Contracts B Class Notes PDF

Contracts B Table of Contents {#table-of-contents.TOCHeading} ================= [Topic 1: Termination by Agreement 3](#topic-1-termination-by-agreement) [Topic 2: Termination for Breach 4](#topic-2-termination-for-breach) [Topic 2 Tutorial: 9](#topic-2-tutorial) [Week 1 summary: 11](#week-1-summary) [Topic 3: Termination for repudiation 12](#topic-3-termination-for-repudiation) [Topic 4: Termination for delay 15](#topic-4-termination-for-delay) [Topic 5: Termination under international contract law 18](#topic-5-termination-under-international-contract-law) [Week 2 summary: 20](#week-2-summary) [Topic 1-5 workshop: termination for delay 20](#topic-1-5-workshop-termination-for-delay) [Tutorial 2: 22](#tutorial-2) [Multiple choice test: 26](#multiple-choice-test) [Topic 6: Consequences of affirmation or termination 26](#topic-6-consequences-of-affirmation-or-termination) [Topic 7: restrictions on the right to terminate 28](#topic-7-restrictions-on-the-right-to-terminate) [Seminar 2: topics 6-7 37](#seminar-2-topics-6-7) [Summary week 3: 39](#summary-week-3) [Topic 8: Damages 39](#topic-8-damages) [Workshop: Damages 50](#workshop-damages) [Tutorial: damages 52](#tutorial-damages) [Topic 9: Liquidation Damages and penalties 54](#topic-9-liquidation-damages-and-penalties) [Topic 10: specific performances + injunctions 60](#topic-10-specific-performances-injunctions) [Topic 11: Action for debt 63](#topic-11-action-for-debt) [Workshop: Action for debt + restitution 69](#workshop-action-for-debt-restitution) [Topic 12: restitution 72](#topic-12-restitution) [Tutorial 4: penalties 78](#tutorial-4-penalties) [Topic 13: frustration 82](#topic-13-frustration) [Workshop: frustration 91](#workshop-frustration) [Topic 14: common law vitiating factors 94](#topic-14-common-law-vitiating-factors) [Workshop: force majeure clause + vitiating factors: 109](#workshop-force-majeure-clause-vitiating-factors) [Topic 15: recission 112](#topic-15-recission) [Workshop: recission 115](#workshop-recission) [Topic 16: misleading or deceptive conduct 117](#topic-16-misleading-or-deceptive-conduct) [Workshop week 11: Misleading or deceptive conduct? 133](#workshop-week-11-misleading-or-deceptive-conduct) [Topic 17: unconscionable conduct under statute 134](#topic-17-unconscionable-conduct-under-statute) [Checkpoint Questions: 136](#checkpoint-questions) [Questions for consultation: 142](#questions-for-consultation) [Rubric: 142](#rubric) Topic 1: Termination by Agreement ================================= Powerpoints: - 3 ways a contract can be terminated (thru legislation): - By agreement under OG contract - Fixed term = e.g lease is for years from commencement date - Express termination clause = - [the customer may terminate this contract] at any time within 30 days notice - " " if the Supplier breaches clause X and fails to remedy the breach within 30 days of a written request from the Customer - ***Shevill v Builder's Licensing Board* HCA 1982** - An example of an express right to terminate - Clause 9(a) of the lease provided that if the rent is unpaid for 14 days the lessor can terminate the lease - HELD: Leesee = late w/ rent payments leasor terminated lease - If neither then could be implied right to terminate on reasonable notice - By agreement under subsequent contract - Termination by express agreement contract to end a contract - Needs contract formation inc. consideration - If executory (both parties have obligations to perform) = consideration is both parties agreeing to release each other from contract - If executed by one (A has fully performed but B has obligations yet to perform) = deed + specific consideration (accord + satisfaction agreement) - Inferred from subsequent agreement = intend to terminate OG contract if new one has similar ground - Abandonment = period of inactivity no longer desire their contract to be on foot = mutual agreement to abandon - E.g *DTR Nominees v Mona Homes* - For some breaches of the contract Topic 2: Termination for Breach =============================== ![](media/image2.png) 2.1 introduction - Breach = whenever one of the parties to the agreement didn't perform its obligations as required under the contract - Need to identify = 1. Contractual obligation 2. Nature of the non-performance - Can only terminate if: - Breach of condition = right to terminate - Serious breach of an intermediate term = maybe (only if serious) - Repudiation (could be all 3) - Cant terminate if it's a warranty only entitled to damages - Very unlikely it's a warranty more likely intermediate term (can be breached in various ways w/ degrees of seriousness) = bec. Gives courts more flexibility - Only a warranty if no possible breach could give rise to an event which would deprive the aggrieved party of substantially the whole of the benefit of the contract = clearly expressed or in legis - Damages = for all breaches monetary compensation to put the party in the position they would have been in had the contract been performed - When party has the right to terminate either: - Terminate = sue for damages - Rights + obligations before termination = binding but future rights = cease - Other party could say RTT (right to terminate) restricted bec. Terminating party: - Chose to affirm - Not ready + willing to perform contract - Estopped - Waiver - Relief against forfeiture would be granted - Significance: - Aggrieved party can get out - Self-help remedy = don't need to go to court - Stakes are high if you get it wrong (if you don't have right to terminate repudiation) - Other info about termination - Damages + loss of bargain damages granted - RTT is rare + courts encourage performance - Wrongful termination = repudiation - If unsure = get court declaration on the RTT - Affirm = lose right to terminate + get damages for parti. Breach (but not loss of bargain) - Termination glossary: - Termination = one/both parties choose to end the contract by agreement or breach - Repudiation = when a party is unwilling/unable to perform the contract -- aggrieved party has RTT - Frustration = ends the contract automatically when frustrating circumstances exist (type of way a contract can be brought to an end like agreement) - Discharge = contract is brought to an end - Rescission = remedy sought by an aggrieved party where a vitiating factor exists 2.2 termination for breach of a condition - When can a contract be terminated? Thru CL - For breach of condition - Serious breach of an intermediate term - For repudiation - Overview: - If term found to be condition aggrieved party entitled to termiate the contract for any breach of the term even if little gravity - Clause may be classified as a condition - by statute e.g sale of goods OR: - *Arcos v Ronassen* HL (UK) 1933 - Facts: contract for sale of wood, wood was fractionally different thickness (which made no diff to use of the wood) + buyer terminated contract - HELD: buyer had the right to terminate the contract - Reasonns: UK sale of goods inc. correspondence w/ description + G didn't match it, didn't matter that it was a minor breach + buyer's commercial motivation is irrelevant - by intention of the parties - use Tramway's essentiality test - by express/intended designation of the parties - e.g Gumland v Duffy Bros Fruit market - use of the word 'condition' isn't conclusive L schuler - factors to determine whether a clause is a condition: - general nature + subject matter of contract - Particular term / language used - *L Schuler v Wickman* ("condition") - *Luna Park v Tramways (*"we guarantee") - Other terms of contract - *L Schuler v Wickman* (clause giving right to terminate for material un-remedied breaches) - *Associated Newspapers v Bancks* (interrelation between parties' obligations) - Whether breach likely - *L Schuler v Wickman* (breach likely) - Likely consequences of breach - *Hong Kong Fir* (various possible breaches of seaworthiness clause) - Damages adequate remedy? - *Ankar v National Westminster Finance* (damages inadequate remedy) - Prior court decisions - ***L Schuler v Wickman* HL (UK) 1974** - Facts: clause 7(b) '**condition** of agreement' 'at least once in every week for the purpose of soliciting orders for panel presses' = 1400 visits over the term didn't do all visits - Issue: Could Shuler terminate the contract if failed to make 1 single visit? -- if condition in legal sense (as per def) then YES, if condition in layman's sense then NO - HELD: Not a condition- cant terminate - not clear 'condition' has diff meanings -- could just mean terms/provisions of contract - 'condition' indication of an intention to be a legal condition= not conclusive - Where a particular construction leads to a very unreasonable result, unlikely strict compliance is req. - ***Tramways Advertising v Luna Park* NSW SC 1938** - Facts: contract to advertise LP by 53 boards on trams, '**we guarantee** that these boards will be on the tracks at least 8hrs per day throughout the season' - Issues: whether breach, whether a condition? - T = sufficient w/ avg ofim 8hrs per day = sued for debt + kept ads - LP = each board must be displayed for 8hrs every day -- purpoted to terminate = HC agreed - HELD: Condition -- LP terminated received 1 shilling as damages - Essentiality test: whether it appears from the general nature of the contract/from some particular term/s, that the promise is of such **importance** to the promisee that he wouldn't have entered into the contract unless he had been assured of a strict(or substantial) performace of the promise and this ought to have been apparent to the promisor -- intention of the parties - Factors: - Importance = 'we guarantee' - Payment not to commence until all boards displayed - Preliminary correspondence demonstrated importance of continuity of display - Repudiation by T that would continue w/ avg - ***Associated Newspapers v Bancks* HCA 1951** - Facts: 10yr contract for 1pg cartoon for newspaper + published on front pg of comic section, AN published on other pgs + B terminated - Issue: Was the termination valid? - HELD: condition = B could terminate - Factors: - Importance of continuity?, cartoon's integrity (published as a whole), + being on most conspicuous pg - B's obligation for 1pg cartoon everyweek = condition therefore AN's corresponding oblig should also be a condition - Affirmed Tramways - ***Ankar v National Westminster Finance* HCA 1987** - Facts: lease agreement of loaned money