ACCG2051 2020 Lecture Area 2.pdf

Contract  Elements of a contract Intention to create legal relations Offer + Acceptance = Agreement Consideration = a promise by each party to do something – the value or worth each is giving to create the contract 2 ...

Contract  Elements of a contract Intention to create legal relations Offer + Acceptance = Agreement Consideration = a promise by each party to do something – the value or worth each is giving to create the contract 2  INTENTION Domestic situation – presumption against the intention to create legal relations Commercial situation – presumption in favour Each of these presumptions are rebuttable 3  Intention Where arrangements are purely domestic a commercial purpose will not be involved – but where domestic or family arrangements have substantial outcomes or concern matters where a party undertakes expense or disadvantages themselves as a result of another’s representations then a contractual intention may be inferred Todd v Nicol Arrangement between relatives for one to come to Australia from Scotland to provide assistance and in return be given rights to a house – the relative arrived but the arrangement was revoked – court holds that sufficient intention to create legal relations existed 4  OFFER In a normal retail situation the offer is made by the buyer – this enables retailers to refuse to sell, that is, not accept the offer Where a ticket is given the offer is made by the seller – as the terms of a contract are determined at formation this principle allows for the inclusion of the terms on the ticket 5  OFFER Offers can be revoked prior to acceptance Offers can lapse if not accepted within designated time An invitation to treat (request for an offer to be made) is not an offer A counter offer amounts to a rejection of the original offer 6  OFFER Offer can be made in many ways: Written Verbal Internet (Facebook, websites) Email SMS Offer can be made or addressed to an individual, specific group of people or even world at large (Carlill v Carbolic Smoke Ball) 7  OFFER What is not an offer: Mere ‘puffs’/exaggerated advertising/ sales talk Carlill v Carbolic Smoke Ball Invitation to treat Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd Concerned legislation prohibiting certain pharmacy sales other than under supervision of registered pharmacist – held that goods on shelf were invitation to treat not offer to sell – the effect was that the customer makes the offer at the cash register (where there was a pharmacist) 8  ACCEPTANCE Acceptance must be in relation to the offer R v Clarke – reward for information given – the court held that the informant was motivated by receiving a pardon not by the offer of a reward – NO ACCEPTANCE) Acceptance generally must be communicated Silence is not sufficient to amount to acceptance Conduct is needed Only the offeree can accept In some cases (unilateral contracts) performance is sufficient without communication of acceptance 9  CONSIDERATION The value that each party gives for the benefits of the contract The value element may be minimal - Chappell v Nestle Consideration must be present or future Past consideration (value already given) or the carrying out of a pre-existing duty or obligation is not sufficient consideration 10  Terms of the contract Terms determine parties rights and obligations Terms can be written; oral; or a combination Terms can be express; implied; or a combination A pre-contractual representation may not be a term – relevant factors are: how close to the formation of the contract was the representation; importance in context of contract; any relevant difference in the knowledge of the parties such as seller has experience and expertise 11  Terms A party may want to limit its liability by inserting a term to that effect – this is an exclusion clause Exclusion clauses may be enforceable where the contract is in writing and signed; or where notice of the exclusion is prior to formation (In Thornton v Shoe Lane this was not the case); or in some cases where there have been previous dealings Exclusions will be construed strictly against those seeking to rely on them 12  Pre-contractual matters If a party to a contract has a claim, that claim will either be as the result of a breach of a term of the contract - or - because at or prior to formation of the contract certain matters took place which show that genuine consent did not exist 13  Genuine Consent Consent Mistake Misrepresentation Duress Undue Unconscionability influence Fraudulent Innocent Negligent Special No special relationship relationship Against the Against Economic person goods Common Mutual Unilateral Non est factum 14  Mistake Common Mistake - both parties mistaken about same thing - not available to void the contract where a party acts in reliance on another party’s promise to their detriment – McRae v Commonwealth Disposal Commission Unilateral Mistake - only one party mistaken but other is aware of this and does nothing to correct it – however not available to avoid contract if other party is unaware of the first party’s mistaken belief Mutual Mistake - misunderstanding or parties at cross-purposes 15  Misrepresentation The representation must be a statement of fact that is false and induces entry into the contract. Innocent Fraudulent – need to show intention to deceive Negligent – this will arise where there is a special (often business) relationship between the parties and is similar to duty of care situations in negligence law 16  Misrepresentation The following ‘representations’ will generally not form the basis of a misrepresentation under the Common Law: Statements as to future conduct or intention; Statements of Opinion; Mere ‘Puffs’ (extreme advertising); Silence or non-disclosure; Statements of Law Note though that the Australian Consumer Law will be relevant For example, relevant sections under the ACL include: – s18 – misleading or deceptive conduct; – s30 – false representations in relation to land; – s31 – false representations in relation to employment; – s29 – misleading conduct regarding services; – s37 – misleading statements about business activities. 17  Duress Duress involves use of threats or violence against a person (actual or threatened), or against their goods or economic interests to force them to enter into (or give up a benefit under) a contract against their will The essence of duress is a lack of free will 18  Unconscionable conduct Courts may set aside a contract for being unconscionable (unfair) where the defendant has abused their superior bargaining position in their dealings with the plaintiff - Commercial Bank of Australia v. Amadio The plaintiff has to establish: They were in a position of ‘special disadvantage’ That this substantially affected their ability to protect themselves; The defendant knew, or ought to have known, of the plaintiff’s disability and not taken advantage of it 19  Unconscionable conduct Statute Law also prohibits Unconscionable Conduct: – Sections 20, 21 and 22 of the ACL prohibit a person who is acting in trade or commerce, from engaging in conduct which is, in all the circumstances, unconscionable: – Section 20 of the ACL provides that the meaning of “unconscionable” is to be found in the common law 20