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Important lecture notes from Contracts B relevant for exam...

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MDC: s18 regime1:Trd or Com: Houghton v Arms, 2: Conduct:i)Adv: Dom MSG test: ACCC v TPG Internet: has to be suff clear & prominent.ii)Reps: need to consider nature of Parties,Chara of Transacti, what each Prty knew of eachother Butcher v Lachlan Elder Realty PL iii) Interpreting MDC: a-cap to cause Error Henjo Investments v Collins M’ville b-Err occurs when P is led to believe false info to be tru Parkdale Custom Built Furn vPuxu PL. Puf: specif in puff (comparing) is actionable Byers v DoroteaPL. Silence: a) fail to disclose: no obli imposed unless r’ship between Ps, or communication gives rise to add/correct info-LamvAustotel Invest AusPL, BUT info-asy- Miller&AssocInsuranceBrokingPL v BMW AusFinanceLimted b) Deliberate: only needs to be deliberate if silence is solely relied in causing MDC, othwise no need to be del, fail to disclose adds to MDC JohnsonTilesvEssoAUS . 3: Rep re Future4(1)&(2). Burden on D to justify s4(3)-depends on words used & context (Gigi-TechvBrand). Promise: D must b able to perform and honour it in future: s2(2) sig support that promise as to pre-exist state of affairs (warranties in K) if false is MDC(AccountingSystems2000 v CCH AUS), ParolEvidRule can’t be used but P has to prove promise was MDC-ItalformPLvSangain. Passin on Info not MD-GooglevACCC. 4:Causation: est by actual reliance, making ind inqs does not eliminate causation-ComoInvestmentsvYenaldNominees. Std apply is GouldvVaggelas applied in TPG, inference of inducement by rep to create partic impression on P reducing P’s burden of proof. 5:Exc Clauses: Entire agr can be exploitation tool so cannot exclude D’s liability(CampbellvBackofficeInvestmnts) but allowed in PouletFraisPLvTheSilverFoxComp(Ack clause-D during negs, made very clear P should make own enquiries VERY CLEAR), otherwise defeats ACL public policy. Disclaimer: can make reliance difficult (ButchervElder-nature of parties) Contrast 2 HavynPL vWebster (circumstances matter-paced out). Exc Clause: Can’t override ACL Public Policy against MDC (NEA PLvMagentaMining). 6: Rems: 236, 237&243. Loss of Opp: WakefieldTrucks. Expec Loss: Contrast: MarksvGIO AUSLtd (not allowed-no oth cheap loans avail) & MurphyvOverton InvestPL (expec loss allowed: ret home,more onerous). Red in Damgs CC&C ACT s137B (CN). UCTL(PT2-3): UT will be void -23(1). K ok if good without UT -23(2). No def for std form but s27(2) sets factors to consider if so (‘take it or leave it). 1: Test (3 limbs-s24): (1a) Sig imbalance (2 pts): 1-causes imbalance in rights and obligations? (Fair Trading v MB Designs-entire agmt). 2-imbalance sig? would it surprise the consumer if he knew? DirofConsAffairsVicv Trainstation Health Club PL -gym moved). AND; (1b) not reasonably necessary to protect the legitimate interest of the trader: D has to show per 24(4) (2pts): 1-T protects a legit interest (protect against inherent risks); 2-T must be reasonably necessary (proportionate response to that risk) (gym- terminate if not follow rules -Not Unfair) AND; (1c) T causes detriment. 2: must account for a)transparency and b)‘K as a whole’ – 24(2). a)24(3)-T expressed in plain language, easily readable/presented clearly n avail (ACCCvAdvMedInstPL :fee formula/fee not disclosed). b)24(2)-balancing harshness with other Ts (eg Price)but this r’ship needs to be obvious to P (JetstarAirwaysPLvFree).3:Remedies avail:injunctions 232 N Compensation orders 237. Also extends to small b’ness. GUARANTEES: CGL(Pts 3-2 N 5-4) provides MIN STDS(K can’t exclude/restrict/modify).Addresses Info-asymmetry. 1 Consumer? 1.1-3(1)3-stage test: 1-below 40K, 2-personal use OR 3-c-car transporting goods. 1.2-3(2) not a consumer if goods used for other commercial process. 51-59 covers guarantees. 2: Acceptable quality-54: 2a)goods must be-(2) fit4purpose for same kind of goods, appearance-ok, defectfree/safe and durable. 