for machinery b/w NWF + manufacturer, Security Deposit agreement 125k w/ ankar to guarantee manufacturing comps lease obligs - NWF(Lombard) obligs under SD = - clause 8 = notify A if comp wants to assign its int. in machinery didn't inform A - clause 9 = notify A if comp is in default under lease agreement didn't advise A - A wants to terminate SD + get 125k back from guarantee - Issue: were the clauses conditions? - HELD: was a condition + A terminate - For condition: - Damages not a way of enforcing promises -- hard to prove loss - Obligation to give notice -- so A could safeguard position + interest - A would be liable but machinery for the L was owed no longer owned by lease - Surety contract -- w/ special relo b/w surety + creditor - Would have been considered IT + gravity of breach = termination = in obiter - Against condition: - Language not expressed as condition - No time fixed for giving notice 2.3 Serious breach of an intermediate term (IT) - tripartite classification of terms: - Before - Condition = breach = termination + warranty = no termination inflexible - After IT = termination if serious - Case authority - Hong kong IT part of UK law - Ankar obiter approval of IT in aus - Koompahtoo HCA adopts IT in aus - IT = less than a condition but more than warranty + can be breached in variety of ways - Only can be terminated if 'deprives the innocent party of substantially the whole benefit of the contract' as per Hong Kong Fir - ***Hongkong Fir Shipping* UKCA 1962** - Facts: HK owns ship + contract for 24 month charter of ship w/ K - Clause = seaworthiness clause = 'she being in every way fitted for ordinary cargo service' ship not used for 20 weeks + K term. - Issue: Was termination valid? - HELD: clause = IT but not serious breach no terminate - Tripartite classification: condition -- every breach must deprive innocent party of substantially the whole benefit of the contract, warranty = no breach can, IT -- may or may not - Seaworthy = IT -- test: - Does it deprive the party who has further oblig to perform of substantially the whole benefit? - No bec. Delay of 20 weeks/2 years isn't likely to deprive K of whole beneifit of contract - ***Koompahtoo v Sanpine* HCA 2007** - Facts: joint venture agreement b/w K(contributed land + under administration)+ S(contributed management + financial expertise), S breached by not keeping proper books of acc + financial records - Issue: could K's administrator terminate? - HELD: IT serious Termination was valid - 'went to the roof of the contract' + 'deprived K of a substantial part of the benefit for which it contracted' - Factors: - Nature of the contract + relo it creates - Nature of the term - The kind+ degree of breach - The conseq of the breach for the other party - The adequacy of damages - CP Kirby = terminate but not using IT bec. Law would be clearer if not Topic 2 Tutorial: ================= **Advise whether Psi Pharma has the right to terminate the contract.** **Facts:** - **3^rd^ batch unusable because above max temp = due to negligence of employee** - **5^th^ batch unusable because below min temp = due to electrical fault** **Issue:** - **Has TT breached the key term of the contract being that 'the vaccines are stored within the required temperature' enabling Psi to terminate for breach of contract?** - **Does PP have the legal right to terminate the contract for breach of terms?** **Rule:** - Condition: Term is so important that wronged party would not have entered the contract if not assured strict performance of it (Tramways) - IT: term that can be breached in a number of ways. - The question is whether the breach deprived the party of substantially the whole benefit of the contract. This has been found to be a strict test with a high threshold. Hong Kong Fir **Application:** **Key Term: the tetanus vaccines are refrigerated within the required temperatures** **Points towards being a condition:** - **Temperature is very important = specifically stated by Psi 'this is very important', mentioned in every clause of the agreement + TT specifically states its expertise in refrigeration** - **Other party's corresponding obligation is a condition???** - **Performance has commenced = already completed 5 batches** - **Any breach would be serious = 'very valuable and highly perishable' = medical use is important for health and safety of community could have drastic consequences** - **Damages are inadequate = although the vaccines could be replaced with compensation from damages the delay could have dire consequences on community health** - **Parties pre-contractual correspondence suggests required temperature is a condition = outlined by both parties in pre-contractual agreement** - **Like in Tramways = the use of 'guarantee' in clause 8 suggests it is important** - **Low likelihood of breach = given a range of temperatures not just a number = for natural variation + also given many assurances by TT** **Away from being a condition:** - **Damages could be adequate = could just reproduce the vaccines lost** - **A breach could be likely due to fault at some point in time = or natural faults = e.g electricity = doesn't state the min + max temp which could be a small range = each month for 2 years is a lot like in L shueler** Even if X term is not a condition, WP will still have the RTT if there has been a serious breach of an IT (intermediate term). (not covered in this tutorial). - The whole benefit of the contract is refrigeration = literally TT's only purpose - The degree of breach can be small but its effect is on a large scale - Not a serious breach = negligence = small accident + electrical fault but could be considered gross negligence with large ramifications **Conclusion:** **It would be considered a condition of the term, therefore PP can terminate for breach of the contract. It is unlikely to be a serious breach of an IT due to it not satisfying the strict tes t** **Answers:** - **\*\*\*unless specified clause of termination of agreement to terminate the contract = don't mention it = if not don't have sufficient evidence of the clauses in the contract of the termination of agreement = even tho mentioned that it will only last for 2 yrs** - **\*\*\*don't have to say it is not indiated that it is covered by statute = don't really need the first two \*\*\* just for the sake of completeness** - **Issue: Does PP have the legal right to terminate the contract for breach of terms?** - **Identify the breach = obvious breach of clause 8 to maintain the temperature range for the vaccines \*\*\*be specific about which clause** - **Either [breach of a condition]** - **Towards condition** - **Language used = importance, sensitivity, guarantee** - **Away from condition** - **Clause 10 = may continue to operate if there is a breach of clause 8 = anticipation that there may be breaches** - **Never said although can be breached = no right to terminate** - **Only 2 out of 5 batches or 2/72 (total batches) = like 20 weeks out of 2 years** - **Or breach of an i[ntermediate term]** - **It would most likely be considered a condition, however should the court disagree it may be considered a serious breach of intermediate term. \*\*\*must mention both** - **Does one batch being wrecked deprive the entire benefit of the contract? if continue with previous 40% success rate then it wouldn't be viable** Week 1 summary: --------------- - Termination of agreement: red flags = fixed term, 'the customer may terminate at any time', contract to end a contract (needs consideration), inferred + abandoned - Termination by breach: issue identify the breach breach of a condition serious breach of an intermediate term conclusion - KEY CASES: - general nature + subject matter of contract - Particular term / language used - *L Schuler v Wickman* ("condition") - *Luna Park v Tramways (*"we guarantee") - Other terms of contract - *L Schuler v Wickman* (clause giving right to terminate for material un-remedied breaches) - *Associated Newspapers v Bancks* (interrelation between parties' obligations) - Whether breach likely - *L Schuler v Wickman* (breach likely) - Likely consequences of breach - *Hong Kong Fir* (various possible breaches of seaworthiness clause) - Damages adequate remedy? - *Ankar v National Westminster Finance* (damages inadequate remedy) - Prior court decisions - Hongkong fir = is an IT but having a delay of 20weeks/2yrs isn't sufficiently serious = inc. as part of UK law - Could arg opposite to this that if the first 20 weeks have been this bad then not a good indicator for future performance - Koompahtoo = not keeping proper books of financial records = IT + sufficient = factors test = part of Aus law Topic 3: Termination for repudiation ==================================== Questions: Powerpoints: 3.1 introduction - Contract can be terminated under CL for repudiation - A party repudiates if they are unwilling or unable to perform their obligations undet the contract - Effect: RTT = repudiation by 1 party entitles the other to terminate the contract - Seriousness: what degree of inability/unwillingness is req? = objective test - Must relate to whole contract = all of promisor's obligations **or** - Be in relation to a condition of the contract **or** - Otherwise be 'fundamental' = deprive the innocent....... - how does it happen: what type of conduct is repudiation? - Demonstrated by party's words/conduct/factual inability (FI) to perform - FI hard to make out + req the promisor to be 'wholly + finally disabled' from performing the contract - May be anticipatory: occurs when a P repudiates obligs under a contract prior to the time for performance e.g I will not pay - Court approach: repudiation of a contract = 'seriosu matter + is not to be lightly found or inferred' - shevill - Overview of language from cases: - 'He is prepared to carry out his part of the contract only if + when it suits him' -- carr - 'a contract may be repudiated if one party renounces his liabilities under it/an intention no longer to be bound by the contract/intends to fufil the contract only in a manner substantially inconsistent w/ his obligs + not in any other way' -- shevill + House - The acts needs to convey to a RP that there was repudiation/disavowal 'either of the contract as a whole or of a fundamental obligation under it' -- Laurinda - Why have doctrine of rep.? - A party shouldn't be bound by a contract that the other party is unwilling or unable to perform e.g when one person can no longer afford to pay for the services and says this before performance - Grounds for termination overlap e.g rep. + condition for Luna Park + Bancks - Consequences of rep. can take 1/2 courses 1. Accept the rep. + terminate (+sue for damages) or 2. Affirm (continue w/ the contract), loses right to terminate (for rep) + get loss of bargain damages unless + until another breach occurs - **Carr v Berriman HCA 1953** - Facts: contract to build factory, C(landowner)breached by failing to clear land + failing to supply steel (given steel subcontract work to 3^rd^ party), + B (builder) terminated - ![](media/image4.png)Issue: Was the termination valid? Had the landowner repudiated? - HELD: C rep. the contract + B had RTT + recovered the loss of bargain damages e.g loss of profit on the building contract, expend. In keeping men ready, liability for breach of steel subcontract - Did B have RTT? - If yes: (here) get damages for loss of contract - If no: then wrongful term would be a rep. + C could get D for loss of contract - Judge: the intention 'evinced' here = not to be bound bec. He carried out his part of the cont. 