What is law?
• Generally:
– Legislation from Parliament
– From bodies to whom the power has been delegated
– Decisions from senior courts
• The “law” can be classified in many different ways:
– Common law and statutory law
– Examine what specific areas law covers
– Historical division of law into principles of common law
and equity
– Geographical limits: Common law system vs civil law
system
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Government has 3 distinct areas of power:
• Separation of powers doctrine: A concept inherited from
England
• Based on the idea that Government is divided into 3
separate and theoretically independent organs:
– The legislature (Parliament), which makes the laws;
– The executive (The Crown, the Ministry & the public
service), which administers the laws; and
– The judicature (The judges and the courts), which
interprets, applies and enforces the laws
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Legislation
• Australian States have their own Constitutions and
generally the States are authorised to make laws “for the
peace, order and good government” of the State
• However these wide legislative powers must be
understood in the light of the Commonwealth Constitution
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Australia’s Commonwealth Constitution
• Gives the Commonwealth government both concurrent
and exclusive legislative powers-
– Concurrent: Those legislative powers shared with the
states
– Exclusive: Legislative powers that are only to be
utilised by the Commonwealth Parliament
• If there are powers not listed in the Commonwealth
Constitution these may be regarded as residual and are
therefore the domain of the State legislatures
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Sources of Law – Common Law
• Law made by judges in adjudicating disputes is often
referred to as Case Law or Common Law and it includes:
– Decisions made by judges where no legislation
applies; and
– Judges interpretations of particular statutes and
regulations
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Causing Harm:
Torts and Negligence
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Law of Tort
A tort is a civil wrong. It provides a mechanism whereby an
individual can protect their personal and property rights.
If these rights are infringed, the victim may seek
compensation from the wrongdoer.
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Law of Tort
There is some overlap between tort law and criminal law:
a person’s act may involve both a crime and a tort,
eg assault, battery, theft/conversion.
However, criminal proceedings are taken in the name of the
state, while proceedings in tort are taken by the injured
person as private citizen.
The standards of proof differ:
- in criminal action, it is “beyond reasonable doubt”
- in civil action, it is “on the balance of probabilities”
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Tort versus Crime
Tort Crime
Aims to
compensate
Aims to punish
Initiated by
individuals
Initiated by state
Outcome is
remedy for
plaintiff
Outcome is
conviction or
release of
wrongdoer
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Types of Tort
There are a variety of torts, including negligence,
trespass, battery, nuisance, defamation. They
protect different rights: - right to physical integrity
- right to protection of one’s reputation
- right to peaceful enjoyment of one’s property
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Trespass
•Forms of trespass:
– to land (interference with plaintiff’s land without
plaintiff’s consent)
– to goods (interference with goods in possession
of plaintiff without plaintiff’s consent)
– to person:
– battery: direct contract with plaintiff’s body without
plaintiff’s consent (Rixon v Star City)
– assault: threat causing plaintiff to anticipate contact
with their person
– false imprisonment
• Defences
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Nuisance
•Involves act that indirectly interferes with
plaintiff’s use and enjoyment of private or
public land
•Two forms of nuisance:
– private nuisance: interferences with
use/enjoyment of private land
– public nuisance: interference with
use/enjoyment of public land
•Remedies: damages and/or injunction
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Defamation
•Publication of statement about plaintiff by
defendant to a third party that would
damage plaintiff’s reputation
Three elements:
– statement was defamatory
– statement identified the plaintiff
– statement was published to a third party
Defences: - Justification, absolute privilege, honest opinion
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Negligence
•Negligence is a particular type of tort.
• The law of negligence imposes a duty on a
person to act with care towards others.
• If this duty exists and there is a failure to act
carefully and another suffers a loss, the tort of
negligence has been committed.
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Negligence
To prove negligence, three steps must be fulfilled:
1) There is a duty of care owed by one party to the other
2) There must be a breach of that duty of care
3) The breach of the duty of care causes harm or
damage.
