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Actions For Debt Notes

Law Notes > Contracts 2 Notes

This is an extract of our Actions For Debt document, which we sell as part of our Contracts 2 Notes collection written by the top tier of University Of New South Wales students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Contracts 2 Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Actions for debt Debts and Liquidated Sums

* "A debt recoverable under an indebitatus account was not and is not now conceived of simply as a cause of action for breach of a duty or obligation. In other words it is a mistake to regard the liability to pay a debt of a kind formerly recoverable in debt or indebitatus as no more than the result of a breach of contract...which the creditor must affirmatively allege and prove" - Young v Queensland Trustees Ltd (1956) 99 CLR 560

Requirements of an Action for Debt

* Generally actions for debt only arise upon executed consideration - i.e. performance of the contract by the party claiming payment (e.g. price of goods sold and delivered) but sometimes it may be recovered as a debt/liquidated sum where payable on a fixed day whether or not consideration has been furnished (payment by instalments). o What amounts to sufficient performance of a plaintiff's contractual obligations to entitle payment depends on the distinction between entire and divisible obligations and on the doctrine of substantial performance

* Entire obligations - ones that must be wholly performed for the plaintiff to be able to entire any of the payment for performance specified in the contract - i.e. performance is a condition precedent to the defendant's obligation to pay

* Divisible obligations - contracts are likely to be divisible where work under the contract and its payment is divided by corresponding segments. Where it is divisible the plaintiff will be entitled to payment for each segment or part of the work fully performed. Steele v Tardani (1946) 72 CLR 386 Facts: The plaintiffs were 3 Italian internees who had been released from internment and permitted to accept employment from the defendant. The plaintiffs weren't employed to cut any specified amount but were paid at a price per ton and both were entitled to terminate at any time. The trial judge found that the contract was to cut the wood to certain specifications. He held that the defendant was liable to accept and pay for firewood cut into proper dimension and to pay fair price for other firewood because he had accepted the benefit of making the allowance for the cost of splitting some of the wood to the specifications. Issue: To what extent is the defendant liable to the plaintiff Ratio (Dixon J):


The contract in this case is infinitely divisible - for the amount per ton fixed eight shillings is a rate to be applied to the firewood cut into the specifications required by the contract


As such it is impossible for the plaintiffs to recover in respect of timber not split according to the specifications UNLESS there are grounds for treating them as dispensed from the necessity of doing so. To recover under quantum meruit the plaintiffs must show circumstances removing their right to remuneration from the exact conditions of the special contract.


For this purpose it is not enough that the work is beneficial to him merely because the timber is turned into valuable firewood. Furthermore 'taking the benefit' is only relevant where it is open to the beneficiary to either accept or reject the benefit of the work (so not so in repair/building contracts - in which case acquiescence has to be inferred)


The evidence showed that all the timber cut, whether or not to specification, was sold by the defendant and thus the defendant must pay reasonable sum for that which he took and sold

even though it didn't strictly comply with the requirements.


Furthermore there was evidence to suggest that his reliance upon the diameter was an afterthought (huge sentence p720)

Latham CJ said that in order to recover, the plaintiffs have to claim upon a quantum meruit which can only be allowed on evidence of afresh contract - on this it is not sufficient that he sold the firewood, and the only way to defeat the claim is not if he allowed the firewood to decay on the ground. But agreed with the second set of evidence of Dixon J. Legislation The right to payment for work under a contract not fully performed may be affected by legislation. Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406 Facts: Under an agreement for hire of an aircraft the appellants agreed to pay $2,200/month payable at the end of each month. On 16th of February the aircraft crashed and the contract was frustrated. Issue: What are the appellants liable to pay Ratio (McPherson J):


Under the Property Law Act 1986 all rents/dividends/periodical payments in the nature of income would be considered as accruing from day to day and the apportioned part of any such rent will only be recoverable when the entire portion of the apportioned part forms part becomes due and payable and not before


Under this section the apportioned part is not payable until the entire portion is due and payable - which would be on February 28th hence the monthly payments due must be apportionable and due in respect of the period running from the 1 st to the 16th of February.

Substantial Performance Where a party has substantially performed his/her obligations under the contract the doctrine of substantial performance may allow recovery of the contract price, less a payment of damages to the other party as compensation for incomplete work. Hoenig v Isaacs [1952] All ER 176 Facts: The plaintiff was an interior decorator who was employed by the defendant to decorate a flat and provide it with furniture including a wardrobe and bookcase to the sum of PS750. The plaintiff claimed to have carried out the work in compliance with the contract and demanded the balance of
PS350. The defendant alleged the work was performed negligently/unskilfully. The official referee held that the door of a wardrobe required replacement and the bookshelf was too short and had to be remade. He further held there was substantial compliance and the defendant was liable to PS750 less loss of remedying defects Ratio (Somervell LJ):


Fulfilment of every term is not necessarily a condition precedent in a contract for a lump sum (Boone v Eyre [1779])


Contrasted the position of sale of goods (stipulations are conditions if not all performed the party may repudiate) with erection of land (builder can recover nothing on lump sum if work is completed half way through and hard to recover on quantum meruit since nothing can be inferred from the fact that the builder stays on the land)

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