'only if + when it suits him' - ***Shevill v Builders*** ***Licensing Board* HCA 1982** - Facts: lease agreement, tenant repeatedly late due to financial difficulties + lessor T relying on express T clause clause 9(a) = 'if the rent is unpaid for 14 days the lessor can terminate the lease.' - Issue: Did the lessor also have a RTT under CL for rep. by tenant? - HELD: no rep. no evidence that tenant evinced unwillingness/inability to perform - Tenant tried to meet its obligs + constant late payments of rent ≠ show rep. (compared to the builder just not completing the work) - Its important to determine grounds for T bec: - If just RTT bec. Of express clause = no loss of bargain damages less damages - If RTT under CL then loss of bargain damages more damages - ***Progressive Mailing House v Tabali* HCA 1985** - Facts: 5yr lease agreement, tenant refused to pay rent for 6mo + other breaches Lessor T relying on the express termination clause = clause 10.1 'T if rent is unpaid for 14 days' - Other breaches = damaged the property, sub-let w/o consent + misused premises - Issue: Did lessor also have a RTT under CL for rep. by tenant? - HELD: rep. by combo of events (inc. series of other breaches which wouldn't have been rep. in iso) - Express contractual RTT ≠ anthude CL RTT (thru rep) 3.4 instalment contracts - Instalment contract = where obligs are divided into a no. of instalments - Issue: what happens when relates to just one instalment = is it rep of whole contract? - ***Maple Flock v Universal Furniture* UKCA 1934** - Facts: Contract to supply 100 tons of rag flock 3x1.5 ton deliveries per week = 67 in total, 16^th^ delivery defective (too much chlorine) Purchasor T - Issue: Had the seller rep? was the purchaser entitled to T? - HELD: no rep smll ratio of breach to whole 1.5tons/100 tons + likelihood of repit was 'practically negligible' = 'business carefully conducted' = 'isolated instance out of 20 satisfactory deliveries' - Factors for whether breach of instalent contract = rep: 1. Quantitative ratio the breach bears to the contract as a whole 2. Degree of probability that such a breach will be repeated 3.5 Erroneous interpretation (EI) - Repudiation bec, of breach/wrongful T = but acting on erroneous interp e.g mistaken about their obligations can be rep. e.g Luna or not DTR - TEST: is the party persisting in its interpretation **willy nilly** in the face of clear enunciation of the correct interpretation? -- DTR - Erroneous = only relevant for rep (not breach of C or IT) - ***DTR Nominees v Mona Homes* HCA 1978** - Facts: contract to sell 1-9/35 lots + contract req. vendor (DTR) to lodge 'relevant plan of the subdivision' vendor lodged wrong one (incorrect interp of contract) purchaser T vendor said T was wrongful rep + T - Issue: had the vendor rep.? did the purchaser have RTT? - HELD: no rep -- vendor honestly believed in interp. -- wasn't persisting in its interp willy nilly in the face of a clear enunciation of true arg - DTA didn't rep. (no RTT) - mona (purchaser) didn't rep. by wrongfully T -- insisting on correct interp + didn't evince an intention not to be bound by contract as correctly interp - both parties abandoned contract + deposit returned to pucharser - If party EI + other party wants to T try to enunciate correct interp to other party + if unclear get a court determination of the correct interp of contract - ***Woodar v Wimpey* HL (UK) 1980** - Facts: W bought land for prop develop. + special condition in contract to T if 'new compulsory acquisition order' + W incorrectly T on basis of pre-existing compulsory acquisition order - Issue: Had W rep. by T on incorrect basis? - HELD: no rep didn't intend to abandon/not perform the contract + would abide by the deci in court of proper interp - TEST: does this indicate an intention to abandon + to refuse performance of the contract? (look at purchasors conduct as a whole) - Rep = drastic conclusion only in v 'clear cases of a refusal, in a matter going to the root of the contract, to perform contractual obligations' - W bona fide relied upon an express stipulation in the C to T - CP honest mistake should be no excuse -- too difficult to assess when honest - Here = honest, = 'impossible to prove the contrary' - ***Eminence Property Developments v Heaney* UKCA 2010** - Facts: contract for sale of 13 apartments + purchaser failed to settle on due date Vendor miscalculated notice period (actual days rather than 'ten working days') for T under express clause purchaser alleges vendor wrongfully T/rep. - Condition 6.8 = 'parties are to complete the contract w/in 10 working days of giving a notice to complete....''time is of the essence in the contract' + condition 1.1.1(m) = working day definition - Vendor = E, T when H failed to complete + H T claimed E's premature T was a rep. - Issue: was the vendor's wrongful T a rep? - HELD: no rep - A RP in position of purchaser would not reasonably have believed an intention to abandon + not perform oblig under the contract but simply that a mistake in calc had occurred - Objective TEST: 'from the perspective of a RP in the position of the innocent party, the contract breaker has clearly shown an intention to abandon + altogether refuse to perform the contract' Topic 4: Termination for delay ============================== 4.1 introduction - Red flags: 'time is of the essence' + notice procedure - Need to analyse this separately - When is there a breach by delay: - If express time for performance: e.g by 25^th^ June failure to perform by time expressed specified for performance - If not: e.g as soon as possible failure to perform w/in a 'reasonable time' in all the circum - When can u terminate for delay? -- OVERVIEW -- important - if time is 'of the essence' = **breach of a condition** aggrieved party can T after due date - if not - **serious breach of an IT** = but law unsettled (only one kind of breach (condition) =if late or degree/conseq of breach can vary (IT)) -- Hong kong fir = IT but left open in Ankar - **repudiation -- general** test delay evinces an intention to no longer be bound by the contract or to perform the contract only in a way substantially inconsistent w/ the contract as shown by: - delay or in combo w/ other conduct -- Laurinda or: - **Repudiation - notice procedure** (when failure to remedy delay after appropriate reasonable notice has been givne louinder; Laurinda) 4.2 where time is of the essence - If the parties have expressly indicated that timing of performance is essential e.g 'time is of the essence' = courts accept - If parties haven't stated this time will only be considered of the essence if that was what the parties intended - Apply tramways essentiality TEST: was performance on time so important to the promisee that it would not have entered into the contract unless assured of strict performance on time? - If not satisfied indicates strongly time is not of the essence - Sale of goods contracts - courts often construe time stipulations in mercantile contracts (commercial contracts for the sale of goods) as essential e.g time for delivery of goods - BUT goods act 1958 (vic) s 15: - Unless diff intention appears for the terms of the contract; stipulations as **to time of payment** are not deemed to be of the essence of a contract of sale. - Whether **any other stipulation** as to time is of the essence of the contract or not **depends on the terms of the contract** - Property law act 1958 (vic) s41 - 'according to rules of equity (time stipulations) are not deemed to be or to have become of the essence of the contract shall be construed + have effect at law in accord. w/ same rules' - time is not assumed to be of the essence = look to **matter of construction** -- did the parties intend it to be a condition? - Before this legis = - CL = time stip presumed to be a condition - Equity = not presumed " " 4.3 Repudiation + notice - If time not of the essence: When will delay constitute repudiation? - General TEST: When the delay is so long or is in circumstances that it evinces an intention not to be bound by the contract -- Laurinda or - After notice procedure: where the breaching party is given notice to perform w/in a reasonable time but fails to do so - louinder; Laurinda - Notice procedure = given after breach - Whether there has been a breach depends on if specific time expressly stip for performance: - Express: notice can be given as soon as any delay occurs - No express: notice can only be given after an unreasonable delay has occurred - Content of notice: 1. Specify performance req: must specify a time for performance of a parti oblig 2. Fix a reasonable time for performance: must be reasonable 3. Specify consequences: must clearly convey the conseq. Of non-compliance a. E.g time fixed for performance is of the essence or b. The party giving notice is entitled to T if notice not complied w/ - Whats a reasonable time under notice? -- Laurinda - All the circumstances of the case - What remains to be done under the contract by the party in delay - The subject matter - The behaviour of the parties - Consequences of valid notice - Failure to comply = repudiation RTT - If notice given at correct time and complies w/ content req. - ***Louinder v Leis* HCA 1982** - Facts: contract for sale of land but no time fixed for completion vendor gives purchaser notice to complete w/in 21 days BUT purchaser unable vendor T purch sought specific performance - Clause 4: req. purchaser to tender a transfer doc w/in 28 days of receipt of statement of title from vendor - Notice to complete: - Issue: Can the vendor T for delay in completion? - HELD: no RTT to T for delay no unreasonable delay by the purch in all the circum to entitle the vendor to give a notice to complete - Where there is no time for performance specified in the contract, notice can only be given after there has been unreasonable delay - But vend. Unable to rely on purch being in breach for delay in providing transfer doc. As justification for giving notice to complete the contract - IF vendor had given notice req. purchaser to tender a transfer doc w/in a reasonable time rather than a notice to complete = may have been successful ![](media/image6.png) 4.4 repudiation + notice -- Laurinda - ***Laurinda v Capalaba Park Shopping Centre* HCA 1989** - Facts: lease of shop premises in new shopping centre C req. to register lease/deliver registrable lease to L.