Legal Studying

Topic 2
Civil obligations
Focus: How do civil agreements and the laws of negligence impact

on citizens in a society?
The law regulates private interactions between citizens in society, both planned (contract) and unplanned
(negligence). The law imposes elements for a contract to be valid and for a negligence claim to be successful.
Both the common law and statutory protection provide stakeholders with remedies.
QSA Legal Studies, Senior Syllabus 2013, p. 7.
Related career options

Lawyer, paralegal, employer, business manager, administrator,
real estate agent, salesperson, human resources consultant
Key terms/vocabulary you will encounter in this topic:

➥ alternative dispute resolution (ADR) ➥ misrepresentation
➥ arbitration ➥ negligence
➥ breach ➥ plaintiff
➥ claimant ➥ proximity
➥ conciliation ➥ reasonable
➥ contributory negligence ➥ reasonably foreseeable
➥ damages ➥ remedy
➥ defendant ➥ standard of care
➥ duty of care ➥ unconscionable
➥ e-commerce ➥ vicarious liability
➥ injunction ➥ voidable
➥ liability ➥ volenti non fit injuria
36
ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

Photocopying is restricted under law and this material must not be transferred to another party.
Relevant law
IMPORTANT LEGISLATION Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Bills of Exchange Act 1909 (Cth) Donoghue v Stevenson [1932] AC 562
Civil Liability Act 2003 (Qld) Fawcett v Smethurst (1914) 31 TLR 85
Topic 2 Civil obligations

Competition and Consumer Act 2010 (Cth) Geyer v Downs (1977) 138 CLR 91
Consumer Credit Code 1994 (Cth) Grant v Australian Knitting Mills (1936) 54 CLR 49
Copyright Act 1968 (Cth) Hitchcock v TCN Channel Nine Pty Ltd [2000] NSWSC 198
Criminal Code 1899 (Qld) In re Baby M 109 NJ 396 (1988)
Crown Proceedings Act 1980 (Qld) In re McArdle [1951] Ch 669
Electronic Transactions Act 1999 (Cth) Introvigne v Commonwealth [1980] 32 ALR 251; Commonweath v
Introvigne (1982) 150 CLR 258
Electronic Transactions (Queensland) Act 2001 (Qld)
Le Mans Grand Prix Circuits Pty Ltd v Iliadis [1998] VSC 331
Fair Trading Act 1989 (Qld)
Matthews v Baxter (1873) LR 8 Exch 132
Law Reform Act 1995 (Qld)
Miller v Karaman Pty Ltd [2003] WASCA 249
Limitation of Actions Act 1974 (Qld)
Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383
Motor Accident Insurance Act 1994 (Qld)
Nash v Inman [1908] 2 KB 1
Personal Injuries Proceedings (Legal Advertising) and Other Acts
Amendment Act 2006 (Qld) Olley v Marlborough Court [1949] 1 KB 532
Personal Injuries Proceedings Act 2002 (Qld) Parker v South Eastern Railway Co (1877) 2 CPD 416
Professional Standards Act 2004 (Qld) Peakhurst Inn Pty Ltd v Fox [2004] NSWCA 74
Sale of Goods Act 1896 (Qld) Richards v Victoria [1969] VR 136
Supreme Court Act 1995 (Qld) Roberts v Gray [1913] KB 520
Traveller Accommodation Providers (Liability) Act 2001 (Qld) Rogers v Whitaker (1992) 175 CLR 479
Workers’ Compensation and Rehabilitation Act 2003 (Qld) Rootes v Shelton (1967) 116 CLR 383
Roscorla v Thomas (1842) 3 QB 234
SIGNIFICANT CASES L G Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Alexander v Rayson [1936] 1 KB 169 Scriven Bros & Co v Hindley & Co [1913] 3 KB 564
Allcard v Skinner (1887) 36 Ch D 145 J Spurling Ltd v Bradshaw [1956] 2 All ER 121
Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 Strong v Woolworths Ltd [2012] HCA 5
Barton v Armstrong [1976] AC 104 Swain v Waverley Municipal Council [2005] HCA 4
Bolitho v City and Hackney Health Authority [1997] 4 All ER 771 Thompson v London, Midland and Scottish Railway Co
Brown v Motor Vehicle Investment Trust [1980] PNGLR 409 [1930] 1 KB 41
Caparo Industries Plc v Dickman [1990] 2 AC 605 Thornton v Shoe Lane Parking Ltd [1971] 1 All ER 686
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Vaughan v Menlove (1837) 3 Bing NC 467
Chappel v Hart (1998) 156 ALR 517 Vellino v Chief Constable of the Greater Manchester Police
[2002] 1 WLR 218
Odd laws CORE AREAS OF STUDY

It is mandated by the Australian Government that every in agriculture and other laborious employments to which their
Australian child should attend school until at least the age of rank in society had destined them … it would enable them
15. However, when the British campaign for mass education to read seditious pamphlets, vicious books and publications
began during the 19th-century Industrial Revolution, there against Christianity; it would render them insolent to their
were many opponents whose views are difficult to relate to superiors … Besides, if this Bill were to pass into law, it would go
today. A minister of parliament said that ‘[giving] education to to burthen this country with a most enormous and incalculable
the labouring classes of poor … would, in effect, be found to be expense, and to load the industrious orders with still heavier
prejudicial to their morals and happiness; it would teach them imposts’.
to despise their lot in life, instead of making them good servants
: 37

Chapter 2.1
Agreements
An agreement is an exchange of promises between two or CCEs

more people whereby one person promises to do something ➥ analysing ➥ using correct spelling,
➥ comparing/contrasting punctuation, grammar
and in return the other person promises to do something else.
➥ judging/evaluating
Agreements are made in everyday contexts for a range of reasons.
Trade of goods and services are the most common agreements Exercise 2.1.1
that occur. However, not all of them are legally enforceable or
necessarily need to be. Most agreements which occur in less 1 Evaluate why the law has different rules for domestic
formal situations are generally adhered to as part of a promise. For agreements and commercial agreements. (K&U, I)
example, let’s say you make an agreement with your parents that 2 Can you think of any situations in which a domestic
they pay you a certain amount for mowing the lawn. However, agreement could be legally enforceable? Explain why
after you mow the lawn, they discover that you haven’t done your this is so. (K&U, I)
homework, so they don’t pay you. In this scenario, which involves 3 What are the most common agreements that occur, but
a type of agreement called a ‘domestic agreement’, your parents which are not all legally enforceable or necessarily need
would not be bound by the promise to pay you for the mowing. to be? (K&U)
That said, society still sees these agreements as important,
because if everyone failed to make good on such agreements,
society would be greatly disrupted.
The situation would be different if you offered to mow
someone else’s lawn for a specified amount and the other person
accepted the offer and promised to pay you the specified amount.
In this case, a contract would exist. You and the other person
would have intended your agreement to be binding on both
parties. If the other person then didn’t paid you for mowing their
lawn, they would be in violation of the contract.
The main differences between these two situations are the
intention of the parties to be bound by the promise, and the
nature of the relationship between the two parties.
38 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

More serious, legally binding agreements are generally called shopkeeper then decides whether they want to accept the offer
contracts or commercial agreements. Most contracts are in written and sell the goods. A price tag on a good is not an offer to sell the
form; however, oral contracts are also legally enforceable. The good at that price. It is merely an invitation to treat (an invitation
main difficulty associated with oral contracts is that the terms of to submit an offer to buy). A supermarket is therefore not bound to
the agreement can be more difficult to prove. sell a good at the price marked on the tag, although it often will,
Some types of contracts must be in writing, including contracts even if the good has been wrongly marked, in order to preserve
Civil obligations
covering the sale of land, buying an automobile, door-to-door good relations with their customers (and to avoid any penalties
sales, and transfers of shares and guarantees. Statutes such as the they may face under other laws, such as that applying to false
Copyright Act 1968 (Cth) and the Bills of Exchange Act 1909 (Cth) advertising).
also require written contracts. These are known as ‘standard form An offer can be said by the offeror to be open for a certain
contracts’ as they often appear as printed, ready-made forms, period of time. For example, a car yard may offer to sell you a car
which generally means that it is unlikely that the terms of the for $10,000 and give you until 2 p.m. the following day to accept
Topic 2
contract will be altered. the offer. After this time, the offer will lapse. If no time limit is
When entering into a contract, it is always useful to have given, the offer will expire after a reasonable period of time.
the terms that are agreed between the parties written down
and attached to or otherwise kept with any other relevant reasonable fair; use of common sense
documentation (e.g. quotes, brochures) that has been supplied –
both parties should sign and date the document at the very end of
An offer can be made to the public at large if some means of
the text. Receipts for any money paid should also always be kept.
acceptance of the offer is indicated when the offer is made. For
These pieces of documentation become very useful if a dispute
example, when you receive advertisements in your letterbox, the
arises.
prices listed are not an offer to the public at large as there is no
means of accepting them. You need to go to the shop and make
2.1.1 Elements of a contract an offer to buy the goods at the price in the brochure. Technically,
the shop could decide not to accept your offer, but this is unlikely
In order to determine whether a valid contract exists, the common
unless the wrong price was shown in the brochure. The advertising
law has developed the following criteria:
brochure is an invitation to treat.
1 Is there an agreement in existence between the parties?
Offers can be made to individuals, classes of people or the
2 Is any such agreement intended to be legally binding?
‘whole world’, depending on the phrasing of the offer. Additionally,
3 Is the agreement supported by consideration?
an offer may require that certain conditions be met in order for
If all three of these elements are present, then certain legal
acceptance to be valid. For example, if an offer requires acceptance
rights and responsibilities fall upon the parties to the contract. If
in writing, a person seeking to accept the offer must comply with
any one of these legal conditions is absent, then the ‘arrangement’
this condition. Offers may also be withdrawn at any time before
between the parties is simply of a social nature and is not legally
acceptance. This is known as ‘revocation’.
binding.
The general principles of an offer CORE AREAS OF STUDY

An offer can be made in writing, orally or through an act which
indicates that an offer has been made. The person making the offer
is called the ‘offerer’ and is bound by an offer when it is accepted.
For an offer to be binding, it must be clearly communicated by
the ‘offeree’ (the person accepting the offer). An offer can be
withdrawn prior to acceptance as long as the withdrawal is clearly
communicated.
In normal situations, a shopper, in indicating a desire to
buy merchandise, is doing no more than offering to buy. The
C hap ter 2.1: Agreement s 39

CASE STUDY
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256
Probably the most famous of all contract cases in this

area was that of Carlill v Carbolic Smoke Ball Company
[1893] 1 QB 256 (Carbolic Smoke Ball case). In this
instance, the court found that it is possible for an
advertisement to be an offer to the world at large.
This case is often remembered because it involved a
strange device called a ‘smoke ball’ that was advertised
as being effective in stopping a person from getting
colds or flu. What you had to do was take the tube
attached to the rubber smoke ball and insert it into
your nose. The ball was filled with carbolic acid and
then squeezed so the vapours went up your nose. The
ironic thing was that the device probably increased
the chances of developing a ‘stuff y’ nose due to the
inflammation caused by the treatment.
The case revolved around the wording of an
advertisement by the company that read:
£100 reward will be paid by the Carbolic
Smoke Ball Company to any person
who contracts the increasing epidemic
influenza, colds or any disease caused by
taking cold, after having used the ball three
times daily for two weeks according to the
printed directions supplied with each ball.
£1000 is deposited with the Alliance Bank,
Regent Street, showing our sincerity in the
matter.
Mrs Carlill bought the smoke ball, used it ‘properly’ cannot be validly made. The court rejected these
and yet still caught the flu. The Carbolic Smoke Ball arguments. It was held that the advertisement was
Company argued that the advertisement was not an an offer of a unilateral contract between the Carbolic
offer capable of acceptance. They tried to argue that Smoke Ball Company and anyone who satisfied the
the advertisement was ‘mere puff’, which means ‘sales conditions set out in the advertisement. Furthermore,
talk’, and was not intended to be a promise at all. the £1000 bank deposit to show their sincerity in the
Alternatively, they said that it was in fact a contract, matter meant that the advertisement was not just ‘puff’
but one made with the world, and that such a contract but was actually a serious offer.
What is acceptance? the required amount or exchanged their goods). Once acceptance
is communicated, it cannot be withdrawn unless the person
Acceptance occurs when one party to whom the offer is made
making the offer agrees to do so. It is also important to note that
(offeree) agrees to the proposal of the person making the offer
only a party to whom an offer has been made can accept the offer.
(offeror). In order for an offer to be made, it must actually be
If acceptance is not complete and unqualified, it may constitute a
directly communicated. However, acceptance doesn’t necessarily
counteroffer, which is an offer in its own right.
need to be spoken or put in writing; for example, the offeree’s
An important exception to the rule that acceptance must
actions may indicate they have accepted the offer (they have paid
be communicated is known as the ‘postal acceptance rule’. This

rule states that if acceptance is made by mail, the acceptance is
deemed to have taken place once the letter of acceptance has
been posted. The rule only applies to acceptance and is based on a
number of early cases.
The Electronic Transactions (Queensland) Act 2001 (Qld) has
attempted to formalise the rules regarding when communication
Civil obligations
is sent and received by electronic systems such as email. Section
23 of the Electronic Transactions (Queensland) Act 2001 (Qld) states:
(I) Time of dispatch
(1) If an electronic communication enters a single
information system (such as a computer server)
outside the control of the originator of the
communication, then, unless otherwise agreed
Topic 2
between the originator and the addressee
of the communication, the dispatch of the
communication occurs when it enters the
information system.
(2) If an electronic communication enters successively
two or more information systems outside the
control of the originator [such as the computer
server of the receiver] of the communication, then,
unless otherwise agreed between the originator
and the addressee of the communication, the
dispatch of the communication occurs when it
enters the first of the information systems.
Section 24 of the Electronic Transactions
(Queensland) Act 2001 (Qld) says the following
about time of receipt
Electronic communication is deemed sent when a person presses a button
(1) If the addressee of an electronic communication
to send it
has designated an information system to
receive electronic communications, then, unless
otherwise agreed between the originator of the for sale via email. The Act means that such an advertisement can
communication and the addressee, the time of
receipt of the communication is the time when it be answered by email, and that the offerer is bound to check that
enters the information system. before agreeing to sell to someone else in person.
(2) If the addressee of an electronic communication
The general principles of acceptance are as follows:
has not designated an information system [such
as an Internet server/carrier] to receive electronic 1 Acceptance must be actually communicated unless the
communications, then, unless otherwise agreed offer requires an act to be done which does not have to be
between the originator of the communication
communicated to the person making the offer.
and the addressee, the time of receipt of the
communication is the time when it comes to the 2 A qualified acceptance cannot be made. Any offer must be
attention of the addressee. wholly accepted.
This legislative material is reproduced by permission, but is not
the official or authorised version. It is subject to Commonwealth of 3 Any conditions stated in the offer must be followed before an
CORE AREAS OF STUDY
Australia copyright. acceptance can be said to have taken place.
These sections put in place a similar rule to the postal 4 Acceptance can be made only by the parties to whom the offer
acceptance rule for electronic communications. This can be altered was made.
by prior agreement, but essentially, electronic communication is 5 Once acceptance is communicated, it cannot be withdrawn
deemed sent when a person presses a button to send it. However, except with the consent of the person making the offer.
this is only the case when a person has decided that the parties will 6 As with an offer, an acceptance must be made within the
communicate electronically. If they have not requested email or time prescribed, or if no time has been prescribed, within a
a text message, for example, then the communication is received reasonable time.
only when it comes to the attention of the person receiving it. This 7 The person accepting an offer must know that it exists. No-one
can have significant consequences if someone offers something can accept an offer if she or he doesn’t know that it exists.

Silence is not acceptance. The offeror cannot specify that an offer to buy. This is an important difference, as it gives the
acceptance will be assumed if the offeror does not hear from the person who is inviting offers control over who they wish to sell
person to whom the offer has been made. Acceptance is therefore the kittens to. Most advertisements are invitations to treat rather
not effective until it has been communicated to the offeror, than actual offers. If they were treated as actual offers, there could
although there can be exceptions to the rule. In the Carbolic Smoke potentially be more offers of acceptance than kittens. You could
Ball case, the mere act of using the smoke ball as instructed was then face legal action when all of the parties who didn’t receive a
seen as sufficient for acceptance of the offer. kitten decide to enforce the alleged ‘agreement’ you made. If the
law did not regard such signs as invitations to treat, you would be
Is there an agreement in existence faced with having to deliver kittens to everyone who ‘accepted’
between the parties? your alleged ‘offer’, or compensate them for their loss.
In order for an agreement to be in existence, there are certain Invitation to treat
requirements, including an offer and an acceptance of that Requesting that people
offer. Once this has occurred, an agreement exists. However, this make an offer
seemingly simple situation can quickly become complicated. offer
Imagine that your cat has just had kittens. You have posted
signs around town advertising them for sale for $150. Have you
Must be clearly conveyed
made an offer to sell? What if someone phones you and offers you
to the offeror either orally
acceptance
$120? Have they accepted your offer, but at a lower price? If you or in writing or by act of
refuse, can they take legal action? one party to the other
Is any such agreement intended

to be legally binding? Something of value which
consideration passes from one party to
Whether an agreement is intended to be legally binding is the
the other
second element of a contract. It is essential that the parties to a
contract intended to enter into a legally binding relationship. A
court will look at the behaviour and statements of the parties to
determine whether they had such an intention. Consequently, a
legally binding contract does not necessarily arise out of a purely Is the agreement supported
social arrangement or an agreement between family members. by consideration?
For example, a promise to meet someone for dinner or to provide
Consideration is the third element necessary for an agreement
a colleague with a lift home from work would not be legally
to be legally binding. Consideration is something given by the
enforceable should any of the parties fail to arrive. If your parents
offeree as a response to the promise made by the offeror. It is
offered to pay you a sum of money for doing the housework or
the value that passes from one party to another in return for the
the gardening, and then changed their minds after you did the
promise made. The most common form of consideration is that
work, the law presumes that this arrangement did not involve the
in which the offeree offers money in exchange for a product or
intention to create legal relations, and would not entitle you to sue
service. For example, Person A offers to buy a car from Person B
them for breach of contract.
for $2000. Person A gives up the money he uses to buy the car and
Is there an offer or invitation receives a benefit from the exchange: the car. Person B gives up
to treat? the car and receives a benefit in exchange: the money.
Person A’s consideration Person B’s consideration

