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ASSIGNMENT 2
On Blackboard from today Contract law, problem question See Guidelines to Students (attached to the assignment) DUE Monday 23 September, 2013 See Course Outline (paragraph 4.4) for details about how to submit your Assignment ONLINE SUBMISSION ONLY - Check your plagiarism score, amend and re-submit as required - FINAL VERSION MUST BE SUBMITTED BY 5pm on MONDAY 23 SEPTEMBER 2013 on Blackboard (via Turnitin)
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ASSIGNMENT 2
Research materials: Your starting point: - Reading materials on Blackboard (PDFs) - Paul Latimers Australian Business Law, 31st edn, 2012 or 32ndedn, 2013 Do some independent research beyond the Blackboard readings and beyond the textbook using other research tools: Look for Cases/Journal articles/Other materials from legal publishers that are available online through UNSW Library database Focus your research on ONLINE materials Do NOT bother the UNSW librarians unnecessarily
ASSIGNMENT 2
Do not plagiarise be careful to acknowledge all source materials that you use References source materials appropriately: see Appendix A of the Course Outline for how to footnote your references Provide full names for cases AND full case citations Include a bibliography at the end of your Assignment
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Sample Answer
On Blackboard THIS IS A GUIDE for FORMAT AND STYLE OF WRITING ONLY DO NOT COPY the content of the sample answer the facts are completely different from your assignment problem! 1. 2.
Legal Research
Primary resources - cases and legislation Secondary sources (journals, textbooks, commentaries, annotators)
Legal encyclopedias
eg: Halsbury's Laws of Australia (Butterworths); the Laws of Australia (LBC)
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Legal Research
Always rely on primary resources, and use secondary resources to support your argument. Refer to UNSW library electronic database Hard copies of legal resources are also available in the UNSW Law School Library
Legal Research
For the Assignment, also refer to: RESEARCH GUIDANCE NOTES ON BLACKBOARD, UNDER ASSESSMENTS APPENDIX A - Style Guide and Written Submission Guidelines in Part B of the Course Outline
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Statutory research
Locate the relevant Acts and the relevant sections within those Acts Law libraries Online Check whether the Act has been amended Make sure you are using current legislation
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Lecture 3: Summary
Essential elements of a contract: Intention to enter into a legally binding contract Agreement Offer Acceptance Consideration
Something of value (price) Exception: Promissory Estoppel
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Lecture 3: Summary
Other elements for a valid contract: Legal capacity Genuine consent Legality of purpose Any formal/procedural requirements must be satisfied (See Latimer at 5-510 to 5-570)
Lecture 4: Summary
Intention to create legal relations
Social/family/domestic/voluntary: implied presumption no intention Commercial/business: implied presumption there is intention Both presumptions can be rebutted
Terms of a contract
Representation: - Pre-contractual negotiations Term (to be discussed today) - Express/Implied - Condition/Warranty - Uncertain/Meaningless/Ambiguous terms - Exclusion/exemption clauses No liability Statutory exemptions (to be studied in Consumer Law)
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Implied Terms
Case: The Moorcock See Latimer at 6-110
Implied Terms
For terms to be implied into a contract, they must: be reasonable and equitable be necessary to give business efficacy be so obvious it goes without saying be capable of clear expression not contradict an express term of the contract
See Latimer at 6-110 at footnote 16: BP Refinery Case
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Types of terms
1. Condition
an essential term going to the root of the contract allows injured party option of rescinding (ie ending) the contract and/or suing for damage a non-essential term of lesser importance allows the injured party only to recover damages (and requires continued performance of the contract)
See:
Australian Consumer Law, which is Schedule 2 of the Competition and Consumer Act, 2010 (Cth) Sale of Goods Acts (different States)
2. Warranty
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Condition or Warranty
Cases: Bettini v Gye Poussard v Spiers (Compare these two decisions) Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market See Latimer at 6-050
Uncertain terms
If there have been prior dealings, courts may imply appropriate terms Where there are no past dealings, courts may be forced to find contract void for uncertainty See Latimer at 6-150
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Meaningless terms
If the term has no meaning, the courts will sever it if possible and leave the rest of the contract valid If this is not possible, the contract will be void for uncertainty See Latimer at 6-160
Ambiguous terms
If a term has more than one meaning, the contract will not necessarily be void for uncertainty, so long as the term can be given a meaning See Latimer at 6-170
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Collateral contracts
Example: In consideration of the manufacturers promise that his product will do X You (the customer) will contract with the retailer to buy it Main contract: between you and the retailer Collateral contract: manufacturers contractual promise to retailer
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Todays lecture
Exclusion clauses Requirements for a valid contract (contd)
Capacity Consent Proper form Agency: the exception to Privity Mistake Misrepresentation Illegality Inequality between the parties Unconscionable conduct (Commercial Bank v Amadio)
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Privity of contract
Vitiating elements
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Overview - Lecture 5
Capacity/Privity/Vitiating Elements On completion of this lecture you should be able to: 9 Identify and explain what exclusion clauses are 9 Explain what it means to have capacity (or to consent) to enter into contractual relations 9 Explain the doctrine of privity of contract 9 Explain the concept of agency 9 Identify different vitiating elements and their effect on a contract (eg mistake, misrepresentation, unconscionable conduct etc)
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Exclusion clauses
Also known as exception or exemption clauses or no liability clauses Their purpose is exclude or limit the liability of the person inserting them Their effectiveness will depend on the construction of the contract as a whole, taking into account the bargaining position of the parties See Latimer at 6-180 to 6-250
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Exclusion clauses
Notice of exclusion clause must be given BEFORE contract is made (not afterward)
Cases:
Thompson v London, Midland & Scottish Railway Co eBay International AG v Creative Festival Entertainment Pty Ltd
Exclusion clauses
