Contracts - LAWS1075 - Contract Law

Introduction to Express Terms - 3 -

Written Terms and Signature - 3 -

From Notice - 3 -

Identifying terms in an electronic contract - 4 -

Breakdown - 4 -

Identifying Express Terms - 4 -

Parol Evidence Rule - 4 -

From Statements Made - 6 -

Incorporation by a course of dealing - 6 -

Interpretation of the Express terms - 7 -

The use of extrinsic material - 7 -

Parol Evidence Rule and Construction - 8 -

The process of interpretation - 8 -

Exclusion Clauses - 9 -

Implied Terms - 9 -

In Law or In Fact or From Custom - 9 -

Implied by custom (impossible to prove) - 10 -

Implied by fact (Byrne v Australian Airlines; Frew v Australian Airlines) - 10 -

Implied by statute/law - 10 -

Australian Consumer Law - 11 -

Competition and Consumer Act 2010 (Cth) sched 2 - 11 -

Termination - 13 -

By Agreement - 13 -

Termination by subsequent agreement - 13 -

Express agreements - 13 -

Termination inferred from subsequent agreement - 14 -

Termination by abandonment - 14 -

Breach - 14 -

For Breach of a Condition - 14 -

For Breach on an Intermediate Term - 15 -

For Repudiation - 16 -

Termination for failure of a contingent condition - 17 -

Termination for Delay - 19 -

Restrictions on Termination - 20 -

Consequences of Affirmation/termination - 20 -

Ready and Willing - 21 -

Election - 21 -

Estoppel and Waiver - 22 -

Outline of an answer on Termination - 22 -

Frustration - 23 -

Frustration - 23 -

Law Against Unfair and Unjust Contract Terms - 23 -

Damages for Breach of Contract - 26 -

Types of Damages - 26 -

Map of the General Principles - 27 -

The Compensation Principle - 27 -

Expectation Damages – Compensation - 27 -

Loss of Chance - 28 -

Reliance Damages - 28 -

Gain-based Damages - 28 -

Limitations to Recovering Damages - 29 -

Causation and Remoteness - 29 -

Mitigation - 29 -

Issues when assessing damages - 29 -

Agreed Remedies and Penalties - 30 -

Actions for Debt - 33 -

Vitiating Factors - 34 -

Vitiating Factors and Rescission - 34 -

Mistake - 37 -

General law misrepresentation - 38 -

Misleading or Deceptive Conduct under Statute - 40 -

Duress - 42 -

Undue Influence - 43 -

General Law Unconscionable Dealing - 43 -

Statutory Prohibitions on Unconscionable Conduct - 44 -

Third Party Liability - 44 -

Specific Performance - 44 -

• Terms of a contract determine what the parties have agreed to do by way of performance to their contract

• The objective approach in assessing parties’ intentions:

  • “the intention which reasonable persons would have had if placed in the situations of the parties” (Reardon Smith Line v Hansen-Tangen)

• What are the terms of a contract?

  • The provisions and obligations of the contracts – find them

  • The scope of the performance that is necessary

  • What damage was caused by the breach of contract

• Express terms may be incorporated:

  • By signature

  • By adequate notice

  • By a course of dealing

  • Under the principle established in the ticket cases

• Statements made orally during negotiations may also be incorporated into a contract

• Written terms and the effect of signature

  • General rule (L’estrange v Graucob; Toll (FGCT) v Alphapharm)

    • A party will be bound by the terms contained in a contractual document which they have signed, irrelevant of if they’ve read the document

  • The agency issues

    • A method of overcoming the requirements of privity in a commercial context

• Circumstances in which the effect of signature may be avoided

  • The rule in L’estrange v Graucob does not apply where the signature was induced by misrepresentations of the nature or scope of obligation, or fraud, or in some cases of mistake

  • Also, where the document cannot reasonably be considered a contractual document, for instance if it appears to have another function, like a receipt (Curtis v Chemical Cleaning & Dyeing)

  • Nonesfacto (latin: this is not my document) – it is clear that someone cannot read a document

• Incorporation of terms by notice

  • It is not uncommon for one party to allege that the contract contains terms which have been displayed or delivered before or at the time of the transaction

  • Whether or not the party will be bound depends upon whether:

    • The terms were available to the party to be bound by those terms before the contract was made