An offer capable of acceptance is required for an agreement
is giving Person B $2000 is giving Person A a car
to occur. Offers can be made in writing, verbally or by conduct
(actions). In the example above, the advertisements are not If parties fall into dispute and one party refuses to carry out his
actually offers to sell the kittens. In the eyes of the law, such signs or her obligations, the other party can take the dispute to court. In
would constitute an ‘invitation to treat’, or an invitation to submit order for their case to be successful, they must show that they gave

consideration for the other’s promise. There must be consideration
given by the person who wants to enforce the promise. This
principle means that if a person doesn’t provide consideration
in return for a promise, the person cannot enforce that promise
in court; that is, sue the other party for breaching the contract.
Consideration in the form of a promise must be clear and certain.
Civil obligations
For example, a promise from Person A to keep a book to sell to
Person B sometime in the future, when Person B needs it, would
be seen as too vague and not a real promise to sell the book, and
therefore not legally binding.
Consideration doesn’t have to be the market value of the
promise for which it is given. A person can enforce an agreement
Topic 2
even though the consideration that person gave for the promise
the other person made is less than what that promise is worth to
others.
There are two classes of contract – contracts by deed and
simple contracts – but only one of these requires consideration
to be present. A deed is a formal legal document. It must fulfil
certain requirements such as that it contains wording at the end
that states it has been ‘signed, sealed and delivered by …’ Deeds
usually convey or transfer property or create a legal obligation
or contract. Consideration is given simply by the fact that the
contract is drawn up as a deed. Contracts which are not deeds,
meanwhile, are known as ‘simple contracts’. Most contracts are
simple contracts. They are informal contracts and may be made in The other case was In re McCardle [1951] Ch 669. The occupants
any way – in writing, orally or implied from conduct. Consideration of a house carried out improvements during their tenancy and
is required for these contracts to be enforceable. were offered payment in recompense by the owner after these
Consideration cannot be something that occurred in the past. works had been completed. An agreement was signed to this
For example, let’s say you aren’t feeling well and a friend helps you effect. However, the owner died before paying the tenants and
do your washing. If, afterwards, you say you will give the friend $20 his representatives refused to honour the promise. The courts
for helping out and then forget, this offer cannot be enforced. The supported the owner’s representatives because the tenants had
reason for this is that consideration – the act of sorting and doing not provided good consideration. All work had been completed
the washing – took place before the offer of money was made. before the agreement to pay for the work was made. The court
This is one of the more complicated rules concerning found that, as a result, the only consideration offered for the
consideration. Two cases illustrate this well. The first is Roscorla agreement was past consideration and therefore the agreement to
v Thomas (1842) 3 QB 234. In this case, Roscorla bought a horse pay was unenforceable. CORE AREAS OF STUDY
from Thomas. Thomas had delivered the horse and Roscorla had Additionally, consideration must not be something unlawful or
asked whether the horse was vicious. Thomas told Roscorla that illegal. This means that an agreement to do something to defraud
the horse was ‘free from vice’, but as Roscorla found out, the horse the government of taxes owed would be held as unenforceable as
was actually vicious. He sued Thomas on the basis of the alleged the consideration offered was unlawful, as in the case of Alexander
promise that the horse was not vicious. The court held that the v Rayson [1936] 1 KB 169. This case involved an agreement to lease
promise was not part of the consideration of the contract as it had a premises for the sum of £1200 per annum. The agreement was
taken place after the contract had been made. The court also held divided into two documents: one for lease of the premises at £450
that the prior sale was not consideration for the promise. Roscorla per annum and the other for services connected with the premises
could not recover money for the horse. at £750 per annum. By drawing up a lease for £450 per annum, the

plaintiff sought to reduce the value of the property, therefore CCEs
defrauding the local authority. The defendant stopped paying ➥ analysing ➥ using correct spelling,
➥ judging/evaluating punctuation, grammar
rent and the plaintiff sued. The defendant raised the illegality of
the agreement as a defence, and was successful.
Exercise 2.1.3
plaintiff the person who initiates a civil action Read the following scenario and
answer the questions.
defendant the person who is accused of a civil wrong or a crime (where
Marie puts an advertisement
they are also referred to as ‘the accused’)
in the newspaper to sell her TV
(four months old and still under
A promise to refrain from taking legal action can be considered warranty) for $2300. She gives
valid consideration. If someone promises not to sue someone a post office box number as her
else in exchange for compensation, for example, then that is valid contact details. Mitch sees the advertisement and writes to
consideration and the agreement would be enforceable. It must Marie, posting the letter on 25 January, saying ‘he will take
be possible to carry out the consideration in the agreement. You the TV at the price listed’.
could not enforce a contract if one of the parties promised to do Marie receives a number of other responses expressing
something that was impossible, such as fly to the moon or swim to interest in the TV. On 3 February, she writes to Mitch and
the United States from Australia. It simply could not be done and tells him that she now wants $2500 for the TV and will keep
therefore no valid consideration is present. Consideration must her offer open for one week.
also be provided by the person making the promise. A third party Mitch receives the letter on 14 February and writes back
cannot provide the consideration, unless it is specified when the to Marie saying he will not accept the offer. He posts the
agreement is made. letter on 15 February but Marie doesn’t receive it until 19
February.
CCEs
On 2 March, Marie meets her cousin and discusses the
➥ analysing ➥ using correct spelling,
➥ judging/evaluating punctuation, grammar TV. Her cousin tells Marie that she would really like the TV
➥ recalling/remembering but can’t afford to pay the full price. Marie tells her cousin
Exercise 2.1.2 that she can have the TV for $1500 if she will look after
Marie’s children on Saturday nights.
1 Why is a domestic agreement usually not a contract?
1 Identify the following by picking out the words that
(K&U)
indicate each:
2 Read the following situations and decide whether you
a invitation to treat
think a valid contract exists. Give a reason for your
b intention to create legal relations
decisions. (K&I, I)
c offer
a You go to garage sale and see a couch you want to
buy, and you give the owner a deposit. d counteroffer
b Ava’s mum agrees to pay her $10 per week for doing e consideration
the dishes after dinner. f acceptance
c Rachel asks Daniel to feed her animals while she’s g breach of contract
on holidays. When she returns, she offers to pay him h vagueness of terms (K&U)
$50 for his trouble, but forgets.
2 Was Mitch’s first letter to Marie an offer or acceptance?
3 Describe the difference between an offer and an Give the reasons for your decision. (K&U, I)
invitation to treat. Give an example of each. (K&U)
3 Has Marie breached her contract with Mitch? Explain
your reasoning. (K&U, I)

2.1.2 Capacity voidable as one side has not complied with their obligations under
it, but it can continue if the ‘wronged’ party wishes it to do so.
Capacity refers to the ability certain people or classes of people
voidable cancelled or returnable
have to be legally capable of entering into a contract or properly
understand their obligations under a contract.
breach broken rule or promise
Certain classes of people are subject to legal restrictions on

their rights to enter into contractual relationships. For example,
In the past, married women were also incapable of entering
people who are not Australian citizens are subject to foreign
into contracts in their own names, as it was the position of the law
investment legislation requirements before they are legally
at the time that only the husband could exercise such legal rights.
allowed to enter into property contracts. Additionally, people
Obviously, times have changed and married women are now able
who are bankrupt or in jail are subject to restrictions placed on
to contract in their own right.
them by the law that effectively prohibits them from entering into
If a person is not capable of fully understanding the nature of
contracts involving the transfer of land, or the purchase of a car, or
the contractual relationship they are entering into, then the law
the entering of a loan contract with a bank.
states that such a contract will not be capable of enforcement
The capacity of bankrupts, jailed criminals and foreign citizens
against them. Some examples of people or categories of people
has been taken away in these situations, and any contract formed
who may not have the requisite capacity to validly enter into a
with a person subject to these restrictions is void. If a contract
contract are the mentally ill (which for legal purposes in many
is void, it means it is of no legal effect between the parties and
instances could also include intoxicated people), those who have
essentially does not exist. This is different to a voidable contract. A
an intellectual disability, and children (called ‘minors’ in law). These
voidable contract is one in which one of the parties may choose to
categories of people may have trouble fully appreciating what
continue to proceed with the contract even though the other party
entering into a contract actually means in terms of the obligations
has done something (called a breach of contract) which could in
and responsibilities they would need to comply with if the contract
theory allow them to end (or ‘terminate’) the contract. An example
was to proceed.
is if a person is required to pay the balance of a deposit by a certain
A contract that is not within the law is not enforceable through
date and does not do so. The person to whom the deposit is owed
the courts. For example, if you contracted to buy stolen goods,
could choose to allow them a little more time. The contract is
the contract would not be valid and therefore would not be
enforceable.
CASE STUDY
In re Baby M 109 NJ 396 (1988)
An American Bill Stern entered into a surrogacy wife when it was born. Whitehead agreed to renounce
agreement with Beth Whitehead. Whitehead agreed parental rights and allow the Sterns to adopt the baby.
to be artificially inseminated with Mr Stern’s sperm, to In return, she would receive $10,000. However, when
carry the child, and to give the child to Mr Stern and his ‘Baby M’ was born, Whitehead did not want to give it
up.
The Supreme Court of the United States held CORE AREAS OF STUDY
that the surrogacy contract was illegal because it
contravened state laws outlining the sale of babies.
The contract was therefore not enforceable. The court,
however, decided to leave the baby with the Sterns
because it thought that the child would have a better
quality of life with them – Whitehead and her husband
had two other children, financial problems and some
marital discord, while the Sterns both held doctoral
degrees and led quiet, respectable lives.

Mental incapacity
People suffering from mental incapacity are in a slightly unusual
position in the eyes of the law. It is considered important that
people suffering from mental illness are given protection by
the law from those who may seek to take advantage of them in
contractual negotiations. At the same time, people who suffer
from mental illness may be capable at certain times of complete
lucidity and may be perfectly able to negotiate their own contracts
without any disadvantage. Previously, the law held that people
of ‘unsound mind’ could not use this as an excuse to avoid their
obligations under contracts. However, in 1847, Pollock C.B. stated
in Moulton v Camroux (1848) 2 Ex 487 that ‘the rule had in modern
times been relaxed, and unsoundness of mind (as also intoxication)
would now be a good defence to an action upon a contract, if it
could be shown that the defendant was not of the capacity to
contract and the plaintiff knew it’. Therefore, the ‘modern’ position
is that the courts will not enforce contracts against the mentally ill
if it can be proven that, at the time of entering into the contract,
the person’s mind was so affected by the illness (or ‘incapacity’,
such as intoxication) that they were incapable of understanding
the nature of what they were doing. However, in order to set Therefore, minors generally lack the capacity to contract;
aside such a contract, it must be proven that the person making however, this is subject to some important exceptions. Cash
the contract with the mentally ill party must have been aware purchases are examples of contracts that minors may make. Other
or should have been aware of the illness. This comes down to a exceptions are a little more complex.
matter of evidence.
Ratification
In the case of Matthews v Baxter (1873) LR 8 Exch 132, Baxter
A person under the age of 18 can enter into a contract as long
agreed to purchase a house at an auction. He was drunk at the
as they ratify or affirm the contract when they become 18. This
time. When he sobered up, he actually agreed at first to be bound
means that they basically confirm that the contract is binding on
by the contract, but then changed his mind. He alleged that he
them now that they are considered an adult in the eyes of the law.
was intoxicated at the time he made the contract and that the
Generally, contracts between a minor and an adult are binding on
other party should have known that. The court held that he may
the adult but not the minor.
have been in a position to escape from his obligations under the
contract on the grounds of lack of capacity, but as he agreed to be Contract for necessaries
bound by it when he was sober, he was now obliged to proceed Minors can be bound by contracts for ‘necessaries’. ‘Necessaries’
with the contract. This means that such contracts are actually are those things that a minor needs to maintain the standard
voidable rather than void, as the party whose capacity is in of living that they currently enjoy. They are particular to that
question is capable of proceeding with the contract if they wish. individual and therefore may differ between people. They are
not confined to things needed for the basics of living (such as
Minors air, food, shelter and water) but rather encompass the particular
Another category of persons who may not have the capacity to needs of the minor. This means that the needs of a minor living
form legally enforceable contracts is minors. In the eyes of the in a mansion may differ from one living in a caravan. The minor
law, minors are persons who have not reached the age of 18 years. living in the mansion will have different ‘conditions of life’ and
It has been considered important that minors (sometimes called therefore what is necessary for them must take into account their
‘infants’) are protected from making bad decisions based on their social position and wealth. However, whatever the minor’s status,
youth or inexperience, particularly in a commercial agreement. the goods or services contracted for must actually be necessary

and not just desirable. For example, in the case of Nash v Inman CCEs
[1908] 2 KB 1, it was held that 11 fancy waistcoats for a Cambridge ➥ analysing ➥ using correct spelling,
University student at a cost of £122 was not considered necessary
as he already had enough clothing appropriate to his position in
Exercise 2.1.4
life. This contract was therefore not enforceable against him. Such
contracts, even when necessary, can be held unenforceable if they Read the following scenarios and answer the questions.
Civil obligations
could be considered harsh or unjust. In Fawcett v Smethurst (1914) 1 Fred, a Sydneysider who was on holiday in Cairns,
31 TLR 85, Graham Smethurst hired a car, but under the terms of wished to buy a 4WD from Northern Motors. He saw a
this contract he was held liable for any damage done to the vehicle particular vehicle he liked and was offered the price of
regardless of how it occurred. The court held that such a contract $42,000. The dealership said it would hold the vehicle
was not enforceable against a minor, reinforcing the general until Friday at noon for Fred. He went home to Sydney
position that the courts will try to protect minors from making to arrange finance. When everything was arranged, he
Topic 2
bargains that may take advantage of their inexperience. wrote to Northern Motors accepting the offer, posting
Beneficial contract of service the letter on Wednesday afternoon. At 2.30 p.m. on
Another exception to the rule is when a minor signs a contract of Friday, another man, George, offered to buy the 4WD
service that is beneficial to him or her. For example, a minor may from Northern Motors. Their mail, which usually arrived
sign an apprenticeship contract with an employer. Such a contract by 1 a.m., had been delayed and not yet received.
is considered of benefit to the minor as it would provide them with Can Northern Motors accept George’s offer, or does a
work and a possible career, and it is clearly to the minor’s benefit contract already exist between them and Fred? Explain
that he or she should be able to obtain employment. your reasoning. (K&U, I)
In Roberts v Gray [1913] KB 520, a minor, Gray, was held liable 2 Brad was told by Sarah
for his failure to perform the terms of a contract to complete a that an engagement
tour with Roberts, a noted billiards player. It was a contract for the ring contained a
instruction of Gray, who wished to become a professional billiards 0.5-carat diamond
player. Gray attempted to avoid his obligations under the contract. and was worth $3000.
The court found that Roberts was entitled to enforce the contract He offered to buy it
against him as the contract was clearly of benefit to Gray. for that price. Sarah
In recent times in Queensland, events like ‘schoolies week’ accepted and handed
have become extremely popular. Contracts for the rental of hotel over the ring. But
rooms for events like these have been held to be enforceable before Brad paid for
against minors, presumably on the basis that these contracts are the ring, he discovered
contracts for ‘necessaries’. This may be because they provide for that it was actually made of zircon (an imitation
accommodation that the minor may otherwise be receiving at diamond) and refused to pay the $3000. Sarah said
home. that he had examined the ring and agreed to pay the
Additionally, many accommodation agencies now require amount. Is the contract enforceable? (K&U, I)
CORE AREAS OF STUDY
a guarantor (a parent or other adult who ‘guarantees’ the 3 Hannah sold antique furniture from her shop in
performance of the agreement) against whom they will seek to Toowoomba. Stephanie saw a table which she wanted
enforce the terms of the contract should there be an issue. For that was only $500. She couldn’t believe her luck and
similar reasons, contracts for cars and mobile phones are also decided to buy it immediately. Hannah explained to
often enforceable against minors as contracts for ‘necessaries’, Stephanie that the table had been marked incorrectly
although this will of course depend on the facts of the individual and that the price was actually $5000. Was the price tag
case. Again, adults often are required to act as guarantors in these an offer? Does Hannah have to sell the table for $500?
cases. (K&U, I)

2.1.3 Promissory estoppel Implied terms are those which can be logically assumed by
the person entering the contract. For example, it was implied in a
The law has recognised that at times agreements can be made contract of employment of a nanny that the nanny owed a duty of
that are unfair to one of the parties involved. This situation has confidentiality to the homeowner and could not disclose details
led to the development of the legal principle called promissory of information learned during her employment to the public. An
estoppel. It means that in some cases, a person who makes a injunction was granted in the case of Hitchcock v TCN Channel
promise (which does not amount to a contract) will be stopped Nine Pty Ltd [2000] NSWSC 198 to stop the nanny from appearing
(estopped/estoppel) from going back on that promise. It is on A Current Affair with her story.
most predominantly used where the party trying to enforce the
agreement has given consideration for the promise of the other injunction where a court orders a person to do or refrain from doing a
party, and there is no legal contract. particular thing
The courts will generally only apply the principle of promissory

estoppel in very few cases. It will apply only if the person relying
on it has suffered loss as a result of what the other person has Conditions and warranties
done.
Conditions and warranties are generally considered the ‘terms’
of a contract. Conditions are the fundamental terms of a contract
CCEs
➥ analysing ➥ using correct spelling, without which it is likely that the contract would never have been
➥ judging/evaluating punctuation, grammar entered into. If these conditions are breached, then the contract is
➥ recalling/remembering
voidable. A warranty is similarly defined but is of lesser importance
Exercise 2.1.5 – it is more likely that the contract still would have been entered
into if this element wasn’t a consideration. For example, let’s say
Would the doctrine of promissory estoppel apply in the that you have been offered a job at a local surf clothing store and
following situations? Explain why or why not. (K&U, I) that you have entered into a workplace contract with them. A
a The parents of a woman offer to build a small house on warranty of your employment is that you will receive a 5 per cent
their acreage for their daughter and her new husband. discount on any items you purchase from the store. This discount
The newlyweds agree to pay for the construction of the is considered a warranty as you more than likely would have
house. Then, after construction is underway, the young accepted the job even if it wasn’t offered.
couple tell the parents that they don’t want to live so To highlight the difference between the terms another way, a
close to them and refuse to pay the construction costs. condition of a contract might be that you are supplied with a Ford
b A business offers to sponsor a music concert and pay car, while the warranty may be that the supplier will replace any
for the headlining acts. The organisers of the concert faulty parts for one year after the car’s purchase.
prepare the event and book the musicians. The business If a warranty is breached, you can claim damages for any loss,
later goes back on its word and refuses to pay for the but you are not entitled to treat the contract as at an end (void). If a
event. court determines a breach of contract, it will try to put the injured
party back into the position the party was in before the agreement
was breached.
2.1.4 The terms of a contract damages compensation, in the form of money, awarded by a court to the
successful claimant in a legal action
Contracts, whether written or oral, include express terms. These
are the words that clearly define the items in the contract that are
Warranties or guarantees are often supplied in the box
legally binding. For example, in regard to buying a new car, the
containing the goods that have been purchased. As they are often
express terms would be the make and model of the car, its year of
not seen until after the goods have been purchased, it may be
manufacture, colour and price. The main terms of a contract are
difficult to prove that they are part of the contract of sale.
known as the conditions of the contract.

