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yeeeetTOPIC ONE: Formation
Contracts are enforceable, which distinguishes them from other agreements.
Elements of contract
efinition of a contract: A contractual agreement that the courts will enforce.
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To be enforceable, a contract needs:
- A complete consensus between the parties as to the terms of the contract
- Intent for the parties to be legally bound by the terms of the contract
- The promises which constitute the agreement must be ‘backed’ by something of
value (Consideration)
- The agreement must be sufficiently certain
- The parties must have capacity to enter into a contract.
- The agreement must comply with formalities.
These are referred to as the ‘elements’ of a contract.
IMPORTANT:
The application of contract law is considered to be ‘objective’, meaning thatwhen assessing
where a contract is made, the law is not applied subjectivelyand does not concern itself with
what the parties felt or thought. Instead, the focus is on what a reasonable person would
infer based on the circumstances.
or a contract to be enforceable, all elements must be certain. However, other factors may
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render the contract unenforceable, such as misrepresentation or duress, or where the sole
purpose is to pursue a criminal outcome.
Doctrine of privity:
InAustralia Coulls v Bagot’s Executor & Trustee CoLTD (1967),the doctrine of privity was
established, which holds that only a person who is party to an agreement can sue on it,
- “According to our law, a person not a party to acontract may not himself sue upon it
so as directly to enforce its obligations. For my part, I find no difficulty or
embarrassment in this conclusion. Indeed, I would find it odd that a person to whom
no promise was made could himself in his own right enforce a promise made to
another.”
xceptions exist, such as in case of insurance laws48(1) Insurance Contracts Act 1984
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(Cth).Zurich Australian Insurance v Metals and MineralsInsurance Pty Ltd (2009)
Privity helps to distinguish contract law from tort law.
Elements of a contract:
Agreement:
ormally identified by an offer made by one party (offeror) to another (offeree), which is
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accepted by the offeree.
his may be express (verbal) or implied, which could lead to a scenario where a contract is
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accepted by ‘conduct’.
Uncertain or incomplete agreements
- n agreement may be unenforceable if it is uncertain or incompleteAustralian
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Goldfields Nl (in liq) v North Australian Diamonds (2009)
- Certainty requires that the essential terms are clearly and precisely stated.G
Scammel & Nephew Ltd v Ouston [1941]
- An agreement is incomplete if an essential element is missing. (And no provision is
made for the essential element).Hawthorn FootballClub v Harding [1988] ‘
- Where an agreement is uncertain the courts may try to give it meaningHillas & Co v
Arcos (1932)
- Incompleteness can be overcome if there is an existing agreement on how to
determine more terms of the contract.Taluja v ShreeShirdai Sai Sansthan Sydney
Ltd [2016]
- If an agreement has been executed, courts are less likely to find it uncertain.G Percy
Trenthan Limited v Archital Luxfer [1933]
- Ambiguous does not mean uncertain.Upper Hunter CountyDistrict Council v
Australian CHilling & Freezing Co Ltd (1968); McDermott v Black (1940)
- Courts can be reluctant to find uncertainty.SevenNetwork Operations v Warburton
(no. 2) [2011].A clause must be ‘utterly impossible’to be voided for uncertainty.
● “The ... legal doctrine of uncertainty does not depend on mere complexity. Nor
is opacity, obscurity or vagueness sufficient by themselves. There must be
such a lack of clarity that the clause is unworkable”
- Where there is uncertainty to a less relevant or incidental area, the courts may sever
it, letting the remaining contact stand.Life InsuranceCompany of Australia v Philips
(1925)
- Incomplete agreements may be ‘filled in’ via statute or past agreement.
Offer:
n offer is a statement of terms upon which the offeror intends to be bound upon. “A definite
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promise with definite terms”.
Dysart Timbers v Nielsen [2009]
- “ An offer is a statement of the terms upon which the offeror is prepared to be bound if
acceptance is communicated while the offer remains alive.”
Offers may be:
a) Express or implied
b) Not be vague
c) Not be confused with requesting or supplying information.Harvey v Facey [1893]
n offer must be distinguished from an ‘invitation to treat’, which invites others to enter into a
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deal. Invitations to treat are justified through commercial means.
Some recognised instances of invitations to treat are:
- Goods on display in a shopPharmaceutical Societyof Great Britain v Boots Cash
Chemists(Southern) Ltd [1953]
- AuctionsBarry v Davies [2001] Harris v Nickerson(1873)
● Plaintiff traveled to an auction, wanted his expenses reimbursed. Held that
the auction was an invitation to treat and an offer was tendered by the buyer.
● Auctioneer is inviting offers from bidders. Bids can be accepted and rejected.
Acceptance occurs at the fall of a hammerPayne vCave (1789)
● Offer can be withdrawn before it is accepted. Auctioneer does not have to
accept any bids.
- Advertisements (esp in magazines)Partridge v Crittenden[1968]
- Tenders:
● In a tendering process each bidder makes a single offer, unknown to each
other.
● The tenderer makes the offer, not the person inviting offers.
● The inviter can accept or reject any tenderMeudellv Mayor of Bendigo
(1900)
● However, if the person inviting tenders states that the best offer will be
accepted, it must be accepted.Harvela InvestmentsLtd v Royal Trust co of
Canada (CI) [1986]
Process contracts are different: One arises when an invitation to tender creates an offer.
Thus, the submission of an offer creates a contract. As a result, many government contracts
include a clause to exclude process contracts.
Other offer rules:
- An offer can be made to a particular person, class of persons, or the world at large
Carlil v Carbolic Smoke Ball Company [1893]
- The offer must be communicated to the person it was intended forFitch v Snedaker
(1868) Williams v Carwardine(1833);R v Clarke (1927)
- Offers must be distinguished from pufferyLeonardv Pepsio (1996)
Acceptance:
cceptance of an offer creates agreement. Acceptance thus occurs when the terms, which
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have been communicated to the offeree, are accepted.
cceptance can be verbal, in writing, or implied through conduct..Brogden v Metropolitan
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Railway Company (1877); Empirnall Holdings v Machon Paull (1988)
- There is a two stage process to determine if conduct has given rise to a contract
(Hawkins v Clayton (1988), Deane J
1. Look for parties’ ‘actual/objective intention’.BellGroup v Westpac
Banking Corp
● Can be difficult.Jago v Costalwatch Pty Ltd [2009]
2. Imputation
● “What, if any, are the terms which are, in all the circumstances,
implied in the contract as a matter of presumed or imputed
intention?”
An offeror can dispense of the need to be notified of acceptance.Carlil.
