week 11 preparation Q&A PDF

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Week 11 Q&A preparation 11.1 Lleyton is in business with his business partner, Ashran. In his own time, Lleyton likes to make his own wine. Ashran says that Lleyton’s wine is awful and refuses to drink it. Lleyton’s life partner, Jamille, however does drink his wine. Ted is a friend to all three. When Lleyton, Ted, Ashran and Jamille meet socially, Ashran often comments to Lleyton about his awful wine, while Jamille says how much she enjoys it. After one of those evenings and with all four present, Lleyton wrote on a serviette that one day he would give his entire collection of homemade wine to Jamille and none would go to Ashran. Jamill has kept the serviette.

Lleyton enters into a formal written contract with Ted for the sale and purchase of a great number of items. Among the terms in the contract between Lleyton and Ted is a promise by Lleyton promising to transfer his valuable collection home-made wine to his ‘partner’. There is no clause in the contract stating that it is the entire agreement between the parties. Ashran notices the executed contract on Lleyton’s desk and is quite happy to be the recipient of such an eclectic gift. Lleyton had intended Jamille to be the recipient of the gift. Using the rules of construction and interpretation of contracts, and in particular the parol evidence rule, advise the parties on who the recipient of the wine will be: Ashran or Jamille. (Do not address the issues of privity or certainty in your answer) Answer whether the word ‘partner’ is ambiguous according to the facts, and it states that the word ‘partner’ may have multiple meaning, such as ‘business partner’ in Ashran’s perspective, and ‘’life partner’ in Jamille’s perspective. Whether Ashran or Jamille is the recipient of the wine According to week 11 PPT slides, and it indicates that the court will Consider the most reasonable interpretation in the circumstances (ABC v Australasian Performing Right Association Ltd (1973) 129 CLR 99), Construe the clause contra proferentem (that is, strictly against the party for whose benefit the clause is inserted) (Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500; Wallis v Pratt [1911] AC 394), and Consider the surrounding circumstances (Codelfa per Mason J).

Due to Ashran ‘says that Lleyton’s wine is awful and refuses to drink it,’ and he talk to others about the wine, and let others know he does not like the wine. Thus, the background information is helpful for court to define the word ‘partner’ in the circumstance, which is ‘life partner’. Due to Parol evidence rule does not apply to contracts that are partly oral and partly in writing, and the true rule made by Codelfa, Mason J states the evidence of surrounding circumstances is admissible to assist the interpretation of the contract. Thus, the serviette would be considered as the evidence in the circumstances, and it states that Lleyton would give his wine collection to Jamille, and it also shows his intention is give his wine collection to Jamille in the circumstances. Thus, Jamille would be the recipient of the wine. 11.2 Lucy lives in Bundaberg in Queensland. She wants an electric battery charged scooter so she can run errands and see friends in her neighbourhood. After some research, she comes across an advertisement for a manufacturer in Brisbane called Scooters To Go. Scooters To Go is a big manufacturer of scooters and they ship their goods interstate and overseas. Their stock changes regularly and they state that they cannot guarantee that a particular scooter will be available at any given time. Their advertisement says that they can deliver a scooter which is in stock to Bundaberg in just three business days. Lucy is very excited and goes onto their website. She chooses the scooter she wants, which costs $1,500, and then she clicks ‘Add to Cart’. Instead of going to her Cart, the site takes Lucy to a page headed ‘Terms and Conditions’. She quickly scrolls through the page and clicks Add to Cart at the bottom. However, the site will not let her proceed until she has clicked an icon stating that she has read all the terms and conditions and agrees to them. She clicks on the icon without reading the terms. She is then able to click Add to Cart, which she does. She checks that she has the right scooter at the right price and then clicks Proceed to Checkout where she fills in her credit card and other required details and clicks ‘Place Order’. The scooter, along with its charging unit, arrives as promised. A few days later, Lucy goes to work leaving the scooter at home charging. Due to a fault in the charging unit, it catches fire and Lucy’s belongings are severely damaged. The fault in the charging unit was due to negligence by the manufacturer, Scooters To Go. The Terms and Conditions on the website include clause 6 which states that Scooters To Go will not be responsible for any loss, damage or injury to the customer and/or their goods or other possessions howsoever caused and including loss, damage or injury caused by any act (including an act of

negligence), neglect or default by Scooters To Go. Clause 7 goes on to state that all guarantees, conditions and warranties that would be otherwise implied or applied by Statute or common law into the contract are expressly excluded. Advise Lucy Whether ‘Scooter To Go’ is responsible for the circumstances According to Canada Steamship rules, and it states that the liability for negligence can be effective if there are clear words indicating ‘negligence’. And such clauses will relieve a party of liability for negligence if the clause expressly covers such liability. Thomas National Transport (Melbourne) Pty Ltd v May & Baker Australia Pty Ltd (1966) 115 CLR 353 According to the clauses 6 from ‘Scooter To Go,’ and it states that they will not responsible for the circumstances by used word ‘howsoever.’ Thus, ‘Scooter To Go’ is not responsible for the circumstances under common law. According to s64 of ACL, and it indicates that it is not possible to contract out of the ACL consumer guarantees by way of a clause in the contract (e.g. exclusion clause). According to s140 (1) of ACL, and it states that the manufacturer of goods is liable to person if (b) the goods have a safety defect, (d) the person used or consumed, or intended to use or consume, the destroyed or damaged goods for personal, domestic or household use or consumption, and (e) the person suffers loss or damage as a result of the destruction or damage. And s140 (2) states the person may recover, by action against the manufacturer, the amount of the loss or damage suffered by the person. Thus, ‘Scooter To Go’ is responsible under ACL. And Lucy may claim for damages under s140 (2) of ACL for ‘amount of the loss or damage suffered’ from “Scooter To Go.’