Sometimes it can be difficult to determine whether a particular CCEs
item is a condition or a warranty; the mere labelling of ‘conditions’ ➥ analysing ➥ recalling/remembering
➥ comparing/contrasting ➥ using correct spelling,
and ‘warranty’ doesn’t always mean the elements fit appropriately.
For example, the term ‘conditions’ is often typed on receipts,
but this doesn’t mean that the statements that follow are legally Exercise 2.1.6
conditions of the contract.
Civil obligations
1 Describe the difference between an express term and
The best way of identifying what the courts consider conditions
an implied term in a contract. (K&U)
and warranties to be is to examine real cases. In one such
case, Associated Newspapers Ltd v Bancks (1951) 83 CLR 322, an 2 Explain why the term of a cartoon being printed on the
agreement between a newspaper and a cartoonist provided that front page of a paper was considered a condition in
a particular cartoon would be printed on the paper’s front page. Associated Newspapers Ltd v Bancks (1951) 83 CLR 322.
However, the newspaper did not do this. The court found the Why was it considered so important to the contract?
Topic 2
term to be a condition due to its importance. In another case, an (K&U, I)
agreement between a supplier and a retailer provided that the 3 Explain why the term of a sales rep being sent out was
retailer would send out sales representatives to get sales at least considered a warranty in L G Schuler AG v Wickman
once per week, but the retailer did not keep its promise. The court Machine Tool Sales Ltd [1974] AC 235. Why was it
found the term to be a warranty, even though it was described in considered to be less important to the contract?
the agreement as a condition. (K&U, I)
CORE AREAS OF STUDY
Terms of a contract

2.1.5 The form of the CCEs
agreement ➥ analysing
➥ using correct spelling,
punctuation, grammar
While most agreements are in writing, this is not legally necessary.

However, it is much easier to prove that an agreement exists as
Exercise 2.1.7
well as the terms of that agreement when it is in writing. If the Evaluate whether the following statements made by a
agreement is in written form, the court will assume that the salesperson are puff, representations or actual terms of a
written content contains all the terms of the contract. This means contract.
that no oral evidence can be used to add, change or contradict the
1 ‘I’ll supply and install seat covers if you sign the contract
terms of the written agreement. This is what is known as the ‘parol
today.’ (K&I)
evidence rule’. It is also consistent with the rules that apply to what
2 ‘This coin is a limited edition. Only 500 of them were
is allowed as evidence in court (admissibility).
made!’ (K&I)
The courts have noted that this can in fact cause some
unfairness. For example, one party may say things to another party 3 ‘This motorbike is in mint condition. There’s nothing
to convince them to sign a contract. However, the contract then mechanically wrong with it.’ (K&I)
does not include what has been said. If the person who made the
statements could legally deny making the comments, this would
be unfair on the person who relied upon them. This exception
2.1.6 Misrepresentations
means that the courts will allow oral evidence to show that one
party has made a false statement to the other before the contract If a statement that is made as a representation is false, it is known
was agreed to. as a misrepresentation and the innocent party affected by the
When a statement is made but isn’t included in a written statement has a legal right to be compensated for it. In order
contract, it is very important to decide if the statement is actually a for the courts to determine that a representation is in fact a
part of the contract or a representation. This is important because misrepresentation, the following criteria must be met:
it can determine the legal remedies available to the plaintiff if the
statement is in fact the truth. The courts have developed several misrepresentation any statement of fact by one person to another,
tests to decide this: either by words or actions, which is not in accordance with the actual facts
➥ If a long time has passed between when the statement was

made and the contract was entered into, the statement is ➥ There must be a false representation of an existing or past fact.
probably not a term of the contract. ➥ It must be addressed to the plaintiff by the person making the
➥ If the statement was made orally and not included in the representation.
contract, it is probably not a term. ➥ It must be made before or when the contract is entered into.
➥ If the statement was important to a party’s decision to enter ➥ It must have been intended to persuade the plaintiff to enter
the agreement, it probably is a term. into the contract, and it must have persuaded the plaintiff.
➥ Where the person who makes the statement is in a better The misrepresentation must also concern factual information,
position than the other person to check the accuracy of the not an opinion. Sometimes silence can be interpreted as
statement, it is likely to be a term. a misrepresentation, especially when it has the effect of a
Representations and terms of the contract need to be misleading impression or statement.
separated from sales talk. The statements made by a salesperson
to persuade a buyer are called ‘puff’. They are exaggerated
comments about the product that no reasonable person would
believe; for example, ‘If you wear this cologne, all the ladies will
want you!’

CCEs Types of misrepresentation
➥ judging/evaluating punctuation, grammar There are three types of misrepresentation:
1 innocent
2 negligent
Exercise 2.1.8 3 fraudulent.
Civil obligations
Misrepresentation Innocent
A dive boat owner was trying to sell his dive boat. A This is a statement made by a party in the belief that it is in fact
potential buyer wanted to see how many passengers the true – they are not aware that it is incorrect. In this case, the
boat was currently taking out to sea. The owner took the wronged party may be able to rescind the contract but may not
potential buyer out on a day when he’d arranged for the be able to claim damages. It would depend on whether what
boat to be filled with family and friends, to make the boat was misrepresented was ‘mere puff’ (no action may be taken),
Topic 2
appear busier than it actually was. The boat owner did not a warranty (damages only) or a condition (rescind/affirm the
tell the buyer this. Would the court find that the owner has contract and/or sue for damages). For example, a person selling
misrepresented the boat to the potential buyer? Explain a house might say it has a view of Mt Brown, when in fact it is
your reasoning. (K&U, I) Mt White and they have simply misidentified the mountain.
Negligent
Negligent misrepresentation occurs when a statement is made
by a party without taking reasonable care to ensure that the
statement is in fact true. The contract may be rescinded and/
or damages may be sought. A negligent misrepresentation may
have occurred, for example, if the seller of a house states that the
view from the house could never be blocked by another dwelling,
when in fact it could. If another dwelling is built that does block
their view, the buyer may be able to take action against the seller
for negligent misrepresentation, as the seller did not take care to
ensure that what they were saying was correct.
Fraudulent
Where a party makes a statement knowing that it is false, or
is reckless, or does not care if it is true or false, then that party
has made a fraudulent misrepresentation. The impact of such
a statement on the contract is severe. The wronged party may
rescind the contract and seek damages. The statement made must
not just be opinion, but rather it must be represented as fact.
Proving fraudulent misrepresentation can be difficult. A
CORE AREAS OF STUDY
number of things must be established in order for such an action
to succeed, namely that:
➥ the statement was actually made
If a party makes a false representation but the plaintiff ➥ it was untrue
does not rely on it, the plaintiff cannot get compensation for ➥ the party making the statement knew it was untrue
misrepresentation. ‘Rely’ means that the person places importance ➥ the party did not care if it was true or not
on the statement and it influences the person’s behaviour. ➥ the party intended the other party to act on it
➥ the other party did act on it
➥ they suffered damage as a result.

2.1.7 Mistakes Mistake of law
Parties are sometimes mistaken as to the legality of the
Another factor that can affect the validity of a contract is when
agreements they make. In general terms, such a mistake will
one or both parties make mistakes, either in relation to the law
not normally allow parties to avoid their responsibilities under a
or in relation to important facts. This can be a difficult area as it is
contract. However, if a contract is formed for an illegal purpose,
obviously necessary in our society that we have certainty in our
such as an agreement to distribute stolen goods, the contract
transactions. If people can simply say ‘I made a mistake’ and walk
is void. In the past, contracts have also been found void for
away from contracts, then clearly this would cause great problems.
promoting immorality (such as hiring a horse and carriage to a
However, in some circumstances, a doctrine called non est factum
prostitute), for leading to corruption in public life (an agreement to
(‘it is not my deed’) may assist people in avoiding liability under
exchange payment for an honour or title), and for being prejudicial
a contract. As a general rule, a person is bound by their signature
to public safety (agreements signed in a time of war with a party
to a document, whether or not they have read or understood the
who is the same nationality as the ‘enemy’).
document.
The use of this rule in modern times has been restricted.
Mistake of fact
For a successful plea of non est factum, two factors have to be
established: In certain circumstances, parties to contracts may be genuinely
1 the signer was not careless in signing mistaken as to certain important facts which are the subject of the
2 there is a radical or extreme difference between the document contract. The case of Scriven Bros & Co v Hindley & Co [1913] 3 KB
which was signed and what the signer thought they were 564 demonstrates how a contractual obligation may be avoided if
signing. a genuine mistake has been made.

The defendants bid for two lots at an auction, believing both
to be hemp. In fact, Lot A was one type of natural fibre, but Lot B
CASE STUDY was another substance called ‘tow’, which was of much less value.
The defendants refused to pay for Lot B and the sellers sued
Go-cart injury for the price. Both lots contained the same shipping mark, ‘SL’,
In Le Mans Grand Prix Circuits Pty Ltd v Iliadis and witnesses stated that in their experience, the two different
[1998] VSC 331, a person was injured after a substances never came from the same ship under the same
go-cart they were driving overturned. They had shipping mark. The defendants’ manager had been shown bales of
previously signed a document which attempted natural fibre as ‘samples of the ‘SL’ goods’. The court held that the
to exclude the track managers from liability in
defendants were mistaken as to what they were buying and as a
the event of injury. The plaintiff gave evidence
result could not be bound to the contract.
that he was not given time to read the document
he signed. Also, the document was headed ‘To
help with our advertising’, and he thought it was
a registration or ‘licence to drive’ form rather
than a type of contract containing an exclusion
clause. In a split decision, the court found that
in certain circumstances in which a person is
completely mistaken as to the nature of the
agreement they are signing, they may not be
bound by those terms. If they do not believe
a document is actually a contract, then they
cannot be held to be bound by the terms of the
agreement.
A mistake will not normally allow parties to avoid their responsibilities

under a contract

CCEs made substantial gifts of property to the superior of her order. She
➥ analysing ➥ recalling/remembering left the order 11 years later and five years after that she sued for
➥ expounding a viewpoint ➥ using correct spelling,
recovery of her property, alleging undue influence (based on the
➥ justifying punctuation, grammar
fact that she disposed of her property to her superior as a result
Exercise 2.1.9 of conversations she had with that person). In this instance, the
action failed primarily due to the time that had elapsed, rather
Civil obligations
1 What is the difference between a mistake of fact and a than a problem with the claim of undue influence itself.
mistake of law? (K&U)
2 What does non est factum mean? Explain how the Unconscionable dealing
doctrine is applied. (K&U) Sometimes, conduct goes beyond using influence unfairly. Parties
3 Should the courts allow the use of the doctrine non est to contracts do occasionally take ‘unfair advantage’ of another
factum to allow people to avoid their responsibilities party to such an extent that the courts will find that contracts
Topic 2
under contracts? Why or why not? (I) formed as a result of this conduct may be void. It is not the
function of the court to interfere if a person makes a ‘bad bargain’.
If someone has simply not made a contract that is particularly
advantageous to them, the court will not interfere for that reason
2.1.8 Other contractual issues alone. After all, in the commercial world, risk is a significant factor
Undue influence and a party must accept this when entering into agreements.
However, in some cases, the courts will find that a contract should
One of the difficulties the law attempts to deal with is when a not be allowed to proceed because it was unconscionable – in
party enters into a contract due to pressure brought upon them by good conscience, the agreement should not stand. It may be that
another party. If this occurs to such a degree that you were unable one party has taken unfair advantage of the other party’s lack of
to properly form an independent judgement about the contract, education, or their illness or problems with language. In cases like
then such a contract may be set aside. You cannot really be said this, the courts may set aside such a contract.
to have properly given consent to such an agreement of your own
informed free will. unconscionable being taken advantage of in a transaction in a way that
Certain relationships are presumed by the court to be offends the conscience
relationships that may give rise to undue influence. This means
that the onus of proof is on the party who is in the position of
An Australian case considered this issue. Commercial Bank
influence to prove they did not use that influence in an undue
of Australia Ltd v Amadio (1983) 151 CLR 447 involved an elderly
manner. The link between a solicitor and his or her client is such
Italian couple, Mr and Mrs Amadio. They had a son who requested
a relationship. The solicitor could be seen to be in a position to
they sign a mortgage to the Commonwealth Bank over property
influence the client to such an extent that the client acts in a
they owned, as security for their son’s company. It was the couple’s
manner that is not consistent with the exercising of their own
belief that their son’s business was secure when in fact he was
free and informed consent. They could be ‘talked’ into signing
experiencing serious financial difficulty, and this was known to the
a contract simply because of the trust they place in the solicitor.
bank. When the son’s company went into liquidation, the bank
CORE AREAS OF STUDY
Other relationships that may give rise to the presumption of undue
claimed $240,000 against the elderly couple under the terms of
influence are those between doctors and patients, parents and
the mortgage.
children, religious advisors and their ‘parishioners’, and trustees
The court found the Amadios were subject to unconscionable
and beneficiaries.
dealing. They were at a special disadvantage due to their age,
In the case of Allcard v Skinner (1887) 36 Ch D 145, undue
lack of formal education and language difficulties. They also had
influence was described as ‘some unfair and improper conduct,
mistaken beliefs as to their son’s affairs. When the documentation
some coercion from outside, some overreaching, some form
was signed, no explanation was given to them as to the effect of
of cheating and generally, though not always, some personal
the documentation, while it was clear to the bank that it was not
advantage gained’. In this case, the plaintiff was a nun who had

CCEs
Exercise 2.1.10
Read the following scenarios and answer the questions.
1 Graham is a lawyer who has a wealthy elderly client. She

dies, but not before she executes a contract to transfer
her house to him. Her relatives make an application to
have the contract set aside. Will they succeed? What
does the court need to consider in arriving at a decision?
(K&U, I)
a good transaction into which the Amadios should enter, as the
2 Michael is a chronic alcoholic. His son, Mitch, gets him
couple were not in a position to judge what was in their interests
to sign a document transferring ownership in the house
and both the bank and their son knew this. The contract was set
and family business over to him. What would need to be
aside.
established to set aside the transfer? (K&U, I)
Duress 3 Emma owns a beautiful house on the beach. One day

she is paid a visit by Stephen, a local ‘tough guy’. He
Related to the concepts of undue influence and unconscionable
says, ‘I like your house and I want to buy it. Sell it to me
dealing, but more serious, is the concept of duress. Duress is the
cheaply or something bad may happen to it’. Emma is
threatened or actual application of violence towards a party in
scared and sells the house to him cheaply. Could she
order to induce them to enter into a contract. The issue is whether
have the contract set aside? (K&U, I)
a party can be said to have truly consented to enter into the
contract of their own free will or whether they did so because
they felt they had no other alternative. The threats can be made
against the party to the contract, their immediate family or close
relatives. They also do not have to be made by the other party to
Lack of ‘good faith’
the contract but can be made on his or her behalf. The enforceability of contracts may be called into question in
The case Barton v Armstrong [1976] AC 104 dealt with threats to certain circumstances because of a lack of ‘good faith’. ‘Good faith’
a party made in order to induce them to enter into a contract. The (or uberrimae fidei, as it is known in Latin) essentially means that
former chairman of a company threatened the managing director information of relevance to the contract must be disclosed. This
with death if the managing director did not agree to purchase the means that in contracts of insurance, for example, a party applying
former chairman’s shares in the company. The managing director for insurance must disclose any and all important facts that may
agreed to do so. There was some evidence that the managing influence whether they would actually receive cover. If you were
director thought the agreement was ‘good business’ from his own applying for life insurance and you did not tell the insurance
point of view and that of the company. However, he claimed the company you had a terminal disease, this would be seen as a lack
agreement was void due to duress, as he did not wish to proceed of good faith.
with the contract. The court held that if the former chairman’s
threats were a reason for the director entering into the agreement, Restraint of trade
he was not bound by the agreement. This was the case even Sometimes, contracts are considered unreasonable by the courts
though he may still have entered into the contract if no threats as they unfairly restrict the ability of one of the parties to earn a
were made that induced him to do so. The onus was on the former living. Clauses in a contract that do this are held to be a restraint
chairman to prove that the threats he made contributed nothing of trade and may be set aside by a court. In considering whether
to the director’s decision to sign. these clauses should be allowed to have effect, the court must

examine whether the restraint is no more restrictive than is relation to the development and sale of foldaway ironing boards.
reasonably necessary to protect the rights of the parties to the The agreement contained restrictions on Hafele using or disclosing
contract. design information about the ironing boards, which Maggbury
Typically, a restraint of trade clause may form part of a contract claimed Hafele later breached when designing ironing boards of
of employment. It usually states that if the employee leaves his or their own. The confidentiality agreement stated the details were to
her bosses’ employment, the employee must agree not to work remain secret ‘forever’.
Civil obligations
in that industry/trade or occupation within a certain geographic The court found that such a time limit was too long and that
area and/or within a certain time so they do not compete with the information required to be kept secret had in fact already been
their former employer. The courts usually recommend such clauses disclosed at trade shows and the like by Maggbury. The restraint
are written with a number of alternatives in place. This is so in clauses were held to be unreasonable and therefore were held to
the event of a dispute, the court may have a number of options be unenforceable.
existing in the contract to consider, and then find as incorporated
Frustration
Topic 2
into the contract.
For example, the restraint clause may have the following times Sometimes, events occur after a contract is made which
and geographical limits in it: fundamentally change the nature of what the parties had
➥ one year and 5 kilometres contracted for, without any party being at fault. For example, if a
➥ five years and 10 kilometres party contracts with a painter to paint a portrait and the painter
➥ 10 years and 100 kilometres. dies before he can start work on it, the contract could be said
The court must decide which of these three clauses, if any, is to have been frustrated. Similarly, if a hall is hired to hold a high
a reasonable restriction on the ability of the employee to earn school dance and the hall burns down a week before the dance is
a living if he or she leaves his or her bosses’ employment. It is a to be held, this contract would also be frustrated without either
question of the relevant facts in each individual case as to what party being at fault. In such cases, it would be held to be unfair to
would be a reasonable restraint of trade. enforce the original agreement. It is rare for a contract to be set
Restraint of trade has also been applied to situations requiring aside for frustration, but when it occurs, both parties are to be
confidentiality agreements. In the case of Maggbury Pty Ltd v restored to the positions they had before the contract was entered
Hafele Australia Pty Ltd [2001] HCA 70, Maggbury entered into a into (deposits are repaid and so on).
contract in the form of a confidentiality agreement with Hafele in
CORE AREAS OF STUDY

