

Hartigan

o

Any independent legal advice?

o

Who suggested transaction?

 

Classes of U.I

Johnson v Buttress (1936) Khan v Khan

(Daunt v Daunt [2015] VSCA 58)

Class 1: Actual undue influence - Plaintiff affirmatively proves that defendant exerted influence Class 2: Presumed undue influence - A: deemed relationships of influence - Relationship must go beyond mere confidence and influence, to one involving dominion or ascendancy by the will of the other; o At minimum: element of authority or superiority; o Must exert this element  o

Tulloch (deceased) v Braybon & ors (No 2) [2010] NSWSC 650

The presumption arises as a matter of law 1. Parent and Child  

Lancashire Loans Ltd v Black [1934] 1 KB 380 (Mother/daughter: mother no money) Grace v Grace [2012] NSWSC 966 (mother/son: shares)



Does not work child  parent



Walton v Walton [2015] NSWSC 218 (adult child/mother: discharging debt)

2. Guardian and Ward 

Powell v Powell [1900] 1 Ch 243 (Step-mother/s.daughter)

3. Religious adviser and disciple  

-

Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 Khan v Khan (1887) 36 Ch D 145 (child/mother: used spiritual adviser)

4. Solicitor and client 5. Trustee and beneficiary 6. Doctor and patient B: relationships outside presumption, but trust and confidence in wrongdoer exists so that presumption should be made o Where donee is in a position to exercise dominion over donor by reason of trust and confidence reposed in donor, the presumption of undue influence is raised; o In determining whether gift was made as a free and genuine exercise of the will of donor, independent advice not necessary, but would be of upmost importance in dete...