The acceptance must be made with knowledge of and on reliance of the offer.Clarke
Any conditions as to the method of acceptance must be complied with.
Acceptance must also be ‘unqualified’.
asters v Cameron (1954)determined that there arethree scenarios in which finality is
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reached after parties reach conditional acceptance. (IE: Parties agree verbally, subject to a
written, formalised contract.)
1. F inality for all terms with intention to be bound, but propose formalising or restating
terms but not actually changing their terms. In this case, an informal agreement turns
in to an enforceable offer.Stirnemann v Kaza InvestmentsPty Ltd [2011]
2. Parties have reached agreement, but have made performance of the contract
conditional on a formal agreement. Informal agreement = enforceable offer.Godeke v
Kirwan (1973)
3. Parties do not intend to make a concluded bargain unless formal contracts are
executed, intending the informal agreement to simply be agreement on terms despite
matching the formal contract.Symbion Medical CentreOperations Pty Ltd v Thomco
(no 2113) Pty Ltd (2009).
4. A fourth category, not recognised inCameron,is whenparties make an informal
agreement to be bound by certain terms but expecting to make a further contract that
has additional terms.Baulkham Hills Private HospitalPty Ltd v GR Securites Pty Ltd
(1986),
- An essential aspect of this category is that the existing terms are intended to
be ‘immediately and exclusively’ binding, and the future clauses are ‘merely
in the realm of expectation’Asic v Edwards (2005)
ategories 1, 2, and 4 - requisite intent to be bound is found in the informal agreement. Cat
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3 - requisite intent found in subsequent contract.
General principle:
- Intention of the parties (filtered through the four categories) must be determined by
construing the terms of the informal agreement in light of the context.GR Securites v
Baulkham Hills Private Hospital Pty Ltd (1986)
- Addendum: In order to determine intent, multiple documents can be considered.
Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008]
Rules as to the method of acceptance:
- If the offeror proscribes a manner of acceptance as the only manner of acceptance,
then that method is the ONLY VALID method of acceptance.
- If the offeror stipulates an offer, but does not specify it as the sole valid method of
acceptance, then any method can be used on the condition that it proves equally or
more advantageous (IE: fast) to the offeror. Otherwise, it is not legally valid.George
Hudson Holdings v Rudder (1973)
- Where no method is specified, the presumption is that the acceptance takes the
same form as the offer.
- Acceptance is only valid if communicated by the offeree or a duly authorised agent
Powell v Lee (1908)
- An offeror cannot stipulate that silence means consent without the offeree's consent
(waivers)Felthouse v Bindley (1862)
- Where communication between the parties is instantaneous, agreement is only
concluded when the offeror receives the acceptance.Entores Ltd v Myles Far East
Corporation [1955]
- Where parties contemplate the postal service as a means of exchanging agreement,
the postal acceptance rule may apply.
Postal Acceptance Rule:
s a general rule, acceptance is created when the last act necessary to establish an
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agreement is done. In a case where the Postal Rule applies, it will be when the letter is
posted. In cases of instantaneous communication, it will be when the communication is
receivedEntores [2015]
- here the parties contemplate use of the postal service as the means of exchanging
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offer and acceptance, acceptance occurs once the letter of acceptance has been
posted.Adams v Linsell (1818) Henthorn v Fraser [1892]
● Postal rule does not apply to letters of revocation.
- Any delay in delivery or non delivery does not invalidate the letter of acceptance,
provided the delay was not the fault of the offereeHousehold Fire & Carriage
Accident Insurance co v Grant (1879)
- The postal rule can be negated by the offeror demanding that, to be accepted, the
letter be receivedHowell Securites Ltd v Huges [1974]
- he postal acceptance rule does apply to public telegrams, butnotto cases involving
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instantaneous communication.
● FaxEgis Consulting Australia Pty Ltd v First DynastyMines Ltd [2001]
● Telephone/Telex. Did not apply inBrinkibon v StahagStahl [1983],did apply
to telex inLeach Employees Pty Ltd v Walter WrightPty Ltd [1986]
● EmailsOlivaylle Pty Ltd v Flottweg GMBH & KGAA (no4) (2009)
● Interactive websites
- Once a letter has been posted, it cannot be revoked.
- The date of a contract is the date that the letter of acceptance was posted. This does
not need to be precise.Ormwave Pty Ltd v Smith (2007)
mail is treated as a form of instantaneous communication. (Thus, the postal rule does not
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apply.) Instead, all email contracts are governed by theElectronic Transactions Act.This act
outlines that unless the parties agree otherwise, the time that the electronic communication
can be retrieved is the date of the contract.
Intention to be bound:
The test of whether the parties intend to be bound is ‘objective’. The parties must look at :
- ‘What a reasonable person would take to be the intent of the parties as evidenced by
their actions in the circumstances of the case, and not according to the subjective
interpretations of the parties’.Rose & Frank Co vJ R Compton & Bros Limited [1923]
‘To create a contract there must be a common intention of the parties to enter in to
legal relations, mutually communicated expressly or implicitly’.
In exceptional cases, evidence of actual or subjective intention may be admitted to
determine if a contract exists.Vantage Systems PtyLtd v Priolo Corparation Pty Ltd (2015)
he court determined that evidence other than the document itself can be considered to
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determine if intention existed inDruin Pty Ltd vCorbin [2014]
ruinalso informs that whether the parties intendedto create legal relations is a question of
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fact, not law.
he test of intention is concerned with establishing the objective grounds of whether or not a
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party intended to enter into a contract.
he onus of proof rests on the party alleging that the agreement was intended to be binding.
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Price v Southern Cross Television (TNT9) Pty Ltd [2014].
To determine, the courts can consider:
- Whether the parties did ‘something that was not intended to be taken at face value’
Seiwa Australia Pty Ltd v Beard (2009)
- The presence of a signatureAlonso v SRS Investments(WA) Pty Ltd [2012]
- The context of the agreementErmogenous, Western ExportServices Inc v Jireh
International Ltd [2010]
- The family, social, and cultural circumstances.
Alikas v Oliviero (no 2) [2014]
- “The commercial character and context should not be regarded as giving rise to a
presumption of an intent to create legal relations”
- “Rather, it is the consideration of the significant commercial characteristics (MONEY
EXCHANGED/Consideration) which support an inference that those arrangements
were intended to be enforceable.”
Presumptions
Where intention is not expressed, it can be determined through presumptions.
- Where the agreement is made by family or close relationships, there is (traditionally)
a presumption that there was not intent to create legal relations
- If the agreement is of a commercial nature, there is a presumption that there was an
intent to create relations.