Chapter review
The main points 2 According to the postal acceptance rule, when is

acceptance deemed to have taken place?
➥ An agreement is an exchange of promises between two
a once the letter of acceptance has been posted
or more people whereby one person promises to do
b once the letter of acceptance has been received
something and in return the other person promises to do
something else. c once the sender is aware the letter has been received
➥ Contracts (commercial agreements) are legally binding, d once both parties agree on a date (K&U)
and are usually written. They include terms, the main 3 An invitation to treat is:
ones being the conditions of the contract. a a counteroffer
➥ Some types of contracts must be written, such as the b an offer
sale of land or an automobile, door-to-door sales,
c an invitation to submit an offer to buy
transfers of shares and guarantees.
d all of the above (K&U)
➥ Acceptance occurs when the party to whom the offer
4 What are implied terms?
is made (offeree) agrees to the proposal of the person
making the offer (offeror). a those which can be logically assumed by the person
entering the contract
➥ Consideration is the value that passes from one party to
another in return for the promise made. b those which can be included in the contract
➥ Issues affecting the viability of contracts include c those which can be assumed by a court
capacity, conditions and warranties, misrepresentation, d those which can be logically assumed by a court
undue influence, unconscionable dealing, duress, lack of (K&U)
good faith, restraint of trade and frustration. 5 What are the three types of misrepresentation?
a guilty, negligent and fraudulent
How much have you learned? b innocent, negligent and mistake

c innocent, agreement and fraudulent
Multiple-choice questions d innocent, negligent and fraudulent (K&U)
Choose the correct response.
1 Which of the following criteria is not used to determine
Short-response questions
whether a valid contract exists? 6 Explain ratification and provide an example to
demonstrate it in practice. (K&U, I)
a Is there an agreement in existence between the
parties? 7 Find a recent media article that deals with a contractual
issue. Explain what the contractual issue is in relation to
b Is there a written contract?
the example that you have found. (K&U, I)
c Is any such agreement intended to be legally
binding? Extended response question
d Is the agreement supported by consideration? (K&U) 8 Write a short essay on whether you think the courts have
divided misrepresentation into three categories. Find
examples of cases to justify your response. (I, R)

Chapter 2.2
Statutory protection
Civil obligations
Topic 2
Historically, contract law has been an area of law that has primarily The Queensland Sale of Goods Act 1896 (Qld) applies to
relied on cases and the decisions of the courts to establish the individuals as well as companies, but it is possible to contract out
applicable legal principles. This is called ‘common law’. However, of the Sale of Goods Act 1896 (Qld) by incorporating a clause in the
in more recent times, government intervention in the area of contract stating that the provisions of the Act do not apply.
contract law has resulted in a series of statutes being passed at the The Competition and Consumer Act 2010 (Cth) imposes strict
state and federal levels. liability on manufacturers of defective products which may cause
These laws attempt to regulate or control certain contractual injury or damage. ‘Strict liability’ means that the manufacturers
common law principles, especially in the area of consumer will be liable if goods are defective, regardless of whether
protection. In most instances, the legislative provisions seek negligence can be proved in the manufacture. The Act also
to address concerns of a substantial difference or imbalance of sets out provisions which prohibit conduct that may mislead or
bargaining power between parties to a contract. deceive. This relates also to the concept of misrepresentation. No
This perceived imbalance generally relates to the increasing false or misleading representations may be made about things
number of large corporations with which people trade in modern such as price, quality, previous history of goods and the quantity
society. In the event of a dispute over contractual terms with a available, among other things. These provisions are mirrored in
multinational company, for example, the average person does the Fair Trading Act 1989 (Qld) and also apply to ‘persons’ rather
not have the resources to take action to resolve such a dispute in than just companies, expanding the scope of traders who may be
their favour. The bargaining position of the respective parties in caught by its provisions.
this case is clearly not equal. Therefore, it has become increasingly
important that the contractual rights of parties are protected, CORE AREAS OF STUDY
especially in the area of consumer protection.
2.2.1 The legislation

A few years ago, the Australian Government released the
Competition and Consumer Act 2010 (Cth), with the object of this
Act being to enhance the welfare of Australians through the
promotion of competition and fair trading, and provision for
The Competition and Consumer Act 2010 (Cth) imposes strict liability on
consumer protection. manufacturers of defective products which may cause injury or damage
C hap ter 2.2: Statutor y p rotec ti on 57

2.2.2 Implied obligations The goods will conform to the
description given by the seller
Both the Competition and Consumer Act 2010 (Cth) and the Sale
If a party wishes to purchase a sewing machine advertised for sale
of Goods Act 1896 (Qld) imply five very important conditions and
as being in ‘excellent condition’, then that party may reasonably
warranties into contracts:
expect the sewing machine to be in excellent condition. This is
1 The seller has the right to sell.
particularly important where the purchase takes place without
2 The goods will conform to the description given by the seller.
the buyer actually seeing the item, such as when ordering from a
3 The goods will be fit for the purpose for which they are
catalogue or over the internet.
intended.
4 The goods will be of merchantable quality.
The goods will be fit for the purpose
5 The goods will conform to the sample, if one was given.
for which they are intended
The seller has the right to sell This condition is implied when the party buying the goods tells
the party selling the goods the purpose for which the goods are
This condition is important as it assists consumers in avoiding
being bought, and the buyer makes it known they are relying on
situations in which they may have paid money for something
the skill and judgement of the seller. The seller is then required
which the seller has no right to sell. It may be the case that the
to provide goods which are reasonably fit for the stated purpose,
seller of the goods actually does not own the goods. For example,
as long as the goods are goods which it is in the seller’s business
these provisions mean that if you wish to purchase a boat, the
to sell. The case of Miller v Karaman Pty Ltd [2003] WASCA 249
seller of the boat is promising that they actually own the boat. If
illustrates the approach the courts take to cases like this. Karaman
this turns out to be incorrect, you may have to return the boat to
sold an amusement park to Miller, who found after he had paid an
its rightful owner, but you would be successful in a claim against
instalment that some of the rides and equipment were defective
the person who sold the boat to you. In common law, this was
and required substantial repair. The court found that the sellers
more difficult to do. Any legal restrictions on ownership, such as
were not dealers in the type of rides which were the subject of this
money still owing on the goods, must be brought to the attention
case. This meant that Miller could not rely on the condition and his
of the customer before purchase.
claim against the sellers failed.

The goods will be of 2.2.3 Exclusion clauses
merchantable quality
Many contractual terms are aimed at ensuring an agreement is
This implied condition means that the goods must be of
carried out in a way that is satisfactory to both parties. However,
reasonable quality, taking into consideration the purpose
some terms have a slightly different function. Exclusion clauses are
for which they were bought, the price and all other relevant
clauses whose primary function is to limit or exclude liability under
Civil obligations
circumstances. In Grant v Australian Knitting Mills (1936) 54 CLR 49,
a contract. In practical terms, this means that one party includes
the plaintiff purchased woollen underwear from a retail outlet.
a clause that tries to restrict their liability to the other party if
The garments contained excess sulfite and the plaintiff contracted
something goes wrong. They include these clauses to limit or
dermatitis from wearing them. The court found that the plaintiff
take away entirely the right of the other party to recover damages
could recover damages as the only proper purpose for which
against them.
underwear is purchased is to wear it next to the skin, and it was
Exclusion clauses do have some restrictions. A party may
not necessary in the circumstances for the plaintiff to state his
Topic 2
only rely on such a clause if (a) it has been incorporated into the
intended purpose in buying the underwear.
contract, and (b) it actually covers the loss in question. A party
The goods will conform to who wishes to rely on an exclusion clause must prove that it does
the sample, if one was given actually form part of the contract. This can be done by signature,
by notice, or by the way in which the parties deal with each other
If a sample is supplied, the goods must match the sample or the or have dealt with each other in the past.
buyer may be entitled to reject the goods. If you sample chocolate If you sign a contract and an exclusion clause is included in the
at a chocolate factory and it tastes really good, and you order a document, you are generally bound by it. This happens regardless
box of those chocolates on the basis of that sample, then you are of whether you have read or understood the document. However,
entitled to expect they will taste as good out of the box. if the other party misrepresented the effect of the document, then
The Competition and Consumer Act 2010 (Cth) also implies the document may be wholly or partially ineffective.
warranties. As they are warranties and not conditions, they give
rise to a right to claim damages rather than ending the contract.
Additionally, the warranties are implied into contracts for the
provision of services rather than sale of goods. These warranties
are as follows:
➥ that services will be delivered with due skill and care
➥ that the service will be fit for the purpose, if the purchaser has
made the purpose known
➥ that if materials are supplied with the service, the materials
will be fit for the purpose for which they are supplied.
CCEs Exclusion clauses do have some restrictions

➥ analysing ➥ recalling/remembering
➥ expounding a viewpoint ➥ using correct spelling, CORE AREAS OF STUDY
Exercise 2.2.1
1 Identify the terms implied into contracts by legislation. any action against the shop that sold the surfboard to you,
(K&U) or the manufacturer? (K&U, I)
2 You purchase a surfboard from a store. On your first wave, 3 Evaluate whether legislation imposes conditions in
the board snaps in half. The wave was small and you did contracts or whether that should be left to the parties.
nothing to place undue stress on the board. Can you take Justify your response. (K&U, I)

Difficulties often arise when an exclusion clause is contained responsible for articles lost or stolen unless handed to the
in an unsigned document such as a ticket or a notice. In cases like manageress for safe custody’. The court held the sign was not part
these, reasonable and sufficient notice of the existence of the of the contract between the hotel and the plaintiff. The contract
exclusion clause should be given. The following are necessary for was made in the hall of the hotel before the plaintiff entered her
this requirement to be satisfied: bedroom and before she had an opportunity to see the notice.
1 The clause must be contained in a contractual document.
2 The existence of the exclusion clause must be brought to the Reasonably sufficient notice of
notice of the other party before or at the time the contract is the clause must be given
entered into. It should be noted that reasonable, not actual, notice is required.
3 Reasonably sufficient notice of the clause must be given. It In Thompson v London, Midland and Scottish Railway Co [1930]
should be noted that reasonable, not actual, notice is required. 1 KB 41, the plaintiff gave her niece money to buy an excursion
4 What is reasonable is a question of fact. It depends on all of the ticket. The plaintiff could not read. The words ‘excursion, for
circumstances and the individual situation. conditions see back’ were printed on the front of the ticket, and on
the back, ‘issued subject to the conditions and regulations in the
The clause must be contained in company’s time-tables and notices and excursion and other bills’.
a contractual document The conditions stated that excursion ticketholders had no right of
If a document is merely a receipt, it is not considered a contractual action against the company in relation to any injury, however it
document. In the case of Parker v South Eastern Railway Co (1877) occurred. The plaintiff was injured when she stepped out of a train
2 CPD 416, the plaintiff left his bag in the cloakroom at the before it had reached the platform.
defendants’ railway station. He was given a ticket which read ‘see The court held that anyone who took the ticket knew there
back’. On the back were several clauses such as ‘The company will were some conditions and therefore was bound by them. It was
not be responsible for any package exceeding the value of £10’. irrelevant that the plaintiff could not read, taking into account
The plaintiff went to recover his bag but it could not be found. the fact that most people in England at that time could read, and
He claimed £24.10 as the value of his bag, but the company therefore the defendant had taken all reasonable steps to bring
sought to rely on the limitation or exclusion clause. In the Court the conditions to the attention of ticketholders.
of Appeal, Mellish LJ stated that if the person receiving the ticket
does not see or know that there is any writing on the ticket, then
they are not bound by the conditions. However, if he or she knows
there is writing, and knows or believes that the writing contains
conditions, they are bound by the conditions. If they know there
is writing on the ticket but do not know or believe that the writing
contains conditions, they are bound if the ticket is delivered to
them in such a manner that they can see there is writing upon it,
by the act that there is reasonable notice that the writing contains
conditions.
The existence of the exclusion clause

must be brought to the notice of the
other party before or at the time the
contract is entered into
In Olley v Marlborough Court [1949] 1 KB 532, the plaintiff was
staying at the defendants’ hotel when a thief stole her mink coat
from her room. There was a sign on the back of the bedroom
door which stated that ‘the proprietors will not hold themselves

What is reasonable is a question CCEs
of fact – it depends on all of the ➥ analysing
➥ using correct spelling,
circumstances and the individual ➥ justifying punctuation, grammar
situation
It is clear that attention should be drawn to the existence of
Exercise 2.2.2
Civil obligations
exclusion clauses by clear words on the front of any document 1 At the Smuggler’s Hole Ski resort, a sign on the
delivered to the plaintiff; for example, ‘for conditions, see back’. main chairlift reads, in large red letters, ‘Skiing and
The degree of notice required may increase according to the snowboarding are potentially hazardous activities. Ski
importance or ‘unusualness’ of the clause. In Thornton v Shoe Lane and ride at your own risk’. What would be the effect
Parking Ltd [1971] 1 All ER 686, a parking company failed to avoid of this sign if you broke your leg when you fell down
or limit liability for loss or damage suffered to customers or their getting off the chairlift? Explain your answer. (K&U, I)
vehicles while they were parked there. The plaintiff was given a
Topic 2
2 Would your opinion change if the sign was at the top
ticket by an automatic machine, which stated that it was issued of the chairlift (where you get off) rather than at the
subject to conditions displayed inside the car park. The conditions bottom (where you get on)? Explain your answer.
inside the car park were in small print and one of them excluded (K&U, I)
liability for damages to vehicles or injury to customers. The
3 Should traders be allowed to rely on exclusion clauses to
plaintiff was injured due partly to the defendant’s negligence. The
avoid liability? Why or why not? Make sure you consider
court held that the clause was so wide and unusual in its exclusion
the effects on the traders and the community generally
of rights that in order ‘to give sufficient notice, it would need to
in your answer. (K&U, I, R)
be printed in red ink with a red hand pointing to it – or something
equally startling’. The plaintiff was not bound by the notice
displayed inside the car park.
Even where there has been insufficient notice, an exclusion 2.2.4 Remedies
clause may be effective where there has been a previous consistent
The Competition and Consumer Act 2010 (Cth) sets out the
course of dealing between the parties on the same terms. In
remedies that consumers may pursue if they are affected by
J Spurling Ltd v Bradshaw [1956] 2 All ER 121, the defendant stored
breaches of implied statutory obligations. In general terms, a
barrels within the plaintiff’s warehouse. He later received a
wronged party must return the goods, give notice of the breach
document from the plaintiff which acknowledged receipt of the
of the statutory obligation and do so within a reasonable time
goods and contained a clause exempting the plaintiff from liability
of delivery of the goods. The Queensland legislation, the Sale of
for loss or damage ‘occasioned by the negligence, wrongful act
Goods Act 1896 (Qld), requires that the wronged party ‘walk away’
or default’ caused by themselves, their employees or agents. The
from the contract before taking delivery of the goods. They are
defendant refused to pay the storage charges when the goods he
allowed to take a reasonable amount of time to inspect the goods
had stored had been consumed or damaged while in the plaintiff’s
on delivery and may reject them then, but once the goods have
care. The plaintiff sued for recovery of the storage charges. The
been delivered, the only remedy available is to sue for damages.
defendant had received similar documents from the plaintiff when
The Fair Trading Act 1989 (Qld) remedies are similar to the CORE AREAS OF STUDY
he had used their services on previous occasions and he was held
Competition and Consumer Act 2010 (Cth) provisions.
to be bound by the terms contained in them.
remedy relief for loss/damage that may be given or ordered by a court to

compensate for a wrong

Causation CCEs
To be successful in claiming damages, the plaintiff must prove that ➥ expounding a viewpoint ➥ using correct spelling,
the breach of contract has caused financial loss. For example, if a
person contracts to buy a house for $750,000 and then does not
fulfil the contract, the house still belongs to the seller. However, if
Exercise 2.2.3
the seller is unable to sell the house for that price and eventually 1 According to the Competition and Consumer Act 2010
resells the house for $700,000, the original purchaser (who didn’t (Cth), the Sale of Goods Act 1896 (Qld) and the Fair
fulfil their contract) would be liable for the shortfall of $50,000. The Trading Act 1989 (Qld), what steps should a consumer
financial loss was caused by the breach of contract by the original take when they feel they have been affected by
purchaser. breaches of implied statutory obligations? (K&U)
2 Explain causation and provide an example, different to
Remoteness of damage that above, of when it could occur. (K&U, I)
The person who has not fulfilled a contract is only liable for the
3 Tracey is the coach of a netball team and receives a
financial loss that could be reasonably contemplated as likely to
bonus for each game that her team wins. Tracey is fired
result from the failure to perform the contract. If financial loss
before the season has finished. Would it be too remote
is too remote from the wrongful act, the wrongdoer will not be
for Tracey to claim damages for bonuses for games she
liable.
thought her team would win? (K&U, I, R)
For example, in the above scenario, if the homeowner decides
to take the house off the market for one year and then sells the
house at less than $750,000, the person who did not fulfil the
2.2.5 Contemporary issues in
original contract would not be liable for any shortfall as this
financial loss would be seen as too remote.
relation to agreements
In addition, parties to a contract cannot make a claim for worry A number of issues relating to agreements have arisen recently
or anxiety that may have been caused by the failure to perform the that are worth closer examination.
contract.