2b)determining-(3): nature/price of goods ,statements on the packaging/ representations made.2c)durability-(2e) is tested as time-period where reasonable N informed consumer would expect proper function (dif from warranty periods provided by D).3: Fitness for disclosed purpose-55(1): goes beyond the ‘acceptable quality’ when P purchased for a particular (can’t be common) purpose and expresses it to D(Baldry v Marshall -fast car). BUT; not applicable in circumstances P did not rely/representor was not an expert for THAT purpose. 4: Express War59: CGL provides a guarantee of compliance with an ‘exp-war’ (Def per s2, as any claim as to quality, state, cond, performance, character of goods… with aim to induce). Thus, D can’t use EA clauses to exclude pre-K statements made as exp-war. 5: Services-60-63: must be done with due care N skill, fit for purpose and supplied within reasonable time. BUT; onus is now on P to prove fault. 6:D’s Defence 54: defect was; specifically shown to P-(4), due to abnormal use-(6)(Gallant v Larry Woods Used Cars-overusing car), reasonably known to P as he’d examined b4 buying (7). 7:Ext.Warr:3-protections:a) defects:C&CReg Reg 90: specified info to be given about who/period/how to claim the warranty AND 90(2): must expressly advise of existing ACL guarantees.b) overlap with ACL protection 29(1)(n): not allowed.c) must extend the war, otherwise breaches 61. Guarantee-REM: A)Maj Fail: (goods 260-Serv 268) a-P wouldn’t have bought if he knew, b- doesn’t match descript,c/d-not easy to remedy, e-is unsafe. B)Min Fail: (goods 259-Serv 267) 2a:remedy by reas time (ref,rep or rep 260) 2b: supp fails 2, P recover cost .If can’t remedy: P can reject goods 263, or get $ for value did 259(3), if serv: 267(3) $ val OR termination. Also any $ RF from fail. C) Limits 262 and Period 262(b): NesbitvPorter (ski-time).D) P able to seek Dam from manufacturer s271: 1-not accep qual 3- not match descript 5-not comply with exp war OR parts & repair sites not avail for reas period. 274: Man req to indemnify supplier in respect to cost resulting from these guarantee. UNCONS: eqt doc: P was under Spec Dis such there was absence of equality btw parties AND SD was suf evident to D thus making it PF unfair to accept P’s assent into K (CommercialBankofAUSLtvAmadio). 1: SD: a)Types: Mental-GibbonsvWright Drunk-must be more-D took adv of his condition (BromleyvRyan-alcoholic).Infatuation: P in a position of emot-dep, D was aware of SD she had deliberately created and exploited it (LouthvDiprose). Emot-Dep: BridgewatervLeahy- extended Louth eventhough P knew what he was doing and wouldn’t change his mind, K was unfair and initiated by D. Combination of factors (Amadio). b)Not SD: mere inequality of barg.power (ACCCvGC BarbaitsHoldings-mere disadv But not Special). 2:Knowledge: willful ignorance and constructive knowledge (Amadio) BUT in KakavasvCrwonMelbLtd constructive knowledge held not enough so must be at actual/willful blindess. 3:ACL: S20: states that D, in trd or comm, must not engage in uncon within the meaning of the unwritten law (apply above). purpose of this section is to widen the range of remedies, also ACCC can take action/allows UI and Duress . s21: (1)connets uncon to goods & services, supplier&consumer, also inc. small b’ness. s22:court may regard: (1)(a)barg position (b)unnecessary req 1

placed on P (c) P understood doc? (d)UI or unfair tactic. NOTE: s22(2) exact same but 4 sml b’ness. 3:Rem: Reci if CL, if ACL: Inj (232-234) Dmgs (236). Ancillary Orders: Non-punitive orders (s246) or Adverse publicity orders (s247). DAMAGES-MEASURING: To put P back in the same situation as if K was performed (RobinsonvHarman). BOP:Onus onP. Loss was RF but no need for it to be exactly F’seable.1:Expectation:dirct/conseq: conseq loss go beyond direct- expenses incurred (profitloss,3rd party obligation).a)build/repair: rectification cost- cost of rectifying the defects due to breach of K to genuinely put P back (BellgrovevEldridge-defect to building).b)reasonableness of rectification: work undertaken must be BOTH necessary and the reasonable course to adopt(BvE-foundation was unstable).c)unreasonableness: if D for cost of rect. Would be wholly disproportionate