1.

Alcatel Australia Ltd v Scarcella (duty of good faith)

Fact: The rental lease stipulated that Alcatel should pay for any work on the building required
17. Campomar Sociedad Ltd v Nike International Ltd (misleading conduct)
Fact: The word ‘Nike’ was registered as a trade mark both by Campomar
by order of the local government authority. Scarcella asked the local authority to inspect the manufacturing perfumes and by Nike manufacturing sportswear. Compomar’s
building and it ordered that the stairwell be insulated. Alcatel refuse to pay costs of complying perfume called ‘Nike Sport Fragrance’ was displayed next to perfumes manufactured
this order because Scarcella had caused the local authority to impose unreasonable safety by Adidas.
requirements Decision: Placing the perfume in the same area of pharmacies with other sports
Decision: A duty of good faith may be implied by law to prevent a contractual power being fragrance was likely to mislead or deceive the ordinary or reasonable member in the
exercised in a capricious or arbitrary manner or for an extraneous purpose. However, seeking classes of prospective purchaser in to thinking that it was in some way promoted by
a fire safety inspection was a reasonable exercise and there was no breach of duty. Nike.
2. Allcard v Skinner (undue influence) 18. Carlill v Carbolic Smoke Ball Co (consideration; offer and acceptance)
Fact: 5 years after Allcard left the religious order, she wanted to get back the property she Facts: Carbolic Smoke Ball Co published an ad in a newspaper, offering to pay a
gave away when she joined the order. She claimed that she gave away the property as a result reward of 100 to anyone purchased and used the smoke balls but who never
of undue influence. caught influenza. The company deposited 1000 in a bank account to pay the
Decision: By failing to avoid the transaction within a reasonable time, Allcard had affirmed the rewards. Elizabeth Carlill bought and used a smoke ball and didn’t catch the
transaction after to be under that influence and could not recover her property. influenza. When she wanted to claim the reward, the company refused to pay her.
3. Associated Newspapers Ltd v Bancks (conditions and warranties) Decision: The promise was intended to be legally bound because the fact stated that
Fact: Associated Newspapers agreed to publish Bancks’ drawing on the front page of the 1000 had been deposited the company expressly for the purpose of making the
newspaper’s comic section. Bancks decided to terminate the contract because his drawing promised payments. An offer made to ‘the world at large’ is capable of acceptance
appeared on page 3. by any member of the public who learns it. Carlill had accepted the company’s offer
Decision: The term was a condition and Bancks was justified in terminating further by doing the acts of buying and using the smoke ball. This is an executed
performance of the contract. consideration. It makes the promise to pay the reward enforceable.
4. Australian Knitting Mills Ltd v Grant (implied condition requiring delivery of goods of 19. Causer v Browne (unsuccessful attempt to include express terms)
merchantable quality) Fact: The statement on the docket that excluded Browne’s liability was not
Facts: After wearing Australian Knitting Mills Ltd’s underwear, Grant developed an itchy rash specifically drawn to Causer’s attention. Causer claimed damages from Browne to
because of the sulphur in the wool. Grant claimed goods sold were not of merchantable compensate for the ruined dress. Browne would normally be liable for damage
quality. caused to the goods.
Decision: The same underwear was being sold in the market to people who were not affected Decision: The statement hadn’t become a term of the contract. It was reasonable for
by the sulphur. Despite the ‘defect’, the good were merchantable as underwear. Causer to assume that the document was only an identifying docket and it couldn’t
5. ANZ Bank Ltd v Ateliers de Constructions Electriques de Charleroi (ACEC) (implied be inferred that Causer was agreeing to exempt Browne from liability for negligence.
authority) 20. Cehave NV v Bremer Handelsgesells chaft mbH (innominate terms)
Fact: ACEC had no bank account in Australia, Helios (the agent) paid the cheque into its own Fact: Bremer shipped pellets that were not in good condition as required but were
account with ANZ and forwarded payment to ACEC, who received it without objection. Not all still good enough to use for Cehave’s intention. Cehave wanted to reject the pellets.
of the money received was forwarded to ACEC before Helios went into liquidation. Decision: Although it was a breach of contract, the breach didn’t deprive the non-
Decision: Although Helios had no express authority, they were authorzed to do so could be defaulting party of the benefit for which they entered the contract. Cehave would
implied from the necessity to make the contract commercially workable. ANZ is not liable to only have a claim for damages.
refund the amounts that had not yet been forwarded to ACEC. 21. Codelfa Construction Pty Ltd v State Rail Authority of NSW (terms implied ad
6. Baldry v Marshall (sale by trade name) hoc; frustration)
Fact: Marshall asked Baldry for information about ‘the eight cylinder Bugatti’ and said his Fact: Both parties believed the construction could continue 24 hours a day when
purpose then bought the car. When the car delivered, Marshall claimed that it was not contracting. Local residents managed to obtain an injunction placing limits on
suitable for his purpose, Baldry argued that the car had been bought under its trade name. Codelfa’s working hours because of noise. Codelfa claimed extra payment because
Decision: The mere fact that goods are described by trade name does not necessarily exclude they have to do the work more slowly and cost extra money.