Alternative dispute resolution (ADR) made at mediation usually are not legally binding, unless the
mediation has been ordered by the court, as is becoming more
There has been a move away from more traditional forms of
common.
dispute resolution, such as court action, to measures known as
alternative dispute resolution (ADR).
Conciliation
A similar process to mediation is conciliation, which may be
Civil obligations
alternative dispute resolution (ADR) settling a dispute without having suggested in regard to forms of contracts such as residential rental
to go through a more formal process such as a court; methods include agreements. It is similar to the process of mediation in that the
mediation, conciliation, arbitration and settlement
conciliator attempts to assist the parties in resolving the dispute
without the cost and expense involved in litigation. Conciliators
There are a number of ways in which contractual disputes are not able to make binding decisions or force people to
may be resolved. If you are involved in such a dispute, the first participate in the process, but are likely to have more specialised
option should always be self-help. This means you should simply expertise in the area in dispute than mediators.
Topic 2
approach the other party, outline the nature of your complaint and
attempt to resolve the problem amicably. conciliation where the parties involved meet with a third person, a
conciliator, to try and settle their dispute
If this doesn’t resolve the problem, the next step is to seek legal
advice. Going to a lawyer can be expensive in the short term, but
the right legal advice may save money and stress in the long run.
Arbitration
However, taking a matter to court may not always be the best way
of resolving a dispute. Instead of going straight to court, which is Arbitration is a slightly different form of dispute resolution.
often costly and time-consuming, a party may seek to follow an Arbitration is a process often used in employment contract
alternative path such as mediation, conciliation or arbitration. disputes. It involves an impartial party, called an arbitrator, who
has the power to make binding decisions about the matter in
Mediation dispute. The advantages of arbitration are that the arbitrator
Recently, parties in dispute have been encouraged to mediate often has the special expertise or technical knowledge required
disputes rather than litigate. Mediation involves attempting to make decisions in relation to complex matters, as well as being
to settle a dispute without legal action. Generally speaking, it potentially less expensive than court proceedings. However, the
involves the parties in dispute meeting with mediators present disadvantages are that arbitration is only available in certain
who attempt to guide discussion between the two sides, to see if it contractual situations, and can sometimes be time-consuming in
is possible to reach agreement without resorting to litigation. complex matters.
The Queensland Government has established dispute
resolution centres around the state, so that parties in dispute may arbitration the hearing and determination of a dispute by an impartial
refer to these in an attempt to resolve their issues. Agreements referee agreed to by both parties; often used to settle disputes between
labour and management
It is also possible for a party to take a contractual dispute to the

Queensland Civil and Administrative Tribunal (QCAT). This body is
CORE AREAS OF STUDY
often called a consumers’ court, as it often hears disputes between
traders and consumers. A person can make a small claim if they
feel a trader has not treated them correctly, or if they are a trader
who disputes a spoken or written agreement with another trader
who has provided goods or services.
Parties represent themselves and the cost depends on the
amount of the claim. It is a forum that people in contractual
The Queensland Government has established dispute resolution centres in disputes can use to resolve a dispute without having to resort
which mediation occurs to potentially expensive professional legal representation. The

decision of the referee (a magistrate) is binding and not subject to
E-commerce
appeal.
E-commerce is having an impact on the laws relating to contracts.
Government ADR bodies The formation of contracts by email, for example, is something the
Government bodies have been set up to investigate claims and courts have recently had to consider. The difficulty of transferring
assist parties involved in certain types of contractual matters. One legal principles from the ‘paper world’ to the ‘electronic realm’ is
such body is the ADR branch of the Department of Justice and obvious.
Attorney-General.
The Office of Fair Trading, which is part of the Department of e-commerce electronic commerce (or EC) is the buying and selling of
Justice and Attorney-General, was established to promote fairness goods and services on the internet
and integrity in the marketplace. It is responsible for administering

the obligations imposed on parties under the consumer protection
The Electronic Transactions (Queensland) Act 2001 (Qld) and the
laws in place in Queensland. It will investigate complaints made in
Electronic Transactions Act 1999 (Cth) have attempted to deal with
relation to contractual matters and will also accept undertakings
this issue. In the main, these Acts preserve a large proportion of
made by a company, individual or partnership as an alternative
contractual common law principles as set out in contract case
to court proceedings. These undertakings can be given by a
law, but some issues are unresolved. Sections of the legislation
party indicating that they will abide by the consumer protection
concerning the receipt and dispatch of electronic communications,
legislative requirements, including the conditions implied into
such as email, apply to the formation of a contract, but there is no
contracts. The Australian Competition and Consumer Commission
clear indication in the legislation of the time at which a contract
is another body that may assist consumers who need assistance or
is actually formed. The courts must continue to rely upon general
information concerning their rights in particular contract-related
contractual common law principles to decide issues like this. As
matters.
electronic communication is a relatively recent phenomenon,
contractual law principles are still to be established in this area.
Electronic communication is a fairly recent phenomenon

Cooling-off periods Government involvement in
Another recent development in contract law has been the growing
contract-related matters
application of cooling-off periods. A cooling-off period is a time In recent times, governments have increasingly intervened in
period during which a party to a contract may reconsider their contract-related matters. Often this has been done to protect
commitment to completing the terms of the agreement. If they the consumer, as concerns have arisen about the imbalance in
Civil obligations
then decide not to proceed with the contract, they may withdraw bargaining power that may exist in our society when increasing
from it with a small, or no, penalty. A cooling-off period gives numbers of people are dealing in a commercial way with large
parties time to think through their contractual commitment and is corporations. In a dispute with bodies like this, obviously the legal
aimed at allowing more informed and reasoned decision making knowledge, financial ‘muscle’ and ability to absorb court costs
in contractual dealings. It may also help parties overcome the favours the companies rather than the individual.
difficulties that can occur when all of the relevant information is Governments have therefore become increasingly involved in
not disclosed to parties at the time contracts are entered into. regulating the contractual rights and responsibilities of parties.
Topic 2
As we have seen, this often takes the form of increased legislation
Rescission in this area. However, it is important to note that this legislation is
Mutual rescission, or rescission by agreement, is the discharging primarily the result of government intervention in areas previously
of both parties from the obligations of a contract by a new left to common law.
agreement made after the execution of the original contract but The law relating to agreements has therefore undergone some
prior to its performance. Rescission by mutual assent is separate to substantial changes in recent years. Changing technologies, legal
the right of one of the parties to rescind or cancel the contract for approaches and societal attitudes generally has meant that the
cause, or pursuant to a provision in the contract. way in which we make and enforce contracts in everyday life
The parties to an executory or incomplete contract can rescind has become increasingly complex. However, basic obligations
it at any time by mutual agreement, even if the contract itself still remain when we seek to regulate agreements, and it is our
contains a contrary provision. A rescission by mutual assent can responsibility as informed citizens to ensure that we are aware of
properly include a promise by either or both parties to make what we are agreeing to.
restitution. The right to rescind is limited to the parties to the
CCEs
contract or those legally authorised to act for them. As with ➥ analysing ➥ recalling/remembering
other contracts, the parties to the rescission agreement must be ➥ expounding a viewpoint ➥ using correct spelling,
mentally competent.
Exercise 2.2.4
1 Outline the advantages and disadvantages of
arbitration, mediation and conciliation. (K&U)
2 What sort of cases is QCAT able to decide? If Tony and
Greg have a dispute about a building contract that is
worth $50,000, in which court would the case be heard? CORE AREAS OF STUDY
(K&U, I)
3 Bianca enters into a contract to buy a unit in Cairns from
Kate. During the cooling-off period, Bianca terminates
the contract. What action can Kate take? (K&U)
4 Explain which party may rescind a contract. (K&U)
5 The Competition and Consumer Act 2010 (Cth) introduced
the Australian Consumer Law. Review the terms and
consider whether it adequately protects consumers.
Present these ideas to your class. (K&U, I, R)

Chapter review
The main points c arbitration
d conciliation (K&U)
➥ There has been a move away from more traditional forms
2 The Queensland Civil and Administrative Tribunal:
of dispute resolution, such as court action, to measures
known as alternative dispute resolution (ADR). a can hear disputes concerning amounts up to $7000
➥ Self-help should be the first option considered when a b is often called a ‘consumer’s court’
dispute arises. c cannot hear contractual matters involving property
➥ Parties can seek legal advice if self-help does not work. d none of the above (K&U)
➥ A party may seek to take the ADR path, which involves the 3 A cooling-off period allows:
processes of mediation, conciliation and arbitration.
a contracts to be terminated for breach of statutory duty
➥ The Queensland Civil and Administrative Tribunal is often
b a party to walk away from a contract with little or no
called a consumer’s court, as it can hear disputes between
penalty
traders and consumers.
c a party to require the other side to be bound by
➥ Government bodies have been set up to investigate claims
contractual terms
and assist parties involved in certain types of contractual
d both parties to refer the matter to mediation (K&U)
matters.
➥ The Electronic Transactions (Queensland) Act 2001 (Qld) and 4 Agreement is:
the Electronic Transactions Act 1999 (Cth) have attempted a offer and acceptance
to deal with e-commerce and the effects of technology on b invitation to treat and offer
contract law. c invitation to treat, offer and acceptance
➥ The formation of contracts by email is something the
d none of the above (K&U)
courts have recently had to consider.
5 The elements required for a valid contract are:
➥ A cooling-off period is a time period during which a
a agreement, intention to be legally bound, and
party to a contract may reconsider their commitment to
acceptance
completing the terms of the agreement.
b intention to be legally bound, capacity and
➥ In recent times, governments have increasingly intervened
repudiation
in contract-related matters. Often this has been done
to protect the consumer as concerns have arisen about c agreement, intention to be legally bound, and
the imbalance in bargaining power that may exist in our consideration
society when increasing numbers of people are dealing in d offer, acceptance and intention to create consideration
a commercial way with large corporations. (K&U)
➥ There has been an increase in contact between ordinary
Short-response questions
members of society and contractually binding agreements.
6 Explain the difference between arbitration and
conciliation. (K&U)
How much have you learned?
7 Explain the parol evidence rule and give an example of its
Multiple-choice questions application. (K&U, I)
Choose the correct response.
Extended-response question
1 The first option for resolving a contractual dispute should
8 Why has the concept of ADR proved popular with parties
be:
involved in contractual disputes? (R)
a self-help
b court action

Chapter 2.3
Negligence
Civil obligations
Topic 2
Laws of negligence are a form of civil law, specifically tort law,
2.3.1 Negligence and duty
that apply when a person fails to take reasonable care, and injury
or damage results. (We will take an in-depth look at tort law in
of care
Topic 5.) Laws against negligence are required in order to protect innocent
victims from any loss or suffering they may have experienced due
negligence an important legal principle that enables a party who has to someone else’s negligence. Negligence principles are applied
suffered loss or damage resulting from the wrongful actions or inactions
by judges to almost every situation in which a person has suffered
of another to claim compensation from the party responsible for their loss;
no contractual relationship between the parties is necessary personal injury, property damage or economic (financial) loss. The
law of negligence requires that the injured person find someone
to blame for the incident. The courts then have the power to order
In civil law, the government or police are not involved in
that person to pay compensation for the injury, loss or damage
the proceedings. However, some civil matters may also involve
to the innocent party. This way of apportioning blame according
criminal proceedings; for example, if a person attacks someone,
to the person at fault is still regarded by our legal system as the
they could be charged with assault as well as a civil case of
fairest way of compensating people for their loss. The threat of a
personal injury through negligence or trespass.
lawsuit against anyone who behaves negligently is meant to act as
The difference between contract or agreement law and tort
a deterrent against negligent behaviour in the community.
law is that with agreements, there is already a legal relationship
Thus, the main purposes of the laws regarding negligence are
between the parties involved at the time of the wrong, whereas
to:
in torts there is no legal relationship prior to the wrong. Contracts
1 compensate victims who have suffered loss by transferring the
also result in some item or process of self-interest.
CORE AREAS OF STUDY
loss from them to the person who caused the loss
A landmark case in establishing the difference between tort law
2 deter members of our society from engaging in unsafe
(negligence) and contract law is the ‘snail in the bottle’ case.
behaviour without due regard for others, by imposing heavy
personal and financial penalties for such behaviour.
Negligence can:
➥ be accidental harm
➥ result in all types of accidents
➥ cause physical and/or property damage
➥ be careless business errors.
Negligence is different to criminal law, although a crime such as
dangerous driving can also constitute negligence.
C hap ter 2.3: Negl igence 67

CASE STUDY
Donoghue v Stevenson [1932] AC 562
Facts: May Donoghue (the appellant) was bought Issues: Negligence – liability of manufacturer to
some ginger beer by a friend in the town of Paisley, ultimate consumer even though there is no contract;
Scotland. The ginger beer was in a dark, opaque article of food – defect likely to cause injury to health.
glass bottle which prevented May
from seeing the contents. Some of
A decomposing snail found
the beer was poured into a tumbler
in ginger beer formed the
for her, which she drank. Her friend basis of litigation
then proceeded to pour the rest of
the bottle into May’s tumbler and it
was then that a decomposing snail
floated out of the bottle. Needless
to say, it made May quite ill to think
she had drunk some of the soda; she
consequently also suffered severe
gastroenteritis. May sued Stevenson
(the respondent), who was the
manufacturer of the ginger beer.
Donoghue alleged that Stevenson
had failed in his duty to provide:
➥ a system of working his business
which would not allow snails to get
into his ginger beer bottles
➥ that it was also his duty to provide an efficient Decision: The decision handed down in Donoghue
system of inspection of the bottles before they got v Stevenson [1932] AC 562 became a landmark one
to the consumer. and formed the basis of the tort of negligence
Lord Atkin, one of the presiding appellate judges, worldwide, not only because of the judgment relating
decided that a manufacturer is under a legal duty to to non-contractual duty of care, but also Lord Atkin’s
the consumer to take reasonable care that the article establishment of the ‘neighbour principle’:
will not cause injury to health. Lord Atkin referred to The rule that you are to love your
the precedent case of Le Lievre v Gould [1893] 1 Q B 491, neighbour becomes in law, you must not
in which the presiding judge also found that ‘under injure your neighbour; and the lawyer’s
certain circumstances, one man may owe a duty to question, Who is my neighbour? receives a
another, even though there is no contract between restricted reply. You must take reasonable
care to avoid acts or omissions which you
them. If one man is near to another, or is near to the can reasonably foresee would be likely to
property of another, a duty lies upon him not to do that injure your neighbour. Who then, in law,
which may cause a personal injury to that other, or may is my neighbour? The answer seems to be
injure his property’. – persons who are so closely and directly
This was particularly important because up until this affected by my act that I ought reasonably
to have them in contemplation as being so
case, individuals had no remedy against suppliers with
affected when I am directing my mind to
whom they didn’t have a contract. As May Donoghue the acts or omissions which are called in
did not actually buy the bottle of ginger beer, in normal question.’
circumstances she would not have been able to sue
as she had no contract or legal relationship with the
manufacturer.

A successful negligence suit must have three elements present and an implicit responsibility placed on all individuals that they
– a duty of care, a breach of that duty, and injury or damages accept a reasonable and identifiable standard of care while
suffered as a result of that breach. doing anything (or not doing something, which is known as an
‘omission’) that could foreseeably harm others. That is, if you can
Element 1: see that what you are about to do is going to hurt someone, the
Does a duty of care exist? responsibility is on you not to do it.

The first thing to consider when deciding whether negligence has
occurred is whether a duty of care actually exists between the duty of care a legal obligation imposed in circumstances where harm
could be reasonably foreseen to occur to others
parties. If there is no duty of care owed, then no negligence claim
can arise. A duty of care means that there is a legal obligation
Definition of negligence:
The breach of a legal duty to take care, resulting in damage
to the claimant which was not desired by the defendant.
L B Curzon, Dictionary of Law
Element 1 Element 2
DUTY OF CARE BREACH OF THAT DUTY OF CARE, AND PROOF
A duty of care may be found by applying the ‘neighbour’ Negligence is falling below the standard of what is
test established in Donoghue v Stevenson [1932] AC 562 considered reasonable by the ‘ordinary’ person.
Rep 1. The following four factors are considered when courts
In recent times, the following must also be considered: decide if there has been a breach.
The claimant must provide evidence. If none available –
res ipsa loquitur, that is, the thing speaks for itself.
b) Whether
a) Whether the c) Whether
there is a legal
consequences in all the
relationship
of damage or circumstances a) The
or physical
harm of the it would be degree
closeness d) The
defendant’s fair, just and of risk b) The
(relationship c) The social
act were reasonable that involved. practicability
of proximity) seriousness importance
reasonably the law should That is, the of taking
between the of harm. of the risky
foreseeable. impose a duty. likelihood precautions.
parties. activity.
of harm
occurring.
Circumstantial
Causal
proximity
Physical proximity is
involves Element 3
proximity (in the closeness
a special DAMAGE CAUSED BY THE BREACH OF DUTY
the sense of or directness
relationship CORE AREAS OF STUDY
space and of the causal
between the
time) between connection or
parties, such
the person or relationship a) Causation:
as employer b) Remoteness of
property of the between the Harm would not have
and employee damage
plaintiff and particular act occurred ‘but for’ the
or professional When establishing
the person or or course of actions of the defendant.
and client, that causation, it must be
property of the conduct and
give rise to a proven that the damage
defendant the loss or
presumed duty was not too remote from
injury sustained
of care the negligent act.
Negligence at a glance

In Donoghue v Stevenson [1932] AC 562, the presiding judge, CCEs
Lord Atkin stated that a person ‘must take reasonable care to avoid ➥ analysing ➥ recalling/remembering
➥ judging/evaluating ➥ using correct spelling,
acts or omissions which you can reasonably foresee would be
likely to injure your neighbour’. Furthermore, in his decision, Lord
Atkin went on to say that neighbours were ‘persons who are so Exercise 2.3.1
closely and directly affected by my act or omissions that I ought
1 Research the case of Rogers v Whitaker (1992) 175 CLR
reasonably to have them in contemplation’. This is known as the
479, Bolitho v City and Hackney Health Authority [1997]
‘neighbour principle’ (see the case study above). The concept of
4 All ER 771 or Chappel v Hart (1998) 156 ALR 517 and
reasonableness is therefore of significance in establishing whether
write a detailed paragraph outlining all of the issues
or not duty of care is owed.
involved (in relation to both parties) and all of the facts
A reasonable person is simply defined as ‘the ordinary
of the case. (K&U, I, R)
person on the street’. What that person would have done in the
same circumstances needs to be considered. The concept of a 2 In pairs or small groups, discuss the following scenarios
‘reasonable person’ was first developed in the case of Vaughan v and determine what standard of care would be
Menlove (1837) 3 Bing NC 467. The defendant built a haystack near expected by the court of the person responsible for you.
the boundary of his land, where it bordered the plaintiff’s land. a You are a first-time skier on a school trip and end up
The haystack caught fire despite a chimney having been built to breaking your leg while skiing down the beginner’s
try and stop it from igniting – the defendant had been warned this slope.
might happen but stated that he ‘would chance it’. The fire then b A friend who has just recently gotten their P-plates
spread to the plaintiff’s land, burning down two of the plaintiff’s sees you walking to school, picks you up and then
cottages. has a car accident in which you are injured badly
At the trial, the judge directed the jury to consider ‘whether enough to require being taken to a hospital.
the fire had been occasioned by gross negligence on the part of
c You are sitting on your school’s oval without a hat or
the defendant, adding that he would be bound to proceed with
any other form of sun protection.
reasonable caution as a prudent man would have exercised under
d You and your friends are playing truant and a
such circumstances’. The jury found the defendant negligent as he
teacher sees you. (K&U, I)
had not acted with reasonable prudence or care.
The standard of care which must be exercised by people is
the standard of the ‘reasonable person’. That is, what would a
reasonable person be expected to do in those circumstances? The
‘normal’ standard of care is considered by the courts to depend
upon:
➥ the degree of risk involved; that is, the more risky the activity,
the higher the standard of care
➥ the practicability of taking precautions
➥ the seriousness of potential harm
➥ the social importance of the activity; for example, most people
would understand the importance of an ambulance having to
drive over the speed limit to reach a seriously injured person.