(tenant) + no time fixed for performance repeated requests for lease, L serves notice req. C to perform w/in 14 days L Ts - 28^th^ nov = C said lease 'would be sent shortly' - 14^th^ mar = L req. copy of lease - 25^th^ mar = C said it had been sent for exec + was expected in 'not too distant future' - April = Cs aware of Ls desire to sell business - 21^st^ aug = L sent notice to C - 5^th^ sep = L Td - Issue: Was tenant(L) entitled to T for delay? - HELD: notice not valid - Time allowed was not reasonable = 14 days + evidence showed it takes longer than that to register a lease - Factors to consider = acts still to be done, extent of previous demands to perform + effect of non-commpliance on innocent party - Notice didn't communicate its consequences = no 'time is of the essence' or that may T if notice not complied w/ - 'if registration is not completed w/in that time then our clients naturally **reserve their rights** in respect of your client's default' - CP notice = valid in context of previous correspondence + knowledge of Ls desire to sell business = could reserve rights if non-compliance - HELD: repudiation (despite defective notice procedure) -- general test 'intention to no longer be bound..' - C's attitude from corresp was 'cavalier + recalcitrant' = inc. incorrect statements as to progress + unfulfilled assurances failure to register lease or provide it, failure to obtain mortgagee's consent to regis of lease + failure to get lease stamped 'more than a case of mere delay' Topic 5: Termination under international contract law ===================================================== 5.1 termination + breach - Termination under CISG - T = restricted promote efficient international trade - Cheaper to provide remedies like damages for breach - Adopts principle = 'favor contractus' = contract on foot where possible - Encouraging problems to be rectified by co-operation + comms b/w parties w/ high hurdle for RTT - T (avoidance) = only accessible when: - Fundamental breach = most common = Art. 25 (high standard) - Must substantially deprive the victim of what they were entitled to expect under the contract + must be reasonably foreseeable that it would do so - RTT = Art. 49(1)(a) -- buyers + Art 64(1)(a) -- sellers - Limited by notice of avoidance, cure + restitution - Failure to perform = e.g failure to deliver/pay the price or take delivery - Can lead to RTT (whereas in aus = lead to rep, breach of C or IT) + similar to aus delay thru notice procedure - If seller fails to deliver the gs or if buyer fails to pay the price or accept delivery of the gs RTT may arise under **Art. 49(1)(b)** (buyers) or **Art. 64(1)(b)** (sellers) - But subject to: - Must give notice fixing a further reasonable period for performance: : **Arts 47 & 63** if fails to meet new deadline = RTT = known as **Nachfrist** - Notice of avoidance Art. 26 - Must be given w/in reasonable time (otherwise lose RTT) - Diff to aus bec. Notice must be given of any breach even if T is not desired Art. 39 - If don't give it then loss of rights to any remedy e.g damages - Reasonable time = short for perishables e.g apple but long for machinery or noble month - Time starts when the buyer knew about non conforminty - Under CISG = Right to cure in aus don't have it - Only provided it wont cause the aggrieved party unreasonable delay/inconvenience CISG = Art 48, UNIDROIT Art. 7.1.4 - If possible to cure the non-conformity so it wouldn't be a fundamental breach cant claim funda breach cant T - Ability to make restitution - = buyer cant T the contract unless they can return the gs in substantially the same condition as they were received - Limitation on RTT Art. 82(1) - After T = parties can get refund of P + gs Art. 82(2) - Exceptions = damage not due to buyer's acts + goods used in course of business before buyer knew about non-conformity - Anticipatory fundamental breach = similar to repudiation - Can be T where the date before the date when performance is due, it becomes 'clear' that the other party will commit a fundamental breach Art. 72(1) CISG - Need notice of intention to avoid only if: - 'if time permits' Art 72(2) - Not req if other party has declared they wont perform Art 72(3) - Right to suspension + assurances = in aus cant stop performance if doubt the ability of party to perform - Under CISG + UNIDROIT = they can suspend if - Becomes apparent that the other partg will not perform a substantial part of their obligs bec.: - Serious deficiency in their ability to perform/creditworthiness or - Their conduct in prepping - AND - Adequate assurance of performance hasn't been provided CISG Art. 71, UNIDROIT Art 7.3.4 - Still need to give immediate notice of suspension + keep performing if adequate assurances are given - T under UNIDROIT - A party may T for 'fundamental performance' Art 7.3.1 = high standard like CISG - Also the breach has to substantially deprive the victim of what they were entitled to expect under the contract + reasonably foreseeable that it do so art. 7.3.1(2)(a) + intentional recklessness Week 2 summary: --------------- - So it can be: - a breach of condition - breach of sufficiently serious IT (like condition but can be breached to diff degrees + w/ various conseq) - repudiation (when a person's actions intend for the contract to be T like being too busy to fufil contractual duties) - repudiation by notice (when they ignore notice to complete duties) + (if wrongfully T then can sue for repudiation = but v unlikely to succeed), - T for delay (where you need to go thru all the previous options) - A lot of vendor/purchaser scenarios - CISG + UNIDROIT = called avoidance + not termination want the contract to succeed more + they have suspension + assurances Topic 1-5 workshop: termination for delay ========================================= Intro: - Performance + remedies + termination of contract = focus - Can the whole contract be RTT bec. Of breach - Delay = when the thing isn't done on time - When can delay RTT? - Failing to perform by time specified = breach - Time is of the essence = condition that there be performance on time or its an IT - IT = could be a little or a lot late - Same as other breaches just time is of the essence - This could be repudiating the contract = apply general test =notice procedure - Non-compliance w/o a valid notice = evidence for repudiation = clear RTT - If oblig says time is of the essence = time is important = condition = late at all = RTT - If not look to intention from tramways test Advise whether Alisha Arnoult can terminate the agreement with Zack Albright. - Set out breach + whether there can be termination for the breach - Facts: - Copyright = Z gets financial returns thru royalty + if she requests Zac has to keep royalty records - Issues: - What was zacks obligation that is an issue? -- royalty reporting in clause 5 - Did zach breach the contract? -- written request = yes first, other correspondence hasn't provided report for 3 months = probably breached - No specified time in clause 5 - Maybe look to intention + ways of analysing words from FOL - You could assume shed want them before end of each quarter = or reasonable time implied by courts - Reasonable time (RT) for performance = think about all circumstances - Royalty payment quarterly = a factor = to check before next is payable over 3months/a quarter is unreasonable - Think about the purpose of the contract = to check shes getting the right amount - Just looking at is their a breach of contract = - Look at the other RT first then: Reasonable time for notice? - Also implied by courts need to do double analysis - Only have to do this because no time specified - Conclusion = Z is in breach bec. Not completed in RT - \*\*\*need analysis because time isn't specified - On what basis does A have the RTT for Zs breach? - Condition: - Ankar - Similar = both financial records - Clause 8 = similar to clause 5 of purpose to inform A - Against condition: - No time fixed for - Diff = - It can be assumed that there was less importance because Ankar had security of 125k and it can be assumed that A earns less than that - Clause 5 to request vs clause 8 to notify = more - Not a condition = would she have still entered into contract even if she didn't get the reports w/in 3 months? probably not IT - For condition: - Similar to ankar = obligation to give notice clause 8 like in clause 5 CP cl. 5 requests more - She wouldn't have entered into the contract using the tramways test if she didn't get strict performance of time because she is a small business and needs clarity - Against condition + tramways not made out: - Language not expressed as a condition - No time fixed for giving notice or performance - Although Ankar, doesn't give notice or expressed as condition it is a surety contract so the gravity for not being given notice is higher than in this case. = bec guarantee = very important to give notice - Clause 4 = time is of the essence. = would've been put in cl 5 if it was that important - Cl 7 = reasons for termination = didn't say anything about records - Not made out! - Look at other parts of contract, language + cases - Then say it could be an IT because can be breached in a variety of ways - Sufficiently serious breach of an IT - Hong kong fir; koompahtoo - Serious deprivation - For serious IT: - A bec. Root of the contract + similar to Kommpahtoo joint venture records - Against serious IT: - Unlike Koompahtoo = issue is didn't provide them on time rather than provide them all - 20/2 yrs = so 4months/10yr contract wouldn't deprive A - Koompahtoo went into administration because of the lack of records = but no serious financial issues arising from lack of records + her business is thriving - Not an IT - Repudiation -- general test - Carr; shevill + Laurinda - For repudiation - Against repudiation - Hes not trying to get out of contract -- he's just busy = but not evincing intention to depart from the contract - Use the language from judges in Laurinda = 'gross + protracted'+ 'cavilier + recalcitrent' = strong language compared to this which is lower level evincing intention - False assurances = the msgs = like carr - Repudiation -- notice = redraft the notice = cl 5 =specify the time performance from request or quarter + time is of the essence Summary - Red flags: delay if time not specified - When there is a contentious RTT for delay need to go thru all ways to terminate; breach of condition, breach of a sufficiently serious IT, repudiation(general test) + repudiation by notice Tutorial 2: =========== Question 1: Advise whether TT has repudiated the contract **Advise whether Todd Transport has repudiated the contract (on the above facts).