Presumptions, however, are rebuttableGould v Gould[1970
- The nature of the relationship between the parties
to the agreement; eg an agreement between husband and wife, the evidence rebutting the
presumption that the parties did not intend to enter into legal relations ‘needs ... to be clear
and convincing.
resumptions are of limited value. Where the onus of proof used to be on the party claiming
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intention to create legal relations, it now falls on the party seeking to prove a presumption in
all cases.Ermogenous v Greek Orthodox Community ofSA Inc (2002)
ngagement of a religious figure can count as employment (And thus intention to be bound),
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thus rebutting the presumption that the work of religious figures is not ‘employment’ in the
legal sense.Ermogenous, Percy v Board of NationalMission of the Church of Scotland.
hus, formation of any employment contract relies on the facts to determine there was an
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intention to be bound.
InErmogenous(105-6):
- “Intention to create legal relations” requires an objective assessment.
- “We doubt the utility of using the language of presumptions in this context. At best,
the use of that language does no more than invite attention to identifying the party
who bears the onus of proof”
- ‘Reference to the presumptions may serve only to distract attention from the most
basic and important question’
PostErmogenous, a number of cases reaffirmed therole of presumptions:
- Chidiac v Matouk [2010] at(177)
● “[t]here is a rebuttable presumption against the intention to create legally
binding obligations in a family or domestic context.”
- Shortall v White [2007] at(18)
● Presumption extended to people in defacto/domestic relationships
- Kennedy & Hunt v Griffiths [2011] at(24)
● “[t]here is a legal presumption of some strength that informal agreements
between spouses are not intended to be legally binding”
- Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005]
● Reliance on presumptions and finding presence of intention on the facts.
- Sion v NSW Trustee & Guardian (2002)
● The law presumes that, as a matter of fact, family members do not
intend to contract when they make arrangements amongst themselves
(Emerret JA)
HOWEVER:
vans v Secretary, Department of Families, Housing, Community, and Indigenous Affairs
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(2012reaffirmed thatErmogenoushas changed the waythat presumptions are addressed.
In some cases, the reliance on presumptions is no longer appropriate.
- Jakobkiewicz v Dickson Catering Pty Ltd [2002] at [19];
- Dowdell v Knispel Fruit Juices Pty Ltd [2003] at [126]–[127];
- Ashton v Australian Cruising Yacht Co Pty Ltd [2005] at [113]–[114];
- Tadrous v Tadrous [2010] at [5];
- Zierholz@UC Pty Ltd v University of Canberra [2019] at [311]
- Reitano v Reitano
In practical terms,Ermogenoushas changed presumptionsin the following ways:
- In cases previously categorised as involving family members, nothing has changed.
- In cases involving commercial agreements, the onus has been shifted on to the party
seeking to prove that the presumption exists.
In business, parties are assumed to be legally bound unless there is evidence to the
contrary.Edwards v Skyways Ltf [1964]
Termination of offer:
Ways to terminate an offer:
1. Revocation
- An offer may be revoked at any time prior to acceptanceRoutledge v Grant (1928)
- It becomes effective once communicated to the offerorByrne v Van Tienhoven (1880)
- Does not have to be communicated by the offeror, only bereliableDickinson v Dodds (1876)
Notification via email is regulated via law common to all Australian jurisdictions
- If the offeree has specified an email address, then ‘communication’ occurs when the
email enters the offeree’s system.
- If the offeree has not specified an email address, communication occurs when the
email message is brought to their attention.
ules of revocation do not apply if there is a binding promise (an ‘option’) to keep the offer
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open, as a separate contract will arise.GoldsboroughMort & co Ltd v Quinn 1910
- To exercises this option there must be clear and unequivocal communication
- The effect is to grant the option holder a period of time to decide whether to purchase
the property that is the subject of the option.
2. Counter Offer
- n offeree is free to reject the offer. Once an offer is rejected, it cannot
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subsequently be accepted.
- Rejection can be explicit, or implicit (Provision of a counter offer implies
rejection of original offer)
- A counter offer can be a counter proposalHyde v Wrench(1840)oran
acceptance that embodies new conditions.
- A counter-offer must be distinguished from a requestfor further information
or a clarification of the offer,which does not terminatethe offer .Stevenson
Jacques & Co v McLean (1880)
ounter offers have become vastly more important with the advent of standard form
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contracts.Butler Machine Tool v Ex-Cell-o Corp [1979]
3. Lapse of time
- n offer will lapse if not accepted within specified time (If a time is specified)
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- Where no time is specified, it must be accepted within a ‘reasonable’ time.
- What is ‘reasonable’ is a question of fact.RamsgateVictoria Hotel Co Ltd v
Montefiore (1866), Manchester Diocesan Council for Education v Commercial
and General Investments Ltd (1969)
4. Failure of a condition
- ffer may be subject to a certain condition that a certain state of affairs
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remains the same way until the agreement is fulfilled.
● If the state of affairs changes, the offer lapses and cannot be
accepted.Financings Ltd v Stimson [1962]
An offer to buy a car lapsed as the car sustained significant damage
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- Express offers will lapse when the state of affair changes.
- Where there is no express statement of the relevant circumstances, than the
objective meaning of the offer may lead to the conclusion that the offer was
only open for a certain amount of time and thus lapses if not accepted in a
certain time.
● Bartolo v Hancock (2010)
● Offer to settle dispute before hearing commenced. Thus, once the
hearing commenced the offer could not be accepted.
5. Death of offeror/offeree
- enerally if the offeror dies before acceptance and the offeree knew of the
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offer it cannot be acceptedFong v Cili (1968)
- If the offeree does not know of the offeror’s death it is uncertain and the facts
of the case must be looked atSmith v Woods [2014]
- Generally, death of an offeree terminates an offer.
TOPIC TWO: Terms
Week four notes
Terms:
contract is considered to be made up of ‘terms’. A term can be expressed, or implied. As a
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result, there is often a need to determine which words make up the term of the contract and
their importance. Special rules apply to terms which may exclude a party from liability for
breach of contract.
- Express terms may be verbal, spoken, or a blend of the two.
- Implied terms are not directly stated but implied by statute or by courts. (Such as
when the court imposes something based on past dealings. _
Express terms:
- If a statement is not a term, it is instead a ‘mere representation’. This is important, as
it affects the remedies available if the statement is false.
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The Parol Evidence Rule:
- If the contract has been reduced to writing and the statement is not included in the
written document it may be excluded by the parol evidence rule.