Although the term ‘neighbour’ was defined in Donoghue v Foreseeability
Stevenson [1932] AC 562 case, Caparo Industries Plc v Dickman
An important part of establishing whether a duty of care is
[1990] 2 AC 605 has become the authority for answering the
owed is whether the chance of injury or damage is reasonably
question ‘Who is my neighbour?’ It was determined in this case
foreseeable. Foreseeability is when a reasonable person is able
that there are three separate requirements regarding duty of care
to predict that harm will take place if care isn’t taken in a particular
to our neighbours:

situation.
1 It must be foreseeable that if one party acts carelessly, the
other party will suffer injury or damage.
reasonably foreseeable used in connection to a negligence action to
2 There must be a sufficient degree of proximity or closeness establish whether damage or injury could have been seen by a reasonable
between the two parties. person as being likely to have occurred
3 The duty of care must be fair, just and reasonable.
CASE STUDY
Strong v Woolworths Ltd [2012] HCA 5
Facts: On 24 September 2011, Ms Strong was shopping all possibilities, the likely cause of Ms Strong’s fall and
at Big W (owned by Woolworths Ltd) in the Centro injuries.
Shopping Centre in Taree. Big W had arranged a display Law: The laws that were considered and applied are in
of pot plants on sale around the store’s entrance, which s 5D(1) of the Civil Liability Act 2002 (NSW), which states
it was responsible for cleaning. Ms Strong, who was an that:
amputee and used crutches, was approaching the pot A determination that negligence caused
plants at lunchtime when one of her crutches slipped particular harm comprises the following
on a chip, causing her to fall and suffer serious spinal elements:
injuries. While the shopping centre had cleaners that (a) that the negligence was a necessary
inspected and cleaned common areas of the shopping condition of the occurrence of the harm
(factual causation), and
centre every 15 minutes, Big W did not, and its cleaners (b) that it is appropriate for the scope of the
had not inspected the area displaying the pot plants negligent person’s liability to extend to the
since 8 a.m. Ms Strong commenced proceedings harm so caused (scope of liability).
against Woolworths Ltd and CPT Manager Ltd, the
Arguments: Ms Strong argued that a reasonable time
owner of the shopping centre, in the New South Wales
period in which the chip may have been dropped on
District Court, claiming negligence and damages.
the floor was between 8 a.m. and 12.10 p.m., although
The District Court found Woolworths Ltd liable and
there was little evidence to suggest whether the chip
awarded Ms Strong $580,299; the claim against CTP
had been on the ground for a short or long time. As
Manager Ltd was dismissed. However, Woolworths
such, it could be argued that Big W did not have an
Ltd appealed in the New South Wales Court of Appeal,
adequate system for inspecting and cleaning.
which overturned the decision of the District Court. The
Decision: On 7 March 2012, the High Court decided
Court of Appeal found that Ms Strong had not proven
that Woolworths was responsible for Ms Strong’s
CORE AREAS OF STUDY
that if Big W’s cleaners had inspected the store at
injuries, upholding the earlier decision of the New
15-minute intervals, she would not have slipped on the
South Wales District Court.
chip. Ms Strong then appealed that decision and the
Reasons: The High Court stated that ‘reasonable care
matter was heard in the High Court of Australia.
required inspection and removal of slipping hazards at
Issues: The High Court was to decide whether Big W’s
intervals not greater than 20 minutes’.
alleged failure to adequately inspect and clean areas of
their responsibility was, when taking into consideration

CCEs It may be physical in that an act done by the defendant may
➥ analysing ➥ recalling/remembering physically impact on the person or property of the plaintiff. An
example may be if a boy shot another boy with a paintball gun. If
the shooter is close enough to hit the other boy, then clearly they
Exercise 2.3.2 were in physical proximity.

It may also be circumstantial, in that a special relationship may
1 Regarding the case study on page 71, evaluate exist between a plaintiff and a defendant that would give rise
whether Ms Strong should have won the case against to the degree of ‘closeness’ so that the actions/inactions of one
Woolworths. Why/why not? (K&U, I) would normally affect the other, such as between a professional
2 Consider the other factors at play which contributed to person and their client. Let’s say that a lawyer forgets to file an
Ms Strong’s injury. (K&U, I) important document on behalf of a client and causes the client
3 Ms Strong had been unable to provide any evidence on to lose a large sum of money. The lawyer may not have been in
how long the chip had been on the ground. Discuss if physical proximity to the client, but by virtue of circumstances and
you think this is a reasonable expectation. Evaluate why relationship, clearly the lawyer’s actions have caused damage to
this is an important element. (R) the client.
CCEs
Proximity ➥ comparing/contrasting
punctuation, grammar
Another issue to consider is whether there is a relationship of

proximity between the parties that may give rise to a duty of care. Exercise 2.3.3
Proximity involves the notion of nearness or closeness between
1 What is meant by the term ‘duty of care’? (K&U)
the parties.
2 Who is the ‘reasonable person’? (K&U)
proximity the degree of ‘closeness’ required between an action or 3 Explain the difference between ‘foreseeability’ and
inaction and damage suffered in order for a negligence action to succeed ‘proximity’ in determining whether a duty of care exists.
Give examples of each. (K&U, I)
Fair, just and reasonable

Even if the harm is reasonably foreseeable and there is proximity
between the plaintiff and the defendant, a court may still find that
there is no duty of care if it is not fair, just or reasonable to impose
a duty on the defendant. This is typically a matter of public policy
and is where the courts have to take circumstances into account
and decide if it is in the public interest to find a duty of care. This
final factor covers a range of issues such as if the obligation of
a duty of care would impede the defendant from doing his job
properly, or if the injured person is assisting in a criminal act.
Physical proximity

CCEs
➥ finding material in an indexed collection ➥ using correct spelling, punctuation, grammar
Exercise 2.3.4

Read the article below and answer the following questions. 2 Do you think a duty of care exists in this case? (K&U, I)
1 Describe the facts of the case as presented in the following 3 This case was appealed. State what you think the outcome
article. (K&U) of the appeal was, then research the outcome. (K&U, I, R)
Teen awarded $50,000 after breaking licensee when he attacked the intruder. He conceded
and entering sends wrong message, that Newton could not have been expected to allow the
cries justice spokesman unauthorised Fox to remain on the premises, but said the
degree of force used was unnecessary.
29 August 2002
Teenager Joshua Fox was today awarded $49,049 in
damages by the NSW District Court after being attacked
upon breaking into the home of a hotel licensee. After the
16-year-old was denied access to Sydney nightclub the
Peakhurst Inn in April 1999, he climbed onto the roof and
entered the on-site residence of Honeheke Gerald Newton,
the nightclub licensee. When Newton, who lived there
with his family, found an aggressive and inebriated Mr Fox
hiding in his laundry, he used a baton-like object to strike
the intruder repeatedly in the head, causing Fox to gain
injuries which required surgery.
Michelle Lee Killby, Mr Fox’s mother, was also awarded
$18,578 in damages after suing for nervous shock, such as
sweating, insomnia, episodes of crying and nightmares, all
of which were caused by seeing her son’s severe injuries.
The presiding judge, John McGuire, stated that ‘the
plaintiff was intoxicated, argumentative and so on and
that he had created a situation in which the use of force to
expel him was a natural and lawful consequence of his own
misbehaviour. However, the degree of force used was in the
end unlawful and not the necessary consequence of his own
condition and behaviour’.
However, the judgment has sparked much criticism
of the law for backing up the intruder instead of the
householder. NSW Opposition justice spokesman Chris
Hartcher today stated that ‘the legal system must stand
behind the homeowner, not the burglar. No legal system
can tolerate situations where criminals are allowed to use
the law for their own profit’.
McGuire found that the Peakhurst Inn was liable for CORE AREAS OF STUDY
Mr Newton’s actions as he was performing his duty as
Element 2: balance of probabilities, that the defendant had a duty of care and
Breach of the duty of care that duty has been breached. This simply means that in negligence
cases, it is the responsibility of the plaintiff to prove that the
Once it is established that the defendant owed the plaintiff a duty
defendant was probably responsible for the damage suffered due
of care, it is then necessary to prove that the defendant breached
to a breach of the defendant’s duty of care to the plaintiff.
that duty. A plaintiff has the burden of proof to prove, on the

To decide if a breach of the duty of care has occurred, the
Element 3:
court will ask the question: Has the defendant failed to reach the
Damage resulting from breach
standard of care as required by the circumstances in this case?
of duty of care
Once a breach of duty of care has been proved, it is necessary to
standard of care the degree of caution required, usually with reference to
the ‘reasonable person’, of an individual who owes a duty of care show that the breach resulted in damage to the plaintiff. In most
cases, proving that damage occurred as a result of the breach is
relatively simple. However, if something happens between the
Each case will be decided on its facts. If the court finds that a
time of the breach of duty of care and the damage or loss suffered,
reasonable person would not have acted as the defendant did,
then that intervening act breaks the causal relationship between
then it is likely that a breach of a duty of care would have occurred.
the defendant and the plaintiff.
For example, watching a game of cricket is not really a dangerous
The defendant in a negligence suit must have been able to
activity, unless you get hit by the ball. Nor should living near a
reasonably foresee that someone could be hurt by their actions.
cricket ground be dangerous, especially if protective fences have
If they could not have seen this, it would be held that the
been erected around the field.
possibility of damage was too remote. This concept is referred to
CCEs
Exercise 2.3.5
1 Identify the question that needs to be asked to determine if d The local council patrols boat ramps for sightings
a duty of care has been breached. (K&U) of crocodiles. They find a crocodile but don’t have
2 Read the following scenarios and decide whether a duty of adequate equipment to catch the animal and relocate
care has been breached. it. Later that night, the crocodile attacks a fisherman
and takes his leg. The fisherman sues the local council.
a Jack rides the dodgems at the local show for the first
(K&U)
time. He is instructed to wear his seatbelt and given
some basic safety instructions. However, although
Jack has very long hair, he isn’t instructed to tie his hair
back. His hair gets caught in the dodgem and is ripped
from his scalp. He sues the operator of the dodgems for
negligence.
b Greg breaks his back when he dives off a cliff into a rock
pool at a national park. The national park authority
knows the rock pool is a popular swimming spot, but it
has not erected any warning signs to inform swimmers
of potential risks. Greg sues the national park authority
for negligence.
c While the Home Economics teacher is out of the
classroom, a student is pushed into a pot of boiling
water, resulting in third-degree burns. The student’s
parents take legal action.
Breach of duty of care

as ‘remoteness of damage’, which we discussed in the previous
Contributory negligence
chapter. It is particularly interesting to consider how ‘remote’
If a plaintiff’s own negligent actions contributed to their injury or
the possibility of damage is when cases regarding the plaintiff’s
damage, the defendant may not be held completely liable. This is
state of mind are examined. These cases are often referred to as
the essence of the defence known as contributory negligence.
‘nervous shock’ cases.
The courts are prepared to award damages even where the person
Civil obligations
CCEs has contributed to their own injuries; however, it does require
➥ analysing ➥ recalling/remembering a causal connection between the plaintiff and the damages
➥ finding mateial in an indexed ➥ using correct spelling,
collection punctuation, grammar sustained. If the defence of contributory negligence is successfully
➥ judging/evaluating used, the amount of damages awarded to a plaintiff will be
reduced.
Exercise 2.3.6
Topic 2
Using the internet, research the High Court case Mount contributory negligence a partial legal defence to a negligence action
that may allow the person responsible for damage done to the plaintiff to
Isa Mines Ltd v Pusey (1970) 125 CLR 383 and answer the
claim that the plaintiff in fact contributed in some way to the damage and
following questions. therefore that the damages payable should be reduced; see also ‘damages’
1 Identify and explain the five issues of relevance to this

case. (K&U, I, R)
An example of contributory negligence would be if a driver
2 Summarise the facts of the case. (K&U, I, R) negligently drove into the path of another car, whose driver was
3 Can there be an appeal from this case? If so, to which looking in the rear-view mirror at the time, causing a collision. The
court? (K&U, I, R) other driver was also driving negligently and couldn’t avoid the
accident. Both drivers contributed to it.
When a person has contributed to negligence, there will be a
reduction in the damages to which the plaintiff is entitled. In fact,
2.3.2 Defences to negligence the courts will apportion liability between the plaintiff and the
defendant, thereby reducing the damages payable to the plaintiff
In order to successfully bring an action in negligence, the
to an amount seen as being in proportion to the amount of harm
burden of proof lies with the plaintiff, who must prove all parts
he or she has caused to himself or herself. For example, if the court
of their claim, on the balance of probabilities. That is, but for the
awards a sum of $100,000 to the plaintiff but they are held to have
defendant’s negligence, the plaintiff would not have been caused
contributed to their own injury, the damages awarded may be
actual injury or loss.
reduced, for example, by a figure of 40 per cent. This means that
However, by providing a defence, the defendant can decrease
the court has found that the plaintiff was 40 per cent responsible
or escape any liability. The three most common defences available
for their own injury and therefore they will only receive $60,000 –
to cases of negligence are:
being the $100,000 less 40 per cent.
➥ contributory negligence
Contributory negligence is sometimes referred to as a partial
➥ volenti non fit injuria (voluntary assumption of risk)
defence, as the defendant is still held responsible for some
➥ illegality of activity.
proportion of the damage suffered. The Law Reform Act 1995 (Qld),
CORE AREAS OF STUDY
All of these defences have been affected, to some extent, by
s 10, ensures that the defence of contributory negligence applies
the relatively recent passing of legislation in Queensland.
in negligence cases in Queensland. The Civil Liability Act 2003 (Qld)
also states, in s 24, that a court can reduce a damages award by
100 per cent if it considers it ‘just and equitable’ to do so.

CCEs
Exercise 2.3.7
Read the article below and answer the following questions. 2 Evaluate whether the outcome is fair, just and equitable.
Justify your reasoning. (I)
1 Identify the legal issues associated with the case. (K&U)
3 Consider an alternate recommendation for the outcome of
this case. (K&U, I)
A 12-year-old boy has won a medical with labour’, Mr Wilson said.

negligence case against an obstetrician and Witnesses claimed that upon reading the CTG, Dr
Victorian private hospital Marshall said, ‘Why wasn’t I told of this?’ and ‘This is
serious’.
23 August 2012
Dr Marshall eventually told Mrs Hanssen to stop
In the second day of trial, the case of disabled Darcy pushing, as he was going to attempt a forceps delivery,
Hanssen was settled. SC for Darcy, Michael Wilson, resulting in Darcy’s delivery over an hour later, by
had earlier informed the jury that Hanssen was suing caesarean, in an extremely bad condition. Midwives
the Peninsula Private Hospital and obstetrician Dr Brett informed Mrs Hanssen that because Darcy was not
Marshall through his litigation guardian, father Henry expected to live, she was to go home to spend some time
Hanssen, for ‘many many millions of dollars’ in damages. with him while she still could.
Submissions from the parties were heard at an ‘in camera’ Dr Marshall’s lawyer, Mr Jack Rush QC, said that
hearing at a request from Justice Anthony Cavanough, who the accusations made against his client should instead be
also dismissed the jury. However, sources believe that both directed at the hospital as there was an ‘absolute failure’ by
the hospital and Dr Marshall are denying liability. its midwives to keep the doctor notified during the delivery.
The amount of compensation for the negligent care that Rush produced evidence that while the printout from the
Darcy and his mother received during childbirth is to be CTG showed Darcy was in a critical condition, nursing
approved by the Supreme Court. notes from the time did not mention this.
Mr Wilson said that Mrs Hanssen was given extreme
doses of Sentocinon, a drug used to bring on contractions,
during an induced labour. It was the excessive use of this
drug that caused Darcy to suffer a hypoxic brain injury,
resulting in him being born with cerebral palsy. The
jury heard that as a result, Darcy needs full-time care, is
wheelchair-bound and is not expected to live past 30.
According to Mr Wilson, at 8.30 p.m. on 10 March
2000, there was a crucial, currently disputed phone call
between several of the hospital’s midwives and Dr Marshall.
In his defence, Dr Marshall claimed that he was under the
impression that Mrs Hanssen was fully dilated, the baby
had a normal foetal heart rate, and the birth was going as it
should. However, according to Mr Wilson, ‘Nothing could
be further from the truth’.
As part of the hospital’s defence, the court heard that the
midwives told Dr Marshall the baby was having episodes
of high heart rate. Mr Marshall arrived at the hospital at
10 p.m. and proceeded to examine a CTG printout which
recorded both the mother’s contractions and the baby’s
heart rate. The jury heard today that it would become
evident that the CTG printout indicated the difficulties
should have been apparent hours before Darcy was
delivered.
‘The expert evidence will be that Darcy was
experiencing very severe foetal distress. He wasn’t coping Wheelchair-bound Darcy Hanssen leaves the Supreme Court

Volenti non fit injuria volenti non fit injuria Latin for ‘voluntary assumption of risk’; it is used as
a legal defence to a civil action for damages suffered by a party, usually in
Volenti non fit injuria (also known as volenti) means ‘voluntary negligence or assault actions
assumption of risk’. To be able to use this defence, the defendant
must be able to demonstrate that the plaintiff voluntarily
consented to, and accepted, either by words or actions, that If the voluntary assumption of risk defence is used, this will

there was a degree of danger in the activity in which they were deny the plaintiff the payment of any damages. The following case
participating. However, there can be no defence if the plaintiff was demonstrates that there is some similarity between the defences
compelled to participate in the activity. of contributory negligence and volenti non fit injuria.
CASE STUDY
Brown v Motor Vehicle Insurance Trust [1980] PNGLR 409
The plaintiff, aged 27 (29 by the time of the trial), The principal injury suffered by the plaintiff was a
claimed damages for personal injuries arising out of a dislocation fracture of the second and third cervical
motor vehicle accident. The plaintiff was a passenger vertebrae. Treatment included three weeks in callipers
in a motor vehicle driven by a woman who admitted with skull traction, which resulted in indent scars in the
that prior to the accident she had drunk eight Bacardi skull, followed by three months in a semi-brace, then a
and cokes and smoked some marijuana. The defendant cervical collar. The residual disabilities included a sense
raised the following defences: of stiffness and a tired feeling in the neck, along with
1 there was no breach of duty by the driver as the occasional headaches and an inability to engage in
plaintiff knew the driver was adversely affected by sporting activities, such as tennis and rugby, or to lift
alcohol and drugs and therefore could only expect heavy objects.
the standard of care from one so affected The decision of the court was that:
2 volenti non fit injuria ➥ the standard of care to be attributed to the driver
3 contributory negligence. of a motor vehicle is an objective one, measured by
the standard of a skilled, experienced and objective
driver
➥ it makes no difference if the driver is drunk, deaf,
one-eyed or inexperienced, and it makes no
difference to the duty of care owed to passengers,
if a passenger knows the driver to be drunk (and so
on)
➥ contributory negligence is a failure to take
reasonable care for one’s own safety: in the context
of a passenger and a drunken driver, it means the
passenger’s carelessness in regard to his own safety
in accepting a lift and thereby exposing himself to CORE AREAS OF STUDY
the obvious risk of injury (voluntary assumption
of risk) that can reasonably be expected from the
driving of a drunken driver
➥ in accepting a lift from a driver whom he knew
before he entered the car was affected by liquor,
or liquor and marijuana, and whose driving ability
was likely to be impaired thereby, the plaintiff was
guilty of contributory negligence.

