204 Contracts

204- Contracts
LECTURE ONE: Law obtained from the common law, developed over time in the courts as problems arose. Not based on civil code. However, Statute does play a role. Studied through analysis of cases. Langdell developed this case law methodstudy decided cases, extract key principles and apply these to hypothetical’s. Legal problem solving model: -Issue - Law -Application -Conclusion. Emphasis on cases and learning the principles from facts that people present, problems people create for themselves. As people bring these problems to the court, these issues need to be looked at and dealt with (bottom up learning process- not looking at principles first). Courts identify threshold requirements by their judgments. Can then use provisions/ threshold requirements, and apply them to the facts. Confucius: I hear and I forget, I see and I remember, I do and I understand—idea behind problem based learning. Legal problem solving model- applying legal principles (the law) to problems/ issues. Unit overview: -contract formation (agreement= offer + acceptance, topics of consideration, how contact law had been formed- common law, statute, knowing whether a contact has been formed and if it should be enforced.) -Contents of Contract (what constitutes the contract, court must determine what parties have agreed to. Many disputes about what a contract actually says, oral/ written statements, what terms govern the statement- express terms, other terms incorporated- may become express terms, implied terms, may not be expressly agreed to- how to courts determine these terms? What are the principles of construction? How may terms be incorporated? Can they limit/ construe liability? Valid exclusion clauses) -Vitiating factors (valid terms could be spoit by something that has gone wrong, was it intended? Genuine consent? Have you been given correct information? If given wrong information, does that vitiate contract? Lack of genuine consent? was it under duress, mistake, undue influence; what is the effect of a vitiated contract?) -Discharge of contract (circumstances by which parties to a contract are released of their obligations, when has a contract been completed, frustrated, terminated, breached? Is it discharged when breach- right to sue for damages/ terminate contract?) -Illegality (contract legal, enforceable? Any reasons to not enforce certain contracts for public policy reasons? Does a term offend public policy?) -Privity (rights that other persons may have under a contract- affecting 3rd party, what rights does 3rd party have? 3rd party has not had consideration)

-Contract theory and practice (what is contract law? What are contracts? Why should the State/ rest of popn. Take interest? Justification? Why enforceable? What role contract law has in practice- clients, consumers, business people- look at contract in a different way to lawyers) Fundamental concepts/ terms: Significance of Contract law—holds central position in law, fundamental to legal work. Fundamental to the study of law. Fundamental to the functioning of society, contracts affect everybody daily, ie. Consumer transactions, employments, renting, bank accounts, credit cards, car insurance. Sources of contract law: -Common law (where contract law originated from. Ie court of Kings bench. UK and AUS.) -Equity ( ‘gloss on the common law’; significant parts of common law have originated from here ie. Courts of Chancery, supplement/modify old common law rules. Common law—formalities, elements to be proved, Equity courts— dealing with justice fairness if common law courts fall short, diff. principles of what is fair) -Statute (law made by acts of parliament, legislation. Does affect contract law. Ie. AUS consumer law—acts of parliament passed to make contract law more relevant to today.) -International law (int. treaties, globalised work, agreements between people in diff. countries, domestic law also affected in gov’t has ratified int. law) Start with the common law, but equity prevails over it. Statute prevails over both. Definitions of Contract: Recognize that contract law is one of the 2 great areas of private law—concerned with obligations. Tort law—obligation is in the source/rule of law. Contracts— source of obligation is in an agreement between people- promises 2 parties make to each other. Court will consider such agreement to be an obligation. 2 obligations: - Promise: English Jurist Pollock: contracts are promises made between 2 or more people. Courts will provide a remedy if the obligation that has arisen has been broken. Implies the only enforceable promises are those contained in the contract. However, Some promises in a contract may be unenforceable because they do not satisfy legal requirements. - Agreement: sees contract as an agreement that gives rise to enforceable negotiations. Sees agreements and contracts as the same thing, however, not all agreements are contracts. Whether parties are in an agreement or not is subject to an objective test—reasonable person looking at what parties did/ said and interpreting. Both concepts are fundamental. Concept of promise survives in concept of consideration (price that you pay for a promise ie. Another promise)

Classification of Contracts: (different ways of looking at contracts) - Promissory Intent Bilateral: Offerer (person who offers) offeree (receives the offer). Offerers promise is met by the offerees acceptance. Exchange of promises. Contract formed when the promises are exchanged. Formation of the contract does not depend on act of performance. Promises are enforceable. Unilateral: offerer’s offer is not met with a counter promise. Promise in exchange of an act. Contract formed when act is performed by other party. Ie. I will give you $100 if you find my dog. Offer in the air, but if you find the dog you have accepted with your performance. Contract is formed because of performance of act. Act must be in response to the offer. Formation: Express contracts: contract created expressly by the words and conduct of the parties. Implied contracts: formed by implication- maybe without parties knowing that they have a contract ie. Clarke v Dunraven [1897] AC 59 Simple contracts: formed without necessity to satisfy a particular form. Must have consideration. Don’t required formal paper work prescribed by law. Formal contracts: does require formal form ie. A deed- formal, written. Does not require consideration, as the form takes the place of consideration Enforceability Valid contract- contract that is in effect, enforceable Void contract- oxymoron- not actually a contract. Agreement that never had contractual form. Void from beginning, no obligations, legal right have arisen, not enforceable. May have been an illegal agreement. Voidable- valid contract that can be cancelled ie. Was created under duress, miss information. Capable of being avoided. Innocent party can avoid contract and sue for damages if suffered a loss, or proceed with the contract but sue for damages if suffered loss. Unenforceable contracts- usually valid but cannot be enforced as it lacks procedural element. Illegal contracts- contrary to statute/ common law, against public policy/ interest. Contract void. Generally involved penalties applied by the State. Performance Executed contracts- both parties have done what they promised to do Executory contracts- parties have not yet done what they have promised, or only one party has completed their promise.

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Remedies: Concerned with courts enforcement of a contract. Go to court looking for a remedy. If unenforceable, there is no remedy. Common law: Damages-- Fundamental remedy. Ie. Want money because of loss. Court determines how much. Purpose is to compensate for loss not to punish. Measurer of damages- where you should stand/ how much you do have compared to where you stand not as a result of breech. Damages are given as a right, nominal damages v. substantial damages (where you actually get money). Basic remedy for breech of contract. Equity: Not designed to give money. Where a party fails to perform, but the other party wants them to perform. Court can order you to perform the contractual obligation. Are discretionary. -Specific Performance- confined to contracts. Positive contractual obligation (party has promised to do something) -Injunction- not confined to contracts. Negative contractual obligation (party has promised to refrain from doing something) -Rescission – self help remedy, party rescinds, trying to get out of the contract, other party goes to court over the nature if the recinding -Rectfication: document may not say what a party thinks it says, want to get out of it Remedies not dependant on contract -tort -statute LECTURE 2: Damages- the perfect remedy, generally the starting point. Generally there is a right to damages. However, there is not necessarily a right to equitable remedies. Sometimes an equitable remedy is not appropriate (they are concerned with justice/ injustice). If damages are not adequate, then equitable remedies come in. Equitable remedies include: - injunction to enforce a contractual obligation - estoppel- promisor is precluded from going back on his promise even though the promise is not supported by consideration from the promisee - restitution Remedies: Depend on the existence of a contract- must be formed, breeched, lack of consent? Misrepresentation? Or have been formed but incorrectly recorded

Remedies may be available as an alternative.- ‘alternative remedies’- exist outside of contract law ie. Misrepresentation If voidable, contract can be rescinded. However this is not always possible. If not, can be sued under law of torts if it can be proved that false information was given (seeking remedy under tort law- proving fraud, not breech of contract. Can sue under tort of negligence, or under statutory provision- does not rely on contract law= alternatives) Consumer law: Courts have power to order delivery of goods/ refund of money etc. but this power does not come from common law. Contract formation: - Agreement (offer and acceptance): issue when there is an oral contract/ partly written. - Consideration (exchange of something of value) - Intention (intention to be legally bound) - Certainty and completeness (language must be definite showing intention and the critical terms must be agreed upon.) Must consider these when considering if there is a contract. Have the parties actually formed a contract? – courts will look at what the parties did/ said: OFFER- ACCEPTANCE- ANALYSIS—objective test If both elements are present, then there is an agreement. This is also used to determine when/ where contract formed (ie. Global issues). Also to determine express terms of the agreement.- if there is an issue with what the contract says. Sometimes this analysis is not appropriate for certain types of cases. OFFER: Statement upon which maker is prepared to be bound. Gibson v Manchester City council (1979) 1 All ER 972. Offeree said they ‘may be prepared to sell’ but did not go ahead with it. Court said they were looking for an offer, but ambiguous, not firm, thus no contract. – must be evidence of willingness to be bound; some promisery intent. Any equivocation/ ambivalence= no intention to be bound, clear offer yet to be put. If something that resembles an offer is made, it cannot be included. It cannot be an ‘invitation to treat.’ INVITATION TO TREAT: one party is looking to negotiate, invitation to make an offer ie. Advertisement. Pharmaceutical society of GB v. Boots cash chemists (1953) 1 QB 401—inviting to make an offer, goods on sale When shopping, customer makes the offer, seller accepts by selling it to you (can reject ie. If drunk trying to buy liquor) Calling of an auction is an invitation to treat (Hams v. Nickerson (1873) LR8 QB 286), as is a job advertisement—inviting you to make an offer Invitation to treat is recognized by courts as a commercial convenience- unfair to hold shops to all advertisements. Some advertisements/ statements may amount to an offer; where there is clear, promisery intent. – intention to be bound.

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Lefkowitz v. Great Minneapolis Surplus Store 8W NW 2nd 689 (1957)— where statement is clear, definitive and leave nothing open= an offer. Carlill v. Carbolic smoke Ball Company (1893) LR8 QB 286—set important precedents. CSB said that one would not get the flu if they used their product, and if they did they would be given 100 pounds. Even put 1000 dollars in trust- illustrates willingness to be bound. CSB said it was ‘a puff’ sales talk, advertising. However, court found that the offer was capable of acceptance, was unilateral offer to the world

Tender: Tender puts in offer, party calling for tender can choose any tender. However: exceptions- if invitor has said that it will accept a certain kind of tender ie. Lowest tender, 1st tender. Also, if there is a process contract, that is, if there is a call for tenders saying ‘we will treat tenders in a particular way’ an offer can be seen to have been made. Ie. Blackpool and Fylde Aero Club v. Blackpool Borough Council (1990) 3 All ER25—promised that they would consider contract in a particular way- damages for loss of opportunity as the Aero clubs petition was not considered properly. An agreement requires an offer. This offer can be made to: - Individual - Certain group - A class of persons defined by some description - Universal ie. But put to a particular number Offer lasts until rescinded/ revoked. Termination= - lapse of time (if time specified in offer or lapse of reasonable time) - Rejection (if offeree rejects offer, instantly terminated) ie. Hyde v. Wrench (1840) 49 ER 132, Stevenson Jacques and co. v. McLean (1880) 5 QBD 346-- counter offer rejects offer- but must really be a counter offer, not just a clarification of the offer or request for more info- should be answered, not treated as a rejection. Revocation of offer: - must be before acceptance - must be communicated. Dickinson v. Dodds (1876) 2 ch D 463—‘Option’ amounts to a separate contract ie. I want to buy property but I need time to organise my finances which brings me over time. ‘Ok I will wait for you, but I want a deposit now’- this option amounts to a contract. Only enforced by way of an option agreement. - Offer can be revoked only before acceptance. Revocation must be communicated, and takes place only once it is communicated. As long as it has been reliably communicated, revocation has taken place. - In the case of non instantaneous communication- ie. Post- if you have accepted before oferee has accepted before recieving revocation, offer must take place. If revoked by fax, takes place when fax machine spits out revocation, despite when the person reads it (which could be 5 hours later). However this must be in business hours. Electronic

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communication- offer takes place when the information enters into the other persons information system. If no email address available, then it happens when it actually comes to the attention of the person. Revocation of a unilateral offer: as soon as revocation is advertised. Unless acceptance takes time- if offeree has already started accepting, must be given the opportunity to complete it (UK model). However, in Aus it is different—ie. Mobil Oil Australia v. Lyndel Nominees (1998) 153 ALR 198 (pivotal case)—mobil said if clients achieved certain targets, they would give them more rewards, however then withdrew offer. Lyndell had already started working on it and claimed it was too late to revoke offer. On appeal, the court said there was no binding offer and even if there was, it was not always unjust to revoke offer if offeree has commenced acceptance- would be unjust for offeror. Esp. if what they were doing was for their benefit. (if offeree had reach the targets, then it would have been different) This case changed aus law.