“‘[W]here a contract is reduced into writing, where the contract appears in the writing to be
entire, its presumed that the writing contains all the terms of it, and evidence will not be
admitted of any previous or contemporaneous agreement which would have the effect of
adding to or varying it in any way’Mercantile Bankof Sydney v Taylor (1891)
- ‘E ntire Agreement clauses’ create a similar effect.Nemeth v Bayswater ROad (1988)
- Exceptions to the Parol Evidence Rule (Occasions where the court will allow text
outisde of the contract into evidence) include:
- To prove that a custom or trade usage was part of the contractHutten v Warren
(1836)
- To prove that the written contract only represents part of the agreement.Van Den
Essercht v Chappel (1960)
statement that may not become a term of the contract may become a contract of its own -
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a collateral contract. A CC’s consideration is entering another contract.DeLassale v
Guildford (1901).The remedy for breach of CollateralContract becomes breach of contract.
Conditions to be met before a collateral contract is achieved:
- The contract must not contradict the main contractHoyt’s v Spencer (1919)
- The representation was promissoryJJ Savage and Sonsv Blakney (1970)
- There must be separate consideration from the main contractDeLassale v Guildford
(1901)
In the absence of writing, courts will use the Objective Test. “What would a reasonable
person, aware of the circumstances of the case, believe to be the party’s intention in regard
to the contractual force of the statement?”
In determining whether a statement is promissory or contractual, the court of appeal in
Manieri v Cirilliocited with approval the followingstatement formMihaljiec v EIffel Tower
Motors (1973):
- " First to establish that a statement made during the course of negotiations was
promissory or contractual in nature, proof of a common intention of the parties to
impose a contractual obligation on the person making the statement is essential.
- Secondly, it is unnecessary that the statement must contain an express form of
words. It is sufficient if in the context the words used import the requisite meaning to
impose on the person making the statement or contractual obligation by way of
promise or guarantee.
- hirdly, whether a statement was intended to be contractual or not must be
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determined objectively in the light of the whole of the circumstances.
- Fourthly, whether an animus contrahendi exists is a question of fact and can only be
determined by looking at all the circumstances attending the transaction.
- Fifthly, in the process of drawing such a conclusion the tribunal of fact is not entitled
to draw any inference contrary to the express terms of any written contract made
between the parties.
- Sixthly, it is easier to draw an inference that a warranty was intended where the
person making the statement of the condition or quality of an article has a personal
knowledge thereof and the person to whom the statement is made is to the
knowledge of both parties, ignorant of the condition or quality of the article and is
relying on the first party's knowledge.
- Finally, in order to determine whether such intention be inferred, I . . . am of the
opinion that the method suggested by Lord Denning M.R. in Oscar Chess Ltd. v.
Williamsg and Hornal v. Neubreger Products Ltd .lo is the most useful way to arrive at
a decision. His Lordship said :'If an intelligent bystander would reasonably infer that a
warranty was intended, that would suffice even though neither party in fact had it in
mind.' "
Non Conclusive Factors in determining intent:
- Time between making of statement and signing of contractBrewer v Mann 2010
- Was the statement followed by a reduction of the terms to writing which did not
include the statement?
- Did one party have knowledge that the other didn’t?Dick Bentley Productions v
Harold Smith (Motors) [1957]; Oscar Chess v Williams [1957]]
- How important was the statement in the mind of the parties?Ecay v Godefry (2011)
Implied Terms: How do the courts determine if there were implied terms?
- By trade usage or custom
- By law or statue (Based on the nature of the contract, not the intent)
- In fact, thus giving effect to the intention of the parties (BP refinery Westenport v
Shire of Hastings) - 5 Conditions must be satisfied.:
The 5 conditions under which courts will imply terms:
- he term must be reasonable and equitable;
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- It must be necessary to give the contract business efficacy
- It must be so obvious that it goes without saying;
- It must be capable of clear expression
- It must not contradict any express term of the contract.
Effect of signing a contract:
- person that signs a document is bound by it unless there was fraud or
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;misrepresentation:L’estrange v Graucob (1934) Equuscorpv Glengallan
Investments (2004)(The legal rights and obligationsof the parties turn upon what
their words and conduct would be reasonably understood to convey, not upon actual
beliefs or intentions)
Escaping a signature:
- Fraud or misrepresentationCurtis v Chemical DyingCo 1951
- Document does not appear to be contractualLes MansGrand Prix Circuits v Illiadis
(1998)
Contractual Assignment
ssential feature of contractual assignment is the transfer of rights. Its effect is to transfer
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the rights in the contract to another party.Lyle& Scott Ltd v Scott’s Trustees
he assignor will no longer have an interest or right in the property that they sign over. If the
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intention was not to sign over the property there can be no assignment. Assignments are
recognised at statute and at common law.
ontractual rights: Choses in action
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Torkington v Magee
- Choses in action defined as ‘personal rights of property which can only be claimed or
enforced by action, and not by taking physical possession’
- Form of intangible property
- Benefit may be assigned
- Right to receive performance is a chose in action
- Burden of performance of contract can generally not be reassigned
ontractual rights are considered to be choses in action and are generally regarded as
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proprietary and capable of being assigned.
- Investors Compensation Scheme Ltd v West Bromwich Building Society
There is a distinction between an assignment for the benefit of contractual rights and
novation.
Kakara Estate Ltd V Savvy Vineyards 3552 LTD
- Under an assignment, the assignor is not relieved of the burden of the contract, and
only an agreement between the assignor and assignee is required, not all parties to
the contract.
- For novation, a new contract will be submitted, which requires the consent of all
parties.
Pacific Sport and Leisure Pty Ltd v
- Assignable contractual rights can be assigned at law or equity.
This assignment allows for entitles the assignee to sue the obligor for damages for breach of
contract irrespective of whether the breach occurred before or after the assignment.
Non assignable contract rights:
ot all contractual rights are assignable, such as personal services assignments and in
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scenarios where there is a clause against assignments.
Personal Service Contracts:
- Justification is that an obligor should not be prejudiced by the substitution of assignor
by assignee.
- Employer cannot assign right of service.
Nokes v Doncaster Amalgated Coileries LTD
- Employee has the right to choose whom they work for
Whether contractual right is of a personal nature is a question of construction of the contract.
Tolhurst v Associated Portland Cement Manufacturers (1900).
However, some personal obligations within a contract can be assigned.
- Mid -City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak
Week five notes
Exemption clauses:
n exemption clause is any term that would exempt a party from contractual liability or
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tortious liability. There are three type:
- Exclusion clause: Completely excludes liability
- Limitation clause: Limits liability to a defined amount
- Qualification clause: Places conditions on exercise of a right
In Australia, all exemptions are treated the same, and should be read in the context that they
appear.Darlington Futures ltd v Delco Australia LTD(1986)
Two important issues when considering an exemption clause:
- Does the exemption clause form part of the contract?
