Australian Contract Law Notes - Contract

FORMATION ................................................................................................................................................................................ 38 CONTRACT THEORY .................................................................................................................................................................. 39 INTENTION ................................................................................................................................................................................. 41 OFFER ........................................................................................................................................................................................... 45 ACCEPTANCE AND CERTAINTY ............................................................................................................................................ 50 CONSIDERATION ....................................................................................................................................................................... 57 FORMALITIES AND ESTOPPEL ............................................................................................................................................. 61 CAPACITY AND PRIVITY ......................................................................................................................................................... 67 EXPRESS TERMS ....................................................................................................................................................................... 75 IMPLIED TERMS ....................................................................................................................................................................... 81 INTERPRETATION OF TERMS AND CONSTRUCTION .................................................................................................... 87 PERFORMANCE OF THE CONTRACT ............................................................................................................................... 103 PAGE 2 LIST OF CASES Intention to be Legally Bound Rose and Frank Co v JK Crompton and Bros Ltd Balfour v Balfour Cohen v Cohen Merritt v Merritt Riches v Hogben Jones v Padavatton Todd v Nicol Wakeling v Ripley Roufos v Brewster Simpkins v Pays Rose & Frank v Crompton Jones v Vernon's Pools Esso Petroleum v Comm Taxation Edwards v Skywards Banque Brussels Lambert SA v Australian National Industries LTD Gate Gourmet Australia Pty Ltd (In Liq) v Gate Gourmet Holding AG PAGE 3 Intend to be bound: clause which indicated they weren't intending to be bound by law Presumption: there is no intention in a domestic relationship Presumption: there is no intention in a domestic relationship Presumption: separated couples are more likely to have intention Presumption: separated couples are more likely to have intention Domestic Relationship: there is no intention between mother and daughter Domestic Relationship: widow invites sister and niece of deceased husband to live with her - there was intention Domestic Relationship: Invited sister and brother--in--law to move to Australia and live with him - there was intention Domestic Relationship: Son--in--law helps out with business deliveries and the goods were damaged en route - there was intention Domestic Relationship: granddaughter and grandmother and paying lodger lived together paying rent and entered a competition for which they paid 1/3 each. Granddaughter refused to pay intention to be bound Honour Clauses Honour Clauses Puffery Ex Gratia Payments Letters of Comfort Letters of Comfort Coogee Esplanade Surf Motel v Cth Administrator of PNG v Leahy Australian Woollen Mills v Cth Cameron v Hogan Baldwin v Everingham Finlayson v Carr Offer Letters of Intent Government contracts Government contracts Voluntary Associations Voluntary Associations Voluntary Associations Presumption: relationship with the Ermogenous v Greek Church is not business - no Orthodox Church intention - PRESUMPTIONS CAN BE REBUTTED AND UNORTHODOX Definition: a statement of the terms upon which the offeror is prepared Nielsen v Dysart Timbers to be bound if acceptance is Ltd communicated while the offer remains alive Knowledge: parties must have Fitch v Snedaker knowledge of the offer, which has to be communicated Who: Offer can be made to the world at large Puffery: exaggeration which is not Carlil v Carbolic Smoke Ball intended to be taken seriously Invitation to Treat: offer to receive offers Agreement: if parties have reached Clarke v Dunraven final agreement, there can be a contract Intention: it was a government Australian Woollen Mills v scheme to promote industry - no Commonwealth intention to be legally bound Puffery: advertisement which Mitchell v Valherie exaggerated benefits of the goods - not misrepresentation Puffery: reasonable person would Leonard v Pepsico not interpret the ad as being factual Information: request for Harvey v Facey information is not an offer or acceptance Information: request for Stevenson Jaques & Co v information is not an offer or McLean acceptance Gibson v Manchester City Invitation to Treat: invitations to Council treat are not offers Advertisements: wine list sent out Grainger and Sons v Gough as an ad was an invitation to treat PAGE 4 Shop Displays: invitations to treat and not offers Shop Displays: the