Acceptance: when offeree indicates they will enter into agreement under offerors terms. Meeting of the minds—consensus ad idem. Acceptance mirrors offer- no conditional acceptance (this would be a counter offer). Cannot be conditional. Offeree must be genuinely responding to offer, must be aware of offer Rebuttable (disprovable) presumption (law presumes to be true) = if you know about the offer, your acceptance is in reliance of it. R v. Clarke (1927) 40 CLR 227—not reliant on offer. Gave information to clear his name, not for the reward that was offered, then tried to claim the reward. Problem with consideration. Acceptance may be expressly articulated or implied by conduct of offereecannot accept by lack of response ie. Felthouse v. Bindley However offeree may be seen to accept offer if act in acceptance of offer ie. Holdings case Acceptance must be communicated back to the offeror. Communication of acceptance takes place once it is received. Exception- where offerer dispenses of the need for communication ie. Unilateral agreement- offerer has dispensed need for communications Postal acceptance rule: Where acceptance is by way of letter etc. by post. Acceptance takes place when letter is posted, not received. Offeree must prove it was sent. Postal acceptance rule does not say communication not required. Must be reasonable, authorized, contemplated for it to be sent by post. Is a rule of convenience. Risk to both parties- will letter arrive/ offeree accepted by common law as the party most at risk in a postal situation as they would act as though it had been accepted. Thus, in the postal acceptance rule the risk is placed on the offeror as they stipulated how acceptance took place. Tallerman and co. v. Nathans Merchandise (1957) 98 CLR 93. Offeror must make it sufficiently clear how to accept ie. By letter, email, personally.

Unresolved area of law- revocation of acceptance by post- what if one cancels the offer before the letter of acceptance arrives? Does it count? Differing opinions, courts can go either way: - There is agreement due to the postal acceptance rule, cannot unilaterally withdraw from contract (rule of convenience) - No contract. Offeree has rejected offer in 1st communication with offeror. Offeror not aware of earlier acceptance, therefore suffers no loss, is then free to negotiate with others earlier than they would have if they had recieved the news by letter (seems more reasonable) Alternatives to offer and acceptance: “battle of the forms” - forms contain terms and conditions to be bound by.—what if acceptance does not mirror offer? Terms in forms contradictory? How does court determine which terms? - Butler Machine tool co. v. Ex-Cell-o Corp (1976) 1 All ER 965—counter offer accepted by Butler. Offer and acceptance not mirrored. Throwing documents at each other- saying different things. Ways of determining: - --last shout —last document between the party binding, determines terms - --highest status approach – which document has the highest status - --global synthesis approach- look at all forms/ documents (strict offer acceptance not appropriate) Goodman v. Cospak (2004) NSW C 704 Brambles holdings v. Bathurst City Council (2000-1) 53 NSW CR 153 LECTURE THREE: Consideration: In order to be binding/ enforceable as a contract, need consideration- exchange of something of value. Price that you pay for the bargain you receive, price you pay for a promise. Promise enforced when met with exchange of value. Typical bilateral contract: Selling a car, reach agreement, offer, acceptance, but neither has done anything in performance in contract- exchange of promises. Consideration (promise in exchange of promise). Bilateral contract- promise to do things is sufficient for consideration. Acceptance is consideration. No contract if no promise. Unilateral- the action of doing what the offerer says constitutes consideration Gratuitous promise (when promise made by one person to another, not reciprocated)- can only be enforced by way of formal contract (deed is an eg formal written document- signed, sealed, delivered, witnessed- represents solemn promise- do not need consideration- if breeched can get damages at common law, but not enforceable in equity- no specific performance). If any doubt about consideration, then deed should be executed.

In formal contract don’t need consideration, but may still have it. Limitation of 6 years on simple contract (can sue for 6 years after breech) Formal contracts have 12 years to sue after breech. Evidentiary positive part of deeds- recitals in the document itself. Recitals evidence that can be tendered in court to prove facts of agreement. Rules of Consideration: -must move from the promisee (making promise back), promisor makes the promise, only the party providing consideration can enforce the promise. Does not necessarily need to move to the promisor ie. Could go to promisors bank. Dunlop Pneumatic Tyre Co v Selfridge & Co (1915) AC 847 We will sell tyres to you if you will not resell them bellow a certain price, promise however did not move from the promisee (now illegal- resale price act, but was not at the time) exception to this rule: joint promisee rule. If promisor makes promise to 2 promisees or more but only 1 promisee makes a promise back, both can enforce promisors promise (as are joint promisees), but promisee who did not make promise need to join promisee ho did make promise as a plaintiff and are then entitled to whatever damages other promisee gets. Coulls v Bagot’s (1967) -2 types of consideration are valid- promise for a promise (bilateral, promise executary consideration, future consideration- consideration a promise to do something in the future- to perform something in the future) -act for a promise (unilateral or bilateral) could be an immediate act (executed/ present consideration, accompanies promise, comes at same time), or act in future. Past consideration is no good- act comes before promise- not given in reliance on/ response to a promise)- would that be gratuitous Roscorla v Thomas (1842) 114 ER 496—buyer sued for breech of promise, but promise given after contract created, additional promise for which buyer gave no additional consideration. Cannot rely on events before promise is made to enforce the promise. -Consideration must be sufficient does not have to ea adequate, just sufficient (consideration does not have to be equal to promise). Courts do not concern themselves with adequacy/ inadequacy of the consideration- commercial value, as long as it has some recognizable value. Must have a legal value the law recognizes. Rationale for this rule: Woolworths v Kelly (1991) 22 NSW LR 189 Collins v Godefroy (1831) 109 ER 1040-- Consideration could generally not be a promise to perform a public duty- ie.—had not given up anything that he was not otherwise going to do (obliged by law) gave nothing new of value. Glasbrook Bros v Glamorgan County Council (1925) AC 270-- If you do something above your public duty, could count for consideration Problem: where it is a promise to perform an existing contractual duty- not good consideration.

Ie. Stilk v Myrick (1809) 170 ER 1168- sailors promised to do all they could to bring ship back. 2 sailors deserted, captain promised the other sailors more money if they helped get the ship back. If give more than existing contractual duty, then may be entitled to more. Ie, Hartley v Ponsonby (1857) 119 ER 1471 Williams v Roffey Bros & Nicholls (1991) 34 NSWLR 723—court of appeal ruled against the rule- by staying Williams was giving consideration by providing a ‘practical benefit’ to the promisee by continuing the work- was sufficient consideration to make the promise of increased payment enforceable. Contract was varied. Could be abused/ manipulated- economic duress (illegitimate) ‘im going to go unless you give me more money’. However practical benefit test still in place and an authority—people would only offer more money if its worth it for them. Forbearance to sue: -abstaining from suing could be consideration- but is it of sufficient value? Ie. Someone does something if the other party promises to not sue them for something else. Value sufficient. Must prove that it was a reasonable case, reasonably held belief that you would win. Hercules Motors v Schubert (1953) 53 SR NSW 301 -promise not to sue was sufficient consideration where consideration is part payment of a debt—sufficient consideration? Can sue for the extra money (for the balance) part payment of the debt not good consideration for the promise not to sue. The promise to pay less than what one is contractually bound to pay is not good consideration ie. Foakes v Beer (1884) 9 AC 605. However, if less money is negotiated before due date for promise not to sue for balance, that is ok. Can practical benefit argument be plied to Pinnels case (1602) 77 ER 237- yes can be applied to compromised benefit cases. Consideration can be in present, future, but not the past, unless past is in same transaction as the present promise. Does not need commercial value, to be equal. Just needs to be sufficient. If you give a practical benefit then may be good consideration. Common law Estoppel: Equitable estoppel Part of the consideration topic. Courts will sometimes be compelled to enforce a promise even if conideration if consideration has not be en given, as long as certain threshold requirements have been met (developed through equity). Widespread in the law. Common law and equity. interpret estoppel in different ways- involves a court preventing a party from relying on their legal rights. Common law estoppel was where one party caused anothor party to make an assumption of fact (assume a fact, when it turns out to be false). If estopped raised as an argument ‘he should be prevented from arguing that’ this allows the court to determine the facts and then to make a judgement on the basis of these facts. Extends to statements of future intention. Promsory estoppel – cannot go back on promise.

Central London property trust v High trees House 1 KB 130. Leasor of properties to tennants had a lease from central property trust. Agreement that high trees company would pay reduced rent (happened during war) after war kept paying low rent. Property trust sued and enforced the promise in the lease, but could not sue for back rent, because it would have been unconscionable- had promised to accept less, could not go back on their promise, would have been unfair to promise something then take it back) promissory estoppel could be used as a shield, but not a sword. Propriety estoppel- in real property cases courts could stop land owner from enforcing their legal rights if they had encouraged the other party to believe they had some right to that land. Ie. Dillwyn v Llewelyn (1862) 45 ER 1285 Equitable estoppel Walton Stores v Maher (1988) 164 CLR 387- promised mar they would sign a lease with him if he fixed his property. Mar began work. Lawyers started to discuss the lease. Walton said they were not going ahead with this, mar sued as Walton should not be allowed to leave after making a promise. He has suffered a loss, and they knew he had. High court found that whilst there was no contract, equitable estoppel existed. Estoppel taken to new level- don’t need pre existing legal relationship- used as a sword, but waltons had acted unconscionably. Mar entitled to damages. Equity will provide relief to a plaintiff who has acted to his detriment on an assumption arrived from someones promise. Need to prove someone relying on a clear promise where there is a reasonable reliance, and unconscionable conduct from the other party. Ostotel v Franklins (ch 32) Intention- 3 element in contact formation. Intention to be legally bound, mutual, intention that it will be enforceable. How does court know intention?- objective test- how will reasonable person look upon this agreement. Analyse nature of transaction- relationship between the parties. Apply public policy approach- is it in the public interest for contract to be enforced? 1- family social domestic assumptions- non binding between family as lack intention ie spouses de facto spuses. 2- commercial business presumption- binding both rebuttable with evidence to the contrary. Depends on the facts. Balfour v balfour (1919) 2KB 571—husband and wife agreement. Paymets stopped being paid whilst he was away, however agreements between husbands and wife lacked intention- outside the courts, domestic. Jones v Padavatton (1969) 2 All ER 616- mother daughter agreement- mother said she could live rent free in the house, however there was then a falling out. Not enforceable as a domestic problem. Nature of the transaction crucial. How to rebut presumption- evidence of loss/ detriment that is serous enough that a reasonable person would believe the agreement to be enforced.

Ie. Roufos v Brewster (1971) 2 SASR 214- presumption rebutted, agreement was commercial in nature. Wakeling v Ripley (1951) 51 SR (NSW) 183—brother he died he would leave her the house if she moved from england to Australia to look after him, she left her home, her life, secure employment to come. However dispute arose and brother breeched the agreement. – seen to be much more than mere family agreement because of serious financial circumstances at stake. Banque Brussels Lambert v Australian National Industries (1989) 21 NSW LR 502— Rose and frank v Crompton bros (1967?) Had a written contract, clause that if the parties fell apart agreement would not be legally binding. Court rued could not be enforced. Presumption rebutted. Letters of comfort: Letters meant to provide some kind of comfort to a commercial entity when it is about to enter into a commercial relationship with a third party. Depends whether letter indicates an intention to be legally bound. Does not show promisery intent—Kleinwort Benson 1989 Government contracts- where government is in pursuance of a policy- govt is carrying out a program involving public law situation with a mandate from election. Not a binding contract. Contractual when it acts in own interests not involving public law, but private law. Adminisration of the territory of Papua and new Guinea v Leahy (1961) 105 CLR Question over usefulness of these presumptions- ermogenous v greek orthodox community of SA (2002) 209 CLR 95

LECTURE 4: Consideration necessary in every simple contract. Something has to match the promise- can be anything that a person does/ gives/ gives up. Giving is the act. Has to be in response to promisors promise, must have value sufficient to satisfy law, flow from promisee, cannot be payment of existing debt. Estoppel- equity may assist wronged part. Promisee assumes the existence of a contractual relationship because of a promise made by promisee, acts in reliance of that promise without providing consideration. Intention- whether parties intend to be legally bound- social/domestic presumption, business presumption- rebuttable on sufficient evidence. For a contract to be considered formed- must have sufficient certainty and competeness. Agreement to be considered a contract must set out essential terms. In land contracts, Contract must set out parties, property, price. Terms must be certain enough for a court to be able to enforce.