    • Reasonable steps were taken to bring the terms to the notice of the party to be bound

• Timing

  • For delivered or displayed terms to form part of a contract they must be available to the party to be bound before the contract is made (Oceanic Sun Line Special Shipping Company v Fay)

• Knowledge or Notice (Thornton v Shoe Lane Parking)

  • If the timing requirement is satisfied, a party will be bound by delivered or displayed terms if they have either knowledge or reasonable notice of the terms

  • If a party knows that the relevant document contains contractual terms, they will be bound by those terms

  • In the absence of knowledge, a party will be bound by delivered or displayed terms if they had reasonable notice of the terms

  • Reasonable notice depends on the type of contract

• Was notice given? Was it adequate timing before formation?

• Electronic Transaction Act 2000 (NSW)

  • Signatures

    • A method is used to identify if a person and to indicate the persons intention in respect of the information communicated

    • The method used was either:

      • As reliable as appropriate for the purposes for which the electronic communication was generated or communicated

      • Proven to the fact to have fulfilled the functions described in paragraph A (above)

    • The person to whom the signature is required to be given consents to that requirement being met by the way of the use of the method mentioned in paragraph a

• Identify the terms

  • Express terms written document, displayed terms of use

  • Implied terms

• Written documents

  • Consider the method of incorporation of terms?

    • By signature

      • Is it a contractual document?

    • By notice (if the document is not contractual)

      • Is the notice sufficient?

        • Timing - For delivered or displayed terms to form part of a contract they must be available to the party to be bound before the contract is made (Oceanic Sun Line Special Shipping Company v Fay)

        • Knowledge - a party will be bound by delivered or displayed terms if they have either knowledge or reasonable notice of the terms (Thornton v Shoe Lane Parking)

  • Includes reference of other terms

    • Oral agreements, additional documents, advertising promises

  • Is the contract conclusive?

    • No oral statements and extrinsic material is included

• What is meant by parol evidence everything that is not the document

• What is the rationale of the rule? to give effect to the intentions of the parties

• What is the parole evidence rule? a circle statement

  • If the contract is whole in writing, then extrinsic material cannot be used

  • Therefore, the PER does not apply (State railway Authority)

• Statements made during negotiations

  • Parties negotiating a contract may make statements about matters relating to the contract

  • If one of the statements is false, the party to whom it was made can seek legal remedy

  • Promissory: and this a term of the contract, then there will be a remedy for breach of contract

  • Representation: not part of the contract, relief must be sought under the law relating to misrepresentation

  • To determine if a statement proves part of a contract:

    • Consider whether evidence of the purported term is admissible to the court

      • Parole evidence rule limits the extent to which extrinsic evidence is available to “add to or vary” the terms of a contract

    • Courts must determine if parties would have intended the statement to form part of the contract.

• Entire agreement clauses

  • Parties may expressly clarify their intention for a contract to be wholly in writing through a merger or entire contract clause

  • Which states that the written contract contains the entire agreement of the parties

  • Therefore, the PER does not apply because all the terms are in the contracts written document and cannot rely on extrinsic material

• The parol evidence rules

  • The evidence available to the court will be important in identifying the terms that form part of the contract and the construction given to those terms

  • Common law: regards contracts that the parties have reduced to writing as being in a special category, and severely limits the kind of evidence outside the written document

  • Consists of two parts:

    • It prevents extrinsic evidence being given to add to, vary or contradict the terms of the contract – the ambit of the contract

    • Limits the evidence that might be given to explain the meaning of those terms

• Evidence included

  • Any evidence extrinsic to the contract

  • In writing

  • Oral conversation

  • Letters

  • Early drafts

• Can extrinsic evidence be used to determine whether a contract is wholly in writing? (Corbin on contracts; state railway authority of NSW v Health Outdoor)

  • The parol evidence rule only applies to contracts wholly in writing

  • Therefore, will not apply to exclude evidence of the oral terms of a contract that are only partly in writing

• Exceptions to the parol evidence rule in identifying terms – Cases in which extrinsic material is admissible

  • Collateral contracts

    • What is a collateral contract?

      • A collateral contract is a contact the consideration for which is entry into another contract (Mann v Nunn)

      • Specific type of contract that is the entry into another agreement

      • EG looking for an apartment but the oven is broken and the guy showing the apartment says that hell...