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Termination by Agreement Failure of Contingent Condition
Performance & Breach Contingent condition/condition Termination
(Need to choose one)
Electing to Terminate
Termination for Breach Termination for Repudiation
Anticipatory Breach/actual breach
Order, standard, and method of performance
Termination for Delay
Notice to complete Restrictions on Termination
Election, estoppels, and waiver
Damages (available for every breach of contact unless contract excludes damages)
**placed in the same position if the contract had been properly formed** Cannot recover more then what you lost
No specified amount claimed
Specified amount claimed
Not to prove: • He/she suffered loss or damage and the extent of the loss or damage; • the loss or damage was caused by the defendant’s breach; and • the loss or damage was not too remote Exceptions:
• • • • • • • • Loss of Reputation e.g. applies to actors etc Loss of Use of Money Reliance damage e..g put in money expecting to loss money to make money Diminished Value OR Reinstatement Costs for Defective Building Work? Net loss only recoverable Causation st nd Remoteness – 1 limb (flowed naturally) and 2 limb (defendant had knowledge) Duty to Mitigate – once a contract is breach - This means that the plaintiff must take reasonable steps to keep loss to a minimum and do nothing to inflate the loss. Contributory Negligence - Law Reform (Miscellaneous Provisions) Act 1965 (NSW) e.g. doctor patent Date for Assessment – damage assessed date of breach The ‘once and for all’ rule – asses damage and put the lump sim through Damages difficult to assess – still can put a claim through
Do not need to prove the elements in agreed damages clause • • • • • Agreed Damages Clauses, if amount specified to high will be a Penalty clause Accelerated Payment Clauses – if you’re late with payment need to pay whole sum straight away. Actions for Debt Recovery of Debt after Termination Exceptions to Exact Performance o Severable or Divisible Contracts e.g. contract for a year but paid weekly o De Minimus Non Curat Lex (the law is not concerned with small things) o Substantial Performance – don’t enough to be paid for the part you have done o Partial Performance or Implied Contract – paid in a pro rata way Obstruction Recovery of deposits Recovery of Debt Following Affirmation
Plaintiff can claim damages for mental suffering, anxiety, injured feelings, and disappointment – if physical hurt due to the defendants breach Plaintiff can recover damages for mental suffering when a plaintiff has sustained physical inconvenience due to the defendants breach Plaintiff can recover damages for distress, vexation (annoyance) and frustration where the very object of the contract has been to provide pleasure, relaxation or freedom from molestation. ***Civil Liability Act 2002 (NSW)***
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Common law remedy for contract breach is damages
Prohibitory Injunctions Injunctive Relief Mandatory Injunctions/ Specific Performance
The requirements for an award of injunctive relief: 1. Valuable consideration 2. Enforceable contract 3. Inadequacy of Damages 4. Breach of Contract 5. The defendant must be within the jurisdiction of the court
Elements: 1. Misrepresentation 2. 3. 4. Was a false statement (representation) made? – Silence not false/vitiating relationships Was the false statement one of fact? – is it puffery or fact/negotiations… Was the false statement addressed to the party misled? Statement is reasonbale... Was the false statement intended to induce entry into the contract, and did it so induce entry into the contract?
Type of Misrepresentation: Fraudulent – rescind contract Negligent - tort Innocent – only remedy rescission Remedies: Whether they chose to affirm or rescind the contract
In answering a question on misrepresentation you need to first assess whether a false representation was actually made – i.e. that it went beyond being a puff, that it was a false statement of fact, addressed to the party misled, and intended to induce entry into the contract. Then you need to assess what category of misrepresentation the statement falls into. This will then guide you to the appropriate remedy that applies to the case – e.g. damages in tort for fraudulent and negligent misrepresentation, and rescission of the contract. Remember that there are restrictions placed upon rescission of the contract, especially in the case of innocent misrepresentation where equitable damages are not available to supplement rescission in the case that precise restitutio in integrum cannot be achieved. We will explore this in depth in Week 10.
Section 29 to 37 Misleading & Deceptive Conduct *** make sure you look at statue The Australian Consumer Law Elements of section 18 1. 2. 3. Conduct In trade or commerce Misleading or likely to mislead
REMDEIES – SEE PAGE 36
This can be seen in the following summary of established principles in relation to establishing misleading or deceptive conduct: 1) Question of fact: it is a question of fact whether the conduct in question was misleading; 2) Positive conduct: most examples of misleading conduct in the context of contract negotiations take the form of express or implied representations which hare both factual and false; 3) Silence: although, generally, silence will not be misleading conduct, silence may be conduct in a broader range of cases than under the general law of misrepresentation; 4) Burden of proof: the burden is on the party alleging misleading conduct to prove both the conduct and the reliance; and 5) Reliance: if the conduct alleged to be misleading was a representation which by its nature was calculated to induce the representee to contract, and the representee entered into a contract, reliance will be inferred.
Duress to the person
Duress to goods
Elements of Duress On McHugh’s reasoning, we
Fundamental elements are 1. 2. 3. Pressure Inducing contract Illegitimacy of the pressure.