the implied term regarding suitability of purpose. The buyer had relied on the seller to supply Decision: The term that obliging the State Rail Authority to pay Codelfa for extra
suitable goods regardless of the use of the trade name to describe it. costs associated with limited construction hours was not implied into the contract
7. Balfour v Balfour (intention to be legally bound) because it couldn’t be inferred that they intended to include such a term since they
Fact: Mr Balfour promised to pay Ms Balfour each month during the time she stayed in believed nothing could prevent the construction from continuing 24 hours a day
hospital in England. Later they get divorced. when contracting. The court held that performance as originally agreed had become
Decision: Ms Balfour can’t enforce the payment of the promised maintenance because the frustrated because of the unforeseen injunction. Codelfa was not obliged to do the
parties didn’t intend to be legally bound. work for payment as originally agreed and it was open to the parties to negotiate a
8. Baltic Shipping Company v Dillon (distress and disappointment) new agreement.
Fact: Dillon sued Baltic Shipping to compensate for her disappointment and distress when the 22. Cohen v Cohen (intention to be legally bound)
ship sunk during her cruise holiday. Fact: In 1918, Mr Cohen promised to pay Ms Cohen 100 per year as dress
Decision: The damages should be awarded because the defaulting party has expressly or allowance. When they get divorced, Ms Cohen claimed Mr Cohen owned her 278
impliedly agreed to provide pleasure, relaxation and entertainment, or to prevent molestation of unpaid promised dress allowance.
or vexation. Decision: Ms Cohen can’t enforce the payment of the promised maintenance
9. Barton v Armstrong (duress) because the parties didn’t intend to be legally bound.
Fact: Barton tried to avoid the contract of purchasing shares in a company from Armstrong 23. Commercial Bank of Australia Ltd v Amadio (unconscionable dealing)
saying that Armstrong had threatened the life and safety of himself and his family. The court Fact: The Commercial Bank of Australia agreed to give Amadio an overdraft of
found that Barton was threated but also had business reasons for buying the shares. $270,000 if his parents would guarantee his debts by mortgaging their property. His
Decision: The court found that even though there were other reasons for agreeing to buy the parent believed facts that was untrue. The bank manager didn’t explain the
shares, Armstrong had been unable to show that his threats had not contributed to Barton’s document and check whether his parent fully understood their risk and liability. The
decision. This was sufficient for the contract to be set aside as void. bank sought to enforce the mortgage when Amadio’s company became insolvent.
10. Bertram, Armstrong & Co v Godfray (duty to follow instructions) Decision: Amadio’s parents were in a position of special disadvantage. The bank
Fact: Godfray instructed Bertram, Armstrong & Co, who were mercantile agents, to sell the knew enough about these circumstances and should have taken steps to ensure they
stock when its market price reached 85% or above that price. Bertram, Armstrong & Co didn’t understand the risk before entering into the agreement. The mortgage should be set
sell immediately when the price of the stock reached 85%, because they expected the price aside.
rise further. Unfortunately, the price dropped again and stayed low. Godfray sued to recover 24. Concrete Constructions (NSW) Pty Ltd v Nelson (meaning of “in trade or
the consequent loss. commerce”)
Decision: The instruction given by Godfray was specific, and that accordingly the agent had no Fact: Nelson fell down the shaft and was injured because of the wrong information
discretion to wait for a higher price so they are liable for the loss caused by their failure to do provided by the foreman of the Concrete Construction. Nelson argued that the
so. company had engaged in misleading conduct in trade or commerce and wished to
11. Bettini v Gye (conditions and warranties) claim damages.
Fact: A term of the contract (Bettini sing at various events over 15 weeks) is that Bettini arrive Decision: It was not part of the company’s commercial or trading activities. It was
6 days before the first engagement and attend rehearsals. Bettini arrived late and missed 4 only something incidental to those activities. Accordingly, the conduct didn’t take
days of rehearsals. Gye wanted to terminated the contract because of this breach. place ‘in trade or commerce’
Decision: Bettini had been engaged to sing over a long period. The term of attending 25. Connor v Stainton (substantial performance)
rehearsals was a warranty, not a condition, and Gye was not entitled to the contract in Fact: Connor contracted with Stainton to erect fence with posts 12 feet apart. When
response to Bettini’s breach. the fence was erected, they were up to 18 feet apart. Stainton claimed by adding
12. BP Refinery Pty Ltd v Hastings Shire Council (terms implied ad hoc) ‘droppers’ between posts, the fence would be as effective as if they were 12 feet
Fact: The Shire of Hasting charged BP Refinery at a lower than normal municipal rate on the apart. Connor refuse to pay.
refinery site. BP Refinery restructured and transferred the site to a subsidiary called BP Decision: It is not sufficient to do something that is materially different, even if it can
Australia. The Shire of Hasting charged BP Australia the full municipal rates on the site. be argued that what was done is just as goods what was promised. Stainton had not
Decision: The term that the preferential rating agreement would be payable only while BP substantially performed the contract and was not entitled to claim the payment.