** **Repudiation = when a party is unwilling/unable to perform the contract** **Breach = not keeping the temperature within the required range = as per clause 8** **Repudiation = by general test** **FACTS:** - **Instalment contract = 10,000 doses each month for the next 2 years = 24 deliveries or 240,000 doses** - **Inferred that 15,000 doses have been damaged** - **3^rd^ + 5^th^ batches damaged** **ISSUE:** - **Did TTs actions constitute an unwillingness/inability to perform the contract?** **ANALYSIS:** **Not Repudiation:** - **Relates to the condition of the contract being** - **Similar to Maple flock:** - **Small ratio of breach to whole 15,000/240,000 doses have been damaged like only 1.5/100 tons** - **Perceived 'business \[being\] carefully conducted' = many assurances "Todd Transport is a long-standing player in the refrigerated transport industry" -- which may point away from the breach being repeated.** - **What about the exact actions?** - **Employee leaving the door open** - **Electrical problems** - **As per shevill 'it is a serious matter and is not to be lightly found or inferred'?** - **As distinguished from Carr where he failed to clear land and supply steel, TT performed all actions as per the contract within the specified time.** - **More likely to just be inference** - **Similar to shevil = TT tried to meet its obligations but negligence by the employees does not show repudiation.** - **Distinguished from Tabali: TT did not incur any other breaches to the contract; and fulfilled all other requirements such as notifying to PP as per clause 10 when the batches were damaged.** **Repudiation:** - **Maple flock:** - **There may be a greater degree of probability of repetition of misconduct then 'practically negligible' as only 5 deliveries have occurred and 2/5 batches have been damaged + not an 'isolated instance' like in maple flock** **CONCLUSION:** **It is found that TT has not repudiated on the contract because they did not an evince an unwillingness/inability to perform.** **However, had the company found repudiation to occur then PP can either accept the repudiation and terminate the contract and gain damages or Affirm the contract and lose the RTT and get loss of bargain damages.** **ANSWERS:** - **Go thru rep even after condition breached = can have both e.g tramways + associated newspapers** - **Electrical fault= unable to perform in general sense = for there to be a breach there doesn't need to be a fault in general** - **Focus on unwillingness not inability** - **Unwillingness needs to relate to the condition or IT or relate to whole contract = more likely** - **Factual inability = unable to perform = a lot rarer than you think** - **'Wholly + finally disabled from performing'** - **E.g unable to sell a good you don't own e.g antique furniture** - **E.g company has gone out of business/liquidation = unable to perform contractual obligations** - **Repudiation = needs to relate to the core of the contract** - **Don't just mention mapleflock for installment** - **Progressive mailhouse = diverse range of breaches but here it's the same breach twice** - **Look to the totality of the contract** - **Look broadly to repudiation maple flock installment** - **Quantitative Ratio of installment = 15,000/240,000 = totality and 2/24 fo** - **Don't know a lot on the facts about the breaches = which would lead you to know the degree of prob that it would happen again e.g if the employees often leave the door open or the electrical system is constantly faulty** Breach= clause 10: not notifying PP of the vaccines which were outside the contracted range Facts: - *Clause 10:* "If the temperature of any vaccine is outside its contracted range, TT must notify the Managing Director of PP immediately (and in any event within 1 business day)." - Issue was one night w/in the previous month - Had contact w/ TT the night before Issue: Has TT evinced an unwillingness/inability to perform the contract? Is TT persisting in its interpretation willy nilly in the face of clear enunciation of the correct interpretation? Eroneous interpretation: = write this clearly Analysis: Against repudiation: - It probably wasn't the intention of the contract to notify about all breaches = happened to a third party = privity - TT will argue that they breached the contract acting on an erroneous interpretation - Similar to Wimpey it is unlikely that this small interpretation -- which does not relate to the condition would likely constitute the drastic consequence of repudiation which should only be used in very 'clear cases of refusal in a matter going to the root of the contract' - As per Heaney; must 'clearly show an intention from the perspective of a RP in the position of the innocent party to abandon + altogether refuse to perform the contract' - But TT did inform her of the other breaches which suggests TT wants to follow the obligations of the contract and fulfilled the contract as to their interpretation of the contract as exemplified by the phone call. - Similar in Heaney where they did inform within 10 days rather than 10 business days. For repudiation: - Tabali - Clause 10.1 is similar to clause 10 of this contract both expressly stated the terms - TT has now abrogated both clause 8 and 10 of the contract =multiple breaches similar to T damaging the property and not paying rent. - As per Wimpey, PP may argue that this issue does go to the 'root of the contract' because knowing whether TT has breached the temperature requirements for other companies will change the likelihood that another breach could occur which would impact upon her cause for their inability to perform the contract for repudiation of the instalment contract. Conclusion: It is likely that TT honestly believed in the interpretation that clause 10 was only subject to vaccines going out of the required range with PP and TT was not persisting in its interpretation willy nilly in face of a clear enunciation of true argument. After TT has failed to enunciate the correct interpretation to PP, they could get a court determination of the correct interpretation of the contract. KEY TAKEAWAY: - Really rare to be inability = only if physically impossible + wholly disable e.g supplying things that don't exist specify which one you're going to talk about and discount the other one = most likely unwillingness Multiple choice test: --------------------- - Look to all parts of the question e.g if it specifies written + time = look at both = read carefully - Term is classified as a condition by statute, courts + parties (not by just one party) - Not repudiation if it only affects an IT - Time is of the essence = condition of contract Topic 6: Consequences of affirmation or termination =================================================== 6.1 consequences of affirmation - T is not automatic - When breach giving RTT aggrieved party can either (both irrevocable): - T contract = contract is at an end loss of bargain damages - Affirm contract = contract is on foot damages for breach - Req. for a valid election (above choice): 1. Aggrieved party must have knowledge of the facts that give rise to RTT and 2. They by words or conduct must demonstrate an unequivocal intention to either T or A the contract - Conseq. Of A -- RTT lost -- Foran v Wight - New right to make an election occurs upon further breaches - Distinguish b/w - Once + for all breach: most common + standard rule applies no RTT unless a new breach occurs - Continuing breach = every day its not rectified get a new right to elect T + (earlier choice wont matter) - Damages: - For loss caused by the breach - Except = A of a rep. for anticipatory breach where damages become available only on actual breach - Contract continues: - Both parties oblig to perform -- subject to estoppel Foran - Aggrieved party may be able to completely perform their oblig under the contract + earn the contract price -- McGregor - Both parties can only rely on subsequent events (future elections from breaches) -- bowes - ***Bowes v Chaleyer* HCA 1923** - Facts: contract to sell silk for ties 'half as soon as possible. Half two months later.' C(buyer) tried to cancel order + seller(B) in 3 shipments buyer rejected goods on basis of breach (3 instead of 2 shipments) seller sued for damages - Issue: what were the consequences of the sellers affirmation? Could the buyer terminate the contract? - HELD: seller not entitled to damages - Buyer repd contract (wrongfully cancelled contract) - Seller affirmed contract (was this by shipping) - Seller breached condition by delivering 3 batches w/in 2 months - Buyer refused to accept delivery = valid + seller not entitled to damages 6.2 consequences of termination - T is not automatic - Consequences of T contract ends + further obligations cease + parties are relieved from future performance - Accrued rights survive: - Past obligs remain on foot = e.g paying as an action for debt - Subject to a restitutionary claim of total failure of consideration in relation to money paid or due -- mcdonalds - Restitution: rest. Remedies for money paid or gs or s provided