Booker industries v Wilson Parking (1982) 149 CLR 600- sufficiently complete even though no price established, however provided a mechanism for determining price ie. To be determined by an independent valuer who both parties agree on (must have chosen valuer) Must be certain what the parties have actually agreed. On ‘reasonable terms’. Consequence of lack of completeness means contract void. People often come to an agreement thinking will be set out in formal document, however then there is a falling out- one party say we agreement reached, the other says no hasn’t been written yet- will preliminary agreement be enforceable even though it has not been formalized?—depends on intention of the parties. Masters v Cameron (1953) 91 CLR 353—outlines different options: 1. parties agree on essential terms and intend to be bound, but they propose to sate those terms in a more formal document later. Prelim agreement enforceable. 2. Parties agree on central terms, make performance of the terms conditional on a more formal contract- do not need to perform agreement until document created. Prelim agreement enforceable. Can get specific performance 3. Parties agree on certain terms but intend performance ONLY upon completion of document- prelim agreement not enforceable. “subject to contract”—not enforceable contract until written up. Possibility of 4th category—Baulkham Hills Private hospital v GR Securities (1986) 40 NSWLR 622 All objectively determined. Ch9 text. Capacity--Minors: under age of 18. NSW has overtaken common law (was age 21, now 18) Some of the old common law cases shed light on why we have act. Seen as having limited capacity- contracts not enforceable against them—exceptions- able to form contracts and be held liable in contracts for necessaries, and beneficial contract of service. – these generally for minors benefit- enforceable for and against minor. Necessaries essential for minors every day needs ie. Purchase of food, clothing, accommodation, could be stretch to education, medical needs. Scarborough v Sturzaker (1905) 1 TasLR 117—enforceable to pay for bike. Contract was for his benefit. If it contains ownerous terms then it is void: Sultman v Bond [1956] St R Qd 180 Bojczuk v Barnum (1890) 45 ChD 430—minor sued as could not pay all of money back—was not essential—given money for migration to Australia. Thus, contract not enforceable. —capable of being a necessary? –takes into account finances, education, background, price of product. Contracts of service- ie, getting a trade, tuition, training- generally enforceable, unless terms unconscionable, exploited minor outweighing benefit minor was to recieve. Hamilton v Lethbridge (1912) 14CLR 236— Court held contract binding. Minor entered into employment contract with a solictor. When he graduated, he was not to practice with 50 miles of where Hamilton practiced. However, he did so.

Minors (property and contracts) Act 1970 (NSW)—gives more protection to people who enter into contracts with minors. certain obligations follow minor. Section 19—where a minor participates in a civil act ie contract and their participation for their benefit then the civil act is binding on the minor. (doesn’t matter age). Section 18—does not make binding a minors act, when they seem to lack understanding for their participation of the act. Act does not define benefit. Wider than common law. Section 20—dispositions of property. Contracts for the acquisition of real/ personal property. If sale of property by minor is not inadequate then the contact is binding . if the minor is purchasing property and the purchase is for a price no manifestly excessive, then it is binding. What is excessive depends on the circumstances. If minor ripped off not binding—probably voidable- facts of case decide. Sections 17, 23, 27. Mentally unsound/ intoxicated Contracts void if legally declared insane. (except everyday goods, must have paid a reasonable price). Where a persons mental state may have impeded capacity to give genuine consent and understand what they are doing. 2 threshold requirements - party setting aside contract must prove that they entered into the agreement whist suffering mental impairment. - Must prove the other party should reasonably have known about his impairment, onus of proof on side trying to get rid of contract. If proved lack of capacity- void. Hart v O’connor (1985) AC 1000—appeared to act rationally, contract not set aside, even though the contract was less than fair. Defendant did not know he lacked the mental capacity. Is it enough to prove you were drunk/ high/ mental condition? Or should you prove you had no idea what you were doing, distinction between lack of capacity to reason, or deprives them only of their business sense. extreme drunkenness is a defense if it prevents the defendant from understanding the transaction and if the claimant knows this (Kurth v McGavin [2007]3 NZLR 614). However, it has been suggested that a defendant cannot rely on drunkenness which merely blurred his business sense. If contract subsequanty ratified since impairment, then contract binding Mathews v Baxter (1873) LR8 Exch 132—lost right to rescind contract as he had ratified contract when sober. May still be able to set contract aside on other grounds, if mental impairment not sufficient. Corporation: Company (has separate legal personality- company itself is a person at law). Have legal capacity.

Sections 124, 125 Corporations Act 2001- contract can still be enforceable if didn’t have the power to make the contract, except when the other party knew of the limitations. Person entering into contract does not need to find out about the limitations of the corporation- not their responsibility. Contracts can be entered into orally, partaially, written ie. Deeds. Simple contracts must be in writing where statute requires it ie. Copyright At common law no requiremrnt that they were written- however issues with proof/ evidence/ subject matter of contract. Court had to decide who was telling the truth- find out what agreement was- led to uncertainty and fraud. Statute of Fraud 1677 (UK)—designed to get over problem of transfer of law orally. Many provision survive today. Section 54 A conveyancing ACT 1919 (NSW) – takes parts from statute fraud. Sale of land- exchange of real property for money. (1) must be evidenced in writing (if for land) or there could be note/ memorandum of it in writing. Unenforceable until it is so (still exists however). Memorandum or note- partly oral / partly written. Can be sufficient. May include receipt, memorandum, electronic communication, letters, -- as long as it contains the necessary material terms (must be signed by party to be charged). If ther is a document/ set of related documents courts have said there are requirements. Must be a description, identification of the parties (sufficient to identify with reasonable clarity). Consideration- must be sufficient note of the price, must have a description of the property sufficient to identify the property. Property, price, parties. Could be a requirement for another essential term. Controversy over whether there should be an acknowledgement of a contract- that parties are entering into contract. Must be signed, if so, implied that parties agree. Signature- by part to be charged- must be indicative of identity, must have written it themselves. Could be signature entered electronically/ click an accept button- courts have taken wide view of signature—flexible. Welsh v Gatchell (2009) 1 NZLR 241 Authorized agent- any party against whom the contract is to be enforced- party to be charged. Agent could have express/ implied/ apparent authority. If all requirements met, sufficient evidence of written contract to be enforceable. Have certain equity rights now, so enforceable. No general provision that contract be in writing, depends on statute. Should be in writing for practical reasons but no requirement. Promotes certainty, enforceability. Agreement to discharge contract can be done orally even if contract is in writing. Of there is a statutory requirement of writing --Unenforceable until put in writing, could potentially be void. Steps for contract for land: -precontractual: purchaser finds, inspects, negotiates property—oral contract, unenforceable. Socicitor writes up contract, sends to purchaser -exchange of contract- each party signs own contracts, parties look at he contracts make sure all the same, physically exchange identical copies. Normally deposit, held by stakeholder who is he trustee of deposit. No have enforceable

contact. 54A satisfied. Purchaser has equitable interest in the land—can enforce it in equity- audit for specific performace -post contractual- parties have certain things to do, ie. Pay stamp duty/ Tax. Searches of the property. Memorandum of transfer. Finalise separate contact with bank to get money (mortgage, separate contract), vendor signs transfer and gets property ready ie. Getting rid of tenants -completion. Settlement. Exchange of documents for money. Enforcement of Oral contracts for Sale of Land Fraud— If 54 A not satisfied- what rights? Oral agreement, or terms of memorandum not clear. - Prima facie- unenforceable contract. Court will not award damages/ provide equitable relief ie specific performance. (possibly estoppel). However may still be enforceable in equity if: - non compliance with statute would amounted to fraud (told part they had put it in writing) ie. Wakeham v Mackenzie (1968) 2 AllER 783— equitable fraud, executor transferred property to woman. - Part performance- (equity prepared to accept what plaintiff did after oral contract formed as evidence of an oral contract)- 54 sub section 2 says conveyenceing act does not affect law relating to part performance. 2 justifications: estoppel (if a part allows another party to act in performance of a another part will not be able to go back/ deny promise), Courts realized that post contractual acts good evidence that they believed there to be a contract. Equity looks at what the plaintiff has done (usually at his detriment) the defendant is charged upon the equities. Waltons Stores v Maher 1988—to prove part performance, acts must be from the party asserting par performance, those acts must be authorized by the oral contract. McBride v Sandland 1918 25 CLR 69 Regent v Millett (1976)133 CLR 679 Khoury v Khouri (2006) 66 NSWLR 241 Steadman v Steadman (1976) AC 536- cheque ok Francis v Francis (1952) VLR 321 Acts that you do must be consistent with the kind of contract you are alleging has been created. Problem: payment of money sufficient for doctrine of part performance?—NSW= no- Payment of money not referable to any specific type of contract.—unless cheque accompanied by certain acts.. LECTURE FIVE: Express terms, implied terms, structure and interpretation of terms. Contents of a contract: - what it says- terms, assumption that there is a validly formed contract . conditions and rules that govern that contract. Need to examine (if written) words and expressions used, if oral, need to examine negotiations between parties, if partly written- words, conduct of parties. - May need to look at what is offered and accepted

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To decide what the terms mean is a different question. How do courts decide what has been incorporated as an express term? Courts most willing to enforce express terms- enforcing the true will and intent of the parties- what the parties had already agreed on. Courts don’t want to add or delete from the contract, don’t really like implying terms either but can. Terms may be classified in a number of ways. Express and implies are the primary. Express- expressly stated. Agreed upon. Appear on face of document. Implied- not expressly states/ agreed, but are part od contract, and may be incorporated into contract. Written contract- express appear in the document itself, in sentences/ paragraphs. Sometimes called terms, clauses, provisions, covenants. A sentence/ paragraph in a written document may amount to a term although it may contain 2 or more terms. If a document says that something in t is a term, then good evidence that it is, however it is not necessarily so. If something doesn’t appear in a document, goo evidence that it is not an express term, however this is not necessarily so. – may have the effect of a term even though it doesn’t appear in the document as a term (may have been agreed on but forgot to be written) Where there is not written document, becomes n=more difficult. Words don’t appear as terms, but it is still the effect they will have. Evidence of what parties did/ said may be implied terms- courts may imply terms. Terms generally contain some promissory element- contractory element. Certain terms in contract are not necessarily promissory ie. Definition clauses. Assist in interpreting the contract, cannot really be breached, do not say what the parties have to do. Express terms- explicitly included by the part, intended. May be incorporated by actual inclusion in the actual document, or orally by what was said. Representations may also become express terms- statements made by parties to ea other before of during creation of contract. Some statements very important- could be seen as forming part of the contracthowever are they express terms? Common law classifies these statements as: irrelevant statements, puffs (exaggerated sales talk, no reasonable person would take seriously, however still have to be careful, some people will believe anything, consumer protection), representations (statements made before contact form that the concern the contract intended to induce the other party into the contract but are not seen as promisery- the person making the statement not promising anything, remain outside of the contract, misrepresentation falls outside of the contract, innocent party however may still be able to rescind the contract, may be negligence/ fraud but cannot take action by virtue of the right from the contract itself- not promissory, remedy outside of contract), terms (amount to promises, are part of the contract, intended to be legally binding, indicate obligations, what parties have to do, contain promissory intent, become part of the contract, if terms breach then constitutes breech of contract, can sue for damages, damages calculated on breech of contract.)—sometimes dividing lines not clear. Representation may be important in that the maker may be seen as promising something- then becomes a term. May become a term because of its importance. How does

court know when this happens- Ellul & Ellul v Oakes (1972)—importance of the statement- common sense, using objective test, timing of the statement, how much time between making of the statement and forming the contract, any skill. Knowledge maker of the statement has, was maker of statement in better position to ascertain the truth, has the statement been included in any subsequent document- statement more likely to be a term if it is important or made shortly before contract, made by party with special skill relating to the statement. If not very important, made a long time before contract, then less likely. Courts look at facts objectively. Is there intention that the statement would be contractually binding— Oscar Chess Ltd v Williams (1957) 1 All ER 325—car had lower trading value than sold for, when realized, sued. Needed to find whether the statement of what the car was, was a term, or a representation. Found to be a representation. Williams had no special skill or knowledge. Dick Bentley Productions v Harold Smith Motors (1965) 2 All ER 65— represenation had become a term ‘if representation induces party to contract (with this intention) then it implies that it was intended as a term unless dealer rebukes this, if statement hadn’t been made it would be unlikely the customer would have made the purchase). Aus courts have taken more restrictive view of ‘terms’- aus cases have said not relevant that party that looses lost because they were somehow at fault, doent matter id maker of statement was at fault, if contract not entered into if statement not made also not so relevant. Pre contractual statements may be binding if they form a separate contract- collateral contract, connected to the contract through consideration, but separate to it. De Lassalle v Guildford (1901) KB 215-- Court held collateral contract formed- connected to other contract, included only one express term. The statement that the ‘Drains in good working order’ was met by consideration from the other party- the signing of the lease. Collateral Must satisfy 2 element- statements must have promissory nature, must have made a promise that induced the other party into the contract, must not be representational—JJ Savage & sons Pty Ltd v Blakney (1970) 119 CLR 435—purchaser had to prove statement had become part of the contract- not held. Obligations relating to the statement- could have been inserted into the written contract, would have then amounted into express term capable of being breeched, purchaser could have sought from the vendor a promise/ guarantee about the speed as a pre condition to the purchase of the boat- then would have been a collateral contract supported by consideration (purchase of the boat), could have relied on the vendors opinion, then it would have been a representation- remained outside the contract, remedy outside contract, couldn’t be a breech of contract. Collateral contract has promissory element. Statement must be consistent with main contract. Collateral contact cannot alter rights that arise from main contract—Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133—not consistent with main contract. Could not be a collateral contract as inconsistent with sub lease. Did not become an express term. Howeverharsh? Estoppel could find remedy- overcome inconsistency rule—