- Is it worded well enough to cover the breach that has occurred?
The courts look negatively on exemption clauses when there is an imbalance of power
between parties.
oes not necessarily extend to third parties (IE: Subcontractors.) A “Himalaya Clause” is
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needed.
Notice Rule:
Signed contractual document:
If thereisa signed contractual document
- The exclusion clause is considered to be part of the contract
- The signatory is bound (even if not read)L’Estrangev Graucob [1934]; Toll (FGCT) v
Alphapharm (2004)
Unless:
- There was fraud or misrepresentation about the contractMendlsshon v Normand Ltd
(1970); Curtis v Chemical Dyeing co [1951]
- The signed document was presented in a way that showed it had a purpose other
than recording than contractual terms Le Mans GrandPrix Circuits v Illiadis [1998]
Reasonable notice is also important. There are two forms:
- Actual: The existence of and contents of a clause are brought to the attention of the
signer
- Constructive: The signatory does not know if it but the other party did everything that
could reasonably bring it to their attention.
Unsigned contract
If there is an unsigned contractual document, the courts must determine if:
- The document is ‘contractual’ in natureThornton vShoe Lane Parking [1971];
Thompson v London, Midland, and Scottish Railway LTD 1989
- Whether reasonable notice was given of the exemption clauseInterfoto Picture
Library v Stileto Programmes LTD [1989]
● Notice rule: clauses not set out in an unsigned document or on a signed
document are not incorporated as express terms are alleged to be binding,
unless the recipient has been given reasonable notice
person will have notice when considered to be aware of the existence of the term even if
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unaware. This is subject to TWO rules:
Timing: Notice of the term must be given during or prior to the entry of the contract:
- Olly v Marlbrough Court Ltd [1949]:A hotel soughtto rely on an exclusion clause that
was in the hotel room. Denied as the contract was created prior to entrance in to the
room.
- Oceanic Sun Line Shipping inc co v Faye (1998):ExclusionClauses printed on a
ticket . Contract made prior to ticket.
olton - install a central heating system in Mahdeva’s house. PRIMARY Objective was not
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Completed!
Himalaya clause - Page 980 - things can be factored in to a counteract for the benefit of a
third party.
TOPIC 3: Avoidance
Week 6ix notes
Avoidance of contract
ontract is voidable at the discretion of the ‘innocent’ party. All listed categories can affect
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the validity of the contract.
Duress
Duress requires:
- Use ofillegitimate and irreversiblepressure whichcoerces a party to enter a contract
under particular terms
- Need not ‘totally override’ the will of the victim. Coerced person will know what
they’re doing, but do it unwillingly.
- If proven,caninvalidate the contract.
Contracts obtained by duress are, of course, voidable.
he primary remedy is recession.Borelli v Ting (Bermuda)[2010],though the court may
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order recovery of money.Universe Tankships of Monroviav International Transport Workers
Federation [1983].
ight to recession is lost if contract is affirmed by expressly or impliedly consenting to its
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continued validity.North Ocean Shipping v HyundaiConstruction Company [1979]
ustralian Consumer Law (ACL) s 50-prohibits useof physical force or undue harassment
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or coercion by companies to consumers. Thus, physical duress will violate this statute.
There are three categories of duress:
Duress of the person
- ctual threatened violence or imprisonment against a person or associate.
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- Can be directed at a party to the contract or a third party.
- Can beinflictedby the other party or a third party.
Barton v Armstrong [1973]
Duress of goods
- ccurs when a party is coerced into contract as a result of the other party unlawfully
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seizing, detaining, or damaging etc goods.
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd[1991]
Economic duress
- ccurs when a party enters or alters a contract based on threats to that party’s
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economic well being.
- The coerced party must have been induced to act by illegitimate economic pressure.
Crescendo Management v Westpac (1988).
- To be illegitimate, the pressure must be unlawful or unconscionable
Factors:
- Whether work was done voluntarily and without protest
- Whether plaintiff elected to pay or vary the agreement to avoid litigation
- Whether the plaintiff was independently advised.
- Whether there was another choice open to the plaintiff
- Whether the plaintiff took steps to avoid contract
Undue influence
rises when one party uses some influence they have over the other party to obtain a
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benefit that they would not have otherwise obtained.
- “ The improper use of ascendancy acquired by one personover another for the
benefit of himself or someone else, so that the acts of the person influenced are not
in the fullest sense of the word his free and voluntary acts.”Union Bank of Australia v
Whitelaw (1906)
The onus of proof is placed on the person trying to prove they were influenced unduly.
- “The party seeking to set aside a transaction must prove … a relationship going
beyond mere confidence and influence.”Anderson vMcPherson (no 2) [2012]
The required undue influence can arise in two ways:
Presumed influence
Arises in cases of ‘special relationships’.
lass 2a
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Arises in cases where there is undue influence. These include:
- Parent and childLancashire Loans Ltd v Black [1934]
- Guardian and wardHylton v Hylton (1754)
- Doctor and patientBar-Mordecai v Hillston [2004]
- Solicitor and ClientWestmelton (Vic) Pty Ltd v Archer& Shulman [1982]
- Religious leader and followerAllcard v Skinner (1887)
In these cases, there is an automatic presumption of influence and the burden of proof falls
on the dominant party to show that the dispute benefit did not arise from the abuse of trust.
lass 2b
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Not in a special relationship but influence established through the facts of the case. A
relationship arises when:
- “It is proved that the party benefiting from the transactionoccupies or assumes
towards another person naturally involving an ascendancy or influence over the
other, or a dependency or trust on the latter’s part.”Janson v Janson [2007]
ange of evidence will be brought forward to show that the relationship gives rise to a
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presumption of undue influence is unlimited.
- Evidence directly related to the transaction at hand isnotrequired.
- Other factors frame the relationship as appropriately influential.
- How these factors colour the relationship is crucial.
Applicant is placed in a weaker, dependent position vis a vis the other party, especially if
there is a past reliance.
- “For a relationship to be brought within the doctrine, it must go beyond one of mere
confidence and influence, to one involving dominion or ascendancy by one over the
will of the other, and correlatively dependence and subjugation on part of the other”.
Tulloch (decd) v Brayborn (No. 2) [2010].
Thepresumptionof abuse of influence can be rebuttedby proof that:
- The other party had access to and actually took independent and fully informed
advice.Janson v Janson [2007] or;
- Getting independent advice would not have changed the other party’s decision or;
- The other party was able to personally form an independent judgement.