may be available - Loss of bargain damages = aggrieved party can claim damages for loss of the other partys performance under the contract - Can rely on diff ground: aggrieved party can rely on any valid ground for T even if they did not have awareness at the time of T - ***McDonald v*** ***Dennys Lascelles*** ***Ltd* HCA 1933** - Facts: contract for sale of land purchase price payable by deposit, instalments + balance of the purchase price on settlement contract validly T by the purchaser Vendor sues guarantor for unpaid instalment - Land = 1,876 acres, 3 roads + 35 perches = ½ the suburb - ![](media/image8.png)Background= boom + bust property prices bec. Great depression - Issue: is the vendor entitled to payment of the overdue instalment? Including paying instalments due + repaying instalments already paid? - HELD: didn't pay overdue instalment of 1,000 pounds + M (guarantor) didn't have to pay it either - When contract for sale of land = T + land not conveyed instalments due don't need to be paid + instalments paid don't need to be returned - Accrued rights are subject to a restitutionary claim of total failure of consideration - 'vendor cannot have its land + its value too' on the basis of total failure of consideration - Vendors right to keep or seek purchase price instalments isn't absolute but conditional upon transfer of land to the purchaser - \- think about it accrued rights + obligs remain valid = instalments paid \| T\| future performance = instalments due ceases - Deposits = different to advance instalments - Recipient = provides consideration by committing to the transaction -- Bot - Sale of land: - If the vendor T for purchasers breach/rep vendor retains/req payment of the deposit -- no total failure of consi - If purchaser T for vendors breach/rep purch. Recovers the deposit in restitution on basis of total failure of consideration -- foran - (whoever is wronged has to pay it back) Topic 7: restrictions on the right to terminate =============================================== 7.1 introduction - This is like all the counter args by the other party - Overview: - Where 1 party has the prima facie RTT the other party may be able to claim this right is restricted when the party purporting to T: - Elected to affirm - Was not ready + willing - Is estopped from T - A waiver - Relief against forfeiture - Other restrictions - Express contract restriction on RTT - Unconscionable T statutory unconscionability under ACL - T breaches an implied duty of good faith - Good faith as a restriction - T under an express contractual RTT breaches an implied duty of good faith: - To act reasonably + honestly + follow fair procedural processes when exercising RTT -- renard - To not exercise contractual powers (RTT) capriciously or arbitrarily for extraneous purposes (ccompared to protection of 'legit interests') -- gary rogers - Good faith is unlikely to restrict RTT under CL 7.2 election to affirm - Affirmation loss of RTT for breach that gave rise to RTT - Requirements of affirmation -- immer - Knowledge of at least the facts that give rise to the RTT + - Unequivocal conduct consistent only w/ affirmation (+ inconsis w/ T) - E.g accepting/insisting on performance, performing acts under contract, unreasonable delay in T (not immediately but cant prejudice the other party) -- immer - Extension of time is unlikely to be affirmation -- tropical traders - When RTT will arise after affirm new breach/rep. or continuing breach/rep - ***Carr v Berriman***: e.g of affirmation + RTT after further breach - Facts: B contracted to build factory for C site excavated by C w/in specified period C didn't B subcontracted for supply of steel for building C appointed diff contractor to do the steel work - Affirmation: making the subcontract after expiry of excavation period act 'consistent only w/ the continued existence of the contract' -- B couldn't T - HELD: new RTT of C appointing a diff contractor to do the steel work = repudiation - ***Tropical Traders Ltd v Goonan* HCA 1964** - Facts: contract for sale of land = purch P= \$47,500 in I+ D = \$10,000 + 4 annual I = \$5,000 + balance payable a year after last I + TE (time is of the essence) - purch breaches = part of D paid 1 day late, first 3 Is were late (3, 13 + 5 days late) but 4^th^ paid 10 days early - ext. of time for final payment = due 6/01/1963 but asked for 3 month ext. 9/01 vendor gives ext. to 14/01 as 'an act of grace on the part of the vendor' + 'w/o prejudice to + in no way varying the right to strict enforcement of cont.' - 14/01 = purch didn't make final payment vendor T - Issue: was T valid? Did granting of ext. amount to binding election not to T for non-payment? By vendor accepting late payments over the yrs was there still TE? - HELD: vendor validly T granting ext. wasn't an election to affirm - 'it might keep the Q open, so long as it did nothing to affirm the contract' - ***Immer v Uniting Church* HCA 1992** - Facts: sale of 'air space' for \$2,306,600: church = seller + immer = buyer - 14/oct/88 contract 1/apr/89 = date after which I entitled to T under cl. 7 if council approval to transfer not granted 26/jun/89 Is solicitors sent draft deed of assignment of airspace 22/aug/89 I told airspace cant be transferred until restoration work complete 25/aug/89 = I T contract under cl 7 25/sep/90 = council approval granted (year later) - Issue: was this an election to affirm the contract? (the draft deed) (or T by notice on 25/aug) - HELD: no affirmation + no unequivocal conduct - Letter/draft deed ≠ unequivocal affirmation only intimated that if UC was in posi to complete (e.g get council approval) then I not exercising RTT - Req. for affirm (above) = knowledge + unquiv conduct - Providing delay ≠ constitute affirm or prej other party = bec. Just considering options + keeping Q open - When sent draft = I ≠ 'confronted w/ 2 mutually excl. courses of action b/w which he must, in fairness to the other party, make his choice' -- wasn't faced w/ election or abandonment - When RTT is continuing 'it is not so readily concluded that the party.. has abandoned that right' - I entitled to T any time after 1/apr 7.3 readiness + willingness - General principle = at CL to be entitled to T a contract for breach an aggrieved party must show that they are sufficiently ready + willing to perform the contract - Overview - The requirement that an aggrieved party must be ready and willing to perform the contract may not apply to termination under an express termination clause. - A requirement to [tender performance] for concurrent obligations - *Goods Act 1958 (Vic)* s35 - [Non-essential breaches] are no bar to termination - *Sharjade v Cth* - How does the requirement of readiness and willingness apply to [actual breach]? - *Foran v Wight; Sharjade v Cth* - How does the requirement of readiness and willingness apply to [anticipatory breach / repudiation]? - *Foran v Wight* - Is there a requirement of readiness and willingness for mere termination or only if seeking loss of bargain damages. - *Foran v Wight; Sharjade v Cth* - A plaintiff's readiness and willingness is relevant to a court's discretion to grant specific performance. - Actual breach = does the aggrieved party have to be R + W to perform to be able to T? - Strongest view: Breach doesn't preclude T of the contract (only damages), provided the breached obligations aren't interdependent + the breach by the party seeking to T has not caused the other party's breach -- Sharjade - Interdependent/concurrent obligs = if a party wants to T for a breach, where that party had a interdependent/concurrent oblig to perform must have tendered performance - Presump for sale of goods s35 of goods act 1958 (vic) = payment + delivery = concurrent obligs - Other view: wronged party must show they were R + W to perform their essential obligs at time of breach - Those Breaches would've given the other party RTT will disqualify a party from T - Non-essential breaches are no bar to T -- sharjade - Anticipatory breach = e.g i'm not going to perform -- - does agg party have to be R +W to perform **at time of rep**. to T? - Uncertain! - Conventional approach - foran - wronged party needs to show that at the time of rep. they were not substantially disabled or incapacitated - other approach -- sharjade - no req. of R + W when T for anticipatory breach unless seeking damages - does agg party have to cont. to perform after other party has rep? - if rep not immediately accepted wronged party ≠ need to perform if the rep. makes it futile/pointless to attempt to perform their obligs + detrimental reliance -- foran - R + W for damages - If loss of bargain damages are claimed, party must prove their loss on BoP + show they would've been R + W + able to perform. - 2 situations which R + W differ: - foran 1. Availability of T only to put an end to oblig to perform a contract in future 2. Availability of T + a claim for loss of bargain damages - ***Foran v Wight* HCA 1989** - Facts: sale of land W = vendor + F=purchaser, vendor reps 2 days before settlement date (TE) 'we have a prob here. We wont be able to settle on wed 22^nd^/06' (anticipatory breach) settlement date = nothing happens purch Ts 2 days after settlement date + wants return of D vendor args purch had no RTT bec. Didn't tender performance - Purch = T valid + return of D - Vendor = T invalid + retention of D + purch not R + W to perform as didn't have finance available to settle on 22^nd^ - Issue: Did the purchaser have RTT? Were they R + W to perform? - HELD: purch had RTT R + W at time of rep satisfied -- 'not substantially disabled form performing' - Reasons = no req of R + W to T, vendors were estopped by their rep from relying on purch's failure to tender - TEST: - the T party must be R + W to perform their obligations under the contract at the time of rep. - The T party must show that they were not substantially disabled or incapacitated from performing at time set for performance - The req of R + W for anticipatory breach = unjustified by principal or common sense + req useless + futile expend. By an innocent party - The aggrieved party must show on the BoP that but for the repudiating contract, he/she would have been R + W to perform the contract at the stipulated time to claim damages for loss of benefit of cont. - Application = purch R + W to perform as weren't 'substantially incapable' of raising the finance - After rep = Werent req. to perform on 