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- Duty of Care
Donoghue v Stevenson established the ‘neighbour
principle’ which indicates to whom the duty of care is
owed.
It is owed to anyone that you can reasonably foresee is
likely to be harmed by your action or failure to act.
It is an objective test: would a reasonable person foresee
that damage may result from the defendant’s action or
failure to act.
The features of the case must indicate a duty of care.
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Situations where a duty of care arises:
• Car drivers owe duty of care to other road user
• Occupiers of premises owe duty of care to entrants
• Suppliers of goods owe a duty of care to recipients
• Solicitors owe a duty of care to their clients
• Doctors owe a duty of care to their patients
• manufacturers owe a duty of care to people who use their
products
• employers owe a duty of care to their employees
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19 - Breach of Duty of Care
On establishing a duty of care, it is next necessary
to show the defendant has in fact been careless:
have they breached the standard of care?
Use the reasonable person test: how would
he/she act in the shoes of the defendant?
If the defendant’s conduct falls below the standard
of the reasonable person they have breached their
duty of care.
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Breach of Duty of Care: Factors to consider - The probability that the harm would occur if
care was not taken (Romeo v Conservation
Comm’n of NorthernTerritory; Bolton v Stone) - The likely seriousness of the harm (Paris v
Stepney Borough Council) - The burden of taking precautions to avoid the
risk of harm (Latimer v AEC Ltd) - The social utility of the activity that creates the
risk of harm (Watt v Hertfordshire County
Council)
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21 - Damage caused by Breach of Duty of Care
Two aspects to damage: - The damage suffered by plaintiff must be
caused by the defendant.
Use the ‘but for’ test : Yates v Jones - The damage must not be too remote. Hence,
only damage that is reasonably foreseeable is
recoverable: the Wagon Mound case
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Defences to Negligence Action: - Contributory negligence:
- Court reduces damages to the extent plaintiff
contributed to their own injury: Ingram v Britten
and s 26 of the Wrongs Act 1958 (Vic)
- Voluntary assumption of risk:
- a total defence
- plaintiff knows of and willingly accepts the
risk of injury: Agar v Hyde
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Contract Law
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Introduction
• A contract is a legally enforceable agreement
• The law of contract encompasses many areas of
commercial law, eg agency, partnership, banking
• The law of contract is traditionally based on common law
and precedent, however legislation has had a significant
impact, eg Australian Consumer Law
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Elements of a contract
Three elements to form a contract:
• Agreement (offer and acceptance), and
• Intention to create a legal relationship, and
• Consideration
Four elements to undo a contract:
• Lack of consent, or
• Lack of capacity, or
• Lack of legality, or
• Lack of formality
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Agreement
• Before agreement there may be negotiations
• Agreement is when there is a “meeting of the minds”
• Agreement is determined objectively
• Agreement consists of a clear offer and an unconditional
acceptance of the terms of the offer
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Offer
• Offers are a promise to be bound providing the terms of
the offer are met
• The “offeror” is the person making the offer, the “offeree”
is the person to whom the offer is made
• Offers can be: - verbal
- in writing
- by conduct
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Offers must be distinguished from an invitation to treat
• Advertisements are usually regarded as invitations to
treat: Partridge v Crittenden
• A mere display of goods for sale at marked prices is
generally regarded as an invitation to treat:
Pharmaceutical Society v Boots Cash Chemists
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An offeree can respond to an offer in 1 of 5 ways.
