Contracts Exam Notes - Summary Contract Law PDF

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Contracts Exam Notes Sem 1 2018...

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CONTRACT LAW

SEMESTER 1, 2018 [COMPANY NAME] | [COMPANY ADDRES S]

Table of Contents FORMATION..................................................................................................................................3 1.0 Was there an agreement?...................................................................................................................3 2.0 Was the offer communicated?............................................................................................................4 3.0 Was the offer standing?......................................................................................................................4 3.1 Was the offer terminated?...................................................................................................................5 4.0 Was the offer accepted?.....................................................................................................................6 5.0 Was the acceptance effectively communicated?.................................................................................7 6.0 Was the agreement complete and certain?.........................................................................................8 6.1 Certainty..............................................................................................................................................8 6.2 Completeness......................................................................................................................................9 7.0 Was there intention to create legal relations?...................................................................................11 8.0 Was there good consideration?.........................................................................................................13

EQUITABLE ESPTOPPEL.................................................................................................................15 PRIVITY........................................................................................................................................17 Statutory Exemptions to the rule:...........................................................................................................17 So-called exceptions...............................................................................................................................17

CAPACITY.....................................................................................................................................20 Minors....................................................................................................................................................20 Mental Capacity......................................................................................................................................22

FORMALITIES...............................................................................................................................23 MISREPRESENTATION; MISLEADING OR DECEPTIVE CONDUCT.....................................................30 Common Law Misrepresentation............................................................................................................30 ACL s 18 – Misleading or deceptive conduct............................................................................................33

UNCONSCIONABLE CONDUCT......................................................................................................35 MISTAKE......................................................................................................................................37 PRE-CONTRACTUAL ORAL STATEMENT.........................................................................................41 INCORPORATION OF WRITTEN TERMS.........................................................................................44 IMPLIED TERMS...........................................................................................................................46 GENERAL APPROACH TO INTERPRETATION..................................................................................48 SPECIFIC TERMS I: PROMISSORY TERMS......................................................................................50 SPECIFIC TERMS II: EXCLUSION CLAUSES......................................................................................53 RESTRAINT OF TRADE..................................................................................................................55

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FORMATION 1.0 Was there an agreement? An agreement is concluded if there was an offer and acceptance between two or more parties (Clarke v Dunraven). It may be necessary to objectively look at the whole of the relationship in order to determine whether there has been an agreement (Empirnall Holdings v Machon Paul Partners) Law is not concerned with subjective intentions of the parties, but with the objective outward manifestation of those intentions (Taylor v Johnson). Was there an offer? Definition of Offer: An expression to another of a willingness to be bound by the stated terms (Australian Woollen Mills)  Ask yourself: Did the statement leave anything to be negotiated? Types of offers Unilateral: Does not impose an obligation on either party to perform.  The obligation on the offeror only arises if the offeree performs the required task – the offeree is never under an obligation to perform: Australian Woollen Mills Ltd v Commonwealth (The offeror is only asking for an act in return and not a promise) Bilateral: Each party undertakes the other to do or refrain from doing something (United Dominions Trust v Eagle Aircraft Services) What are not offers Invitations to treat: o Advertisements in catalogue or circular (Grainger v Gough)  Newspaper or magazine or periodical: Partridge v Crittenden  Unless they say they will sell it to ‘the first 15 customers for $200’  Electronic Transactions Act (Qld) s 26B o Goods displayed in shops (Pharmaceutical Society of GB v Boots Cash Chemists) o Auctioneers request for bids (Payne v Cave)  Auction with reserve – call for bids will be invitation to treat. Each bid will be an offer that may be accepted or rejected: Payne v Cave  Auction without a reserve – there is conditional acceptance that a bid will be accepted only if it’s the highest bid (Warlow v Harrison). Each bid will be an offer that may be accepted or rejected (AGC v McWhirter). o An ad for an auction or houses to let: Harris v Nickenson o Tendering  Announcement inviting tenders unless it indicates that lowest will be accepted (Spencer v Harding)

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

Each tender submitted is an offer, which the party calling for tenders is free to accept or reject (Blackpool & Flyde V Blackpool Council). Implied offer that all complying offers will be considered.

 These are only presumptions – can be rebutted (Carlill)  One factor the courts will consider in determining whether an advertisement is an offer or invitation to treat is its likely effect upon the potential customer (Carlill)  Each case will be considered on the facts (Highes Aircraft Systems) Request for information A mere statement of the price of which someone would contract if they decided to sell does not amount to an offer (Harvey v Facey) Mere puff:  An exaggerated or unsubstantiated claim about a product that are made only for advertising purposes and ‘mean nothing’ (Carill)