waltons and maher outlines equitable estoppel. Renigged on promisereasonable reliance on a promise not supported by consideration. Hoyts could also say misleading deceptive conduct under trade practices act. In order to overcome this, parties often include entire agreement clause as an express clause- Parties acknowledge express agreement- nothing else outside the agreement. Interepreneur Pub Co v East Crown Ltd (2000) 2 Lloyd’s Rep 611. Entire agreements stop parties from looking for pre contractual promises upon which they can argue collateral contractcould even be used to stop estoppel. Tripartite collateral contractual contracts- 3rd party plays a role. A promises to B, on bases on this promise, B enters into contract with C— The signing of the B’s contract with C is consideration for collateral contract between B and A- even though here may be an inconsistency between the contracts, as long as A gets benefit from the contract between B and C— Andrews v Hopkinson (1957) 1 QB 229. Further way a statement may become an express terms is- exception to the parole evidence rule. Parole evidence rule comes in 2 forms. Parole evidence rule states that were a contract is wholly in writing/ intended to be, any evidence that is extraneous to the doctrine is excluded. Cannot bring other evidence in into contract. Courts generally will not accept evidence outside written documents that add or subtract to the contract. All terms are in the document. Oral evidence not included in agreement, documents related to contract (ie. Email) not incorporated. Earlier drafts not included. . Syas that the written contract speaks for itself- finality, doesn’t rely on faulty, biased human memory. Gives certainty to documents, parties know what they have signed. However- courts have allowed extraneous evidence where contract partly written, partly oral- on a provisional basis. Courts may be willing to exclude the rule. Contract may not be meant to start until something happens ie. Finances arranged. Courts will accept this oral evidence as terms of the contract. Exception- existence of an implied term. Prove the written contract has incorrectly recorded agreement. Fourth exception- existence of prior collateral contract. Signature rule- anything signed to becomes an express term. Signing contract means binding- you have read/ understood/ agreed to terms. – L’Estrange v Graucob (1934) 2 KB 394. – lost case because she was bound by terms of the contract she had signed. Reinforced in Toll (FGCT) pty ltd v Alphapharm pty ltd (2004) 219 CLR 165- if signed, means you’ve read. Vitiating factors ie.- duress. Curtis c Chemical Cleaning & Dyeing (1951) 1 KB 805—court of appealher signature didn’t count as there was a misrepresentation of what the contract said.

A terms may also become express term by way of notice- given by one party to another. Ie. Exclusion clause. If say ‘this is a term of the contract’ then it is a term, as long as notices satisfies: -time: notice must be given before contract formed ie. Olley v Marlborough Court (1949) 1 KB 532— timing too late. Notice given at time contract formed- terms written on a ticket- rule of convenience, could reject ticket when being given it. Thornton v Shoe Lane Parking (1971) 2 QB 163.—timing of notice. Ticket issued from ticket machine with terms printed on it- however thus had already entered into contract before saw terms- too late. Was exclusion express term? No- because no notice had been given before contract made. Contract had already been formed when he took the ticket. Reasonableness also important. Notice must be reasonable- must have reasonably come to attention of the party- must have known of the notice. Even where signs clearly visible- must distinguish between documents and signs that appear contractual/ not contractual. Parker v South Eastern Railway Co (1877) 2 CPD 416—clause incorporated by notice. Cannot rely on going document to a person in order to satisfy person of reasonableness, need to tell customer of exclusion clause, give them notice must be explicit. Need to give notice to be incorporated. Must appear contractual in nature. Incorporation by prior dealings- courts may apply terms if parties have dealt with each other previously on similar terms. Hays Personnel Services v Motorline Pty Ltd (2008) QCA 375. ILACIssue- 20% Law- 20% Application- 50% Conclusion- 10% LECTURE 6: Implied terms can be incorporated into a contract. They are exactly as they sound, are not consciously agreed by the parties, but are implied into the contract under certain circumstances. How/ when? May be done in 3 situations: - where term implied on the facts of the case (court asks whether facts of the case justify implication of the term) - where term implied by operation of the law (common law/equity) - where term implied by custom and useage (court inquires into way things are usually done in a particular trade/ industry/ market- does this justify the implication of the term- gives precedent for implication of the term.) courts only imply terms when certain threshold requrements are met. Do not want to create contracts for parties- are tying to determine intention of the parties when crating the parties.

Convincing the court that there is a term (onus of proof) rests with the party claiming that there is an implied term. Courts may imply term if the term fits presumed intention of the parties. Courts have made a distinction between contract formed formally, and contracts that are more informal ie. Oral/ partly oral. Harder to imply terms into a written, formal contract. Court will only imply term if certain requirements have been met, as established in BP Refinery v Shire of Hastings (1977) 180 CLR 266 at 282-3: - Implied term must be reasonable and equitable. Presumed intention of the parties must be reasonable to both parties. Court balances the burdens and the benefit that each parties would face if the term was implied. - Implied term must be necessary to give business efficacy to the contractif the contract is capable of sensible operation without the implied term, then the court will probably not imply the term, term must not be so necessary that without it the contract would not be able to function at all. - Implied term must be so obvious that it goes without saying- both parties would clearly have included the term had they put their minds to it- not obvious if it disadvantages one party, or if several terms could have been used. - Implied term must be capable of clear expression- not so wide and imprecise that it would be uncertain. Implied term must not contradict any express term in the contract- must be in line with what the contact already says. Codelfa Construction Pty Ltd v State rail authority of NSW (1982) 149 CLR 337— assumption that statutory authority would extend to any contractor. However, when local residents took codelfa to court it was found Statutory immunity did not to extend to codelfa. Then Codelfa took rail authority to court because they lost money. Was not obvious that they had agreed to pay the more money, likely that the parties would have negotiated further. Courts will not imply a term if it would benefit one party, and seems like a good idea. Attorney General of Belize v Belize Telecom Ltd (2009) 2 All ER 1127—where a contract fails to expressly say what will happen if an event happens, then nothing is to happen. If the even causes loss to one of the parties, so be it. Implication of a term is not an addition to a contract, only spells out what contract means but has failed to say. Implied term must spell out what the contract actually means. Arguably shifts from necessity to reasonableness. Co relative obligation—ie. Tenant is to pay for lighting to the car park (express term). But, if there is no express obligation on the landlord to apply lighting in the carpark, the court may imply term that landlord should supply this lighting. If performance requires co operation between parties in performance of contract, then court will imply term that the parties must cooperate. Can imply what a ‘reasonable’ time, and also a reasonable price.

--BP matters to be taken into account as opposed to essential elements requiring proof. Implied term must be capable of clear expression, not contradicatory to express terms—Byrne v Australian airlines ltd (1995) Implication of terms by law: Statute and common law Courts concerned with public interest, can contract be but into certain category. Services must be rendered with care and skill. Parties may agree to exclude statutory obligatory terms (but not consumer contracts) Under common law, terms more likely to be implied- ie. That the employee will exercise care and skill. Employer will provide a safe workplace. Many of these terms no statute, are genera law principles, applied on the facts. Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) 186 ALR 289. Implication of terms of good faith—controversial. Is there an implied term in commercial contracts, can you imply term? That parties will act in good faith. NSW more likely to imply term, other states less inclined, high court yet toresolve issue. Opportunity to address issue in royal botanic gardens case, but the High court said issue does not need to be resolved in order to solve the case. Justice Kirby said 3 things have to be decided: To what type of contracts will this apply? Is it referable only to commercial contracts? What does he obligation of an implied duty of good faith mean? Duty to co operative, parties should act reasonably, adhere to honest standards of behaviour. Can it be expressly excluded? Free to negotiate and exclude the need to act fairly? At what point does profit become unfair? – freedom of contracts, state able to regulate contracts. Implication of terms by custom- to imply term on this basis. Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (1986) 160 CLR 226—High court said not enough evidence of certain customs in the insurance industry. If asking court to imply term on this basis, issue of custom is an issue of factmust prove the custom as a question of fact, heavy onus of proof. Custom must be well known, so well known that the parties must have reasonably intended to include it (does not have to be a universal custom- exception). If an express term says otherwise, then not implied. Construction of Terms— Important in a practical sense. Most cases not about formation, but what the contract actually says- meaning of terms in the contract (poor, inadequate drafting by lawyers- highly specialized form of writing, is about limiting the meaning of words, precision). Determining true intention of the parties, to avoid declaring the contract void for uncertainty. Old view: Strictly literal approach to construction of terms- literally held to it. Now, a more commercial approach,

how would be reasonably interpreted in the context. Courts decide what term means objectively. What a reasonable person would believe to be the purpose of the contract. Presumption that unreasonable result not intended. However if it is clear from the express terms that the unreasonable result was intended, then upheld. Court will overlook obvious inconsistencies in words. Ie. If contract says must be finished by certain date, but then another sections says extensions allowable. courts go for more practical operation. Courts generally favour what reasonable person would think a term was purporting to say- depends on purpose. Terms etc. However, if words clear then can still enforce something that a reasonable person would not think was enforceable. Parole evidence rule: 2 limbs to it— - exclusionary limb—cannot bring in oral evidence to vary term if it is written - Construction limb—court will not allow you to bring certain evidence to help court to decide what the term or the contract actually means. Excludes evidence of prior negotiation of what a contract/ term means. Prefer to let written contract speak for itself. Aus generally applies this rule- prior negotiations reveal intention, not what they actually agreed upon. In UK house of lords more flexible, even call for abolition of this rule- helps decide what term means. However, in aus, evidence of prior negotiation useful in est background facts esp those known to both parties. Not what it tell us abou how contract should be read/ construed. Excludes evidence of post contractual conduct. Should courts take this into account to decide what contract says? - Common law rule that the parole evidence rule excludes what parties did before or after. No ruling from high court. Evidence of what happens after may distort what was agreed upon (may be what ONE party understood it to mean). Generally distorts the view. Evidence of what the parties did after does show intention in NZ- more liberal- if sheds light on the meaning held by BOTH parties. Hide & Skin Trading Pty Ltd v Oceanic Meat traders Ltd (1990) Can take these evidence into account however, to show that the contract is a sham, or that a term has been incorporated into a contract, if a contact has been formed at all, if there was an error in the contract (rectification). Also to clarify ambiguity, identify subject matter/ the parties. Classification of terms: Different types of terms. Discharge by breech. Type of term hat has been breached is crucial. In order to know effect of breech and know what kind of remedy, then must know this. If seeking damages for breach, classification of terms not that important, more important when seeking termination of contract for breached term. If goods delivered at wrong time, contract breeched. Termination more drastic, depends on the kind of term. Manner breached. Breech affects what parties can doactions/ remedies. Directly related to discharge of breech. Can classify terms as

-Conditions- for which termination is available. Essential term. Root of the contract, substance of the contract. – tramways Advertising Pty Ltd v Luna Park Ltd (1939) 38 SR (NSW) 633. – was court a condition or ter? Essentiality testlook at intension of the parties, importance for the promisee- would they have entered into the party without the term? And the promisor knows this. High court sad that it was a condition. Associated Newspapers Ltd v Bancks (1951) 83 CLR 322. High court essentiality test- yes fundamental- a condition, -Warranties- termination generally not available. Non essential term. Does not go to the root of the contract. Can sue for damages if suffered loss. Bettini v Gye (1876) 1 QBD 183—no right to terminate contract. Had breached contract, but only a breech of a warranty, attendance of all rehearsals does not deny other party the substantial benefit of the contract. Promoter had a loss, but sue for damages, but not termination of the contract. If he had not turned up for concert, breech of condition. -intermediate terms- termination depends on conditions of the contract. Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) 2 QB 26— on first trip 5 weeks was lost as ship in poor condition, in Japan had to repair ship for 15 weeks, terminated for breech of seaworthiness term. Court of appealcame up to intermediate term- not clearly a condition or a warranty, nature of term depends on the consequences of the breech. If breech of term means innocent part not deprived of essence of contract then the term is a warrant, if breech of term means deprived of essence of the contract, then a contract. If you do not know until the breech has occurred and what damage has eventuated from the breech, then it is an intermediate term—may in some cases deprive innocent party, and in other circumstances not- need to look at consequences in the specific case. Found not deprived from essential benefit of the contract. Have suffered a loss however, and can sue for damages. Koombpahtoo Local Aboriginal Land council v Sanpine Pty Ltd (2007) 233 CLR 115- parties should know what terms are essential, intermediate term lead to uncertainty. However, found that the intermediate term constituted a condition due to the consequences of the breech. For conditions and warranties the fact that the term has been breeched is sufficient to sue. Termination depends on seriousness of consequences of that breech. How courts interpret time stipulation- failure to comply with time stipulationgeneral law position strict view. Equity more reasoned view, which has prevailed. Breech of time stipulation to be treated as breech of a warranty. Can sue for damages if suffered a loss. However, can make it an essential condition by expressly agreeing that the time stipulation is an essential condition. Courts may imply essential condition for time ie. Truck of lettuce that will expire after a certain time. Often consequences of ‘time of the essence’ contracts are so serious that courts have established equitable procedures. Vendor may be entitled to deposit for what he has lost if purchaser breeches contract. Often things go wrong in land cases- purchaser often at big risk (what if bank doesn’t get money