Refinery itself occupied the refinery site wasn’t implied ad hoc into the contract. The 26. Coulls v Bagot’s Executor & Trustee Co Ltd (privity)
suggested term wasn’t needed to give business efficacy to the contract; nor was it fair and Fact: Mr Coulls gave O’Neil the right to dig up and remove stone from his property.
equitable; nor could it be inferred from the circumstances that the parties obviously intended O’Neil pay the royalities to Mrs Coulls. After Mr Coulls died, the executor of Mr
to include any such term. Coulls’s estate wondered if Mrs Coulls had a contractual right to receive royalties.
13. Brinkibon Ltd v Stahag Stahl und Stahlwarendelsgesellschaft mbH (acceptance by telex) Decision: O’Neil owed no contractual obligations to Mrs Coulls because she was not
Fact: One telex sent by Brinkibon (London) to Stahag (Vienna), constituted the acceptance of a party to the contract. The royalties should be paid to Mr Coulls’s estate and
an offer from Stahag. distributed to his beneficiaries.
Decision: The contract was made in Vienna because the acceptance took effect when received 27. Donoghue v Stevenson (manufacturer’s duty to consumer)
by Stahag. Fact: Donoghue consumed a ginger beer contained a decomposed snail. Although
14. Buckenara v Hawthorn Football Club Ltd (injunction to prevent threatened breach) she didn’t purchase it but she was the consumer of that food. Donoghue sued
Fact: Buckenara contracted to play for the Hawthorn and not to play for competing club while Stevenson for damages.
contracted. Hawthorn sought an injunction when it seemed that Buckenara intended to play Decision: Stevenson owed Donoghue a duty of care.
for a competing club. 28. Dougan v Ley (orders of specific performance)
Decision: The court issued an injunction because preventing Buckenara from playing for Fact: Dougan sold a taxi cab and its operating license to Ley but later Dougan
competing clubs would not indirectly force him to actually play football for Hawthorn. changed his mind and refused to perform the contract.
15. Burger King Corp v Hungry Jack’s Pty Ltd (duty of good faith) Decision: Taxi licenses were not readily available on the market so Ley was entitled
Fact: Hungry Jack’s (HJ) was an Australian franchisee of Burger King Corp (BK). BK decided to to an order of specific performance.
force HJ to sell out of its franchising rights by making it impossible for HJ to perform its 29. Ermogenous v Greek Orthodox Community of SA Inc (intention to be legally
franchise obligations (e.g. disapproval of new sub-franchise outlets). bound)
Decision: A duty of good faith was implied by law into this contract and had been breached by Fact: Ermogenous accepted the Greek Orthodox Community of SA’s offer and came
the refusal to approve the sub-franchise outlet. to Australia where he served as archbishop for 23 years. He was paid a salary. At the
16. Butcher v Lachlan Elder Reality Pty Ltd (misleading conduct) end of his appointment, the Community refuse to pay him for the accumulated leave
Fact: Lachlan Elder (agent) published a brochure with a statement in small print said all that Ermogenous would have under a binding contract of employment.
information cannot be guaranteed its accuracy. Butcher purchase the property based on the Decision: The agreement was intended to be legally binding and Ermogenous was
information on the brochure and didn’t check it. He wanted to avoid the contract when he entitled to payment for accumulated leave.
found the inaccurate diagram seriously affected how he could develop the property. 30. Esso Petroleum Co Ltd v Commissioners of Customs and Excise (commercial
Decision: The disclaimer was printed in small writing but it was clear and legible so the court agreements)
held that Lachlan Elder had not engaged in conduct that amounted to a breach. Fact: Esso Petroleum produced a set of commemorative coins and promised to
motorists a ‘free’ coin with every 4 gallons of Esso petrol purchased. The
Commissioners of Customs and Excise argued that the ‘free’ coin were ‘produced in
quantity for general sale’ and were subject to a purchase tax.
Decision: The offer of coin was a commercial promotion as a gift to its customers. It
was a promise made with an intention to be legally bound in commercial
circumstances, so it was subjected to a purchase tax.


31. Expo Aluminium (NSW) Pty Ltd v Pateman Pty Ltd (duty to deliver goods
suitable for buyer’s purpose)
46. Holland v Wiltshire (late performance, termination of performance)
Fact: The payment should be made on Jan. Although Wiltshire agreed to and
Facts: Expo Aluminium ordered window frames from WR Patemean and told the extended DDL, Holland failed to meet the extension and informed Wiltshire he
manufacturer that the house would be fully exposed to strong winds and rain. When didn’t intend to procced. Wiltshire would commence legal action if Holland did not
the windows were installed, they were found to leak. settle by March 28th.