11.3Hugh Jackson is building an industrial estate in a suburb of Brisbane. The construction budget is $4 000 000. Chris Hepworth is an architect who has been hired by Hugh to oversee the construction. Hugh and Chris enter into a contract containing (among other terms) the following promissory terms: 1.5 It is a condition of this contract that Chris will ensure that the foundation slab is certified by a qualified civil engineer as meeting Australian Standards. 1.6 It is a condition of this contract that, in the event a dispute arises under this contract, the parties will initially attempt to resolve it through face to face consultation 1.7 Hugh acknowledges that the builder is under a primary obligation to immediately notify Hugh of any cost overruns that may require a variation to the building contract. However, it is a condition of this contract that, by way of confirmation, Chris will keep proper books of account and report any cost overruns on the budget to Hugh within one month of a cost overrun coming to Chris’s notice. The frame had been put up and the roof was being installed on the building when the frame collapsed. An investigation showed that the slab had shifted after some rain causing instability in the frame. Chris had not arranged for the slab to be certified by a qualified civil engineer. Hugh was very angry and arranged for his accountant to go over the books of account. There had been three cost overruns that Chris was aware of and of which he had not notified Hugh. The overruns total $6,000. Hugh commences legal proceedings against Chris. (i)

Classify the three terms as being a condition, intermediate term or warranty supporting your classification with appropriate authority

(ii)

State what remedy would be available and to which part

Answer (i) It is a condition of this contract that Chris will ensure that the

foundation slab is certified by a qualified civil engineer as meeting Australian Standards. According to the week 11 PPT slides, and it states that conditions are the most essential terms which go to the root of the contract (Bettini v Gye per Blackburn J), and the promisee would not have entered into the contract ‘but for’ an assurance of the ‘strict or substantial performance of the promise’ (Luna Park v Tramways Advertising per Jordan CJ). This term is considered as conditions because Hugh would not enter the contract if he knew there is no qualified engineer. It is a condition of this contract that, in the event a dispute arises under this contract, the parties will initially attempt to resolve it through face to face consultation According to week 11 PPT slides, and it states that warranties are less important terms that are subsidiary to the main purpose of the contract, and the face-to-face consultation is considered as warranties in this circumstance because it leads trivial consequences if both parties breach this term. Hugh acknowledges that the builder is under a primary obligation to immediately notify Hugh of any cost overruns that may require a variation to the building contract. However, it is a condition of this contract that, by way of confirmation, Chris will keep proper books of account and report any cost overruns on the budget to Hugh within one month of a cost overrun coming to Chris’s notice. According to week 11 PPT slides, and Lord Diplock summarised that ‘There are … many contractual undertakings of a more complex character which cannot be categorised as being "conditions" or "warranties“. Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a "condition" or a "warranty". Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 This term is considered as intermediate term in the circumstance. (ii) It is a condition of this contract that Chris will ensure that the foundation slab is certified by a qualified civil engineer as meeting Australian Standards.

The remedies for breach the condition or essential terms are termination/repudiation and /or damages. Luna Park (NSW) Limited v Tramways Advertising Pty Ltd (1938) 61 CLR 286; Associated Newspapers Ltd v Bancks (1951) 83 CLR 322; Bettini v Gye (1875) LR 1 QBD; Poussard v Spiers and Pond (1876) 1 QBD 410 Hugh can likely terminate the contract because it is too dangerous to do construction without a qualified engineer, and Hugh can likely claim damages due to the construction work does not meet Australian Standards. It is a condition of this contract that, in the event a dispute arises under this contract, the parties will initially attempt to resolve it through face to face consultation

This term seems not essential to the contract because it leads trivial consequences if both parties breach this term. Thus, breach of a warranty can results in an order for damages but not a right to terminate/repudiate. Ellul v Oakes (1972) 3 SASR 377 Hugh acknowledges that the builder is under a primary obligation to immediately notify Hugh of any cost overruns that may require a variation to the building contract. However, it is a condition of this contract that, by way of confirmation, Chris will keep proper books of account and report any cost overruns on the budget to Hugh within one month of a cost overrun coming to Chris’s notice. The remedy depends on seriousness of the breach of intermediate terms. Due to the overruns total is only $6,000, and it is small amount compared to $4,000,000. And it leads minor consequences from the contract, Hugh may claim damages under this term....