BE CAREFULyou are bound by what you sign, even if you do not know what you have signed READ what you sign BEFORE you sign it Signing = evidence you intend to be bound! Case: LEstrange v Graucob Ltd See Latimer at 6-190
Exclusion clauses
Terms, including exclusion clauses, may not be binding unless properly incorporated into a contract Cases: Parker v South Eastern Railway Co Curtis v Chemical Cleaning and Dyeing Co Causer v Browne See Latimer at 6-200
Exclusion clauses
How to interpret exclusion clauses: The ambiguity rule (or the contra proferentem rule): The negligence rule The four corners rule Look at what the main contract says
Cases: White v John Warwick & Co Ltd Bright v Sampson and Duncan Enterprises Pty Ltd Sydney County Council v West Thomas National Transport (Melb) Pty Ltd v May & Baker (Aust) Pty Ltd Darlington Futures Ltd v Delco Australia Pty Ltd See Latimer 6-240
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Exclusion clauses
Statutory modifications Some statutory provisions may render an exclusion/exemption clause ineffective, particularly legislation dealing with:
Consumer Protection Sale of Goods Insurance
Capacity
Presumption that everyone has full legal capacity Lack of capacity will invalidate the contract
Capacity
Classes of persons subject to incapacity: Minors Mentally ill Intoxicated Corporations See Latimer at 5-510 to 5-570
Consent
Is there genuine consent? Ask what have the parties agreed to? There must be genuine agreement between the parties to a contract as to its nature and scope
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Proper Form
Consider - are there any statutory procedural requirements that need to be satisfied? A lack of compliance with the required formalities may make the contract void or unenforceable
Privity of contract
Means part of Only a party to the contract has any rights under the contract Similarly, the contract only imposes obligations on the parties to the contract Case: Beswick v Beswick See Latimer at 6-260
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Agency
Exception to doctrine of privity An agent: person who is authorised to enter into contracts on behalf of another person, called the principal The contract is between the principal and the third party, and is generally not enforceable against the agent Doctrine of privity not relevant in agency situation
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Agency: definition
The legal relationship between one person, the AGENT (A) having authority to act, and having consented to act on behalf of another person, the Principal (P), places the Principal in a contractual relationship with a Third Party (TP)
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Principal P
grant of authority
Agent A
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Vitiating elements
Vitiate means: to corrupt to damage to reduce value Vitiating elements include: Mistake Misrepresentation Illegality Inequality between the parties
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Vitiating elements
A vitiating factor operates to render a contract voidable or void retrospectively (ie void ab initio)
Voidable vs void
If a contract is bad because of a vitiating element, it can be: VOIDABLE: the contract will continue on foot unless the injured party elects to rescind (ie cancel) or avoid the contract or VOID: void back to the moment of formation, as if it never existed (void ab initio)
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Mistake
If a mistake operates, it often renders a contract void ab initio (from the very beginning) Places the parties in the same position as if no contract had ever been made
Types of mistake
Common mistake: both parties make the same mistake as to the existence or identity of the subject matter Mutual mistake: parties are at cross-purposes both parties have made a mistake but each party has made a different mistake Unilateral mistake: only one of the parties is mistaken, and the other is, or should be, aware of this and does nothing to correct the mistake See Latimer at 5-620 to 5-695
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Representation
A representation is a statement of fact made by one party to another, either before or at the time of contracting, relating to an existing fact or a past event, which induces the contract
Misrepresentation
In contract In tort Misrepresentation legislation
Australian Consumer Law
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Misrepresentation
Statement of fact Communicated to another An inducement
Misrepresentation
Minor misrepresentation:
non-contractual or mere misrepresentation no remedy for breach of contract but may be remedies under other heads of law (such as tort/Australian Consumer Law)
Major misrepresentation:
Actionable misrepresentation Voidable: allows innocent party to cancel/rescind the contract
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Misrepresentation
Fraudulent Misrepresentation: intention to induce a person to enter into a contract voidable: rescission (and/or damages) Innocent Misrepresentation: misstatement of a material fact lack of intentional deceit not known to be false rescission Negligent Misrepresentation: statement made innocently but carelessly right to damages See Latimer at 5-702
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Illegal contracts
Contracts will be illegal if they involve illegal conduct Contracts can be illegal or void:
- by statute or - at common law
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Duress
Duress involves use of violence or illegal threats against a person, their goods or economic interest to force them to enter into a contract against their will Lack of voluntary agreement
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Duress
To the person Actual or threatened violence to one contracting party, or their immediate family or near relatives To goods Wrongful threats to seize, damage or destroy the goods of one contracting party Economic duress Economic pressure beyond normal acceptable commercial practice
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Undue influence
Involves the improper use of a position of influence or power possessed by one person over another in order to induce that other person to act for their benefit Lack of genuine consent to the agreement
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Unconscionable contracts
The plaintiff has to establish: They were in a position of special disability or special disadvantage That substantially affected their ability to protect themselves The defendant knew, or ought to have known, of the plaintiffs disability/disadvantage and should not have taken advantage of it AND The actions of defendant were unconscionable
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Unconscionable contracts
Examples of special disability/special disadvantage include: age financial needs illness ignorance inexperience inability to understand the language inability to read See Latimer at 5-730
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Next lecture
Breach of contract Termination for breach Remedies for breach of contract Read: Latimer Ch 6 6-280- 6-510 REMEMBER: DOWNLOAD ASSIGNMENT 2, READINGS AND RESEARCH GUIDANCE NOTES FROM BLACKBOARD
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