display of a Pharmaceutical Society v product in a store with a price Boots Cash Chemists attached is not sufficient to be an offer Auctions with Reserve: the call for Payne v Cave bids is an invitation to treat AGC (Advances) Ltd v Auctions without Reserve: general McWhirter rule applies (call = invitation) Internet Auctions: a binding contract existed between the two parties as the essential terms were Smythe v Thomas listed on eBay and it wasn't stated that sale was subject to discussion or negotiation (sale of a plane) Pratt Contractors Ltd v Tenders: the call for tenders is an Palmerston North City invitation to treat, but the Council submission is the offer Tenders: the contract is awarded to Harvela v Royal Trust the highest fixed bid (bilateral Company contract) Tender - Collateral Contract: Hughes Aircraft Systems information about the tender was International v Airservices passed to another party - breach of Australia a collateral/process contract Tender - Collateral Contract: Blackpool & Fylde Aero tenders, and requests for tenders Club v Blackpool Borough are accompanied by a collateral Council contract which implies the bid will be inspected MacRobertson Miller Ticket purchase (prior): Issue of Airline Services v the ticket = offer, and when the Commissioner of State passenger takes their seat = Taxation (WA) acceptance Ticket purchase (automatic Thornton v Shoe Lane machine): display of the machine = Parking offer, money placed into the machine = acceptance Termination: an offer is terminated Byrne v Van Tienhoven if it is withdrawn, however revocation must be communicated Termination: termination of the Dickinson v Dodds offer can be in words or in conduct, even by a third party Termination (Option Contract): Goldsborough Mort and Co an offer can be revoked by the v Quinn offeror before communication of acceptance by offeree Fisher v Bell PAGE 5 Acceptance Termination by Death: a contract can still be performed if there is a Carter v Hyde personal element, or else the offer will lapse Termination through Condition Failure: the signature of one co-- Neill v Hewens vendor is not binding without the signature of another - ALL parties must sign Rejection/ Revocation and Unilateral Contracts: breached Mobil Oil v Wellcome contract with dealers - revocation International made it impossible for acceptance to occur Acceptance: must be as a response Crowne v Clarke to and as a result of the offer Counter--Offer: a counter offer is Hyde v Wrench not acceptance Standard Forms: Terms of the Butler Machine Tool Co Ltd buyer were different to the terms of v Ex--Cell--O--Corp (England) the seller. Accepted as a counter Ltd offer as it wasn't the original terms Subject to Contract: finality is Master v Cameron subject to another contract being formed Empirnall Holding v Conduct: acceptance can be Machon Paul Partners conferred through conduct Silence: acceptance is not valid if it Felthouse v Bindley is stipulated by silence Postal Rule: acceptance arises as Adams v Lindsell soon as the letter is posted, NOT recieved Postal Rule: parties must have Henthorn v Fraser contemplated post would be means of communication Postal Rule Exception: parties Bressan v Squires must have stipulated actual receipt of the acceptance letter Postal Rule Exception: Tallerman v Nathan's circumstances of the case - where Merchandise negotiations are complex and highly contentious Instantaneous Communication: Entores Ltd v Miles Far general rule applies to telexes and East telephones, not the postal rule Instantaneous Communication: Brinkibon Ltd v Sahag general rule applies to telexes and Stahl telephones not the postal rule PAGE 6 Reese Bros Plastic Ltd v Hamon--Sobelco Australia Foley v Classique Coaches Ltd Instantaneous Communication: general rule applies to faxes Completeness: need final agreement on all essential terms Completeness: parties/subject matter and price need to be decided Illusory Terms: A term can be implied based on reasonableness regarding the deferral of agreement Completeness: Agreements to agree or negotiate constitute an incomplete contract Certainty: A contract is only legally enforceable if the terms are officially agreed on and certain Illusory Promises: If a promise gives one party an unrestricted discretion, the promise is illusory Illusory Promises: if the promise isn't illusory, the contract provides information as to who should determine important matters Illusory Promises: If the promise isn't illusory, the contract provides an objective criteria for exercise of discretion Illusory Terms: Terms can be implied based on an external standard Illusory Terms: Invalid terms can be severed if the contract can survive without it. Otherwise the contract becomes void Illusory Terms: If a term is for the benefit of one party only, that party can waive the term Definition: Act, or promise of an act which is done in return for a promise Move from the promise: To enforce it, it must be paid for Definition: Valuable consideration must consist of some right, interest, profit or benefit for one party, or a forbearance of the other Definition: Consideration must be paid for to be enforceable Hall v Busst Coal Cliff Collieries P/L v Sijehama P/L G Scammell and Nephew Ltd v HC and JG Ouston Placer Development Ltd v Commonwealth Godecke v Kirwan Meehan v Jones Hillas v Arcos Fitzgerald v Masters Whitlock v Brew Consideration Dunlop Pneumatic Tyre v Selfridge and Co Currie v Misa Parastatidis v Kotaridis PAGE 7