to the benefit obtained (Ruxley v Foresyth- pool was 6 ft deep instead of 7.6 - app in Wheeler v Escroplot).2:Reliance:expenditure suffered in anticipation of K, usually covered under expectation.a)if can’t prove expectation: then reasonable expenses incurred in reasonable reliance of K can be awarded (McRaevCDC- M purchased wrecked tanker, upon salvation no such thing existed).b)No double compensation: if expectation loss exists, then it covers reliance, therefore can’t recover both at same time because overcompensation.c)reasonable? Unreasonable expenditure if unlikely to have been contemplated by the parties and thus is too remote (CTHvAmann Aviation).d)reliance v expectation: exp seek to put P in position if K had been performed, Rel return P to position if K had not been made. HOWEVER, Cth v A considered Rel damages were consistent with the principle of Exp damages because the law assumes P would have recovered his expenditure had the K been fully performed. Otherwise, unlikely for P to have entered K. Courts use reliance damage to put P in position he would have been by AT LEAST compensating P for the wasted costs which he could have recouped if K performed. Supported by courts’ refusal to award Rel damages if K would have been loss-making if performed. Counter: provides concession to P based on justice thus dif. D-LIMITATIONS: Causation of loss due to breach by R (tort steps; NAI when multiple causes).1:Remotenes: a)Rule in HadleyvBaxendale adopted by HC(CTHvA): P entitled to claim loss arising from usual course of dealing(naturally) OR if reasonably should have been contemplated by both parties when K as a probable result of breach. In application: rule is dependent on the degree of knowledge of R: reasonable for R to realise loss is likely if K breached, based on the info avail? (Czarnikow vKoufos).b) extent: not necessary to contemplate exact extend of loss suffered RATHER contemplating loss suffered as “not unlikely to occur” (H ParsonsvUttley-Pig/food/ecoli).c)Degree of likelihood: dif expressions used but C needs to show HIGH but not ‘nearcertainty’ of likelihood was contemplated (WehamvElla).2:Mitigation There are three LIMITS on award of damages, ONE of these Limitations is mitigation. MITIGATION is subject to 3 RULESa)Avoidable loss: P can’t recover for A.L and is required to take reas.steps to mitigate (ok as long as reas. No need 4 best steps BancovWaterloo). If P’s impecunious(poor),to take reas steps may contribute to reduce damages (BurnsvMAN auto -hired car broke down = profit loss but did not fix it).b)Attemps at mitigation increasing loss: even if conduct of P causes additional loss in taking reasonable steps, P can still recover for these (Simmons VischervHolt&Thompson-wool swiss employee audit).c)Avoided loss: P can’t recover for losses that were avoided b P’s actions, even if law doesn’t consider the actions as part of what should be‘reas.steps’(BritishWestinghousevElectric Rilways-D supplied defective turbines, P replaced with better 1s, this reduced cost and upped profit, hence no net loss occurred from D).3:Speciefic Claims:a)distress.loss.of.rep:Genral rule=not awarded. UNLESS i)suffered from physical injury caused by breach,ii)relate to physical inconvenience cause by breach iii)recoverable due to AIM of k (BalticShippingvDillon-ship sank, promise was to provide good times(nature of K) b)CN:i)causation chain breaks:(LexmeadvLewis-towing hitch broke, P continued to use it, caused accident) ii)CN reduces damages-as per tort-legislations.4:Anticipatory Breach:a)other party needs to accept the repudiation.b)assessed at date of performance due rather than breach (Melachrino).c) Mitigation must be made still, in sale of goods. P must take an reas. opportunity available to mitigate before claiming. LIQ-D&PENALTIES: when K is breached, P can enforce liq-d clause (Brings certainty AMEV-UDC FinancevAustin) and recover liquidated sum, instead of proving loss in damages, but distinction must be made if it is lid-d(allowed) or penalty(if agreed sum is out of proportion to likely suffered Ds-AMEV) (not allowed).1:Event of