in time)- courts will generally not allow vendor to keep deposit (often outside control of the purchaser), often vendor will nominate new dat (reasonable in the circumstances), courts may be liberal/ flexibe. Structure of exclusion clausesDestructive of rights, can be incorporated into contract, if it passes incorporation test. Look at construction—historically courts suspicious of exclusion clauses and often tried to deny it. Now, less qualms- if don’t want it to be upheld, don’t sign it. When a court interpreting what exclusion clause says, look at: --Ordinary and natural meaning of the words- what the words say. What it would mean to an ordinary, reasonable person. Should be clear, visibile --if there is an ambiguity, apply the contra proferentum rule- courts interpret clause against interest of the party seeking to rely on it. Where it is clear, equality of bargaining power, must be upheld. –Photo Production Ltd v Securicor Transport Ltd (1980) AC 827. – words clear, not reasonable foreseeable, exclusionary clause valid. Construction of exclusion clauses. Is to exclude liability from breach of conduct, limit liability. Can be incorporated into contract- signature, notice, dealings. Construction: meaning, interpretation- assumption that it is incorporated into a contract. If not, do not need to interpret. 3 main issues need to be resolved: Must be a breech, must be some liability on part of defendant, which triggers exclusion clause Also needs to be incorporated- exclusion clause must be incorporated into contract. Does clause actually exclude liability on a proper construction of the clausecourt views, construes, interprets in such a way to give effect. Courts used to deny exclusion clause by flexible interpretation, now less hostile, especially to commercial. Business transactions where courts have an equal bargaining position. Even if the effect of clause is harsh. Ordinary and natural meaning test- decide on meaning by looking at what the words mean in their ordinary and natural sense. No priority to technical meanings. Words placed in context of facts and circumstances of the caseequality of bargaining power? If there is an ambiguity- could mean more than one thing, then must be ruled against the interests of the party that is relying on it. Cannot be enforced if ambiguous. Onus on parties inserting exclusion clauses to draft clause in unambiguous, clear way. Photoproduction v securical- one of the terms said that securical excludes liability for any loss occasioned by employee, unless act could be foreseen or avoided by securical. – no ambiguity, even though harsh outcome for photoproduction. Negligence rule- can they be used to exclude liability for negligence? Negligence may result in injury, property damage. Exclusion clause needs to expressly refer to negligence, or the clause must use terms wide enough to include negligence ie. ‘Will not be responsible under any circumstances.’ Other expressions will not exclude liability of the terms are so wide as to cover other grounds of liability as well, ie. Will only cover the other grounds, not negligence.

Four corners rule: conduct being excluded must be within the scope of the conduct. Conduct must be within the contract- authorized, contemplated, within scope, of the contract. Should not be outside of what the contract is dealing with. Exclusion clauses also relevant in statue. Are often commercial in nature. Most parliaments have limited their use in certain times of contracts ie. Consumer contracts- where consumer not in position to negotiate the terms. Any term in consumer contract that purports to restrict or modify, that has the effect of this, under the consumer protection provisions (consumer protection act sect 68) is void. Stops corporations from attempting to limit liability, esp if good are faulty. LECTURE SEVEN: Vitiating factors: Lack of genuine consent Misleading or deceptive conduct-- statute Misrepresentation Mistake Duress Undue influence Unconscionable conduct Unjust contract—statute: Contracts review Act (NSW) Misrepresentation: Statements made by parties to each other during the making of the contract. Representation- statement made usually before contract formed with intention of inducing representee to enter into contract, without any promissory intent on the part of the representor- remains representation (descriptive rather than promissory)—where these are incorrect- misrepresentation, contract may be rescinded- voidable. Whether it can be rescinded on the facts is a separate issue, if cannot rescind, look at the nature of the misrepresentation to see if it was fraudulent, negligent, innocent. If fraud involved, could be an alternative to rescission- an action in deceit- a tortous action (not contract) can get damages. If negligence- action in torts, damages. If it is innocent, damages not available. if rescission not possible, damages not available, then the representee left without a remedy. How a contract that has been validly formed can be rescinded because was entered into under misrepresentation. Statute has changed and simplified (aust consumer law) misrepresentation. Common law position: How actionable misrepresentation found. 3 elements need to be satisfied. Must prove statement related to past/ present material fact. -statements of law; about the legal effect, misstatement of this nature is not misrepresentation as there is a presumption that everyone knows the law and it is freely available. However, MAY sometimes be found as a representation -puff- exaggerated statement, would not take literally. Incapable of being misrepresentation as no one could be fooled

-predications about the future- not misrepresentation as everyone knows you cannot predict the future: not statements about fact. Statements about future intention- not statement about presently existing fact as could not be true or false when made. However exceptions, could amount to representation of representor had no intention at the time the statement was made to fulfill that statement. Edgington v Fitzmaurice (1885) 29 Ch D 459 Smith v Land & House Property Corp (1884) 28 Ch D 7: Statements of opinion- inference drawn from facts. Could not be misrepresentation, except where facts upon which opinion is based are not equally known to both cases. Where the facts are equally well known then the statement is likely to remain an opinion, not representation. Statement must be false. Positively asserted. False statement involves a positive assertion of something, cannot be accused if say nothing. No obligation to disclose certain facts. Not entitled to the facts (except in certain circumstances ie. Statute says land contracts). However; Cavie dentor- buyer beware. No entitlement for buyer to receive info, had to enquire, except common law recognizes obligation to disclose in certain situations: --where there is a partial disclosure. Partial truth a misrepresentation, distorted --If the statement is true when made, but circumstances change so that it is no longer true- Dimmock v Hallett (1866) LR 2 Ch App 21. Is a misrepresentation, fraudulent. Can seek damages. If not aware facts have changes, is still a misrepresentation, except innocent misrepresentation, no damages. --Obligaton in certain types of contracts to disclose facts. Contracts of utmost good faith- ie. Insurance. Contract entered into on the basis of good faith. Statement must induce and is intended to Must prove this. Representee must prove objectively that the statement was an important factor. –statement upon which they reasonably relied. Presumption that it was intended to induce. Onus of proof then shifts to representor to rebut that presumption, representee was not induced, did not rely on that statement, balance of probabilities that they knew the statement was false. Ie. Holmes v Jones (1907) 4 CLR 1692—could not rescind, as no actual inducement as had not relied on that statement. If have opportunity to check truth of statement but do not—Redgrave v Hurd (1881) 20 Ch D 1—court of appeal held that the purchaser had still relied on the statement, even though they hadn’t checked. Requirement exists that the fact be past or present fact be material. Not a separate element. Must be important, less important the fact, the less likely the representee relied on it. Rescission not always available: if cannot restore parties to pre contractual position, where the innocent party had elected to affirm the contract (lost right to rescind), where third part rights are affected, on equitable principles: must have certain principles satisfied. Alternatives if rescission not available:

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Tort: action in deceit. If misrepresentation is statement of fact fraudulently induced: damages available for fraud. Negligence: false info given negligently- breach of duty of care, damage flowing from breech. Courts never considered that statement made could cause damage ie. Precontractual statements made during negotiations, however, then expanded to negligently made statements that cause damage. – negligent misstatement—Esso Petroleum C Ltd v Mardon (1976) QB 801. . Statute: tries to repair anomolies arising from common law. Sect 18 Trade Practices Ammendment (Australian Consumer Law) Act (No.2) 2010 —most important consumer protection provision. Accessible to everyone, does not require contract, can take action against false statement even if no contract for misleading or deceptive conduct. Cannot engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Covers fraudulent, negligent, innocent statements where they are false. Cannot exclude liability for the statements by an exclusion clause: void if excludes liability. Will not apply to every contractual situation, must be consumer (someone who acquires goods or services under value of 40 000 or over that amount if the goods are ordinarily for domestic/ personal household use or consumption.) Statement must be made in trade or commerce- engaged in business enterprise wanting to make profit. Includes opinions. Tobacco Institute of Australia Ltd v AFCO (1993) ATPR 41-199—people would think that opinion based in fact. Silence can also mean misrepresentation- where something should have been said. Henjo Investments Pty td v Collins Marrickville Pty Ltd (1988) 79 ALR 83. How to prove misleading/ likely to mislead: 1. Conduct/ statement directed to an individual, court looks at nature of the parties, at their respective knowledge and experience, to decide if statement is misleading or deceptive. Butcher v McLachlan 2004 218 CLR— high court said not misleading as very experienced business couple, agent had no skill or knowledge as to nature of title, only produced what solicitor told him to. 2. Where statement directed to the public at large. Taco Company of Australia v Taco Bell Pty LTd (1982) 149 CLR 191— identify target audience to whom statement is directed, decide what impression is being conveyed to that target audience, what reasonable member of target audience would be led to believe, determine whether impression is true or false. If false, misleading or deceptive conduct. Even if false statement made innocently.

Mistake— Have entered into contract due to a mistake- contract vitiated. Unlike misrepresentation, recognized mistakes of fact and of law. Not every mistake vitiates contract. Limited meaning, courts reluctant to find mistake, means contract void. Have recognized 3 formes of mistake: - Common: both parties to contract have made the same mistake about a material fact or point of law. Void. Ie. Mistaken about existence of the

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subject matter of the contract. Prtichard v Merchants & Tradesmans mutual life Assurance Society (1858) 140, ER 885, Associated Japanese Bank Ltd v Credit du Nord SA (1988) 3 All ER 902. Exceptions: where the parties are mistaken about an attribute of the subject matter ie. The quality/ value of the subject matter, that is different. Leaf v International Galleries (1950) 2 KB 86- mistake about its value, not subject matter itself, not a true mistake. Or, when one part induces the mistake McRae v Commonwealth Disposals Commission (1951) 84 CLR 377—instructions about location wrong, no operative mistake as the commonwealth had induces McRae into the mistake, breach of warranty, entitled to damages. Common mistake in equity: one of the parties left disadvantaged due to unconscionable behaviour of the other party. Solle v Butcher (195) 1 KB 671—in situations where there is a common mistake by the parties that leads to unfairness to one of the parties. Equity could hold contract voidable. Would require 1. Common mistake about important matter 2. No fault on the part of either party 2. Circumstances where it would be unconscionable to enforce that contract. Great Peace Shipping Ltd Tsavliris Salvage Ltd (2003) QB 679 Mutual mistake: both parties make separate mistake, no meeting of the mind, void. Raffles v Wichelhaus (1864) 159 ER 375, goods late, court found no meeting of the minds, however if one more reasonable version, can enforce that version, not declare void. Unilateral mistake: W Where one part made a mistake and the other party knows or is deemed to know of that mistake. If one party mistakes the other party for someone else, and identity a material fact- Lewis v Averay (1972) 1 QB 198—outcome depended on whether action conducted face to face or at a distance via communication. If at a distance: then contract void for unilateral mistake. However, face to face- knew who he was dealing with, could not be mistaken about the person he was faced with. In this case, was voidable- third party protected as he purchased car before rescinded for unilateral mistake. Unilateral misake as to terms of the contract- where one part has made mistake about significant term of the contract and the other party knows of this mistake. Void, except where contract voidable; Taylor v Johnson (1983) 151 CLR 422—high court held not void as there was a signed contract, and it was entered into willingly, but it was voidable in equity, as it was unconscionable conduct of purchaser in trying to mislead mrs Johnson. Non est factum- it is not my deed- not my contract- represents category of unilateral mistake, important exception to signature rule. If argued that there was a fundamental mistake as to the nature of the document signed. Petelin v Cullen (1975) 132 CLR 355- people with clear impediments to their understanding of the document being signed-

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petellin almost illiterate, did not understand what he was signing. Ford v Perpetual Trustees Victoria Ltd (2009) 257 ALR 658—mentally imparted, signed documents he did not understand. Balancing signature rule and avoiding injustice to weak. Vulnerable people who are taken advantage of and manipulated

LECTURE EIGHT Duress, undue influence, unconscionability Vitiating factors of a contract: - Misrepresentation- false statements made before contract formedfraudulent, negligent, innocent. Must be about material fact, false, intended to induce and induce. Concerned with that courts may set contracts aside. May be voided/ voidable. Conduct which the law doesn’t tolerate. Any duress, Force, Violence/ threat means the contract has been formed without free will. How much coercion required? Case law- pressure must be considerable enough to be illegitimate: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Do not need to prove that a persons will has been totally overcome- party submits at a point where will not totally overborne, but its less painful than the alternative to enter into such a transaction. Did any pressure induce? If it did, did it go beyond what law considers legitimate? – unlawful threats/ unconscionable conduct. Duress does not have to b the sole factor that induces. This law slightly ammented by court of appeal- ANZ banking Grou Ltd v Karam (2005) 62 NSWLR- unconscionable conduct does not count for duress. Requires unlawful, illegitimate pressure.—where unconsicionable to law generally- action unlawful with regard to criminal law ie. Assault- transgresses criminal law. – may be no legal basis for the action, no contractual basis for the pressure to be exerted. Once illegitimate pressure extablished, Onus of proof shifts onto defendant- must show duress had no impact on plaintiff entering into contract. Types of duress: --to person: ie. Violence, unlawful imprisonment, can alao be a threat to family, associates: Barton v Armstrong (1973) 2 NSWLR 589. Held that whilst barton may have had a variety of reasons to enter into contract, one of them was the threats. Contract voidable -- Duress to goods ie. That plaintiffs goods will be destroyed/ hidden etc. --Economic Duress ie. Contract targeted at the victims economic, commercial interests. North Ocean Shipping company ltd v Hyundai Construction company ltd (1979) 1 QB 705. Judge held threat to breech to end a contract (ie unless payments increase) could amount to economic duress. However, could not rescind contract due to delay in bringing proceedings, seen as affirmation of the contract.