Express influence:
) A
1 rises where there is no relationship of trust and influence
2) Party must show that there was express influence through either actual coercion, or
general domination.
- “In a case of actual undue influence it is necessaryto prove some overt act by
which influence will be exercised less directly and its exisentece is inferred
from a consideration of facts relating to the transaction under consideration
and the relationship of the parties to that transaction.” Evans v Lloyd [2013]
REmedies for undue influence:
A) Normal remedy is recession. Contract is set aside and parties restored to their
original position.
B) Recession can be lost if not sought within a reasonable time, if the victim affirms the
contract once the influence has been lifted, or if an innocent third party has obtained
an interest in the subject matter of the contract.
C) Ancillary orders can be made to ensure parties are restored to their original position.
Unconscionability:
Effect of unconscionability:
- Renders the contract voidable at the option of the weaker party
- Court may instead decide to reduce liability of the weaker party
- Right to relief can be lost in certain cases: ratification, intervention by an innocnet
party, or the weaker party also engaging in unfair conduct
Common Law:
. H
1 arshness of a clause is not enough.
2. Where a clause is particularly onerous, it is not enforceable unless the party is
informed ahead of time.
3. Inequality of bargaining power is nota ground for relieving a party from the affects of
a harsh clause.ACCC v C G Berbatis Holdings Pty Ltd(2003).
Equity
1. Intervenes where a stronger party took some unfair advantage of the weaker party’s
positionCommercial Bank of Australia v Amadio [1983]
2. It must be shown that:
A. The weaker party is under a ‘special disability’Kakavasv Crown Melbourne
Ltd (2013); Garcia v National Bank of Australia (1998); ACC v Samton
Holdings Pty Ltd (2002).
- 2 categories of special disadvantage. Constitutional (age, illness,
poverty, inexperience, lack of education.) and Situational (Particular
features of relationship.)
B. The stronger party is aware of the factBlomely vRyan (1956)
C. It would be unfair, given the circumstances, to allow the stronger party to
enter in to a contract.Louth v Diprose (1992).
Statute (ACL:)
S. 20-22 ACL
‘A
person must not, in trade or commerce, engage incontract that is ‘unconscionable’ within
the meaning of the unwritten law from time to time’ - ACCCv Samton (2012)
or the purposes of of s21, the definition of unconscionability appears to be wider but must
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be read with s22 in relation to matters that would be read.- Wolfe v Permanent Custodians
LTD [2013]
Deals with commercial transactions, protecting business consumers from unconscionable
conduct from a supplier and vice versa.
- Advantage over common law: Wider range of remedies available.
1. S.236:Recovery of damages
2. 2.243:Ancillary orders, such as varying the contractor ordering return of
property
3. S. 244(1) (A) I:Guilty party may be subject to furtherfinancial penalty.
Unfair contract terms under the ACL:
. 23-8regulate unfair contract terms. These sectionsonly apply to ‘standard form’ contracts
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that are also consumer contracts - meaning that goods or services involved in the contract
must be consumers by the purchaser.S. 24(2)providesthat courts must consider the
wording of a term.S 23(1)an unfair term is void.If it can be severed, the contract will remain
intact. Other remedies are also available.
Non Est Factum
Two criteria:Saunders v Anglia Building Society
- The person relying on the defence usually must belong to a class of persons who,
through no fault of their own, are unable to have any understanding of the purport of
a particular document, because of blindness, illiteracy or some other disability.
- The signatory must have made a fundamental mistake as to the nature of the
contents of the document being signed, having regard to the intended practical effect
of the document; and the document must be radically different from the one the
signatory intended to sign
Non est factum arises when a party that, without undue carelessness, signs a contract that
is substantially different to what they believed. That party may claim non est factum and void
the contract.
- ocument becomes void ‘ab initio’
D
- It must be shown that the mistake arose from a fundamental misunderstanding of the
terms of the contract
- EXCEPTION to signature rule
- Heavy onus of proof required to prove non est factum
istake as to nature of contract:
M
Saunders (Executrix of the estate of Gallie, deceased.) v Angila Building Society [1971]
(Gaille v Lee)
- was the owner of a house on a long leaseshold. She signed a document which
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transferred the property to her nephew, so he could borrow money off of it. She did
not read the contract due to broken glasses. The contract held that the leasehold
would be transferred fully to L, an associate of her nephew . L mortgaged the house,
then defaulted. Building society sort possession, with G pleading Non Est Factum
- Held: No radical difference between the contents of the contract ( Transfer of
leasehold)
ifferent in
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Petellin v Cullen:
- , a near illiterate, granted C the option to purchase property. The option expired, but
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C sent 50 dollars while asking for an extension. C visited P, asking for P to sign a
receipt for the money. The receipt was actually the option. P argued NEF
- Held: P’s argument was successful. The class of persons who can avail themselves
of the defence is limited. It is available to those who are unable to read owing to
blindness or illiteracy...To make out the defence a defendant must show that he
signed the document in the belief that it was radically different from what it was in fact
and that, at least as against innocent persons, his failure to read and understand it
was not due to carelessness on his part’.
on Est Factum may also be established when the signatory lacks mental capacity to enter
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into the contract.
- ord v Perpetual Trustrees LTD: Man with intellectualdisability signs contract. He is
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unable to understand the terms and contract is thus void.
If Non est factum is unsuccessful, plaintiff MAY be able to establish duress, undue influence,
or unconscionability.
Week 7
Week 7
voidance of Contract:
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Misrepresentation and Misleading
conduct
Misrepresentation criteria:
oncerned with pre-contractual statements that are falseandhave induced a contract. The
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party alleging misrepresentation must prove the following four criteria :
- There must be false representation
- The representation must be one of fact
- The reputation must induce the contract
- The representation must be addressed to the person seeking to rely on it.