Decision: The buyer had sufficiently indicated the purpose for the goods required. An Decision: First breach: Holland failed to perform at the agreed time. Wiltshire was
implied term in the contract is that the goods would be suitable for the buyer’s entitled to terminate the contract. Second breach: Holland would not procced
purpose. This implied term had been breached by supplying windows that leaked. with the sale. Wiltshire was entitled to claim damages the difference between the
32. Finch Motors Ltd v Quin (hidden defects) lower price on resale and the original contract price. Wiltshire had kept the
Fact: Quin bought a car that she wanted to use to tow a boat. She took the car after contract alive for a short time after Holland’s repudiation, but made it clear that
inspection and lately she discovered that a defective radiator had caused the car to any further failure would result in an action for breach. The eventual decision to
overheat when towing the boat. She stopped payment and returned the car. treat the contract as terminated was communicated sufficiently. The contract had
Decision: The defect was a serious one that made the car unsuitable for towing. The been effectively terminated.
defect was hidden and was not discoverable merely by looking or driving it without 47. Imbree v McNeilly; McNeilly v Imbree (determining the standard of care;
towing so Quin was entitled to reject the car. contributory negligence)
33. Fitzgerald v FJ Leonhardt Pty Ltd (illegal contracts) Fact: Imbree, a licensed adult driver, allowed McNeilly, a minor without license, to
Fact: Fitzgerald was supposed to obtain the permit of drilling any borehole before drive a wagon. While driving, McNeilly swerved to avoid the debris on the road
Leonhardt began his work, but failed to do so. When Leonhardt finished his work, and lost control of the car. Imbree was left paralyzed in the accident and sued
Fitzgerald refused to pay, arguing that the contract was performed illegally. McNeilly in Negiligence.
Decision: The contract was enforceable despite the lack of permits because although Decision: The standard of care was properly determined by reference to an
the Water Act penalized such conduct, it did not prohibit it. ordinary licensed driver even though in this case McNeilly was unlicensed.
34. Freeman & Lockyer v Buckhurst Park Properties (Mangal) (apparent authority) Imbree’s failure to warn McNeilly and instruct him constituted contributory
Fact: Kapoor was not appointed but took it upon himself to carry out managerial acts negligence so responsibility for the harm was apportioned between both parties.
and employed Freeman & Lockyer to work for the company. When Freeman & 48. JC Williamson Ltd v Lukey & Mulholland (specific performance)
Lockyer claimed payment, a dispute arose over whether Kapoor had the authority to Fact: Williamson leased the confectionery shop next door to the theater to Luckey
engage Freeman & Lockyer on behalf of the company. for 5 years and granted Luckey an exclusive right to sell sweets in the theatre
Decision: The court held that Kapoor had no actual authority to bind the company itself. After 3 years, Williamson allowed another person to sell sweets in the
but he had apparent authority. The company should not be allowed to deny liability theatre.
to third persons who dealt in good faith with Kapoor while relying on his apparent Decision: The exclusive right to sell sweets in the theatre involved repeated acts
authority to act as an agent of the company. by both parties and this would have requited constant supervision. Therefore,
35. Garcia v National Australia Bank Ltd (unconscionable dealing) specific performance was refused and Lukey had to be satisfied with a claim for
Fact: Garcia asked his wife to provide the security by executing a mortgage and damages for breach of contract.
assured that there was no real risk. The bank didn’t explain the transaction or he 49. Johnson v Buttress (undue influence)
liability. Ms Garcia appeared as ‘a capable and presentable professional’. The bank Fact: Buttress was an elderly man and very dependent on the help of others.
wished to enforce the mortgage when Garcia’s business failed. Buttress began to rely on Johnson and Johnson took him to her own solicitor to let
Decision: The relationship between spouses is one of trust and confidence. If a Buttress make a will in her favor and transferred ownership of his house to her as
spouse giving a guarantee didn’t understand its effect and gained no financial benefit a gift.
and the creditor failed to ensure the transaction had been properly explained and Decision: A relationship of confidence and trust existed sufficient to establish a
understood, then the transaction will be set aside as void. presumption of a general controlling influence. The visit to the lawyer didn’t
36. Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (unconscionable constitute independent legal advice to Buttress because it was Johnson’s lawyer
conduct) that they had visited. The transfer was voidable because of undue influence.
Fact: Garry Rogers Motors (GRM) was appointed under a franchise agreement with 50. Keighley, Maxsted & Co v Durant (undisclosed principal)
Subaru as an authorized dealer. Subaru decided to terminate GRM’s appointment Fact: Keighley, Maxsted & Co authorized Roberts to buy wheat. Roberts purchased
when GRM indicated an unwillingness to comply with new requirements imposed by wheat at a higher price in his own name from Durant. Later, Roberts said that he
Subaru. Subaru refused to change its mind even if GRM agreed. intended to purchase for the company that assented the acquisition. But Durant
Decision: Failure to comply with an industry code of conduct is a factor which may was not paid and he sued the company for the price.
indicate unconscionable conduct. Despite the reasons for termination not being put Decision: Keighley, Maxsted & Co couldn’t ratify the contract because an
into writing, they were well known to the parties. This was insufficient in the undisclosed principal is a stranger to the contract that is created, they cannot
circumstances to amount to unconscionable conduct by Subaru. become a party by subsequent ratification.
37. Government of Newfoundland v The Newfoundland Railway Co (divisible 51. Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (the right to
contracts) terminate performance)
Fact: The government would grant the company 25,000 acres of land on the Fact: The joint venture agreement required Sanpine to keep proper books of
completion of each 5-mile section of railway. The project end after just 7 sections. account etc. Sanpine failed to do so.