Hyudai’s action unlawful as there was no legal basis for the extra contract- made it illegitimate. Court held economic duress even though they were not aware of the pressure the shipping company was under. Shipping lost case as they couldn’t rescind. Still said important things about economic duress. Crescendo management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 598 at 610—husband and wife director of company. Decided to buy new house (private, not attached to compant), own companies under pressure, bank refused to release funds until they signed further documents to prop up their companies. Then went to court to have company documents set aside. Court of appealwestpac’s pressure illegitimate as no lawful basis- unlawful, however no economic duress as husband and wife would have had to sign the documents anyway in the future. Defendant showed pressure had no impact on the signing of the contracts. Remedies: rescission, Undue influence comes from equity: if one party dominates over other party to the point of unfairness, inequality or abuse of trust. Contract not entered into freely. Narrow scope. Limited to situations where law presumes undue influence, making contract voidable, rescission main remedy. Actual undue influence: rare. No anticedent, pre existing relationship, but one party has unduly influenced the other. Often decided in terms of unconsicionability Undue influence presumed by law: depend on pre existing relationship between the parties. Relationship existed before contract. Contract voidable unless presumption rebutted by accused party showing that the other party knew what they were doing, and emancipated from the influence of the other party. Special relationship- class 2A cases. Facts of the case establish relationship of undue influence- class 2B. Special relationship: law recognizes some relationships as special ie. Parent and child—immediately presumes undue influence. Presumed that child under inlfuence of parent, quality of consent impaired, voidable. Facts determine the strength of that presumption. Facts may challenge presumption ie. Child may be unduly influencing parent (once they are old). Limited number of special relationships at law: solicitor client, doctor patent, religious leader and follower, teacher student. Not closed categories- can be argued in cases involving people form outside these groups ie carers. Where weaker partyreally trusts stronger party. 2 contentious eg- trustee and beneficiary. Ie. Deceased estate, property left to children, trustee must get that propert to the children—already existing fidicuary relationship at law- must act in their interests, no not need to assume special relationship? Already based in trust and confidince and remedies available in equity. Unnecessary to add further area of reliability. However, 2 not incomparable. Undue influence could prove breech to fidicuary duty. No presumption of undue influnce between married couples. However, with engaged couples- male in position of influence (historical view) however this presumption weakened 20th century. Role played by women considerable,

weakened further 60s 70s feminism, however given boost 2005- leeder v Stevens (2005) EWCA Civ 50- controversial decision. Cless 2B- facts of the case establish whether undue influence exists. No special relationship at law. Johnson v Buttress (1936) 56 CLR 113. Buttress dependant on Johnson. He was owner of house, she convinced him to sign house to her. Buttress then went and lived on Mrs Johnsons property. After his death, his children wanted to set aside the transfer of the property. Mrs Johnson could not prove that it was of his free will, undue influence on the facts. Bester v Perpetual Trustee Co Ltd (1970) 3 NSWR 30- no special relationship uncle niece, but undue influence established on the facts. Voidable. Once relationship of undue influence established, relationship vitiated, contract voidable unless presumption rebutted by showing emancipation form influence of the stronger party. Emancipation shown by; -illustrating independent advice. Stronger party acting prudently if make sure weaker party has other independent advice. Look at nature of advice, advisor has all relevant information? Advising for both parties? Gave sound advice objectively? Alternatives explored? Weaker party obtained independent advice? Demonstrating transaction not improvident; fair and reasonable. Was something a reasonable person would do if properly advised. Will not of itself invalidate the transaction. If combined with undue influence, stronger. Balancing act on the fact of each case. Undue influence 3rd parties: Question has arisen. If A and B enter into contract , can there be undue influence upon B by third party C that could make contract voidable. Could guarantee be set if A had knowledge of the influence between B and C. Yerkey v Jones (1939) 63 CLR 649—no relationship of undue influence between husband and wife, however wife protected by special equity if doesn’t understand the effect of the contract. Wife depended on husband- Presumed to be inferior in business dealings. However, rise of feminist movement etc. meant that principles here seemed rather irrelevant now. However: Garcia v National Australia Bank 1998) 194 CLR 395—resurrected this equitable protection for wives. limited to: -where spouse does not understand full effect of the transactions -where spouse a volunteer, not for benefit -where other party to transaction knows/ should know that the wife had trust in husband and accepts lack of explanation and bank takes no reasonable steps to make sure wife understands. These principles could be extended to other transactions- defacto relationships, same sex relationships. Shows that lenders make sure guarantors are in receipt of proper independent advice. If undue influence established, remedies:

Rescission Damages under contracts review act (is act satisfied by ruling of ‘unjust’) Equitable compensation. Unconsionability; Originated equity. So grossly unfair, that offends the reason of the common person, extremely unfair. Common law. Expanded into statute. Well established in AUS. Parliament has extended. Similar to undue influence, but no dependence on preexisting relationship. Deals with abuse of power. Blomley v Ryan (1956) 99 CLR 362—alcoholic, farmer, easily inluenced. Ryan an agent wanting to buy his property, exerting pressure, giving him booze, eventually signed paper work. Commerical Bank of Australia v Amadio Court require 3 elements to be satisfied;: -party suffering from special disadvantage/ diability (something the courts must recognize on the facts of the case, unique characteristics ie. Poverty, physica/ mental illness, old age, inexperience, illiteracy, lack of English skills, substance abuse, alcoholism, lack of independent advice). Louth v Diprose (1992) 175 CLR 621- cannot deliberately take advantage on disability- infatuation and emotional dependence on a woman. -Knowledge of special disadvantage, disability. Ie. Bank should have known. - advantage or exploitation. Equitable presumption of advantage if can prove: special disadvantage, actual or constructive knowledge, improvidence. Statute: Trade Practices Act 1974 (cth) (now Australian consumer law act, s 20) – major consumer law in Aus- brings together trade practices act and state legislation. -section 51 AA: Shall not engage in unconscionable action that is unconscionable within the meaning of the unwritten law. – in terms of how courts understand it from time to time. Restates the doctrine of unconscionable conduct, but extends the remedies. Knowledge, disability, exploitation must be proved. -Section 51AB- now ACL s 21 knowledge, disability, exploitation so not need to be proved. Looks at strength of bargaining positions. Whether consumer required to comply with conditions not necessary. Provision not reasonably necessary. Consumer able to understand documents? Undue influence or pressure exerted? Circumstances under which identical goods or services could have been accepted. Section 51 AC- now ACL s 22 To protect businesses (small against large). Successful where small business claims to be ripped off by large business. Looking at when one party weaker/ stronger. Remedies wider. Injunction available, ancillary remedies. Now deal with persons rather than corporations. Eg of changing law Contracts review Act NSW- unique- increasingly commercial society.

Trade and commerce- supply of the services in context of repetitive ongoing activity between business and customers for profit.

Contracts review act 1980 NSW Contract can be reviewed if terms unjust or whole contract unjust. Can be set aside or varied- duress, undue influence, unconsicionablity. Where contract unjust. Courts given wide powers, section 7. Can refuse to enforce contract, declare void. can vary contract, provide ancillary relief. Unjust contract- if it is harsh, repressive, unconscionable. Sharman v coonad

LECTURE NINE: Discharge by performance: Time for performance Order of performance Obligations of good faith and cooperation When does the law recognize they have been released of their obligations- when does it end/ when has it been breeched. Situations: Where the parties have performed all their obligations. Discharge by performance Discharge by agreement- agree to discharge Where parties have breeched their obligations- what kind of breech? Consequences? Can contract be terminated because of breech. Where obligations to contract have been frustrated- cant fulfill because something has happened that has prevented actions. Performance of contract- have performed obligations. Not required to do more than they have contracted to do. Disputes arise over whether performance has taken place as agreed. Most disputes about 1. time for performance. Have obligations been performed on time? 2. Level or standard of performance- performed to required standard? 3. Order of performance of obligations-should party perform if the other party has not yet performed? Court decides whether obligations discharged- depends on construction of contract as a whole. Time- is a failure to perform on time a breech? Yes it can be. Can also be breech that amounts to termination of contract. Where particular time specified, a failure tot perform as agreed will constitute breech. Innocent party can sue for damages for loss incurred. Right to terminate contract is a more serious

question. If no time stipulated for performance- reasonable time- unless indications to the contrary. Reasonable time- reasonableness no assessed b=by referring to facts of the time that the contract was made. Instead, facts as they were at the time the contract was performed, or at the time where performance should have taken place. Facts looked at retrospectively- to find when reasonable time for performance would have been. Reasonableness has to take into account: - Estimate of how long it would take to perform - Whether the other party needed to take part in performance - Whether third party needed for performance - Causes of the delay Where time has to be specified, the time has to e reasonable. When the time for performance has past, and it is decided that new time will be arranged, this does not mean contract breeched? No. duty on each party to comply with treasonable requests for performance. New time frame has arisen. Electronic industries v David Jones 1950’s- contract varied by the parties, duty to cooperate arose on setting a new time, DJs had breeched contract by failing to perform its own obligations Implied terms of good faith- if no good faith actually carried out, breech. Time stipulations in contracts generally considered warranties, unless stipulated to being a condition ‘time Is of the essence’ then contract can be terminated. Intentions of the parties: Concurrently- performing at the same time Or, entire contract- one party fills out their entire end of the deal before the other. Does non performance of the other party mean that the other party does not need to perform? Generally yes. If the obligations of the parties are independent of each other- order of performance is generally not an issue, either party may call on the other party to perform at any time. Ie. Under sale of good acts- right that a seller has to recover payment after an agreed date regardless of whether goods have been received. Where dependant- order matters more, one party need not perform until the other party has- employment- do not need to play until employee has worked. Automatic fire sprinklers case. Level or standard of performance- is required before contract performed, obligations discharged. Strict performance rule- expect exact performance of terms of contract. Any deviation of express terms amounts to breech. Exceptions: 1. If the contract is divisible rather than an entire contract. Work a precondition of payment. Ie. Contract for performance in installments such as building contracts. Each stage of performance attracts liability under the contract 2. trivial differences in the actual performance- law does not concern itself with trifles. 3. substantial performance of the contract. Ie. If there is a defect in a small section of the work, but most of the work good, should be paid contract price subject minus the price of the repairs. Lord Denning- Where the contract is entire and it involves work, courts should ask if paying party has been deprived

of essence or substantial benefit of the contract?- ie. Where work only half done, substantially different- then don’t have to pay. However where performance is a term and damages are available for breech of warranty, then the owner is entitled to sue renovator for cost of repairs- deduct amount from the amount owning to the renovator. 4. partial performance- less than substantial performance, party in breech may recover something if the partial performance has been accepted by the other party. How do you prove acceptance- by proving that there is a choice to accept the work or not. Discharge by agreement- parties agree to not agree anymore. Agree to discharge obligations under contract. Can be express or implied. Abandonment- implied agreement by the parties. How do we know if they have agreed? An inordinate length of time has elapsed, can vary- years/ months. Nether party can have attempted to call on the other party to act on the contract. Discharged from further obligation. – form of implied agreement to discharge Express agreement to discharge must satisfy normal agreement- usual contractual elements to be satisfied. May be done through original contract, or subsequent agreement. May be an express contractual right to terminate, if something happens/ doesn’t happen. If a certain type of breech occurs, other part y has a right to terminate. Condition precedent- to formation: term of contract states contract wont come into agreement unless something occurs. No enforceable right crated unless elements fulfilled - to performance: parties obligation to perform does not arise unless a certain event occurs- performance of existing contract. Contract exists. Conditions subsequent- contract may be terminated by one of both of patties, or may automatically end if a specified occurs/ does not occur. Theoretical distinction. Depends on the effect of the stipulated event on the contract. Contract may no specifically provide for termination, but there is a subsequent agreement that provides for it. McDermott v Black (1940) 63 CLR -Contract must remain executory, cannot have been fulfilled. Consideration of discharge an exchange of mutual promises not to sue each other for non performance. Consideration. If original contract had to be in writing there is no requiring that the discharge be in writing. Any variation of contract however does need to be in writing. -if has been performed can discharge if novation agreement: ie. Mortgage. Where 3 parties sign up and the bank no takes a mortgage over someone leases for security of the same loan. New contract may be formed in substitution for the old. Could be new parties plus other parties, earlier obligations extinguished