The false statement:
1. May be constituted by verbal or written words, or some other form of conduct.
2. S
ilence will not necessarily amount to misrepresentation (However, the context in
which it appears is significant)Demagogue Pty Ltdv Ramensky [1992]UNLESS:
- What is said is a half truthKrakowski v EurolynxProperties Ltd (1995)
- The representor subsequently discovers that the representation was untrue
Lockhart v Osman [1981]
- The statement becomes untrue due to changing circumstancesWith v
O’Flanagan [1936]
- Contracts of insurance 'Uberrimae fidei’Bell v LeverBros LTD [1932]
Statement of fact:
. M
1 ust be distinguished from pufferyDimmock v Hallet(1866)
2. Cannot be a mere statement of opinion.Bisset v Wilkinson[1927]UNLESS certain
conditions are metSmith v Land & House Property Corp(1884)&Esso Petroleum v
Mardon [1976]
3. Cannot be a statement of future intent unless certain conditions are metEdginington
v Fitzmaurice (1885)
Inducement
1. S tatement must be made with the intention that it be acted upon by the innocent
party and the statement must be one of the reasons that the contract was entered
into.Esso Petroleum v Mardon [1976]‘
2. It DOES NOT MATTER if the innocent party would discover the truth by taking proper
care or doing researchRedgrave v Hurd (1881)
Addressed to the party:
1. A person can only be considered to rely upon the misrepresentation if the
misrepresentation is addressed to themAttwood v Small(1838).Where the
representation had not been directed to the other partyPeek v Gurney (1873)
2. A representation can be addressed to a person directly or indirectly, or a class or
group.
3. The representation must be:
- Made known to the representee
- Regarded as material and acted upon
Types of misrepresentation:
Fraudulent
Remedy: Recession and or damages
Occurs when the representor makes a false statement;
- Knowing it to be false OR
- Without belief in its truth OR
- Recklessly, without caring if it is true or real.
Honestly believing the representation to be true removes the possibility of fraud.Derry v
Peak (1889)
Innocent
emedy: recession
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Where the representation makes a fraudulent statement without knowing it was false and
without any intent to mislead the representee.
Negligent
emedy: Recession and or damages
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Arises when:
1) A statement is made by a person who is an expert or holds themself as an expert
2) The statement is made without reasonable care
3) The statement is relied upon by the person the statement was made to
4) The statement causes loss
It needs to be shown that:
1) The representor was aware they were being trusted by the representee to give
information which the latter believed the former to possess
2) The representation was of a serious or business nature
3) The representer realised that the representee would act on the information.
4) In the circumstances, it was reasonable for the representee to act on the information.
Remedies:
Recession:
) A
1 vailable for all forms of misrepresentation
2) Representee has the option to rescind
3) Aim of recession is to restore the parties to the position they were in prior to the
breach
4) The right to rescind can be lost if:
- Restitution is not possible
- The representee affirms the contract
- Time lapses
- A third party gets involved
Damages:
) N
1 ot based on breach of contract
2) For fraudulent misrepresentation - based on the tort of deceit. Can recover actual
loss following the fraud. (Which can include unforeseeable damages)
3) For negligent misrepresentation - based on the tort of negligence. Can only recover
foreseeable damages.
4) No damages allowed for innocent misrepresentation
Under Australian Consumer Law
Section 18 Australian Consumer Law(FormerlySection52 Trade Practices Act 1974.)
‘A person must not, in trade or commerce, engage in conduct that is misleading or
deceptive or is likely to mislead or deceive’
Includes matters covered previously but also includes broader things such as
misrepresentation about intention .
Before applying s18 make sure the criteria for application are met:
1) Applies to all ‘persons’ (doesn;t have to be a company)
2) ‘Engage in conduct’ defined in S.4(2)(a)
3) The conduct must take place in ‘trade or commerce’ thus excluding private dealings
Concrete Constructions NSW Pty Ltd v Nelson (1990)
‘Misleading or deceptive’ means that is not necessary to show:
A) A person was actually mislead, just that the conduct was intended to deceive
B) The person whose conduct is being questioned intended to deceive
C) The person whose conduct is being questioned was being fraudulent, negative, or
deceptive. .
he objective test is used to show if something was misleading or deceptive or not.
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It is a question of fact to be decided by considering what was said and done against a
background of all the surrounding circumstances -
Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd [1998]:
‘Accordingly, to determine whether [one] has contravened [s 18(1)] ...two questions
arise for consideration. The first is whether the failure by[one] to inform [the other of
the relevant matter] was misleading or deceptive conduct. The second question is
whether that conduct was deliberate ... One circumstance where the failure to
provide information will constitute misleading or deceptive conduct is where the
circumstances of the case give rise to a reasonable expectation that if a relevant fact
exists it will be disclosed
It also can only be judged against the audience for whom the conduct was intended.
- World Series Cricket v Parish (1977)
- Dibble v Aidan Nominees Pty Ltd [1986]
Entire contract/Disclaimer/exemption clauses
1) T he issue is whether or not the contract/disclaimer/clause has been incorporated into
the contract, but whether the conduct, taken as a whole, is misleading … or
deceptive
2) They are only effective where the conduct as a whole can be shown to be misleading
or deceptive.
Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992)
Silence under ACL:
ilence can construe misleading or deceptive conduct where it has induced a contract that
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would be affected by the voicing of the information silent.Collins Marrickville Pty Ltd v Henjo
Investments Pty Ltd [1987]
Promises and predictions under ACL:
1) Inaccurate opinions can give rise to an action under s 18. S.4 casts the burden on
the maker of the prediction to show that it was based on reasonable grounds. A
breach of S.4 Is misleading/deceptive conduct.
2) S.4 ACL:
“If (a) person makes a representation with respectto any future matter .. and
(b) the person does not have reasonable grounds for making the
representation, the representation is … taken to be misleading.
SeeWheeler Grace & Perucci Pty Ltd v Wright (1989)
Remedies under s18
. 236: Damages
S
S. 243: Ancillary orders
- An order declaring the contract void in whole or part
- An order varying the contract
- An order refusing specific performance of the contract
- An order requiring the defendant to return money or refund property
- An order requiring the defendant to return parts for goods
- An order requiring the defendant to provide services; and
- An order requiring the execution of instruments relating to land that variates and
terminates a previously executed instrument relating to said land.
-
Week 8
Termination of contract:
Termination by agreement:
arties may choose to terminate a contract through mutual agreement. There are three
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‘forms’ of termination by agreement: Abandonment, provision in the original agreement, or
subsequent agreement.
ontact must be abandoned by both parties.
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An inordinate amount of time being allowed to lapse may infer abandonmentJ R Marine
Systems Pte Ltd v Wavemaster International Pty Ltd (in liq) [2011]
he question of abandonment is considered a matter of fact inferred fromobjective
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assessment.This means that:
- Parties do not need actual intention
- There exists a question as to whether the parties conduct is enough to manifest such
intentionCGM Investments Pty Ltd v Chelliah [2003]FCA 79
- When abandoned, a deposit must be returnedSummersv Commonwealth (1918)
ermination can be a term in the original contract:
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The term may be:
1) A condition precedent: A term that if an event does not occur a contract will not arise
Perri v Coolangatta Investments Pty Ltd (1982)
2) A condition subsequent: A term that specifies that after the contract is entered into an
event occurs the contract is voided and parties are returned to their original position.