2.0 Was the offer communicated? 1. It can be made to the world at large and need not be directed at a particular person ( Carlill) 2. An offer is effective when and not until it is communicated to the offeree or his/her agent by the offeror or his/her agent (Taylor v Laird) o Objective interpretation (Taylor v Laird)  Within the terms of the offer the offeror may expressly or impliedly prescribe the method of communicating acceptance. Failure to adopt that method is at the offeree’s risk o However, in an appropriate case an equally expeditious method of communication may be acceptable (Tinnv Hoffman)  An offeror can waive communication of acceptance. Must show o There is express or implied intimation from the offeror that a particular mode of acceptance will suffice – and that mode does not involve communication o Must be some overt act or conduct on the part of the oferee which evidences intention to accept and conforms to the mode of acceptance indicated by the offeror ( Carlill)

3.0 Was the offer standing? Standing offer: provide goods or services over period of time  Each time an order is placed series of independent contracts  Can be withdrawn or revoked at any time prior to an acceptance: Colonial Ammunition Co. v Reid  Once revoked no further acceptances are valid unless the offer is renewed (Colonial Ammunition Co. v Reid; Great Northern Railway)  If the goods are not delivered after the contract has been accepted, the offeror will be in breach of contract (Great Northern Railway) Options - offeror entitled to revoke an offer any time before it is accepted, this is even the case where the offeror promises to keep the offer open for a time (Routledge v Grant)  Not enforceable unless supported by consideration, then it is irrevocable: Routledge v Grant

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3.1 Was the offer terminated? An offer can be terminated at any time before it has been accepted. Once an offer has been accepted, the offer is irrevocable. (Great Northen Railway co v Witham) Where the offer takes the form of an option then the offer cannot be terminated before the time of the option has expired (Goldsborough Mort v Quinn) How can an offer be terminated? 1. Withdrawal by the offeror o Option: Ordinarily, an offeror may revoke an offer at any time before it is accepted. This is the case even if the offeror promises to keep the offer open for a time (Routledge v Grant)  The position is different if the offeree provides consideration – for example by paying money – for the offeror to keep the offer open o Revocation of an offer is ineffective until communicated by the offeror or his/her agent and received by the oferee (Byrne v Van Tienhoven) o Communication by a reliable third party is effective: Dickinson v Dodds o Revocation of offer made to world at large may be effectively communicated by using the same means as communication of the offer, even if someone who saw the offer does not see the revocation (Shuey v United States) o Unilateral contracts: An offer may not be withdrawn after the promise has begun to perform the necessary conditions to enable acceptance of the contract to be completed  This is because commencing to perform is acceptance of an implied offer not to withdraw the express offer (Abbott v Lance)  This means not withdrawn with impunity: if the offeror attempts to withdraw there will be breach of the implied contract not to withdraw: Mobil Oil v Lyndel Nominees 2. Rejection by the offeree o Rejection may be express or implied: Stevenson Jaques & Co v McLean 3. Counter – offer: The giving of a counter-offer will terminate the original offer. Distinguish a counteroffer from a request for information (Hyde v Wrench) 4. Lapse of time o Offer must be accepted within the prescribed time, otherwise, within a reasonable time (Ramsgate Victoria Hotel v Montefiore) o Reasonable time: Question of fact depending on the circumstances. Taken into account are (Buckley J in Nanchester Diocesan Council for Education v Commercial and General Investments)  The nature of the matter  Subject matter  Means used to communicate the offer 5. By failure of a condition subject to which the offer was made o Conditional offers where the condition is not complied with will cease: McCaul v Pitt Clun 6. By death o An offer cannot be accepted after he or she had notification of the offeror’s death: Coulthart v Clementson  If the offeree dies, it appears that he or her personal representative cannot accept the offer on behalf of his or her estate – the offer lapses automatically (Reynolds v Atherton)

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4.0 Was the offer accepted? Definition: Acceptance of an offer is the expression, by words or conduct, of assent to the terms of the offer. Can be express or implied (HBF Dalgety v Morton; Brogden v Metropolitan Railway) A person cannot accept an offer which has not been properly communicated (Taylor v Laird) Acceptance must coincide exactly with the offer. The introduction of a new term, even one consistent with the offer, will render the acceptance ineffective. The offeree will have made a counter-offer (Turner Kempson & Co Camm)

Requirements  The offeree must assent to the terms of the offer  The acceptance must be communicated to the offeror (Number 5) Assent to the terms of offer  The offeree must intend to accept the offer and an acceptance must be unqualified and must correspond to the terms of the offer Intention to accept  It appears that there is no contract if two offers identical in terms, cross in the post - neither can be construed as an acceptance of the other, although there is unanimity of mind (Tinn v Hoffman & Co)  The acceptance must be in reliance on the offer rather than for some other reason (R v Clarke) o E.g a man provides information on a murder to ensure he was not charged rather than for money reward  It will be a question of construction whether the offer is such that it may be accepted only by the first person responding or by more than one person (Robinson v M’Ewan)

 

o E.g. Carlill – more than one person, reward for information – only one person In the case of an offer is capable of being accepted by more than one person, more than one valid contract may have formed (Patterson v Dolman) However, if the offer relates to a single item of property the offeror will only be able to perform one of the contracts and will be obliged to breach the others.