merger: executing a deed replicating the original terms, and the original contract is merged in to the later deed which governs the parties actions from then on. Simple contract may be merged into a formal contract ie. Deed or court order. Where parties agree to vary/ terminate/ novate contract, does new agreement have to in in writing, consideration> Subsequent agreement does not need to in in writing if agreee to terminate the contract. Subsequent agreement must be in writing where varying a contract that is in writing, and where written agreement being replaced. Need consideration depending executory/ performed. Both parties must provide consideration of executory. Where contract is executed/ one party has performed, is more complicated.—unilateral discharge- only one person being discharged of remaining obligations. Consideration an issue. – still need to give consideration, to support promise not to sue. May be by payment of money/ something else of value. Can also be enforced by use of a deed- displaces need for consideration. Parties often use deeds to overcome problems with consideration for unilateral release. Or, can rely on estoppel if other party breaks promise to terminate the contract. Accord (agreemtns that orig contract discharged) and satisfaction (consideration)- unilateral discharge binding even if no consideration—mc dermot v black. Where no deed and no accord and satisfaction, there is a naked promise, only chance is relying on estopple. , or aust consumer law. Accord and satisfaction- bilateral contract. Where contract remains executory court will recognize subsequent agreement to discharge. Complete defence. Can be sued for breech of new contract, but not for breech of the old. Similar to: -conditional accord and satisfaction- promise not to sue on the condition that you promise to do something. Can sue on the original claim if not performed. Abandon claim only on condition that you do something. Cannot revoke new agreement. If perform new act, have to abandon old claim. Can be sued only on the original claim if do not perform under new agreement. -Accord executory; promise you will abandon claim if you do something, can revoke claim, unilateral offer, can revoke unless offer accepted and performed by the other party. Original claim subsists, can be sued up until acceptance of unilateral offer, as long as that offer is not revoked. Can sue only on the original claim. Court will look at intentions, wording. Waiver- can be complicated, relates to estoppel. Court will sometimes use this doctrine to decide if the parties have in effect agreed to discharge contract. Has consciously relinquished rights, or has acted in a way that makes another party reasonably believe strict performance not required. Commonwealth v Verwayen (1990) 170 CLR 394

One party released from it obligations by the other part waiving is rights, or appearing to waive its rights. LECTURE 10: Discharge by breech- breech by one party allows other party to terminate contract. Rescission- rescinding contract after vitiation. Going back to before the contract made. Termination different. Does not cancel contract. Discharges parties from further obligation. 2 forms of breech- actual and repudiation. Actual- one party fails to perform agreed obligations. eg failure to perform on time, to perform in the manner of the contract. Result- innocent party can sue for damages. Right to terminate? Depends on type of term breeched. Conditions, warranties, intermediate terms- innocent parties will be able to terminate if condition, intermediate term breeched, not if it is a breech of a warranty, or a minor breech of an intermediate term. Repudiation- where there is a failure to be ready, willing or able to perform. Renouncing the contract. Can take different forms Ie. Where one of parties shows intention not to be bound by the contract in its entirety. Performing contract different to what contract requires. May be giving notice that you will be unable to perform. If notice is given- anticipatory breechas soon as notice given, innocent party has the right to terminate, don’t have to wait for actual breech. Innocent may have right to terminate and sue for damages- extract what they have loss because contract not carried through. Problem area- court determining whether termination justified. Party in breech may bring action to contest termination of the contract by the innocent party. If not justified, then termination is wrongful and can amount to repudiation, allowing other party to sue for breech of contract (wrongfully terminating contract). Cannot terminate if breech or a warranty, or a minor condition. Bettini v Guybreach of warranty. Hong Kong fur shipping- lord diplock spoke about intermediate terms. Forfeiture- vendor able to keep deposit- forearm v white- contract for sale of land, 10% deposit, settlement was to be in 6 months time, time was of the essence, and an easement was to be put in. problem with getting easement ready- just before settlement told purchaser that the easement would not be ready on time. – anticipatory breech. Innocent party has right to terminate. Vendor asked for more time, purchaser refused to give more time. Two day later time came for settlement, neither party turned up. Purchaser then terminated the contract because of an actual breech. The vendor contested that termination at court. Vendor argues purchaser himself unable to complete contract on time due to financial issues. Easement then finished, vendor called on purchaser to complete the contract, issued a notice to complete. Ignored notice to complete and new date. Vendor then terminated the contract. The question at court was who was entitled to the deposit. Had to determine which party has terminated validly. Court found in favour of purchaser- anticipatory breech, had right to terminate but this lime lapsed when contract completed, instead had a new right: to sue for actual breech. That new right to terminate was validly exercised by the

purchaser when vendor did not turn up to settle. Vendor was estopped from raising the issue that the purchaser was not ready to purchase, as his own inability to settle made it unnecessary for purchaser to prove he was readyvendor had already given notice that he wouldn’t be ready. Purchaser would have been able to be ready- he could have raised tha money. This means purchaser did not need to show that he was ready willing and able to perform the contract at the time the vendor repudiated. But the purchaser only needed to show that he would have been ready. Court also said Repudiation may be withdrawn and insist on performance, but whether this is possible depends on the timing, and whether it is reasonable to the purchaser. Restrictions on the right to terminate: 1. election to affirm: if you say you are not terminating contract, right to termination is lost. Can choose to proceed. Electing to affirm the contract. Can still sue for damages because of the breech however. Court must ask has the innocent party said or done anything inconsistent with maintaining the right to terminate. Bellgroup v Westpac. 2. Relief against forfeiture: equitable doctrine- recognizes that when contract terminated, obligations have ended, party in breech loses a right or claim. Court orders contract to proceed. Right to terminate contract denied. Unconscionability- would it be fair to allow innocent party to terminate the contract, or would it put the other party in a terrible situation. Stern v mcarthur. Need to look for unconscionable conduct by the party that is not in breech before relief could be granted. Section 55 2 a conveyancing act- court can give relief against forfeture to a purchaser in appropriate cases Effect of termination; If validly terminated, termination infuturo (into the future) both parties are relieved from further obligation to perform. Frustration- something happens that makes the contract unable to be performed as agreed. Must establish certain elements to prove the contract has been frustrated. Where the performance of a contract relies on the continued existence of a person or thing, in that contract there is an implied condition that performance will be excused if the contract cant be performed because that a person or thing no longer exists- subject matter not longer exists etc. national character and panall peters case. – 4 main elements of frustration: 1. need an intervening event.. that changes the nature of the contractual rights/ obligations. Not enough to show that it changes cost or onerousness of the contract. 2. No fault on the part of either party- cannot self induce the frustration 3. No contemplation of the intervening event by the parties. If even had been contemplated or reasonably foreseeable that the even could take place, frustration not recognized. Should the parties have reasonably seen the occurrence of the event (panall peters case)- whether on an objective test the court finds that a reasonable person with the knowledge that the parties had at the time the contract was formed, would have been able to see that the event was reasonably likely to happen. If they should have

foreseen it, no frustration. Theoretical forseeability not enough- need to work with the facts the parties had. Must have been highly foreseeable on the facts. 4. It would be unjust in the circumstances to expect the parties to perform. Generally follows the first three. Must be an intervening event- ie court order- cadelford construction case. Change in the law- legislation passed after the contract that makes it difficult to perform. Where subject matter of the case is destroyed. Where there is incapacity/ death of one of the parties (where it involves personal service performance.)- chapman v taylor- interruption ratio- if not dead ie sick- how sick are you? How big was the interruption? Where ther has been failure of a condition within a contract. Contract reliant on a particular premise, but what if premise does not occur. Ie. Coronation cases of king Edward 7—people hired rooms etc to watch coronation of the king, but he was sivk and the parade cancelled- Krell v Henry- krell sued to get paid when henry refused to pay after the parade was cancelled. Court of appeal said that it needed to be made clear why the room was being hired- for the particular event. Effect of frustration—differences between common law and statute. Frustrated contracts act—we have statute because of the difficulties common law grapples with. Contract automatically discharged from the moment of frustration, but obligations the occurred before the frustration happened are enforceable- future obligations are discharged. Discharge is automatic where frustration proven. Consequences of common law frustration often therefore highly unsatisfactory. All rights and obligations prior to the frustration are enforceable. A deposit however may be able to be given back, but only if there is a total failure of consideration (ie. Getting nothing for the deposit paid). Problem for other side however- get nothing for the costs incurred in making the product until the frustrating even that prevented further work- common law does not have a remedy- no apportionment of loss between the parties. This is why we have the NSW frustrated contracts Act: - the act does not apply to all contracts. Some are excluded - some parties can exclude the operation of the frustrated contracts act and instead decide between themselves how to go about remedying the situation - common law rules excluded where the act is in effect. - Sets up a mechanism for the parties to apportion their loss on a partial basis, in the frustration. Detailed schedule of adjustment so that they share the costs of the frustration as much as possible. Any money paid prior to frustrating event is to be repaid. Any promises due but yet to be performed are discharged. Section 13.

LECTURE 11:

Illegality Contracts that are otherwise valid, are tainted in some ay by a purpose that is illegal or offends public policy/ is against public interest. –Wetherell v Jones (1832) 110 ER 82- where contract is expressly or implied (by implication) to be illegal by statute, the law will not uphold it. 2 broad grounds of illegality- statutory illegality- illegal by statute/ legislation by parliament or delegated legislation.—2nd: common law illegality- belongs to class of contract that the courts consider to be against the public interest/ public policy. parliamentary illegality: regulation make void due to : contract being made illegal in its formation (illegal to form such a contract) or in its performance (illegal to perform it in a particular way). Which type effects the consequences for the parties. Express statutory illegality- not that common- act of parliament specifically stated that a certain type of contract cannot be formed. – Re Mahmoud and Ispahani (1921) 2 KB 716. What does parliament intend Implied statutory illegality- more common- legislation more likely not to forbid a contract, but impose a requirement on the way the contract is performed, which would then make performance of the contract lawful. Yang Partoral Co Pty Ltd v First Chicago Australia ltd (1978) 139 CLR 410- Yango couldn’t pay the loanargues illegal as FC had infringes statutory provision- sect 8 cth banking act- did not possess requisite license. Banking act also said penalty had to be paid- 10 000 per day that a company operated without a license. Illegal b y necessary implication?- no. in cases involving statutory illegality where contract not expressly illegal, court needs to ask whether parliament desires contract to be void. Looking at banking act, high court held no- statute provided penalty for each day bank operated without a license, not to penalize every transaction the bank entered into- intention not to rendered contracts illegal. If contract illegal, every loan would have been illegal and everyone who deposited would be acting illegally- unacceptable. Look at aim of the statute. 2 basic aims: to protect the public, intention of the parliament to regulate an activity in which the contract has been formed. Where protection of the public is the main aim, contract more likely to be illegal by implication. Anderson ltd v Daniel (1924) 1 KB 138. Need to look at intention of parliament. Common Law illegality—class of contract that the courts do not tolerate. Commit a crime, tort or fraud. Ie. Contract to murder someone. Are against public policy/ interest. May not be a statute. These contracts are void, generally penalties from statute. No body can take action, no rights. Contracts that are illegal in themselves vs those that are made with the intention to make use of the subject matter of the contract for some unlawful purpose. Party with unlawful intention, prevented from suing. Illegal, unenforceable. Contracts made with the intention of acting unlawfully. Contracts aimed at defrauding the state of tax revenueAlexander v Rayson (1936) 1 KB 169. Contracts prejudicial to the administration of justice- Public Service Employees Credit Union Cooperative Ltd v Campion (1984) 75 FLR 131. Contracts to oust the jurisdiction of the courts- undermine

the authority of the courts - scott v avery clauses- are ok as not ousting jurisdaiction of the court, are instead attempting to arbitrate, minimizes litigation. Unenforceable agreements between husband and wife as attempt to take away jurisdiction of the court in wife husband matters. Sect 55 2 A conveyancing act- application for relief, court can order deposit to the paid to the purchaser where it is just to do so. Exclusion clauses ok- parties are only agreeing on limitation of rights, not limiting courts jurisdiction. Contracts that promote sexual immorality- are against public interest- Seidler v Schallhofer (1982) 2 NSWLR 80- argument of sexual immorality used, man and women in de facto relationship and signed pre nuptial agreement, went to court over division of property- said ‘living in sin’- not married, argument rejected, living together when not married now accepted within the community. Contracts that impose a restraint on trade- void at common law- may have terms that restrict freedom of one of the parties to conduct trade ie contracts of employment, contracts for dale of business, may be an unreasonable restraint on trade- void- if it is a reasonable restraint is ok.- Nordenfelt v Maxim-Nordenfelt Guns Co Ltd (1894) AC 535, Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288, Bridge v Deacons (1984) 2 All ER 19. Restrain of trade clauses are prima face void as they restrict competition unless they are reasonable- look at interests of the parties, and interest of the public- look at reasonableness of the parties/ the restraint- does the clause impose a restrain t that goes beyond what is reasonably necessary to protect the legitimate interests of the party in whose favour the clause applies. Look at facts and circumstances of the case. Restraint on business more likely to be upheld than restrain on employment. Junior employer also less likely to be restrained that senior employer. also look at inequality of bargaining power between the parties. Reasonableness of retraint look at area (geographic area of restraint ie. 3-5km, depends on what kind of shop, what kindof area ie urban rural etc) time (that you have been restrain for ie. 3-5 years) and scope (the more precise the restrain the more likely it will be seem as reasonable)- criterior used by the courts. Common law often did not look at the breech, but the reasonableness of the clause- problem. Not several alternative restraint clauses in statute: Restraints of Trade Act 1976 (NSW), Section 4 (1), 4 (3).- act is relevant only if restraint is unreasonable and unenforceable at common law. Allows the court to read down on unreasonable restraint and amend the terms of the restrain in order to make it reasonable. Allows court to remove unreasonable part of the restraint, making the restraint narrower. Actual conduct of the defendant may be considered (unlike common law) – allows court to assess reasonableness of the breech. Often means that parties cant agree on the limits of the restraint, say will go to court so court can decide- however section 4 (3) prevents this- if there is a manifest failure to negotiate a reasonable restraint. Manifest failure often difficult to assess, however: K A & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702, section for4 (3) only used if the convenentor (party promising to be restrained) could show covernentee knew the clause was unseasonable and repressive. Effect of illegality: Courts will generally not enforce them.