Decision: The company was entitled to the grants of land for each of the 7 Decision: Termination of the joint venture was justified because Sanpine’s
completed sections because it was clear that the grants of land were dependent only breaches went to the root of the contract and deprived the Council of a
on the completion of each 5-mile section of the railway not the entire railway. substantial part of the benefit of the contract.
38. Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (mistake) 52. Koufos v C Czarnikow Ltd (damages)
Fact: Tsavliris contracted with the owners of the Great because he and its owners Fact: The ship made some unauthorized deviations from its route so it takes 10
think it was the closest available ship. Then Tsavliris discovered it was further away more days to deliver the sugar. in the10 days, the price of sugar dropped
so he tried to cancel the contract. significantly.
Decision: Great Peace was close enough to perform the task it was engaged to do Decision: Damages could be claimed to compensate for the direct loss caused by
even if it was further than expected. The contract wasn’t void in common law or the drop in price. The loss was foreseeable as a loss flowing in the usual course of
voidable in equity despite the error. events from the breach.
39. Hadley v Baxendale (consequential loss) 53. Leaf v International Galleries (common mistake)
Fact: Baxendale carelessly delayed the delivery of shaft which caused Hadley’s mill Fact: When buying the painting, both Leaf and the seller believed the painting was
stood idle. Hadley claimed damages for the loss of profits caused by the delay. the work of famous artist John Constable. Leaf wanted the sale made void when
Decision: The loss of profits was not direct loss because it would be expected that a he discovered the mistake.
mill would have a spare shaft. The lost profits could not be claimed as consequential Decision: There was no objective evidence that the agreement had been for ‘a
loss because B hadn’t been told that the mill would remain completely out of painting by John Constable’. The error as to the artist was irrelevant and the
operation. contract was binding despite the common error. The mistake didn’t justify setting
40. Handbury v Nolan (representations and terms) the contract aside as void.
Fact: The auctioneer announced the cow was pregnant and the buyer bid $3200. 54. L’Estrange v F Graucob Ltd (assent to express terms in signed document)
However, the cow was infertile. Fact: L’Estrange signed the document which included a clause that expressly
Decision: The auctioneer’s statement was an express term of the contract. If the excluded any implied warranties or conditions from the agreement without
statement was made, higher prices would be paid. The statement was made just reading it. L’Estrange alleged breach of an implied condition that the machine
before bids were invited. So the statement was intended to be a legally binding would be reasonably fit for the purpose for which it was bought.
promise. Decision: L’Estrange was bound by the terms of the document she had signed.
41. Hawkins v Clayton (liability of professionals) When a person signs what is clearly a contractual document and haven’t been
Fact: Clayton prepared a will for Mrs Brasier to named Hawkins as principlal induced to do so by any fraud or misrepresentation, they cannot late say they
beneficiary of her estate. Clayton knew of Mrs Brasier’s death but didn’t contact didn’t agree to be bound by the terms of that document.
Hawkins until 6 years later. By that time, the house was worth much less than it had 55. LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (A/asia) Ltd (sale by
been. sample)
Decision: Clayton was liable in Negligence because he failed in his duty to inform Fact: Thorne was given a sample of oil to test. Borthwick sent a document which
Hawkins without delay. Hawkins was entitled to recover damages to compensate for set out quite detailed particulars about the oil but made no mention of the
his economic loss. sample. Thorne found the old did not have the same qualities as the sample he
42. Henthorn v Fraser (acceptance by post) had tested.
Fact: Henthorn accepted Henthorn’s offer by post. After the letter had been posted, Decision: It was not a term of the contract that the sale was ‘by sample’ because
but before it was received by Fraser, Fraser attempted to withdraw his offer to the written contract contained no reference to a sample and it is a complete and
Henthorn. workable agreement.
Decision: Acceptance of the offer was effective as soon as the letter of acceptance 56. Lindner v Murdock’s Garage (restraint of trade)
was posted, and this took place before Fraser’s attempt to withdraw so Fraser can’t Fact: Lindner’s employment contract contained terms that would restrain Lindner
withdraw the offer. from working in two towns for a year after leaving Murdock’s employment.
43. Hochster v De la Tour (anticipatory breach) Murdock wanted to enforce the restraint when Lindner stopped working.
Fact: De la Tour engaged Hochster as a courier. 3 weeks before that the day Decision: The restraint clause in this contract extended to two towns, whereas
commencing work, De la Tour informed Hochster that he no longer required a Lindner had been employed only in one. He was unlikely to have contact with
courier. customers in the other. The extent of the restraint was therefore unreasonable
Decision: There had been an anticipatory breach of contract and the non-defaulting and unenforceable.