Counter Offer  A counter offer is not acceptance but causes the original offer to terminate. The original offer cannot be accepted unless it is renewed (Hyde v Wrench)  A purported acceptance that departs from the terms of the offer but only in minor, non material way may be effective and not a counter-offer (Turner v Camm) Mere Inquiry  Will not amount to acceptance and will not cause the offer to terminate (Stevenson Jaques v McLean)

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Conditional Acceptance  Where an offer is accepted ‘subject to the preparation of a formal contract,’ or is ‘subject to contract’ where no binding contract is intended until the formal contract is executed (Masters v Cameron).

5.0 Was the acceptance effectively communicated?      

Acceptance is not effective until communicated to offeror or agent: Byrne & Co v Leon Van Tienhoven Acceptance can only be communicated by offeror/ agent: Powell v Lee Silence is not acceptable: Felthouse v Bindley An offeror may waive the need for acceptance to be communicated: Carlill If no method is stipulated, will depend on nature and method used to make offer. Court will look at surrounding circumstances determine what a reasonable method is: Quenerduaine v Cole General rule that acceptance must be communicated and that it is incomplete until it is received applies to contracts when the parties are in the presence of each other o Or are using the telephone or some other method of communication which is virtually instantaneous e.g. email or fax (Hampstead Meats v Emerson & Yates; Entores Ltd v Miles Far East Corporation) o However, this depends upon the circumstances since such communications may be sent and received outside business hours: Brinkibon ltd v Stahag Stahl

Email – Electronic Transactions Act 2001 (Qld)

24 Time of receipt (1) Unless otherwise agreed between the originator and the addressee of an electronic communication— (a) the time of receipt of the electronic communication is the time the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee; or (b) the time of receipt of the electronic communication at another electronic address of the addressee is the time when both— (i) the electronic communication has become capable of being retrieved by the addressee at that address; and (ii) the addressee has become aware that the electronic communication has been sent to that address. (2) For subsection (1), unless otherwise agreed between the originator and the addressee of the electronic communication, it is to be assumed that the electronic communication is capable of being retrieved by the addressee when it reaches the addressee's electronic address.

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Postal Acceptance Rule  Acceptance is complete as soon as it is posted: Adam v Lindsell o Delays in post are immaterial: Henthorn v Fraser The rule can be excluded, eg. By setting a time for receipt of acceptance: Bressan v Squires o A revocation of an offer by post is ineffective until it reaches the offeree: Byrne v Van Tienhoven Revocation of Acceptance  Acceptance can be revoked before it is effectively communicated, unlikely in case where postal rule applies: Nunin Holdings o

6.0 Was the agreement complete and certain? 6.1 Certainty Individual Terms  What parties agreed on needs to be determined objectively with a reasonable degree of certainty: Whitlock v Brew; Hall v Busst  The law is anxious to uphold a contract whenever possible and will make certain that which is able to be made certain so that the mere fact that an agreement is capable of more than one meaning does not make it void or uncertain ( Hillas). Whitlock: HELD that the clause was uncertain as it did not prescribe the terms of the lease or the rent. Hall v Busst: HELD price was not sufficiently certain G Scammell and Nephew: No common hire purchase terms, agreement required further agreement Ambiguous, uncertain, meaningless contracts – mechanism to resolve Contract may be upheld if the court is able to use some mechanism to give meaning. (i) Link to external standard: Hillas and Co Ltd v Arcos o Uncertain clause may be enforceable if a meaning can be attributed to it by reference to an external standard o This may be achieved by directly incorporating the standards into the contract, or indirectly where the contract does not provide for that link o Hillas & Co Ltd v Arcos: House of Lords relied on certain specifications agreed in a previous contract in order to determine the size and quality of timber supplied o Biotechnology Australia Ltd v Pace: Court unable to estbalish external standard, thereby resulting in research scientist being denied relief when he sued to obtain employment benefits under his employment package

(ii)

Link to reasonable standard: Hillas and Co Ltd v Arcos

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o

Hillas & Co v Arcos: House of Lords prepared to uphold clause relating to ‘softwood good of fair specification’ on the basis that, if the parties failed to agree on what was a ‘fair’ specification, ‘the law can be invoked to determine what is reasonable in the way of specification, and thus machinery is available to give the necessary certainty’

Severance of uncertain (non-pivotal) terms:  Uncertainty of a term doesn’t mean contract will be invalid. Uncertain term may be severed, allowing rest of contract to be enforced. The question will be whether the remainder of the contracts, after uncertain clause is severed, still reflects actual intention of the parties: Fitzgerald v Masters.  

Uncertain clause which is pivotal part of contract cannot be severed: Whitlock v Brew If a contract contains a number of different types of obligations and issues of uncertainty arise in relation to one of those obligations, it may in certain circumstances be possible to sever that particular aspect of the contract: The Life Insurance Company of Australia v Phillips

Fitzgerald v Masters: clause 8 in a contract for the sale of an interest in land incorporated a set of nonexistent conditions. Because the parties would have intended to be bound in the absence of clause 8, the High Court severed the clause and upheld the contract: ‘Clause 8 was merely an appendage to the parties' de...