Week 12 contract law case notes PDF

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Week 12 The Common Law Position– Rescission Alati v Kruger Principle:

FA CTS The Plaintiff bought a fruit business from the Defendant During negotiations for the sale, the Defendant made several misleading statements about the profitability of the business.  Once the Plaintiff had bought the business, he became aware that the business was not as profitable as he had been lead to believe, and looked to rescind the contract.  However, the nature of the store meant that the parties could not be exactly restored to their earlier positions.  

ISSUE WAS THE RECEISSION VALID PLANTIF



Could the contract be rescinded, even though the parties could not be exactly restored to their original positions?

HELD The Court acknowledged that the Plaintiff could have sued for breach of warranty or for fraud, but either of these would affirm the contract and leave damages as the only remedy.  Rescission was not available at common law, because the parties could not be restored to their original positions.  However, it was available at equity, as equity can allow rescission provided that the parties can be substantial restitution is possible ly returned to their earlier positions.  Thus, the Plaintiff obtained his desired remedy of rescission. 

Facts: Brown v Smitt Principle: In order for the court to allow rescission for a pre-contractual misrepresentation, it must be possible for the parties to be returned to the pre-contractual position: Brown v Smit. Facts:

Coastal Estates v Melevende Principle: The right to rescind the contract will be lost if the party who has suffered the misrepresentation has elected to affirm the contract: Coastal Estates v Melevende. Once the

election is made it cannot be retracted: Sargent v ASL Developments. Authorities suggest that in order for a contract to be affirmed, the representee requires knowledge of the right to rescind as well as knowledge of facts falsifying the representation: Coastal Estates v Melevende. Any election to affirm must be made in clear and unequivocal terms to be effective.

Fact: Once a representee The Statutory Position: Unconscionable Conduct, Unjust Contracts and Unfair Terms Unconscionable Conduct under Australian Consumer Law (ACL)

ACCC v CG Berbatis Holdings Pty Ltd Principle:

FA CTS A group of tenants brought an action against their landlord The landlord made a condition of their lease renewal that they had to drop proceedings against them in the tenancy tribunal  The tenants claimed this was unconscionable  

ISSUE



Was the conduct unconscionable?

HELD Gleeson CJ: Unconscionable conduct is defined in the legal sense, not the colloquial sense. Something may be “unconscionable” in everyday life, but the legal definition is more precise  It is not unusual for one party to have greater bargaining power than the other in a contract. This alone does not make the conduct unconscionable.  There must be a “special disadvantage” to make the conduct unconscionable.  The tenants were at a distinct disadvantage in terms of bargaining power, but there was nothing “special” about it to make it equity’s role to fix it up by calling it legally unconscionable. 



The tenants did have the option to reject the offer if it was not amenable to them.

Facts:

ACCC v Lux Distributors Pty Ltd Principle:

hatconsumerpr ot ect i onl awsr ei nf or cesoci et alv al uesandexpect at i ons t hatc onsumer swi l lbedeal twi t hhones t l yandf ai r l y ,andwi t houtdecept i on -

Cant take advantage of vulnerable members of society Coming into someone’s house under false pretences is unconsible

Facts:

3el der l ywomanwer econt act ed,byLuxst at i ngt heyar eget t i ngaf r ee v ac uum cl eanercheck upmai nt ai nce,i nst eadt heypur s uedt osel lt hem a newv acuum cl eaner . TheFeder al Cour thasor der edLuxDi s t r i but or sPt yLt d( Lux)paypecuni ar y penal t i est ot al l i ng$370, 000f orengagi ngi nunconsci onabl econduct ,i n pr oceedi ngsbr oughtbyt heAus t r al i anCompet i t i onandConsumer Commi ssi on. Legi sl at i on: TheACCCi nst i t ut edpr oceedi ngsagai nstLuxi nMay2012.TheACCC al l egedt hatbet ween2009and2011,Luxengagedi nunconsci onabl e conducti nr el at i ont ot hes al eofv acuum cl eaner st ofi v eel der l yc onsumer s i ncont r av ent i onofs ect i on51ABoft heTr adePr act i c esAc t1974and sect i on21oft heAus t r al i anConsumerLaw....