party is entitled to accept this repudiation of the contract and sue immediately for 57. Lintrose Nominees Pty Ltd and Others v King (conflict of interest)
damages on grounds of anticipatory breach. Fact: Lintrose entered into an arrangement with John Hopkins & Co, requiring it to
44. Hoening v Isaacs (substantial performance) find a buyer for the strata title units. King appointed JH as his agent for investment
Fact: Hoening contracted to paint Isaacs’s apartment, and supply some furniture, for advice. Without disclosing that it was also acting for Lintrose Nominees, JH advised
750. The work had been badly done and it cost 55 to rectify the defects. Isaacs king to purchase Lintrose units.
paid only 400. Hoeing sued Isaacs for the balance of the agreed price. Decision: King was entitled to avoid the contract because JH had breached the
Decision: Hoening had performed substantially. The failure will be treated as a duty to avoid an undisclosed conflict of interest.
breach of a warranty. Isaacs was not obliged to pay the full price, but was only 58. Lumley v Wagner (injunctions)
entitled to 55. Fact: Wagner contracted to sing in Lumley’s theatre for a fixed period and
45. Hole v Hocking (liability for physical harm caused) wouldn’t perform elsewhere. After a breach by Wagner, Lumley wished to enforce
Fact: The plaintiff suffered a brain haemorrhage in an accident caused by the both of these promises through an order of specific performance.
defendant. The medical evidence suggested that the haemorrhage was going to Decision: Actual performance of this promise wouldn’t be ordered because it is
occur at some point anyway. difficult to ensure that the performance of such promises will be properly carried
Decision: The driver couldn’t be held responsible for sth. that would have occurred out in the absence of genuine goodwill. The court would issue and injunction to
even without his negligent. The plaintiff was entitled to damages which the stop Wagner singing elsewhere because she was able to make a living in other
haemorrhage was accelerated. ways than singing in Lumley’s theatre.
59. Maritime National Fish Ltd v Ocean Trawlers Ltd (frustration)
Fact: Maritime National chartered a trawler from Ocean Trawlers. Maritime
National allocated licenses to their other boats and asked Ocean Trawlers to take
back the trawler, claiming the contract had been frustrated by the lack of license.


Decision: Maritime National was not entitled to rely on frustration that they had
deliberately brought about.
75. Shaddock & Associates Pty Ltd v Parramatta City Council (liability for
misstatement causing purely economic harm)
60. Masters v Cameron (conditional intention) Fact: Shaddock bought the land based on the information given on the phone and
Fact: One of the provisions is “The agreement is made subjected to the preparation in the certificate that there was no road widening proposal. Shaddock suffered
of a formal contract of sale which shall be acceptable to Cameron’s solicitors”. financial loss relying on the wrong information.
Decision: It was clear that Cameron had intended not to be bound until a formal Decision: No duty of care arose from advice given over the telephone because that
contract was prepared and signed. advice was essentially informal. A duty of care arose from the advice given in the
61. McRae v Commonwealth Disposals Commission (damages for wasted written certificate and the council was liable.
expenses) 76. Radford v de Froberville (objective of damages)
Fact: McRae bid 285 for an oil tanker lying wrecked on a reef and spent Fact: Radford sold one of two adjacent blocks of land to de Froberville on the
considerable sum of money searching for it, but it turned out that they didn’t exist. condition that she build an expensive brick wall on the boundary. She failed to
McRae claimed damages include the price paid and expenses wasted searching for build the wall and resold it to a third party. Radford claimed the cost of actually
it. constructing the wall. Froberville argued only the reduction in the value of the
Decision: McRae had a right to claim these as damages unless the commission property without the wall which is less than the cost of building the wall is
could prove that the expense would have been wasted even if the contract hadn’t entitled.
been breached. Decision: Radford was entitled to claim the damages equal to the cost of actually
62. McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd construction the wall. The objective of an award of damages is to put the non-
(misleading conduct) defaulting party in the position he would have occupied had the breach of contract
Fact: McWilliam’s Wine and McDonal’s both marketed their product under the not occurred.
name ‘Big Mac’. McDonalds claimed that McWilliams’ use of the name was 77. Raffles v Wichelhaus (mutual mistake)
misleading conduct. Fact: The cotton that Wichelhaus bought would be put on board the ship Peerless.
Decision: The ad didn’t suggest a connection between McWilliams and McDonalds. There were two ships called Peerless. When contracting, Raffles had one of these
McWilliams’ conduct was not likely to be the cause of any confusion that might ships in mind, Wichelhaus the other.
arise in the minds of consumers so there was no misleading conduct by Decision: No binding contract existed because there is no objective agreement due
McWilliams. to mutual mistake. The contract will be void.
63. Merritt v Merritt (intention to be legally bound) 78. Rogers v Whitaker (breach of duty of care; relevance of defendant’s specialist
Fact: Mr and Ms Merritt borrowed money from a bank to build a house and repay skills)
the loan together. After getting divorced, Ms M agreed to finish paying off the loan Fact: Rogers, an eye surgeon advised Whitaker that an operation on her blind eye
and Mr M promised to transfer the house to Ms M’s sole ownership and signed a would probably restore significant sight without warning her of any risks. The
letter. operation failed and led to blindness in her other eye. This condition was rare and
Decision: Ms Merritt can enforce the transaction because the goodwill between not always so catastrophic in effect.
married person has broken down. The agreement was intended to be legally Decision: As a specialist ophthalmic surgeon, the defendant’s duty of care required
enforceable. him to warn his patient of the possible risks involved. So Rogers breached the duty
64. Moorhead v Brennan (terms implied ad hoc) of care that he owed his patient.
Fact: Brennan had the exclusive right to produce and sell Moorhead's book, to 79. Steele v Tardiani (acceptance of partial performance)
license other publisher to do so and wrote an introduction to the book. The Fact: The payment would be made at the rate of 6 shillings per ton of wood cut
Women’s Press offered to publish Moorhead’s book under license, but without and split 6 inches in diameter. Tardiani cut 1500 tons of timber but split it into
Brennan’s introduction. Brennan refused to allow the book to be published so the pieces ranging from 6 to 15 inches in diameter.