Breach a)Identifying Penalty: DunlopPneumaticTyre v New GarageandMotorCoLtd per Lord Dunedinaffirmed by the HCA:RingrowPtyLtdvBP Australiai)using pen or liq-d in K is not conclusive ii)essence of Pen is payment is to discourage offending party, essence if liq.D is genuine pre-est of D. iii)it is a Q of construction of each K, at the time of making K, not at breach .iv)tests applicable are: 1:Pen if sum is too high & unconscionable when compared to GREATEST loss possible from that breach.2:Pen if Breach was only not paying money & clause is more than that.3:PRESUMPTION of Pen when LUMPSUMP is payable by compensation on events which cause Dam varying in severity. On oth hand: 4: NOtT Pen if pre-est Damages was the true bargain between the parties. It has to be out of ALL proportion (AMEV) and extravagant & unconsoinable (Ringrow).b)determining Pen:i)HCA terms this as Q of characterization determined by extrinsic circumstances (therefore PER not to apply)-PacioccovAus..andNeZea..BankingGroupLtd.ii) loss is assessed ‘forwardlookin’ not ex post (after event)SpiersEarthworksPtLtvLandecProjectsCorporationPtLt-$13k was pen cause developer had NOT ensured cond was satisfied at TIME of entry in K. 2:K not Breached:a)penal capability HCA held security for performance of primary K stipulation will NOT attract PEN doctrine where it gives rise consequentially to an additional obligation (AndrewsvANZBankingGroupLt-fees still capable of being penal), thus promise to perform secured by promise to pay if not performed is penal in nature Cedar Meats(Aust)PtyLtdvFive Star LambPtLt.b)is it penal? if capable, then to determine go to 3)Effects of T being Pen:a)Recoverability Unclear, P may recover(EsandaFinancevPlessnig) CONTRASTED by Shevill v BuildersLicensingBoard: D not avail as general law D where K is terminated pursuant to term in K, rather than by relying on right to terminate conferred by CL. b)if sum payable is Pen, then party relyin on stipulation may only enforce it ‘to the extent of provided loss – Paciocco (also consider if UCTL).4)Reasons for rule against Pen: a)Substantive fairness (look at the substance of the contract not just the process, which the vitiating factors consider)b)Unfair for the plaintiff to threaten use of agreed damages clause when common law damages might be lower c) Procedural fairness: r’ship btw parties is relevant in determining unconscionability in enforcing the penalty clause -AMEV). 2

ACTIONS 4 DEBT: alternative to claiming Damgs, must be AFTER K is terminated. Can be in addition to Damgs but same sum can’t be recovered twice. 1:Requirements (two): 1-K imposes a sum payable AND; 2-the right to payment of sum was accrued which is dependent on the following: a)entire obli: LUMP SUM upon FULL performance (not partial) b)Divisible obl: payment divided into severable parts per performance (Steele v Tardiani: D hired P to cut wood into certain size, pay per ton, P cut wood not to specified size, D refused pay, ruled P was entitled to claim pay for tons which met criteria).c)Subs Perf: depends on performance rendered and nature of defects, (HoeningvIsaacs: installments for 750 tot for decor, D refused pay balance due to defect, court said subs-perf so was payable minus the 55 defect cost) CONTRAST to (BoltonvMahdeva: heating system install cost D 560, defects cost 174 but ALSO nature of defect was high, court: No subs-perf, so not payable).2: Deposits: indep of perf a) if trans doesn’t proceed: i)if specified in K: usually if seller at fault=buyer can recover or vice versa ii)no express intention: if not excessive, determined as matter of construction of parties’ presumed intentions (usually the normal way)iii) Not a penalty: even though it is not a genuine pre-est of Damgs (NLSPtyvHughes),HOWEVER: if it is so unreasonable a sum to be forfeited it should be treated as a penalty(Hale J in CoatesvSarich).3: Mitigation doesn’t apply: a)principle in White&CartervMcGergor-that a party may choose to affirm a K following repudiation, complete his oblis and sue in debt for K price b) subject to 2 Limits: i)Party must be able to completely fulfill