22^nd^ bec. Of estoppel: vend represented that it would have been futile/pointless for them to perform + purch acted to their detriment in relying on this assump in not continuing to seek finance - Damages claim = return of deposit - CP not R + W + no estoppel -- mason j - No estop = purch couldn't have raised finance so wasn't R + W - T was invalid + purch couldnt get their D back - ***Sharjade v Cth* NSWCA 2009** - Facts: agreement b/w RAAF ex-serivce org + developer of land promise by RAAF to actively promote + assist develop. For pre-sales of units of develop -- breached promise by develop. To arrange finance for the develop -- breached RAAF T - Issue: Was the termination effective? Was the ex-service organisation precluded by its own breach from terminating? Is there a requirement of readiness and willingness for termination or only if seeking damages? - HELD: breach by T party was no restriction on RTT bec. Was a breach of a non-essential term - Foran = obiter Don't need to seek R + W unless seeking damages 7.4 estoppel - Can restrict a RTT where there is detrimental reliance (DR) on an assump induced by the other party that the RTT would not be exercised - E.g sale of land = TE = before settlement V asks P if could allow him to tender purch price after date specified in contract. Bec. Having difficulty getting money V gives P extra 2 days - Elements of estoppel: - Walton stores 1. **Assumption:** relying party must have adopted assump, either of fact/about future conduct 2. **Inducement:** assump must've been induced by the conduct of the representor 3. **Detrimental reliance:** relying party must've acted on the assump in such a way that they will suffer detriment if the representor doesnt adhere to assump 4. **Knowledge:** representing party must know/intend that relying party will rely on assump 5. **Departure:** representor has departed/threatened to depart from assump adopted + acted upon by relying party 6. **Reasonableness:** relying party has acted reasonably in adopting assump + in the detrimental action they took in reliance on the assump 7. **Unconscionability:** it would be unconscionable in the circumstances for the representor to depart from the assump - ***Legione v Hateley* HCA 1983** - Facts: sale of land 14/07/78 1/07/79 balance due + purchaser fails to pay \$29K balance of purch money 26/07 V serves notice complete by 10/08 9/08 purch asks for ext. to 17/08 ('i think that will be all right but i will have to get instructions' 14/08 V Ts 15/08 purch pays balance but rejected by V - Issue: does V have RTT? Was P estopped from acting? - HELD: no estoppel (possible relief against forfeiture) - Representation needs to be 'clear + unequivocal' 'i think' is not enough for promissory estoppel - Purch's solicitor must have known the limit of Mrs Williams (solicitor's clerk) authority so it was not reasonable that any promise/representation could be inferred from her conduct - While saying 'i will have to get instructions' = makes it clear she doesn't have authority to make reps for ext. of time - CP minority = made out - Williams induced belief in the mind of the solicitors - Purch acted on faith of the inducement i.e DR = could've paid on 9^th^ of aug if thought contr. Was going to be T - Inequitable to allow T i.e unconscionable = w/o V first informing purchaser + giving them change to complete contr. 5. waiver - doubt if it exists as an indep. Doctrtine usually about election to affirm, estoppel + contract variation - ***Agricultural and Rural Finance v Gardiner* HCA 2008** - the term used as no more than a conclusionary word stating the consequences of the operation of that more specific principle, rather than as indicating the application of any distinct and independent principle - 'waiver' = used to describe some modification of the terms of a contract without the formalities, or consideration, necessary for an effective contractual variation - Residual category? - Wasn't pleaded in case unnecessary to determine whether it exists at CL = but silence shouldn't be taken as encouragement to further speculation - Willing to recog as a 'free standing doctrine of waiver (based on unfairness) - TEST: the facts must be such that it would be manifestly unfair for the party which had earlier waived its legal rights later to adopt an inconsistent position + seek to enforce them - The law will provide relief by upholding waiver in circum where not to do so would be manifestly unfair to the beneficiary of the 'waiver' - cases of election + estoppel = manifest unfairness 6. relief against forfeiture - court may restrict RTT + grant relief against forfeiture of: - payments of money e.g instalments - property rights in land e.g sale of land/mortgage/lease or personal property e.g patent/shares/finance leases of machinery - contractual rights e.g trademarks - \+ grant the remedy of specific performance - Used to protect against unconscientious exercise of legal rights + T would be unconscientious where there is fraud, accident, mistake or 'surprise' (tanwar; legione) - Court wont readily grant RAF + restrict aggrieved party's RTT e.g union eagle - ***Union Eagle Ltd v Golden Achievement Ltd PC* 1997** - Facts: sale of apartment, 'commonplace conveyancing transaction' settlement at 5pm w/ TE paid 10 mins late V Ts at 5:11 P sought specific performance - Issue: was the P entitled to RAF? - HELD: no RAF + T was valid - No RAF for T of an ordinary contract of sale of land for breach of an essential time condition - Only 10mins? - 'only slightly late is bound to lead to args re how late is too late + can be only resolved by litigation' - ***Legione v Hateley* HCA 1983** - Issue: could hateleys obtain RAF? - HELD: potentially RAF -- procedural prob bec RAF not raised in lower court so needed to be remitted to supreme court - Considerations: - Did conduct of V contribute to Ps breach? -- yes (P relied on words from secretary of ext.) - Was Ps breach trivial or slight and inadverdant + not wilful? - Paid 5 days late breach not serious + was inadverdant + not wilful - What damage or other adverse conseq did V suffer by reason of Ps breach? - Evidence needed - What was the magnitude of Ps loss + Vs gain if forfeiture is to stand? P had built a house on land + would lose its value - Is specific performance w/ or w/o compensation an adequate safeguard for V? -- evidence needed - \*\*doubt about these considerations but some judges still use - ***Tanwar Enterprises v Cauchi* HCA 2003** - Facts: sale of land in nsw for \$4.5 mill completion due 4pm 25/06/01 -- TE, P unable to settle on time (couldn't get funds transferred from Singapore) V T on 26/06/01 P sought specific performance - Issue: was P entitled to RAF of its interest in land (special performance)? - HELD: no RAF no unconscientious use of Vs legal RTT for breach of the essential time stipulation - TEST: There is unconscientious use by the Vs of their legal RTT on failure of the P to complete in accordance w/ the essential time stipulation - RAF may be granted where there is 'unconscientious condut' which in a 'broad sense' requires one of the 'special heads:' - Fraud - Accident - Mistake or - Surprise - 'these special heads do not disclose exhaustively the circum which merit this equitable intervention but at least where **accident + mistake are not involved**, it will be necessary to point to the conduct of the V as having in some significant respect caused or contrib to the breach of the essential time stip.' - No conduct of the V that caused/contrib to breach so no 'fraud' or surprise' - 'nothing to suggest Vs helped to lull the purchasers into the belief' that they would accept completiong provided it occurred w/in a few days terms of deed = attitude to keep T on edge - No 'mistake' or 'accident' this req. exceptional + unforeseen circum that would make it unconscionable for V to T = possibility of delay in obtaining finance = inherent risk - Possibility of V reaping benefit of improvements by a P (e.g legione) ≠ grounds for relief + doubt over role of considerations in legione = at least for breach of time stip. Cases 7. good faith - when T **under express** **contractual RTT** breaches an implied duty of good faith: - to act reasonably + honestly + follow fair procedural processes when exercising RTT -- renard constructions - to not exercise contractual powers (e.g RTT) capriciously or arbitrarily or for extraneous purposes (compared to 'legit interests') -- garry rogers - good faith unlikely to restrict a party's RTT under the CL - ***Renard Constructions v Minister for Public Works* 1992 NSW CA** - Facts: contract for construction of sewerage pumping stations - Express stip in contract: - Cl 44 = principal can take over the work or cancel the cont. 'principal must first issue a show cause notice' + 'RTT if the contractor fails to show cause to the satisfaction of the principal' - = if contractor is in breach = principal can T if contractor fails to give reasons satisfactory as to why it shouldn't be T - Time for practical completion 17/jan/1986 - After construction started contractor req. extensions granted - Principal manager = not satisfied w/ delays + workmanship contractor called upon to show why shouldn't cancel/take over - C said R + W to perform + inc. manpower + working hours manager recom cancellation to principal princip misunderstood + not aware than C had inc. work efforts C told to leave - Issue: Was the principal obliged to act fairly, reasonably or "in good faith" in exercising the contractual power under cl 44 of the contract? - HELD: cont. wrongly T bec. Power has to be exercised reasonably - Bec. Of implied term in fact or law -- based on construction of clause - Implied term in fact that power has to be exercised reasonably applying business efficacy test - Contract read literally = can allow notice for trivial breaches - makes contract unworkable if can exclude contractor from the site 'no C in his senses would enter into a contract under which such a thing could happen' - Implied term in law of 'reasonableness' into fixed price major construction contract apply necessity test - Test = not absolute necessity test has the sense of something req. in accod w/ current standards of what ought to be the case, rather than anything more absolute - Bec. No implied oblig of reasonableness but P acting on incorrect knowledge couldn't have been 'satisfied' as req. to exercise T - ***Garry Rogers Motors v Subaru* 1999 FC** - Facts: R = Subaru dealer comprehensive aggrement e.g 18pg + diverse matters e.g nature of dealership premises RTT on 32 days notice -- cl 11 = 'either party may T this arrangement by giving the other notice in writing' Subaru intro. 