Women’s Press withdrew their offer and Moorhead lost the opportunity to earn Decision: The contract was partly performed. Steele had allowed Tardiani to finish
royalties. working without requiring him to split the thicker logs properly. The court decided
Decision: The term was implied into the contract ad hoc that Brennan would not that Steele did not choose to reject the work done. Having accepted it, he had to
obstruct opportunities for Moorhead to receive royalties from persons publishing pay for the value of the work.
the book under license. Moorhead was therefore justified in terminating her 80. Stilk v Myrick (insufficiency of past consideration)
contract with Brennan. Fact: The captain made a promise to the remaining crew that they would share the
65. Musumeci v Winadell Ltd (practical benefit as consideration) deserter’s pay if they worked extra hard to get the ship safely back home. When
Fact: Winadell leased a shop to Musumeci and another shop to a competing the ship was back, the owner refused to pay.
retailer and Musumeci’s business declined. Winadell agreed to reduce Musumeci’s Decision: The crew had given nothing of value in exchange for the captain’s
rent but lately refused the rental. promise. They just gave past consideration, so no binding contract for extra
Decision: The promise was legally binding because it was supported by payment was created.
consideration. The consideration obtained by Winadell was the practical benefit of 81. Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (claim for damages)
keeping Musumeci as a tenant. Fact: A term of the lease was that Tabcorp Holdings would not make any
66. North Ocean Shipping Ltd v Hyundai Construction Ltd (duress) substantial alteration or addition to the building without obtaining Bowen
Fact: Hyundai said they would not build the ship unless North Ocean Shipping Investment (Bowen)’s written consent. Without obtaining the landlord’s consent,
(NOS) agreed to a 10% increase in the contract price. NOS urgently needed the the tenant demolished the foyer and rebuilt it. The landlord sued for the cost of
tanker therefore agreed to pay the additional sum. Hyundai created a new contract restoring the foyer to its previous state. The trial judge held only the difference
for the increased price. between the old and new value of building could be awarded.
Decision: NOS had agreed to pay the higher price because of unlawful threats of Decision: Damages may be claimed to put the party in the same actual position
economic harm and this amounted to duress. The contract was voidable. not financial position as if the contract had been performed. The appropriate
67. Oscar Chess Ltd v Williams (terms and representations) measure of damages was the cost of restoring the foyer to its previous state.
Fact: Williams believed his motor car was a 1948 model. The documents that 82. Taylor v Johnson (unilateral mistake)
Williams showed to the car dealer contained a statement that the car was a 1948 Fact: Johnson sold the land at $15,000 for the whole 10 acres not $15,000 per acre
model. In fact, it was a 1939 model. The dealer claimed the statement regarding by mistake. Taylor knew that the price was too good to be true but still accept the
the age of the car a promise and was intended to be contractually binding. offer.
Decision: The statement was a mere representation rather than a contractually Decision: Unilateral mistake does not make a contract void. The contract will be
binding promise. Because it couldn’t be inferred that the parties intended made void if the other party was aware that the first party is mistaken and
Williams’s statement to be a binding promise. deliberately sets out to ensure that the first party does not discover their error
68. Partridge v Crittenden (ads not an offer) until it is too late.
Fact: Partridge put an ad in a magazine to sell cocks and hens at $25 each. He was 83. Thomas v Thomas (token consideration sufficient)
prosecuted by the RSPCA for the statutory offence of unlawfully ‘offering’ wild Fact: After Mr Thomas’s death, his executor took account of Mr Thomas wish and
birds for sale. entered into a lease agreement with Ms Thomas, allowing her to occupy the house
Decision: The ad was only an invitation to enter into negotiations with interested in return for her promise to pay 1 a year and keep the house in good repair.
buyers who might offer to buy the advertised birds. Decision: Sufficient consideration had been provided so Ms Thomas was entitled
69. Perre v Apand Pty Ltd (duty of care) to enforce the agreement. Consideration is enough that it be of some value and is
Fact: Sparnon acquire seed potatoes from Apand who knew they were prone to not necessary to be of equivalent value.
disease. Sparnon’s potato crop was affected by the disease which caused Perre 84. Van den Esschert v Chappell (proving orally agreed terms of partly written
suffered purely econimoic loss because he can’t export his crop to buyers in and partly oral contracts)
Western Australia as he normally did even his crop was not affected by the disease. Fact: Van den Esschert’s assurance that the house was free from infestation by
Decision: Apand was held to own a duty of care to Perre because Perre belonged white ants was not included in the written contract of sale that Chappell signed.