Contract illegal on formation- neither part may bring an action to enforce a contract. Contracts that become illegal in the manner that it is performed- if a party is innocent of illegal intent, can take an action. The other party cannot. Severence- may be able to sever illegal part of the contract and make rest of the contract enforceable- Thomas Brown & Sons Lts v Fazal Deen (1962) 108 CLR 391. For severance to be permitted, contract must be altered only as to its extent, not to its nature or essence. Substance of contract should not be affected. Some contracts may not allow contracts to be severed, if so contract would be as a whole illegal, even if only one section of the contract actually technically is. Alternative causes of action- may still be a way to enforce agreement, even if illegal: Tort of deceit- to recover loss where contract illegal or unenforceable. If one person deceived into thinking the action legal (no contract actually required, if part made representations) Misleading or deceptive practice- if mislead into relying on certain statements or conduct of a party (must be subject to consumer protection provisions) can sue for damages. Collateral contract- Strongman (1945) Ltd v Sincock [1955] 2 QB- controversial (has been adopted in NSW), may not always be able to argue this. Consideration must not be tainted by illegality. Equitable Estoppel- promise creates assumption of legal relationship upon which representee reasonably relied on and suffered a loss. LECTURE 12: Revision: Agreement, Offer and acceptance analysis Revocation of offers Acceptance ie communication of acceptance, Alternatives to offer and acceptance Case law! Consideration – (offer plus acceptance equls consideration, generally don’t have to look for consideration as something else) must move from the promisee, Sufficiency rule- legal value Forbearance to sue Partial performance Estoppel Intention, social and domestic presumption, commercial presumption. Can be rebutted. Letters of comfort Certainty and completeness Capacity ie minors (common law has been largely set aside in nsw) Writing requirements, discharge Express/ implied terms Termination Parole evidence rule, signature rule, presumed intention of the parties. Exclusion clauses; incorporation, construction

Privity: Who is entitled to enforce a contract? Who may sue for breech of contract? Only the parties to the contract. Prob with third parties- sometimes third party stands to gain a benefit from the contract, but cant sue for breech because not a party to the contract. Dunlop Pneumatic tyre co ltd v Selfrige& co (1925)AC 847, Coulls v Bagot’s Executor & trustee Co Ltd (1967) 119 CLR 460- wife didn’t have grounds to sue as she was not involved in the contract, provided no consideration for the promise. Privity and consideration- action can only be taken by parties to the contract, who have provided consideration. Measure of damages is the difference in your position had the contract been performed, and your position after breech. Could seek specific performance of the contract. However is an equitable, discretionary remedy- may be refused. Will only order specific performance if damages an inadequate remedy. Beswick v beswick (1968) AC 58- sells business to nephew, balance of the purchase price would be paid over time, would act over time, if still money left over after he died money would be paid to the widow. Widow the administratior or her husbands estate- sued for specific performance as the representitive of the dead uncle. Where damages nominal, measure of damages inadequate from the perspective of justice. Unjust to refuse an otder for spec perf as if it is held if the measure of damages is nominal, party in breech gets off scott free. Would amount to injustice. In such cases damages inadequate and specific performace can be instructed. Some say this rules should be done away with because as it goes away with privity. Others say privity is of decreasing practical importance. Trident General Insurance Co ltd v McNiece Bros Pty Ltd 1988 165 CLR 107. Insure policy unenforcable on the ground of provity- McNiece party to the contract, although they would recieve a benefit under the contract had no standing to sue. Went to high court- resolved in favour of mcniece Mason CJ- Wilson J, Toohey J- Privity does not apply Dean j- privity apaplies, but trust exception Gaudron J Privity applies, but unjust enrichment Brennan J, Dawson J- Privity prevails Privity can be done away with, but should not be done lightly. Others think is not the job of the courts to do away with it, should be up to parliament. Still an important doctrine Exceptions to privity? Are they truly exception- dean said there are no true exceptions, more about finding alternative means as opposed to just dismissing privity. 1. Agency- party trying to enforce the contract was acting as an agent of one of the parties during the creation of the contract. Agency relationship. May be valid in some contexts ie. Context of exclusion clauses.

Midland silicones Ltd v Scruttons Ltd (1962) AC 446- agency exception possible if 4 elements established: himalaya clause must clearly say the other party is going to be protected, shipping contract must have authority to act as agent, third party must provide consideration for shipping companies promise. NZ shipping CO Ltd v A M Satterthwaite & Co Ltd 1975 AC 154- preexisting corporate relationship established an implied authority. Not really getting rid of privity, just amounting to a separate collateral contract between the owner of the good and the third party. 2. Covenants on land- restrictive covenants- private agreement between land owner that may restrict the use of land. ie. Say that they cannot build the house above a certain height- what if the first lot then sold- can the subsequent owner still enjoy the benefit from the contract? What if the other lots then build the house high? Yes under land law- privity circumvented. 3. Trust- legal owner of the land, but have to use the land for other people (beneficiaries). Ie. Opening a trust account for your children. Need a trustee, beneficiary, trust property, obligation of the trustee to hold the property for the beneficiary. But can be intangible property ie. Trust of a covenant- property is the promise itself. Can hold a benefit to a third party if third party is acting as a trustee to a party to the contract. Ie. Trident general insurace case- tridant entered into the contract as a trustee to McNiese. 4. Equitable estoppel 5. Unjust enrichment6. Statutory exceptions ie. Compulsory thirds party insurance. Commonwealth insurance act s 44. bills of exchange or cheques. LECTURE 12: General, unifying principles? No- and if there are they are increasingly irrelevant. Parliament passing actsnow contracts are very different. Few unifying principles. Others argue the opposite- despite great variety they all share certain elements. Contract law has been a vibrant area in theory (ch3). 2 types of theories: analytic question (what- what are contracts, what events give rise, what obligations, how formed) and the normative question (why? Why should be recognize/ form contracts, why contract law justified). Promissory theories- the promises parties make to each other, important- reflect the free will of the parties, obligations arise because of these promises. Not about the value of the thing, but the value of the promise. If there is no specific promise, not enforceable. Charles freed- promises are a sound basis for contract, based on individual autonomy and trust. Parties morally bound to perform and expect performance. Breaking promise provides the rationale for remedies. Criticsflaw: too much emphasis on the subjective, when it is an objective test used to find contract. Cannot explain implied terms.

Reliance theories- promise is binding because it induces a reasonable reliance. Atiyah- contractual relationships arise from consequences of the parties contract, only when a reasonable reliance has taken place. Promise itself is only evidence of the liability. Critics- what abut relicenses where there is an executory contract- only loss would be expectation. An offshoot of promissory theoriescannot have a relieacne if there is no promise Transfer theorists- contract a transfer of rights. Transfer of existing performance right. Premise that each party has right to expect performance. When a contaract is formed, there is a transfer of already existing rights. Barnet- contractual liability arises when I consent to transfer of existing rights to someone else. Intention to be legally bound. Normative question: Why should be recognize a contract? Utilitarian theories- contract law a necessity from perspective of utility- promote human wellbeing, social acceptability, promote the most good for number of people. Human beings enter into conracts for their own benefit to Protect heir rights from explotiation. Promote fair distribution of wealth and power. Promotes valuable relationships between each other- respect each others interests. Autonomy- allows people to become more independent. Valuable social goal, broader range of options and choices. Many different kinds of utilitarians. Rights based theorists- contracts protect rights. Stop people infringing other peoples rights. Enforcing a remedy if there is a loss of rights. Favour specific performance- would protect the right to have the contract performed. Damages on an expectation- loss basis. Critical legal studies school- attacks contract law as pillar of capitalism. Says contract law perpetuates the powerful using their power over the weak. Law indeterminate- depends on the values preferences of judges, parliament. Feminist legal theories: major support of patriarchal views of social relationships. Ie. Undue influence involving third parties- special equitysubordinate feminists vs inherent feminists. People look at contract law from different perspectives.

Market theory and consumer protection: Consideration 17th century. 19th century crucial- emergence of many important elements- ie. Offer and acceptance, postal acceptance, vitiating factors, frustration. Arose in GB post industrial revolution- mid 18th century to mid 19th century. Led to massive

economic growth fuelled expansionism. Contract law largely developed in response to Market economy. Contract law- promoting competiton and security, certainty. Predominance of 2 major ideas- freedom of contract (freedom to choose with whom one wanted to contract, and the terms, courts were to facilitate agreements not dictate agreements, assumption was that one party held equality of bargaining power- freedom of parties to contract how they wanted to contract), sanctity of contract (parties should be held to their freely negotiated bargain. Courts did not interfere in the bargain. Courts and the state did not interfere in the agreements that were freely made, even if the agreements were unfair. Favour signatures as created certainty as opposed to implied terms- reflected the need for commercial certainty and efficiency). Changes in society after WW2- led to changes in contract law as commercialization became more complex. Rise of large, multinational corporations, mass production. These companies had enormous, disproportionate bargaining power. Undermined the equality of parties, freedom of contract- in much stronger position- individual consumers had very little bargaining power. Rules bases on strict equal bargaining power had to be relaxed. Courts adopting new concepts ie unconscionability. Trade practices act, consumer protection legislation. Although the principals of freedom and sanctity still underpin many concepts, there is now greater intervention and regulation of contract in order to avoid abuse of power and have flexible, fair contracts. Growth of good faith bargaining, concept of duress ie. Economic duress, equality of bargaining power. Growth of consumer protection legislation to fix unfair sections of contract law. Consumer protection is now the trend. Less freedom and sanctity. Empirical studies: not purely theoretical, looking in the field, fact based. Wanted to see the difference between law in the books and law in society. role contract law plays in the contracts entered into by commercial, business parties and within societies. To what extent do people use/ abuse/ avoid contract law? McCaully- US professior 1960s. looked at interfirm contracting- how manufacturing companies entered into contract with each other. Found contract law as such often ignored in commercial relations. Commercial relationships with other companies influenced by other things. Contract law was relevant in only certain typed of transactions (for the business people)- those of detailed contracts created by the lawyer, not contracts in the ordinary course of business, high risk of loss or large amounts of money involved, Routine transactions usually done with standard forms. Contract law affected only a fraction of their contract planning- rarely planned what would happen if things went wrong, did not want to plan for breech of contract by other party, damages clauses seen to put focus on breech and made parties suspicious of each other- saw termination. Litigation as a last resort. Contract law less important than the relationshiprelying on good faith- good will and trade custom- felt detailed contracts inhibited flexibility, created distrust. Business people did not expect full enforceability of terms, substantial performance was enough. When engage in contracts with unknown parties, more care used- risk higher, but even then non legal sanctions preferred, commercial pressure and negotiation seen as preferred option. To plan contracts seen as expensive- legal

and transaction costs- planning for contract limited to certain situation ie. Where a lot of money involved, operating in different parts of the industry with different customs, large risk, if had not contracted with this party before. Proper role of contract law in society- it does underpin the economy and financial system. Distributon of wealth and power in society, influences market transactions. Promote predictability ans stability, give effect to expectations of promises, enable commitments to be planned. Purpose- to ensure the reasonable expectation of promises are fulfilled, promote stability. Background to how parties conduct business- negotiate in the shadow of the law. If agreements and relationships break down, there is a way rights and obligations can be enforced and dealt with.