'six-star revitilisation program' = changes to dealers showrooms, service + spare parts dpts + new uniforms + distinctive interior + exterior decoration negotiations if R has to implement program - S gave 13 months notice of intention to T R applied for injunction restraining T bec: - Unconscionable contravention of the trade practices act 1974 cth. (now ACL) + breach of an implied term of the agreement that S not exercise any power conferred upon it by the agree. Inc. powet of T otherwise in good faith - Issue: Did S act in 'good faith' by T contract with R? - HELD: S had good reason to T yes = implied term of good faith in law but S didn't act capriciously - S accepted bec. Implied term in dealership agreement legal incident of relo - TEST: must not act capriciously but doesn't restrict acts to promote legitimate interests - On facts: not breached - program = appropriate means of improving the position of dealers in market place + req. adoption of program in full + applicant refused to do so conduct contrary to own business interests - 13 months notice = sufficient for R to reorg affairs to accommodate loss of dealership Seminar 2: topics 6-7 ===================== - Depends on the Q if u should talk about conseq T or restrictions T first - Can T for anticip breach only if breach of serious IT or condition - If provided gs + s under contract could get damages under restitution - Rights accrued can be enforceable - w/ affirm still get damages for breach - for later breach for rep after previous affirm = can use this to help the case for later -- carr Priya v Vance -- quick facts : - facts: cl3 D due w/in 48 hours, clause 5/6 final payments/settlement due 29/01 -- TE, special condition = vendor has to paint the apartment a specific shade of white - scenario 1: does Vance have RTT? - Facts: paid D on time but didn't pay balance of purch price on the settlement date + V T the contract - HELD: P has breached = time was a condition can T = like Tanwar + union eagle case = 10 min delay in payment (both considered relief against forfeiture = no) = here no - V cant keep D? (P can only get D back if V breached) - Scenario 2: does Vance have RTT? - Facts: P 2 days late on D + V accepts P asks for ext. on settlement P doesn't pay balance of purch P on settlement date V Ts - Not like carr bec. That's thru rep here is breach of condition - HELD: V has RTT - Contract says TE on settlement date -- Tropical traders = even when ext. given time doesn't cease to be of the essence - Diff to tropical traders = bec. Said 'as an act of grace' = strong words but still could use - Acceptance of the earlier breach ≠ give rise to estoppel after didn't pay purch price after - Scenario 3: does V have RTT? - Facts: bushfire + loan from aunt fallen thru + property value went up + at contract settlement = P didn't but V ready P had been 'hoping to get finance' by - Issue: is he restricted from T because of earlier statements that he could 'sell a but later on' as long as i get payment before i have to settle in feb on house i have bought.' - HELD: - Look at **estoppel** + relief against forfeiture - \*\*for estoppel don't have to bring in any cases you know from contract A from the elements but still need to do aidkdru -- use hately + waltons - Gratuitous promise = not a contract bec. No consideration law doesn't protect against just changing ur mind - Did P detrimentally rely on the promise of extension -feeling relieved bec. Loan had fallen thru w/ aunt + she thinks she didn't have enough money? - Waiver? -- wouldn't operate as indiv restriction on RTT only w/ estoppel = just a term that's used to describe election to affirm = waived RTT legal doctrine is affirmation (what is legally box of estoppel) - **R + W?** - **Relief against forfeiture** - If evid. Found that she couldn't finance = then no relief or detrimental reliance but if shed tried to get other stuff then could be RAF or DR.??? - DR on not trying to get other finance? - Good faith? - Only restricts express RTT in the contract (T by agreement) - Whereas here is CL doctrine of good faith wont restrict it - Estoppel + waiver - DR, inducement = legione + facts + lack of authority of secretory to vendor stating here, less equivocal but lesser than legione -- but language is informal here, legione + casual nature of FB post + no - R + W - Painting of the appart. warranty no sufficiently seirous cant restrict RTT - Painting = subsidiary = warranty = no relation to sale of land - Damages would always be adequate because can just get someone to paint - Does calling it a special condition ≠ condition -- L schuler - P wouldn't have entered into contract w/o it bec. She talked about specificity -- apply tramways test - CP doesn't meet tramways not a condition - Special condition = specific to the contract as opposed to Ts + Cs - Whole point of contract is for land - Sharjade = non-essential - R + W doesn't restrict? -im confused why is this not in relation to her not being able to pay? - Relief against forfeiture - Tanwar= forfeiture not readily given , legione + (not like union) - Land = yes - RAF = protecting against the unconscious exercise of legal righs , T would be unconscientious where there is fraud, accident, mistake or surprise - Here surprise like Tanwar - She wouldn't have paid but for he said the facebook post? -- him commenting wouldn't have contributed to the breach - V must cause or contribute to the breach - Is it unconsciencous - Possibly talk about legione? No loss here by V bec. Doesn't nned to settle until feb - i think theres a test or something - Market value wasn't bec. Of Vs actions - Could be unconsciencious = may be RTT - Good faith isn't relevant Summary week 3: --------------- - Good faith = express agreement in contract Topic 8: Damages ================ 8.1 introduction - Damages = amount awarded by a court to compensate for breach - General rule = compensation principle - Where a party sustains a loss by reason of a breach of contract, he is so far as money can do it, to be placed in the same position with respect to damages, as if the contract had been performed' -- robinson + affirmed by HC w/ Cth v amann + Tabcorp - Procedure: 1. Identify the breach + whether there is a RTT: - Apply compensation principle to identify possible losses that might be claimed e.g lost profit/specific expenses - Compare what would have existed if contract performed vs non-performance situation - Consider whether the breach involves any of the following: - An obligation to build or repair - Loss of a chance of a benefit - Non-profit making contract or benefit cannot be determined (reliance damage) - Consider measure of damages -- put a money value on these losses 2. For each item of loss consider if any limitations apply: - Causation - Remoteness - Mitigation - Non-pecuniary loss - Limit on loss of bargain damages/T under contract - Express exclusion in the contract - ***Carr v Berriman*** - Damages = awarded to the builder for lost profit, expenditure incurred in keeping a tea mof men ready to start work when the site was cleared + liability to the builder's sub-contractor for the steel fabrication work - Compensation principle: - D are compensatory not punitive or restitutionary -- CP UK position in Attorney General v Blake - Expectation D= value of expected benefit - Put aggrieved party in the position they would've been in had the contract been performed correctly - E.g lost profit, cost of substitute + reduced market value - Ordering the cost of rectification or repair - Discounted to reflect possibility of benefit not being obtained - For speculative contract = loss of chance D - Usually reliance losses = inc. in expectation D - Reliance D = value of wasted expenses - Granted where its difficult to work out how much benefit the aggrieved party would have received from a contract -- assume would've at least covered costs - Controversial if should be discounted to reflect possibility of benefit not being obtained -- cth v amann - An approx. of expectation D - D available as of right if there is breach of contract assessed the date of breach - Proof of loss -- R + W - Substantial D = aggrieved party must prove on BoP that they have suffered loss bec. Of breach (otherwise just nominal) - Must prove they were R + W to perform their own essential/fundamental obligations under cont. to claim loss of bargain D - Relevance of RTT for D - If RTT + T loss of bargain D - If no RTT D for compensation of particular breach - Except in case of affirm. Of a rep, for anticipatory breach become available only on actual breach - Restitution = alternative to D - Claim in respect of money paid/goods/s provided can be made as an alt to contractual D w/ procedural adv. -- mann - But no double-recovery -- Baltic shipping - Limitations on bringing an action for breach of contract vic = 6 yrs from date of breach + 15yrs for deeds -- limitations of actions Act 1958 * *(Vic) s 5(1)(a) + s 5(3) - Limitations on D overview: - Causation = req plaintiff's loss to have been caused by the Ds breach - Remoteness of D = sets limits beyond which the D's responsibility for the loss wont extend - Mitigation = the reasonable steps that have been/should be taken by the P to reduce his loss - General exclusion of compensation for non-pecuniary loss = D not usually awarded to compensate non-pecuniary losses e.g disappointment (CP Baltic shipping) - Loss of bargain D + T under express term = full loss of bargain D aren't available unless there is a CL RTT -- shevill -- unless contract clearly provides for loss of bargain D -- gumland - Exclusion clauses = parties can contractually excl. or limit their liability for breach of contract, commercial contracts excl. D often for 'consequential loss' 8.2 measuring D -- practical examples - Assessing D = common sense - 'assessing liability in D is to an irreducible extent a pragmatic one' - Cheshire + 'estimating D may be difficult but a court must 'do the best it can' -- Amann - Expectation loss examples: - Customer repudiates contract for supply of services -- supplier's expectatio

Contracts B Class Notes PDF

Document Details

Tags

Related

Summary

Full Transcript

Upgrade to continue