its obli under K without assistance needed from repud party ii) party continuing perf and suing in debt folloeing rep must have legitimate interest (commercial) for doing so.4: Penalties & Acceleration: distintion btw liq damgs and penaltieswill not apply in K provisions requiring full or immediate payment of debt OR interest OR part of the debt, per conditions set out in K, if money is OWED (O’Dea v Allstates Leasing System). DURES: Imposed by a) A threat of harm: physical/economic b) Improper conduct unlawful/beyond what is accepted c)Impaired Consent (TheAtlanticBaron&CresendoManagementPLv WestpacBankingCorp).3 TYPES:1: of Person: Legit threat considered illegit pressure(MutualFinanceLtvJohnWhetthon-threat 2 prosecute affected Ment Health).2: of Goods:(HawkerPacificPLv HelicopterCharterLt).3:Economic: D threatens non-performance unless P re-negotiates more $ (NorthOceanShippingCo v HyundaiConstructionD demanded increase in K price, P agreed but launched recovery of $ =not duress). ALSO: Presence of reasonable alternatives eg protests and are evidential matter which help determine. However, they should not be elevated to make it a requirement: Electricity Generation Corporation v Woodside Energy Ltd. Remedy: Recession in CL, if ACL: has to be part of unconscionable conduct per s20. (Also same applies to UI). UNDUE INF: using Close Personal/Prof R’ships to influence P into K. 2 TYPES 1:PUI first establish r’ship of influence: characteristic of P and D (LeevChai:P buying house for mistress as gift but not UI as P intel b’sness man). If so, Onus is on D to prove UI was not a factor in K and has to show P freely Consented? D’s Rebuttle is: P knew and understood when consented (eg. ind advise but WestmelonPLvArcher&Schulman-solicitor case: Nature of Party -D was more of an expert than P). 2: AUI: overlap with PUI & Duress. R’ship of influence not enough on its own, onus on P to prove D applied extra improper pressure to force P into K (BarclaysBankvO’Brien-Violent Husband into mortgage). PUI & Dur dif to Uncon: eqt p’ples of relief related but distinct quality of consent of weaker Party rather than conduct of stronger party in circumstances inconsistent with equity (Amadio). Misrep (CL): still relevant-3 reasons(BMW). 1:St’ment Must be a Rep:a)Pufs not rep: Non-spec words are puffs as mere sales tactics (MitchellvValherie-‘nothing to spend’) Contrast with (SmithvLand&HousePropertyGroup: ‘perfect tenant’ = not puff).b)Stm of Law: mis-stment of law is NOT misrep UNLESS restitutory claim of recovery paid by mistake, if so, a misrep should also provide basis for recission (DavidSecuritiesvCTHBankofAUS) OR Fraud-misrep of law (PublicTrusteevTaylor).c)Pos Misrep(Silence): Nomisrep as no duty on D to disclose (Caveat Emptor: buyer beware) UNLESS: Duty arises from special r’ship of parties or nature of K. d)False Impresh: craerting impression of truth through conduct (D not aware of falsity earlier but aware later becomes liable for earlier rep and has duty to rectify it-JonesvDumbrell) AND: (Even if D doesn’t know new info has falsified earlier rep, P gets relief if he can show dales impression still existed -FinancingLtvStimson). 2:3 TYPES: a)Fraud: D knows st’ment false (t of deceit) with intention P act in reliance on Rep (if just reckless=not decit as element truth is most importantDerryvPeek). What is most relevant is the sense D intended the rep to be understood (LrakowskivEurolynxProperties-concealment of fact tenant can’t pay). b)Neg: (allowed in HadleyByrne&COvHeller&Partners). D has duty to take reasonable care re accuracy/soundness of info. This is a restrictive approach needing a special r’ship between parties (D realises or ought to have that P nwill act on his rep AND it is reasonable that P will do so, Factors inc nature/charectors of parties and Trans -rel to Amadio -MutualLife&CitizensAssurancevEvat c)Innoc: no culp, relief (see Recis). CL prevails to the exclusion of equity when the untrue statement is also a term and the representee chooses to affirm the contract rather than rescind. In such cases, any equitable remedy is lost and the a...