There may be other specific issues we can raise to assist us in identifying duress: 1. Pressure a. Threats of violence b. Death threats c. Threats of imprisonment i. These can be against the party or someone else d. Threats to detain goods owned by the party e. Threats to destroy or damage goods owned by the party f. Threats to breach contract with the other party 2. Inducing the party contract a. This may be the sole reason b. It may be one of several reasons c. It must be an operative reason d. If the threat is to breach a contract, the innocent party must not be able to follow a reasonable legal alternative such as court proceedings or arbitration 3. Illegitimacy of Pressure a. The pressure is illegal b. The pressure is unlawful c. The pressure amounts to unconscionable conduct d. The pressure is knowingly made without lawful claim.
There are three relevant categories: Undue Influence [someone you know/existing relationship] 3. 1. 2. Established class of relationships where undue influence is presumed to exist Relationship falling outside the established class, where claimant proves an actual relationship of dependance/servience/trust which would justify presuming the specific transaction was produced by undue influence. Relationships falling outside 1 and 2 where actual undue influence has to be positively proven to have produced or tainted the specific transaction.
Constitutional disadvantage – age, illness, poverty etc Situational disadvantage – emotional dependency, marriage etc It is sufficient to show that the stronger party need only be aware
Unconscionability [disadvantage in not understanding what is happening e.g. other person is aware person the person entering into the contract is disabled, drunk, old etc
Unconscionable Conduct Distinguished from Undue Influence Generally, in cases of unconscionable conduct (as opposed to undue influence), there exists no presumption against the transaction by reference to the relationship of the parties. The focus in unconscionable dealings is on the position of the parties, at the time they enter the contract, and whether one takes advantage or exploits the position of the other. It is not concerned with relationships of influence, although there can be some overlap between the two doctrines. Amadio, for example, would not have succeeded as a claim for undue influence (nor duress, for that matter). It is clearly a situation where one party has taken advantage of the special disadvantage of another. Deane J’s judgment in Amadio is helpful to examine to understand this distinction further.
An Equitable Remedy
Was there genuine consent to the transaction by both parties?
Contracts of Sale
Contracts of Guarantee
The Effect of Unconscionability - Where a contract is vitiated by unconscionable conduct, it is considered voidable at the election of the weaker party. At common law, the transaction is generally set aside and the parties are returned to their pre-contractual position Section 7 – confers jurisdiction on court - unjust “Unjust” is defined under s4(1) and public interest 9(1) other factors 9(2) – subject of negotiation - Whether independent advice was obtained by a party seeking relief;
There are three classes of prohibited unconscionable conduct under the ACL: 1) unconscionable conduct in connection with the supply of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption (ACL s 21, replacing Trade Practices Act 1974 (Cth), s 51AB); 2) conduct which is unconscionable within the meaning of the unwritten law, from time to time, of the states and territories (ACL s 20 – replacing TPA s 51AA). The common law principles explored in Amadio were encapsulated in s51AA of the TPA. The main difference here lies in remedies, as the ACL (and former TPA) provide greater flexibility in the range of remedies; and 3) unconscionable conduct in business transactions (ACL s 22 – replacing TPA s 51AC).
Unjust contracts under the Contracts Review Act 1980 (NSW) Legislation Unconscionable conduct as prohibited by Australian Consumer Law (ACL) and the unfair contract terms regime of the ACL.
Unconscionable under the unwritten law
Unconscionable conduct in business transactions
Unfair contract terms 1) 2) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and 3) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
***Contracts that are vitiated – you look at recession not termination If contract has been breached look at termination*** Rescission [Remedy for vitiating contracts]
Restitutio in Integrum
To rescind a contract means to set aside the contract and put the parties back to their original pre-contractual positions
Partial Rescission Usually a contract must be rescinded as a whole, but in some cases where substantial restitution in integrum is impossible a court can make a declaration for partial recession. Before proceedings commenced the contract could have been rescinded The rule of Seddon’s Case The rule is that rescission for innocent misrepresentation is not allowed where the contract has been executed on both sides. In this case ‘executed’ means that all obligations on both sides have been fully performed
The more the contract has been performed the more harder to sue in rescission
Third Party Rights The right to rescind will be lost if a third party has bona fide acquired for value an interest in the subject matter of the contract. This follows from two rules. First, the rule that the contract, though voidable, remains valid until it is rescinded. Thus title can pass from the purchaser to a third party up to the point of rescission. Second, rescission is only available where restitution in integrum is at least substantially possible. If title has passed, the purchaser cannot return the property, so restitution is not possible.
*** prevents rescission*** Election Once you affirm – binding you cannot rescind it
Misleading and deceptive conduct STATUTORY REMEDIES
Damages, other orders and injunctions (preventing)
Australian Consumer Law
Unconscionability and unfair terms *go to common law first*
A contract that is not illegal may be void or unenforceable
Impliedly prohibited by statute Check how legislation drafted Contracts affected but not prohibited by statute
General rules A contract is illegal or prohibited by:
A rule of public policy
Restraint of trade
The effect of Illegality
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