Head v Tattersall (1871)
ermination can also be by subsequent agreement:
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To be enforceable, a subsequent agreement has to have consideration.
1) Unilateral discharge: where only one party has outstanding obligations under the
contract
2) Bilateral discharge: Where both parties have responsibilities but agree to mutually
discharge them (Novation)
ovation:
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May be a new contract between the same parties or a new contract between one existing
party or anew party.
- The departing party must join novation because novation agreement extinguishes its
rights and obligations under the new contract
- Intention is crucial to show a novationFightvisionPty Ltd v Onisforou [1999]
- Novation may be express or impliedDi Giovanni v DarkHorse Developments Pty Ltd
(in liq) [2014]
- he main question that arises is to whether it has been agreed that a new contract
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will be brought in to existenceLH Group Property Holdings Pty Ltd v Chief
Commissioner of State Revenue(NSW) (2012
Termination by performance:
A contract is discharged when everything is done!
However, an issue arises when determiningwheneverythingis done.
Thebasic rule is that performance must be exact.
‘If the written contract specifies conditions of weight, measurement and the like, those
conditions must be complied with. A ton does not mean about a ton, or a yard about a
yard…’
- Arcos Ltd v E A Ronaasen & Son [1933]
InjusticeCutter v Powell (1975)has lead to exceptionsto the Basic Rule:
1) Severable contracts
A) Contracts that anticipate some performance will give the performing party the
right to demand some performance by the other party
B) General rule: it is presumed that contracts are not severable
C) If a contract is divisible into discrete parts, the party that performs the part
only has rights in relation to that part
- GEC Marconi Systems v BHP Information Technology Pty Ltd [2003]:
Having discussed entire contracts, Finn J said: ‘The question whether
a contract or an obligation is entire or is, in contrast, divisible, is a
question of construction ...While building contracts ...have commonly
been regarded, prima facie, as entire or ‘lump sum’ contracts ... such
contracts commonly provide to the contrary by, for example,
apportioning the consideration ...where the contract provided both for
the payment of instalments and for their refund if the contract was
cancelled in specified circumstances.’
2) De minius non curat lex (The law does not concern itself with trifles)
A) Where a party does not complete the performance exactly the law will ignore
it
B) Shipton Anderson & Co v Weil Vros [1912]
( he’s gonna touch you)
3) Substantial performance
A) Unless extremely clear in the contract that exact performance of the contract
must be performed, a plaintiff may recover contract price for substantial work
minus costs of any remedial work that must be done.
B) Hoenig v Isaacs [1952]; Bolton v Mahadeva [1972]]
4) Acceptable partial performance
) O
A ccurs when the innocent party chooses to accept partial performance
B) The agreement to accepted past performance must be made freelySumpter v
Hedges [1891]
Week 9: Termination of Contract p2
Discharge by breach
wo types:
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Actual - Cause by failure to perform, defective performance, or underlying term found to be
untrue
Anticipatory - where the actions of a party indicate (explicitly or by implication) that the
contract will not be performed when time for performance becomes due (Also considered a
form of repudiatory breach)
General effect of breach:
1) Any breach entitles the victim to sue for damages
2) For a serious breach, the innocent party can also treat the contract as discharged.
This is breach ‘of condition’
3) The innocent must elect to have the contract terminated or may continue with it and
sue for damages (Immer v Uniting Church 1993)
3.5) The election must be by clear and unequivocal words or conduct (Alikas v Oliviero (No.
2) [2014]
Galafassi v Kelly [2014], Gleeson AJ:
- It must be shown that the party has evinced an intention to no longer be bound by the
contract or stated an intention to fulfil the contract in a manner substantially
inconsistent with its objective and in no other way.
- The conduct amounts to a refusal to perform. The innocent party need not prove that
the other party was actually unable to perform.
- If it’s clear, termination can be made via word or deed.
- The test is whether the conduct of one party is such as to convey to a reasonable
person, in the situation of the other party, enunciation either of the contract as whole
or of a fundamental obligation under it
Discharge by frustration
Week 10: Damages
Remedies:
Damages:
1) Usual remedy for breach of contract
2) Must be made within six years (expect for NT, 3 years)
3) For deed - limitation - must be made within 12 years (except vic and SA, 15 years
4) Date of breach - Date by which measure of damages is generally assessedJamal v
Moola Dawood Sons & Co
5) Damages are awarded when money is an appropriate remedy
6) Where money is not effective injunctions or specific performance may be ordered
7) Aim is to restore plaintiff to position they were in prior to breach
arty in breach can only be liable if the loss is not ‘remote’.
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Test of remoteness - two ‘limbs
1) Does it arises naturally from the loss - includes presumed knowledge (objective test)
OR
2) Was considered by parties prior.
Hadley v Baxendale (1854), Victoria Laundry v Newman [1949]
efore determining which limb, it must be established whether loss would flow ordinarily,
B
which raises the question of the likelihood of the loss occurring.
- Victoria Laundry v Newman Industries [1949] - ‘reasonably foreseeable as liable to a
result’ ‘serious possibility’ ‘real danger’ ‘on the cards’
- Koufous v Czarnikow [1969] -test stated as likelyor not unlikely. This test is
accepted in Australia. (Accepted in Australia.)
For damages to be recovered, defendant need not have contemplated precises extent of
lossH Parsons (Livestock) Ltd v Uttley Ingham & CoLtd [1978]
Recovery of damages for breach requires ‘causal connection’
- All factors do not need to be looked at but simply where the breach lead to the loss
- Breach need not to be the sole contributing factorAlexander v Cambridge Credit
Corp Ltd (1987)
- Issues of causation are one of fact, not law.MarchE & M H Stramere Pty Ltd (1991),
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2012)
- Onus is generally on the plaintiff.
Traditional ‘but for’ test is used:
- Loss would not have occurred but for the breach
- This test may be inadequate in some cases, so the test is only used as a guide.
Cause of loss should be regarded as ‘a matter of ordinary common sense and
xperience’ March v E & M H Stramare Pty Ltd (1991); See also Hunt & Hunt v
e
Mitchell Morgan Nominees Pty Ltd (2012)
Case of Plaintiff’s conduct forming intervening event
- Rolfe v Katunga Lucerne Mill Pty Ltd [2005].
- R brought feed, rumour it was contaminated but it was continuously used.
- Held: Rumour insufficient to constitute clear knowledge and did not suffice to break
chain of consideration.
Week 11: Remedies