The Civil Liability Act 2003 (Qld) ensures that this defence is now
less likely to be used than it was previously. The legislation actually CASE STUDY
attempts to remove any question of liability in actions where
volenti may have previously been used. It provides that a person Vellino v Chief Constable of the Greater
engaging in an activity with a high degree of obvious risk, even if Manchester Police [2002] 1 WLR 218
the probability of the risk actually occurring is very low, is assumed The plaintiff had been arrested after a struggle
to have known about the risk unless they can prove otherwise with police and somehow escaped from the
(s 14). Also, the Act provides in s 19 that a person can not be police officer holding him. He jumped from a
liable in negligence to another person engaged in ‘dangerous
window, fracturing his skull and suffering severe
brain damage and quadriplegia. The trial judge
recreational activities’ where the risk of harm was obvious. Clearly,
held that the police did not owe to an arrestee
this Act has had an impact on the relevance of this defence to a duty to take care that he was not injured in
negligence claims and, in reality, on whether action will even be a foreseeable attempt to escape from police
taken in such circumstances. custody. This finding was made on the basis that
escaping from custody was a sufficiently serious
CCEs criminal offence to require the application of
➥ analysing ➥ recalling/remembering the principle ex turpi causa non oritur actio and it
was not fair, just or reasonable to impose a duty
of care to prevent the claimant from injuring
Exercise 2.3.8 himself by his own unlawful act. The appeal was
dismissed by a majority. Schiemann LJ observed
1 Describe what volenti non fit injuria means. (K&U, I) at 224 [19]:
2 Evaluate whether it is fair that it’s now more difficult to
claim against a person for injury suffered during a ‘high- claimant the party who formally insists that a specific
action occurred
risk’ activity. Justify your reasoning. (K&U, I)
3 Provide an example of volenti where a person could be
To suggest that the police owe a
injured by another but not be able to make a negligence criminal the duty to prevent the
claim. (K&U, I, R) criminal from escaping, and that the
criminal who hurts himself while
escaping can sue the police for the
breach of that duty, seems to me
self-evidently absurd.
Illegality of activity Again, the Civil Liability Act 2003 (Qld) has had
Ex turpi causa non oritur actio (also known as ex turpi) means ‘no
an impact on this defence. In s 45, the Act clearly
states ‘criminals not to be awarded damages’
right of action arises from a despicable cause’. This defence is
for injuries suffered during the conduct of an
more commonly used in the law of contract; however, it can be indictable offence unless the court considers this
used as a defence in torts. The ‘illegality’ is not so much a defence, restriction would operate ‘harshly or unjustly’.
but it does remove a duty of care between the defendant and
the plaintiff in a situation where illegal activities made up the
negligence. Therefore, if there is no duty of care, then there is no
breach, and no damages – so no claim can be made.

2.3.3 Remedies and the impact General and special damages
of legislation These types of damages cannot be quantified and are awarded to
those who have suffered personal injury or loss. Examples of this
The primary reason for bringing an action in negligence is to find
would be:
a ‘remedy’ for what has happened. In most cases, the remedy is
➥ pain and suffering
Civil obligations
damages (financial compensation).
➥ emotional damage
The awarding of damages is seen to:
➥ loss of a limb
➥ represent justice, and/or
➥ loss of enjoyment of life.
➥ act as a deterrent, and/or
To determine the appropriate sum to award as damages, judges
➥ provide financial compensation for the plaintiff for the
will rely on precedent cases. Special damages, on the other hand,
damage suffered.
can be precisely quantified, therefore allowing the person who
In cases of personal injury, insurance companies (on the basis of
suffered to be completely compensated for any financial losses.
Topic 2
claims made by their policyholders) are required to make payment
Examples of what may constitute special damages are:
to the person awarded damages by the courts.
➥ replacement of damaged property or items
The purposes of awarding damages to those who have been
➥ lost earnings since the event, and expected loss in the future
injured or who have suffered a loss through a tortious action is to:
➥ any costs associated with the modification of dwellings
➥ indemnify that person against the loss, and/or
➥ loss of profits from a business.
➥ penalise the person who caused the loss (this is only used in
Queensland and Commonwealth parliaments cannot pass
limited circumstances where malicious harm is caused).
legislation to cover every single eventuality in society, especially
However, there are two stipulations regarding the awarding of
in civil law. Consequently, the courts have for many years created
damages:
rules and doctrines to deal with non-legislated areas. However,
➥ damages can only be made once; that is, after the case has
recently there has been a move away from case or common
been settled, the plaintiff cannot return to court with the same
law to statute law in this area. The Civil Liability Act 2003 (Qld) is
complaint
the primary legislation covering claims for damages as a result
➥ the amount of damages is to be made in one lump sum.
of harm. The Act ensures that the cost of insurance remains
affordable by maintaining appropriate awards for personal injury.
CORE AREAS OF STUDY
The Civil Liability Act 2003 (Qld) gives courts the power to reduce a damages payment by up to 100 per cent.
However, it does not apply to personal injury as defined under the Motor Accident Insurance Act 1994 (Qld)

In s 9, the Act sets out that a person does not breach a duty of
Restrictions on claims
care unless:
In an attempt to control rising insurance costs, the Queensland
➥ the risk was foreseeable
Government introduced legislation aimed at regulating personal
➥ the risk was not insignificant, and
injuries claims. So many negligence claims were being made and
➥ in the circumstances, a reasonable person would have taken
damage awards were rising so high that insurance companies were
precautions to prevent or limit the risk.
raising insurance premiums to record levels as they were being
It also provides that a person is not liable for negligence for
required to pay these increased damages sums.
injuries or harm done to another person if the injured person was
The Queensland Government felt it was appropriate to pass
engaged in a dangerous recreational activity where the risk of
legislation regulating negligence actions in an attempt to control
injury is obvious. A person is assumed to know the risk unless they
the size and frequency of successful claims awarded.
can prove otherwise.
The Personal Injuries Proceedings Act 2002 (Qld) states that:
The Act also places restrictions on the amount of damages that
➥ exemplary and punitive damages (damages awarded as
a person may claim for personal injuries suffered after 1 December
‘punishment’) have been abolished for personal injury claims
2001. Damages for pain and suffering are capped at $250,000.
➥ restrictions on legal costs payable to a plaintiff lawyer have
Injured persons also can only claim damages for loss of earning
been restricted to costs for claims under $50,000
capacity at a maximum of three times the national average. The
➥ the cap on maximum loss of earning capacity recoverable is
Act also gives courts the power to reduce a damages payment
restricted to three times the average weekly earnings
by up to 100 per cent if the court believes the injured person
➥ restrictions apply to a plaintiff’s claim for damages in respect
contributed to their injury/damage. It does not, however, apply to:
of care provided voluntarily by friends or relatives. Damages
➥ most injuries as defined in the WorkCover Queensland Act 1996
cannot be awarded if care is for less than six hours a day for
➥ personal injury as defined under the Motor Accident Insurance
less than six months.
Act 1994 (Qld)
➥ injuries which are defined in the Workers’ Compensation and
Rehabilitation Act 2003 (Qld)
➥ personal injury that occurred before June 2002
➥ personal injury that is a dust-related condition
➥ an injury resulting from smoking or the use of tobacco
products or exposure to tobacco smoke.
CCEs
Exercise 2.3.9
1 Explain why a ‘cap’ has been placed on the amount of
damages payable under the Civil Liability Act 2003 (Qld).
(K&U)
2 Identify the restrictions placed on the capacity of
people to make negligence claims under this Act.
Provide an example of a situation in which an injured
person is unlikely to be able to make a claim due to the
Act, but may have previously succeeded. (K&U, I)
3 Evaluate the fairness of these restrictions. Justify your
reasoning. (K&U, I)

These elements tend to restrict the amounts of damages ➥ waivers and self-assumption of risk (subject to suitable
awarded and the circumstances in which damages could be safeguards for minors), which would see people waiving their
awarded. right to sue before undertaking certain high-risk activities
There is also legislation which protects citizens from negligent ➥ the protection of volunteers from being sued, except for gross
situations relating to motor vehicles, products and advice. The negligence, by way of an indemnity from the organisation for
primary Acts are the: which they work, and caps on general damages.
Civil obligations
➥ Competition and Consumer Act 2010 (Cth)
➥ Fair Trading Act 1989 (Qld)
➥ Civil Liability Act 2003 (Qld)
2.3.4 Negligent situations
➥ Personal Injuries Proceedings Act 2002 (Qld)
relating to motor vehicles
➥ National Consumer Credit Protection Act (2009) (Cth) Every driver in Queensland has compulsory third party insurance,
➥ Motor Accident Insurance Act 1994 (Qld). which is paid through their car registration fees each year. If a
Topic 2
driver were to cause any injuries through negligent driving, the
Adequacy of compensation insurance will cover any compensation sustained in any of the
Currently, most people who suffer serious injury will not receive following situations:
the large sums of money which were awarded prior to the Personal ➥ the operation of a motor vehicle
Injuries Proceedings Act 2002 (Qld) and the Civil Liability Act 2003 ➥ action taken to avoid a crash
(Qld). The reform contained in these two pieces of legislation ➥ a vehicle running out of control
means that damages awarded will fall far short of what some ➥ a defect in a vehicle which has caused the vehicle to run out of
may consider adequate and reasonable for people who have control
experienced major changes to their lives. ➥ any other incident as outlined in the Motor Accident Insurance
Since April 2003, s 62 of the Civil Liability Act 2003 (Qld) has Act 1994 (Qld).
determined that $250,000 is the maximum amount which can This means that the injured party can claim damages for the
be awarded as general damages, and that is for the ‘gravest extent of their injury from the third party insurer of the vehicle/s at
conceivable kind’ of cases, such as quadriplegia and extreme brain fault. However, in some instances – such as when a driver may be
injury. When one takes into account the costs of rehabilitation injured in a single vehicle accident, or when the negligent driver
and/or modification to premises of the victim, the amount of is unidentified, or uninsured – there is no-one on to whom the
compensation may seem to be inadequate. liability can be passed. In such cases, a statutory body known as
Damages for economic loss are governed by s 51 of the Personal the Nominal Defendant, which was established under the Motor
Injuries Proceedings Act 2002 (Qld) and s 54 of the Civil Liability Accident Insurance Act 1994 (Qld), becomes involved. A small
Act 2003 (Qld), which calculate the damages to be paid out as no percentage of the compulsory third party insurance premium is set
more than three times average weekly earnings per week. Average aside for this fund to compensate those injured as a result of there
earnings per week is that which is set down by the Australian
Statistician. Other areas now covered by the Personal Injuries
Proceedings Act 2002 (Qld) include:
➥ prohibiting the recovery of damages where the injured person CORE AREAS OF STUDY
was engaged in criminal activity at the time of injury (with
appropriate boundaries)
➥ the proposal that the increase in risk caused by taking
recreational drugs (including alcohol) should be taken into
account as a factor in negligence and not lead to an increase in
the duty of care owed by a third party

being no liable party who can be identified. It must be proved that This does not just apply to employer–employee relationships
another party was at fault in order to succeed in a claim under this but also to principal–agent relationships; that is, a person (agent)
Act. who has been asked by another (principal) to do something which
will bring them some sort of benefit or gain.
CCEs This application is called vicarious liability. A person cannot
➥ judging/evaluating punctuation, grammar be sued for vicarious liability as it is simply a way of transferring
➥ recalling/remembering liability from employee to employer, or from agent to principal.
Exercise 2.3.10 vicarious liability when a superior person is held responsible for the tort
of their subordinate, even though the person being held responsible may
1 Evaluate what would be the effect if the Nominal not have done anything wrong
Defendant did not exist in Queensland. (K&U, I)
2 Consider why a separate Act has been created to deal liability a responsibility a person has to another person or for an action
with motor vehicle accidents. (K&U, I)
3 What are the restrictions on legal costs payable to a
There are two elements which make up vicarious liability:
plaintiff lawyer for claims according to the Personal
1 liability for the negligence of another
Injuries Proceedings Act 2002 (Qld)? (K&U)
2 strict liability – liability without proof of fault. One person
(such as an employer) can be vicariously liable for the
negligence of another (such as an employee) regardless of
2.3.5 Product liability how careful the employer was.
A manufacturer, wholesaler or retailer of products has a duty of CCEs

care to all consumers of their products to ensure that there will ➥ analysing ➥ recalling/remembering
be no inherent defects likely to harm or injure the consumers. ➥ judging/evaluating punctuation, grammar
Failure to address the standard of care could result in a claim of
negligence whereby the plaintiff must prove that the damage Exercise 2.3.11
was caused by a defect in the product. Legislation such as the
1 Evaluate whether it is fair that employers can be liable
Competition and Consumer Act 2010 (Cth) and the Sale of Goods Act
for the actions of their employees. (K&U, I)
1896 (Qld) regulate this. These Acts impose statutory warranties
in relation to the supply of goods. Of particular relevance to 2 Describe the processes employers might have to
negligence actions are the warranties regarding: consider more thoughtfully to protect themselves.
➥ merchantable quality (the actual quality of the goods (K&U, I)
manufactured) 3 Evaluate why warranties are implied in a statutory form
➥ fitness for purpose for which the goods are intended (whether and not simply left to the common law of negligence.
the goods are actually fit to be used in the manner for which (K&U)
they were made).
2.3.6 Negligence and the Injury suffered in the area of employment law is also governed
workplace by legislation. If, during the course of employment, an employee

is injured, they may have an action against their employer.
If an employee or person acting under the instructions of another The Workers’ Compensation and Rehabilitation Act 2003 (Qld)
(the employer, for example) commits a negligent act, then the is the legislation that allows an injured employee to pursue
person injured can sue the employer in negligence, unless the act: compensation for work-related injuries. A claim can be pursued
➥ was outside the scope of the employee’s duties using the procedures set out in this legislation. In these cases,
➥ was an intentional wrongdoing.

Civil obligations
Topic 2
The Workers’ Compensation and Rehabilitation Act 2003 (Qld) is the
legislation that allows an injured employee to pursue compensation for
work-related injuries
compensation may be available regardless of whether anyone was Public liability insurance covers those insured from damages
at fault for the injury suffered. However, a worker may also choose payouts relating to an organisation’s normal activities which have
to pursue a common law action in negligence if they believe resulted in injury, death or damage to property. It also covers the
someone is at fault. As long as they can prove that the employer costs of defending any compensation claims and acts which have
owed them a duty of care, that duty was breached and damages been committed against third parties and have resulted in injury,
resulted, then such an action would normally succeed. death or damage to property.
The insurance ‘crisis’

2.3.7 Insurance
The insurance ‘crisis’ that began a decade ago was that the cost
Insurance, in law and economics, is a form of risk management of public liability insurance became so high that many businesses
primarily used to hedge against the risk of potential financial loss. and associations were forced to close, or to take the risk and
Ideally, insurance is defined as the ‘equitable transfer of the risk compromise themselves by not having any insurance at all.
of a potential loss, from one entity to another, in exchange for a In 2002, the cost of public liability insurance premiums CORE AREAS OF STUDY
reasonable fee’. increased by 370 per cent, with the increase blamed on the
Insurance is also used to indemnify against liabilities or marked rise in the number of people making claims, as well as the
penalties incurred by one’s actions; that is, a person would be in solicitors who encouraged the litigation. However, it was also felt
the same financial position after the event as they were before that a decline in competition within the insurance industry and
it. Other than domestic policies, which householders take out to the collapse of the FAI and HIH insurance groups were the major
protect their assets, the insurance which has the highest number contributors to the ‘insurance crisis’. The events of 11 September
of policyholders is public liability insurance. This insurance is taken 2001 in New York also encouraged on exorbitant increase in public
out by organisations and associations that deal with the public as liability insurance premiums throughout the world, not just here
part of their normal course of business. in Australia.