to a limited class of identifiable person who might suffer harm. Perre was Chappell sued Van den Esschert for breach of contract when the house is infested
extremely vulnerable and was dependant on Apand acting responsibly and Apand with white ants.
can foresee the potential harm. Decision: The contract was partly written and partly oral. The parol evidence rule
70. Perri v Coolangatta Investments Pty Ltd (reasonable time for fulfilment of don’t exclude evidence of additional orally agreed terms.
condition) 85. Varley v Whipp (duty to deliver goods as identified)
Fact: Perri agreed to buy a property in Cronulla from Coolangatta Investments (CI) Fact: Varley offered to sell a second-hand reaping machine which was a year old
if he first sold his property. In July, CI asked Perri to complete the purchase before and had only been used to cut a few crops to Whipp for 21. When delivered, the
8/8. When Perri failed to do so, CI terminated performance of the contract. Perri machine was very old and had been broken and mended. Whipp returned it and
said he still wanted to complete the purchase even though his property wasn’t sold refuse to pay.
yet. Decision: The thing sold was a specific machine. The seller failed to deliver the
Decision: Performance had been validly terminated by CI because Perri had failed particular goods as identified in the contract. Whipp was entitled to reject the
to sell his property within a reasonable time, thereby unduly delaying the machine and was not obliged to pay.
completion of the Cronulla sale. 86. Waverley Council v Ferreira (the standard of care)
71. Phillips v Ellinson Brothers Pty Ltd (divisible contracts) Fact: Martin Ferreira fell of the roof of the community center which is controlled
Fact: Philip was obliged to spend 160 hours each month working for Ellinson by Waverley Council. Martin died and his father suffered depression and chronic
Brothers. Later, Phillips reduced his work to 60 hours per month. This was done by stress disorder. The council ought to have foreseen that a parent might suffer
informal arrangement between the parties, but the original contract was not mental harm if a child died because of the council’s failure to make the park safe.
varied. At the end of the period, Phillips claimed the agreed payment on the Decision: A defendant must do what a reasonable person in the position of the
original contract. defendant would do to prevent foreseeable harm. The council had failed to do
Decision: The court treat the agreement as an indivisible contract. Phillips’s failure what was required.
to work these agreed hours for the whole period meant that he had not performed 87. Woolcock Street Investment Pty Ltd v CDG Pty Ltd (duty of care)
his obligations so he was not entitled to claim payment by enforcing the contract. Fact: The owner of the land decided against doing soil test suggest by CDG, a firm
72. Placer Development Ltd v Commonwealth (illusion of promise) of consulting engineers, before the building work commenced. When the building
Fact: The Commonwealth government said they would pay a subsidy to companies was completed, the owner sold it to Woolcock Street Investment (Woolcock). A
imported timber at an uncertain rate. Initial payment was made but then stopped. few years later, a structural stress caused by the settling of the soil or foundation
Placer wanted to enforce the payment. became apparent and fixing the problem would be expensive. Woolcock alleged
Decision: Placer can’t enforce the payment. A promise to pay an unspecified that CDG had owed it a duty of care to avoid economic loss (the expense of
amount of money an illusory promise (unenforceable). rectifying the problem).
73. Price v Easton (privity) Decision: CDG didn’t owe a duty of care to Woolcock because Woolcock could
Fact: A builder owed money to Price. Easton agree with the builder that if the have taken independent steps to avoid the risk of harm. The plaintiff was not
builder did work for Easton, Easton would pay Price the money that the builder vulnerable because it had the ability to protect itself from the consequences of a
owed. Easton failed to pay Price. defentant’s want of reasonable care.
Decision: Price was not entitled to enforce Easton to pay the money. Price was not 88. Yorke & Anor v Lucas (misleading conduct, liability of principal and agent)
a party to the agreement between the builder and Easton, so Price didn’t acquire Fact: York entered into negotiations with Treasureway Stores Pty Ltd which
legally enforceable rights. appointed Ross Lucas to act as its agent. Some of the information provided by Ross
74. Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd Lucas which it got from Treasureway was incorrect. Yorke relied on this
(duty to cooperate) information and suffered loss so it sued Tresureway and its agent.
Fact: St Martins purchased property from Secured Income (SI) for a price that Decision: The court held both Treasureway and Ross Lucas liable for breach of the
would be determined in part by the extent to which space in the building could be Trade Practices Act (former version of ACL) because the misleading information
successfully let to tenants during a specified period. SI itself applied to lease the was given to Yorke without negligence and in the belief that it was true. To avoid
remaining space because fever tenants had signed leases than expected. St Martins liability, Ross Lucas should have disclaimed responsibility for the accuracy of the
rejected this offer. SI sued St Martins for breach of an implied term of not information when he passed it on to Yorke.
cooperating.
Decision: there was an implied term of the contract to cooperate, but St Martins
had not breach this term. Since St Martins hadn’t acted capriciously or arbitrarily in
rejecting the offer, there had been no breach of this duty.