The crisis forced meetings between the Australian Insurance
During the insurance crisis, the Brisbane Commission and members of the state and federal governments
Exhibition (the Ekka) saw its public liability in an attempt to contain the insurance ‘blow-out’. Through
SIDE insurance premium increase by 500 per
cent. In Victoria, the Show Society’s annual
legislation such as the Personal Injuries Proceedings Act 2002 (Qld)
BAR premium rose from $360 to $4000. What

reasons can you give to account for these
and the Civil Liabilities Act 2003 (Qld), it was hoped that affordable,
reasonable insurance would become more available as damage
increases? awards were restricted, and more importantly, that it would
remain that way and any further increases in premiums would be
contained.
Other relevant legislation included the Professional Standards
Act 2004 (Qld), which enabled the creation of schemes to limit the
civil liability of professionals in an attempt to further restrict legal
claims and high damages awards. It was the award of damages
amounts such as that in the following case that forced government
intervention in this area of the law.
The Australian Competition and Consumer Commission
(ACCC) has a crucial role to play in monitoring any developments
regarding insurance premium prices. In 2002, the ACCC released
its report on the Insurance Industry Market Pricing Review, the
purpose of which was to identify the causes of the major rise in
the cost of insurance. Its report for January 2005 found that public
liability insurance premiums had in fact fallen on average by
15 per cent in the six months to June 2004 (Queensland Treasury
Department).
While the government can do much to avoid such a crisis
recurring, it is felt that businesses and associations must take some
responsibility for reducing the risks associated with their activities,
so that insurance claims are contained and therefore reduced.
CASE STUDY
Swain v Waverley Municipal Council [2005] HCA 4
Mr Swain was at the beach with two friends. He waded safety of people using the beach. It was found that
out about 15 metres into waist-deep water and dived the council was liable and that there was contributory
through a wave but hit his head on a sandbar, resulting negligence of 25 per cent on the part of Mr Swain. He
in Mr Swain becoming a quadriplegic. Mr Swain sued was awarded $3.75 million.
Waverley Council for negligence, alleging that the Consequently, the council successfully appealed to
red-and-yellow flags induced him to swim where he the New South Wales Court of Appeal. Mr Swain then
did and that the council had failed to take reasonable appealed to the High Court, which upheld the damages
care in positioning the flags and in not erecting signs award, finding that the council was indeed negligent
warning swimmers of the sandbar. and should have taken reasonable care to prevent
The New South Wales Supreme Court stated that injury to bathers.
the council had a duty to take reasonable care for the

CCEs people who have been significantly injured and require long-term
➥ analysing ➥ using correct spelling, care. This is different to the common law system, where a plaintiff
➥ expounding a viewpoint punctuation, grammar
sues the person responsible for the injury and is awarded a lump-
sum amount of damages, therefore establishing the fault of that
Exercise 2.3.12 party. However, if a person claims under a no-fault scheme, it is
expected that they cannot then sue in common law.
Civil obligations
1 Explain what insurance does for consumers. (K&U)
An advantage of having a no-fault compensation scheme is
2 List the factors that could have been responsible for the that the injured party does not just receive a percentage of their
massive increases in insurance premiums. (K&U) weekly wage, which may simply be inadequate for maintaining the
3 Evaluate whether it’s fair that the claims of injured lifestyle they enjoyed prior to the event, as they may under other
people are now restricted due to concerns about rising ‘fault’ compensation arrangements.
insurance costs. Justify your reasons. (K&U, I)
Topic 2
2.3.8 No-fault compensation
schemes
When a person has been injured, not only do they want financial
compensation for any expenses, they also seek damages for their
injuries from the party responsible for causing them. With a no-
fault compensation scheme, a person’s injuries are not linked to
the fault of another party and dealt with through litigation under
common law, but rather they are dealt with under legislation. The
purpose of the scheme is to reduce the number of claims being
dealt with in the courts, and consequently reduce the costs of
litigation generally.
The Workers’ Compensation and Rehabilitation Act 2003 (Qld)
is an example of a no-fault compensation scheme. A worker
simply has to prove they are indeed a worker and that the injury
occurred at work. It is not necessary for them to prove they were
injured due to a negligent act. The Act sets out the procedures to
be followed in order to be entitled to statutory compensation for
the time a person may need off work, for treatment and for other
rehabilitation costs resulting from the injury. Generally under this
scheme, an injured worker will receive weekly payments until a
final decision is made as to the amount of compensation required CORE AREAS OF STUDY
to be paid to them is made. The Workers’ Compensation and Rehabilitation Act 2003 is a no-fault
compensation scheme
Weekly benefits, rehabilitation and payment of medical costs
will then cease and a one-off lump-sum payment may be made.
This payment is made with reference to medical advice and the
table of injuries and the maximum amount of compensation
payable for that injury as set out in the Workers’ Compensation and
Rehabilitation Act 2003 (Qld) regulations.
A no-fault compensation scheme would typically be a
government scheme through which compensation is paid to those

Table 2.3.1 No-fault compensation schemes There are many contributing factors to take into account, but in
general terms, the duty of care may be breached if there has been:
Advantages Disadvantages
➥ failure to provide adequate supervision
• claims are settled more • there may be a difference ➥ failure to provide adequate instruction to avoid injury or harm.
quickly between the compensation The defences which could be used in this area of negligence are
• fault does not have to be awarded to wage earners and the same as for others:
proven the amount awarded to non- ➥ contributory negligence – where the student’s actions
• care is guaranteed wage earners contributed to the injury or harm
• payments under the scheme • in the bigger picture, ➥ voluntary assumption of risk – the student understood the risk
may be easier to manage there may not be enough of harm in undertaking the action.
than a lump sum compensation paid to
• no legal fees are required maintain a reasonable CCEs
• overall insurance premium lifestyle ➥ analysing ➥ summarising/condensing
costs may be reduced for ➥ explaining to others written text
consumers ➥ judging/evaluating punctuation, grammar
➥ recording/noting data
2.3.9 Duty of care in schools Exercise 2.3.13

1 Working in pairs, investigate possible negligent
One area in which litigation has increased is the school setting,
situations within your school’s grounds. (K&U, I)
which can involve allegations of negligence in a variety of
2 Describe what needs to be done to rectify any situations
situations. The duty of care which exists between the teacher and
you have discovered. (K&U, I)
students is a profound and special one. At any time during school
hours, or when on school excursions or activities, the teacher has a 3 Compile and submit a report to your school’s workplace,
legal responsibility towards the student and owes a duty of care to health and safety officer. (K&U, I)
protect students from injury or harm, or to take care not to provide 4 Research the following cases and discuss the key
students with activities which may cause injury or harm that is aspects relating to the duty of care in schools.
reasonably foreseeable. • Shaw v Commonwealth (1992) 110 FLR 379
• Vandescheur v State of NSW (1999) NSWCA 212
• Johns v Minister of Education (1981) 28 SASR 206
Duty of care exists between teachers and students

CASE STUDY CASE STUDY
Introvigne v Commonwealth (1980) 32 ALR 251, Richards v Victoria [1969] VR 136

Commonwealth v Introvigne (1982) 150 CLR
Two schoolboys had a fight during a lesson,
258
resulting in one of the boys becoming paralysed.

A 15-year-old schoolboy (the plaintiff ) suffered The class’ teacher previously had been identified
severe head injuries when he was struck by a by the principal of the school as lacking in
flagpole. At the time of the incident, all but one behaviour-management skills and had been
of the staff of the school were in an emergency sent to a behaviour-management seminar in an
staff meeting, which meant that playground attempt to improve their skills in this area.
supervision was minimal. The court held that the teacher had been
The plaintiff unsuccessfully sued the negligent, although the boy was found to have
Commonwealth of Australia, the relevant school contributed to his own injuries and consequently
authority. However, on appeal, the Full Court of was awarded reduced damages. The Education
the Federal Court found that the Commonwealth Department was found to be vicariously liable
had been negligent by: for the teacher’s negligence.
➥ failing to provide adequate supervision
➥ failing to ensure the flagpole was securely
fixed.
The High Court dismissed the appeal by the
Commonwealth. In his judgment, Murphy J
found: CCEs
➥ comparing/contrasting ➥ recalling/remembering
that the nature and extent of the
school’s authority is: ➥ justifying punctuation, grammar
• To take all reasonable care to
provide suitable and safe premises
• To take all reasonable care to Exercise 2.3.14
provide an adequate system to
ensure that no child is exposed to Evaluate whether it is fair for schools to be held responsible
any unnecessary risk of injury, …,
for the care of students before school has actually started.
and
• To take all reasonable care to see Why or why not? Consider whether your answer would be
that the system is carried out. different if you were talking about:
Mason J in his judgment said: a a kindergarten
The immaturity and inexperience b a primary school
of the pupils and their propensity
for mischief suggest that there c a high school
should be a special responsibility on d a university campus. (K&U, I)
a school authority to care for their Justify your reasons for each of these.
safety, one that goes beyond a mere
vicarious liability for the acts and CORE AREAS OF STUDY
omissions of its servants.

2.3.10 Duty of care in sport Participation in sporting activities often gives rise to potential
liability of the participants. The duty of care owed depends on the
Another area of some complexity is the question of when is a duty circumstances of the individual case. This is well illustrated in the
of care owed in a sporting situation. following case.
Sport is a vital part of the lives of many people. Whether
playing, watching or administrating, for many people sport CASE STUDY
has become a pivotal component of our society. Professional
sportsmen and sportswomen often command large amounts of Rootes v Shelton (1967) 116 CLR 383
money for competing in sporting competitions. Yet when it comes
The appellant was an experienced waterskier
to protecting their rights or resolving problems, those professional and was practising a manoeuvre with some
athletes, as well as amateur ‘weekend’ athletes, need the law fellow waterskiers. As the appellant was passing
to assist them, particularly with regard to civil law and torts. to the right side of the boat, he was temporarily
Increasingly, there has been a move towards litigation by people blinded by the boat’s spray. When he regained
injured in sporting situations. his vision, he found he was only 2 metres away
from a stationary boat, and of course tried to
In sport, there is a duty of care especially for those people who
swerve to miss it. He didn’t succeed. He sued the
assume a position of responsibility; for example, by agreeing to
driver of his towing boat for failure to take due
coach an athlete or referee a game, or those who have relevant care in the control of the boat and to warn him
skills or expertise (like a sports administrator). Relevant factors of the presence of the stationary boat.
relating to this are: The jury found for the plaintiff at trial;
➥ consideration of the extent of expertise of the senior officials – however, this was overturned on appeal. The
Court of Appeal decided that the driver of the
the more experience and expertise, the higher the standard of
boat did not owe a duty of care to the plaintiff
care that is expected from them
because anyone who engages in such a sport
➥ whether the participants are old or young – the very young should expect some risk of injury, and in fact
and the very old, for example, would require a higher standard voluntarily accepts that risk. The High Court
of care reversed the Court of Appeal’s decision. While
➥ how good they are at that particular activity – beginners it accepted that anyone who engages in such a
would require a higher standard of care than experienced sport should expect some risks of injury and in
fact voluntarily accepts that risk, the driver of the
participants.
boat did owe a duty of care to the appellant.
Chapter review
The main points ➥ Negligent situations involving motor vehicles, product
liability, worker’s compensation and the types of
➥ Legislation has become increasingly important in how remedies/defences available for these claims have been
negligence, and tort law generally, is regulated. the subject of legislative intervention.
➥ Numerous Acts have been passed in recent years in areas ➥ If an employee or person acting under the instructions
relating to negligence law. of another commits a negligent act, then the person
➥ The Civil Liability Act 2003 (Qld) and the Personal Injury injured can sue the employer in negligence.
and Proceedings Act 2002 (Qld) are statutes covering ➥ A manufacturer, wholesaler or retailer of products has a
claims for damages in general. duty of care to all consumers of their products that there
will be no inherent defects likely to harm or injure the
consumers.

➥ Every driver in Queensland is covered by compulsory 2 Special damages:
third party insurance, which is paid through their car a can be precisely calculated
registration fees each year.
b are ‘punishment’ damages
➥ The Defamation Act 2005 (Qld) allows for the publisher of
c are awarded for ‘pain and suffering’

defamatory material to offer to make amends.
d none of the above (K&U)
➥ Injunctions are court orders to cease the particular
3 Product liability legislation is:
activity which is causing the tort.
a the Sale of Goods Act 1896 (Qld) and the Motor
➥ The purpose of awarding damages is to indemnify the
Accident Insurance Act 1994 (Qld)
plaintiff, and to act as a punitive measure against the
defendant. b the Competition and Consumer Act 2010 (Cth) and the
Workers’ Compensation and Rehabilitation Act 2003
➥ General damages are those which cannot be quantified;
(Qld)
for example, pain and suffering.
c the Sale of Goods Act 1896 (Qld) and the Competition
➥ Australia will probably have a tort in privacy in the
and Consumer Act 2010 (Cth)
future.
d the Sale of Goods Act 1896 (Qld) and the Defamation
➥ Insurance is the transferring of risk from one person
Act 2005 (Qld) (K&U)
to another, for a fee. It is also used to indemnify the
policyholder against loss. 4 The insurance which must be taken out by all
Queensland drivers is called:
➥ With a no-fault compensation scheme, a person’s injuries
are not linked to the fault of another party. a comprehensive insurance
➥ The Personal Injuries Proceedings Act 2002 (Qld) and the b third party (property) insurance
Civil Liability Act 2003 (Qld) regulate the reforms to the c compulsory third party insurance
personal injury damages compensation. d registration insurance (K&U)
➥ The Professional Standards Act 2004 (Qld) enables 5 Vicarious liability is:
the creation of schemes to limit the civil liability of
a when the employer is held liable for the actions of an
professionals.
employee
➥ A duty of care is owed in many school and sporting
b a defence against a dangerous activity
situations.
c a type of insurance policy to cover negligence
d a type of insurance policy to cover negligence by
How much have you learned? motor vehicle drivers (K&U)
Multiple-choice questions Short-response questions

6 Explain what the term ‘strict liability’ means. (K&U)
Choose the correct response. CORE AREAS OF STUDY
1 Remedies available in tort law include: 7 Define ‘strict liability’ and identify a case relevant to this
doctrine. (K&U, I)
a damages
b injunctions Extended-response question
c apologies 8 ‘The common law approach to negligence is all that is
d all of the above (K&U) needed to effectively regulate this area of law.’ Evaluate
this sentence in light of recent legislative changes
in Queensland. Write three or four well-constructed
paragraphs explaining your answer. (K&U, I, R)

Topic 2 review
Multiple-choice questions Short-response questions

Choose the correct response. 6 Define a ‘contract’. (K&U)
1 Factor(s) affecting the validity of contracts include: 7 What role does capacity play in the formation of a valid
a misrepresentation contract? (K&U)
b negligent condition 8 Explain the difference between ‘void’ and ‘voidable’. (K&U)
c undue warranties 9 Distinguish between conditions and warranties. (K&U)
d all of the above (K&U) 10 Why has the government intervened more in recent times in
2 Vicarious liability refers to: contractual relationships? (K&U)
a liability on the part of a deceased person 11 What terms are implied into contracts by statutes? Explain
how each would work, giving an example. (K&U, I)
b the potential for one person to be liable in many situations
12 Evaluate this statement: ‘Government intervention has no
c professional people’s duty of care to clients
place in contractual relationships’. Write at least three well-
d liability on the part of one person for the actions of
constructed paragraphs. (K&U, R)
another (K&U)
13 Why is Donoghue v Stevenson [1932] AC 562 considered to be a
3 The standard of proof required to establish civil liability is:
landmark negligence case? (K&U, I, R)
a beyond a reasonable doubt
14 List and explain the three defences to a negligence claim.
b beyond reasonable probability (K&U)
c on the balance of probabilities 15 Define ‘remoteness’ in the context of negligence. (K&U)
d reasonable foreseeability (K&U)
4 Volenti non fit injuria means:
a voluntary acceptance of risk
b contributory negligence
c injury resulting from negligence
d negligence which does not result in injury (K&U)
5 In civil law, the term ‘damages’ refers to:
a the amount of destruction caused by another person
b a list of items which need to be indemnified
c the amount of compensation paid to the person who has
been injured
d the cost of the civil case being heard in the court (K&U)

Extended-response question Response-to-stimulus question

16 It was a dark and rainy night and visibility was almost nil. Mr 17 You are a lawyer. Read the following scenario and advise John
Magoo was driving happily when his car was clipped from of his rights.
behind by another car driven by Noddy. Mr Magoo’s car was John wants to buy a new motorbike. He sees a flyer posted
subsequently overturned, while Noddy was thrown from his on the noticeboard at school that reads: ‘Matt looking to sell
car and lay unconscious on the road. bike. Near new condition. Only $2500. Email me to accept at
Along came Dr Fixit, who stopped and went to Noddy’s sellbike@schoolnotice.com’. John knows Matt, so he leaves a
assistance. Also arriving were two other drivers – Big Ears and note in his locker that says: ‘I want the bike. Throw in a new
Big Ted. As they noticed that Dr Fixit was already attending to set of tyres and you have got a deal, John’. Matt doesn’t like
Noddy, they went to help Mr Magoo. John so he throws the note away and sells the bike to Max.
Yet another car came along, this time driven by Jemimah. John sees Max with the new bike and is furious. He comes to
Unfortunately, Jemimah didn’t see Dr Fixit, or Noddy! Jemimah you saying he wants to sue Matt. Advise him of all the possible
struck Dr Fixit and caused him injuries which resulted in his contractual issues. (K&U, R)
death.
The executors of Dr Fixit’s estate commenced proceedings
to claim damages for the benefit of Mrs Fixit and the children.
Of course, Jemimah said it wasn’t just her fault. Dr Fixit
contributed to the accident by being in the middle of the road.
Jemimah lost the case.
However, the judge ordered that Noddy pay a fourth of
the damages. Noddy appealed that decision and lost. Jemimah
now wanted him to pay more, plus pay her some money as
well.
Noddy didn’t like this and took out a full-page
advertisement in the Townsville Bulletin calling Jemimah a
money-hungry old cow who was just after any money she
could get: ‘She deliberately ran into us – she’s as blind as a bat.
She’s got buttons for eyes!’ Jemimah was furious and sued
Noddy.
a You are the solicitor acting for the plaintiffs. Advise your
clients if their suits would be successful. You are to refer to
precedent(s) wherever appropriate. CORE AREAS OF STUDY
b Evaluate and discuss in two paragraphs the difference
between a voidable contract and when a contract is void.
Refer to examples that may illustrate these differences.
(K&U, I, R)
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Topic 2

Focus: How do civil agreements and the laws of negligence impact

Related career options

Key terms/vocabulary you will encounter in this topic:

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

Topic 2 Civil obligations

Odd laws CORE AREAS OF STUDY

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

An agreement is an exchange of promises between two or CCEs

38 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

The general principles of an offer CORE AREAS OF STUDY

C hap ter 2.1: Agreement s 39

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Probably the most famous of all contract cases in this

40 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

C hap ter 2.1: Agreement s 41

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

Is any such agreement intended

to treat? the car and receives a benefit in exchange: the money.

Person A’s consideration Person B’s consideration

42 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

C hap ter 2.1: Agreement s 43

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

the dishes after dinner. f acceptance

44 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

Topic 2 Civil obligations

In re Baby M 109 NJ 396 (1988)

C hap ter 2.1: Agreement s 45

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46 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

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that he or she should be able to obtain employment. your reasoning. (K&U, I)

C hap ter 2.1: Agreement s 47

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

The courts will generally only apply the principle of promissory

48 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

CORE AREAS OF STUDY

C hap ter 2.1: Agreement s 49

ISBN 9781107653467 © Dosen et al. 2013 Cambridge University Press

While most agreements are in writing, this is not legally necessary.

➥ If a long time has passed between when the statement was

50 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

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C hap ter 2.1: Agreement s 51

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signing. a genuine mistake has been made.

A mistake will not normally allow parties to avoid their responsibilities

52 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

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C hap ter 2.1: Agreement s 53

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1 Graham is a lawyer who has a wealthy elderly client. She

Duress 3 Emma owns a beautiful house on the beach. One day

54 I nve s ti g ati n g Lega l Studi es fo r Q u een sla n d

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CORE AREAS OF STUDY

C hap ter 2.1: Agreement s 55