Offeree can:
• Accept the offer in its full terms;
• Reject it;
• Make a counter-offer;
• Ask for further information or clarification before making a
final decision; or
• Do nothing at all
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Termination of offers
• Offers can be rejected by the offeree outright or in the
form of a counter offer, but inquiries from the offeree to
clarify the offer are not rejection: Stevenson, Jacques &
Co. v McLean
• Offers can be revoked or withdrawn by the offerror prior
to acceptance
• However the revocation must be communicated to the
offeree before acceptance: Byrne v van Tienhoven
• If the offeror uses the post to revoke the offer it is not
effective until it is received by the offeree
• Offers can lapse: Ramsgate Victoria Hotel v Montefiore
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Acceptance
• Is the unconditional positive response to the offer
• Must be in reliance on the offer
• Must be unconditional and clear
• Can be express or implied. Sometimes the conduct of
the parties will lead to the implication that an agreement
exists: Carlill v Carbolic Smoke Ball
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Intention to create legal relationship
• If the agreement is of a social or domestic nature, the
presumption is that there is no intention that the parties
intended to be legally bound:
• Balfour v Balfour
• Serious economic consequences and evidence of writing
can rebut the presumption:
• Wakeling v Ripley
• If the agreement is made in a commercial context, the
court will presume an intention to be legally bound. But,
this presumption may be rebutted:
• Rose and Frank Co. v Crompton & Bros Ltd
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Consideration
• Consideration is the value given by the offeree (promisee)
for the offer/promise received from the offeror (promisor)
• Defined in Curie v Misa
some right, interest, profit or benefit accruing to one
party, or some forbearance, detriment, loss of
responsibility given, suffered or undertaken by the
other
• Consideration may be money but can be a promise to act,
or do something or to refrain from certain actions
• It can be a benefit flowing to the promisor, or to a third
person at the promisor’s direction, or a detriment to the
promisee
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Consideration continued
• If consideration is the price paid for the promisor’s
promise, then it must occur in response to the promise
• It can’t be past consideration:
• Roscorla v Thomas
• Anderson v Glass
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Consideration need not be “adequate” but should be
“sufficient”
• The statement that consideration need not be adequate
refers to the relative value of the promise and the
consideration, ie if goods are sold well below their value it
is irrelevant for the purposes of consideration:
• Thomas v Thomas
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The statement that consideration should be sufficient
refers to the actual existence of consideration
Consideration will not be sufficient if the consideration is:
- a public or legal duty:
• Glasbrook Bros v Glamorgan County Council - an existing contractual duty that has to be performed
by one of the parties to the contract:
• Stilk v Myrick
• Hartley v Ponsonby
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Consideration
Payment of a sum lesser than agreed is not sufficient
consideration (Foakes v Beer):
• If the creditor accepts the lesser sum of money in full
repayment of a greater amount, there isn’t any “new”
consideration for the new agreement. The repayment is only a
part of the original debt.
Exceptions:
• Where debtor pays a smaller amount and adds something of
value or pays the debt earlier than the due date
• If a third party has entered into an agreement to pay a lesser
amount in full settlement of the debt: Hirachand Punamchand v
Temple
• If the ‘practical benefits test’ is fulfilled: Musumeci v Winadell
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Promissory estoppel
• This rule was traditionally used as a defence to prevent
someone going back on their promise after the other party
has acted in reliance on that promise and suffered
detriment: Central London Property Trust Ltd v High Trees
House Ltd
• In Australia promissory estoppel can also be used as a
cause of an action (a sword), not merely as a defence-
Waltons Stores v Maher
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Elements of promissory estoppel
• A pre-existing legal relationship between the parties under
which rights either existed or were expected to be
created;
• A promise by one party that he or she will not insist on his
or her strict legal rights
• The promise gives rise to an expectation in the promisee
that the promise will be honoured, even though it is not
supported by consideration
• Actual reliance by the promisee on the promise
• An element of detriment in that the promisee is placed in a
worse position when the promise turns out to be false
• An element of unconscionability
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Consent
• Contracts which are affected by the lack of real or genuine
consent may be rendered void or voidable
• Categories:
- mistake
- misrepresentation
- unconscionable conduct
- undue influence
- duress
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Mistake
• Mistake may be about the existence of the subject matter,
its qualities, the terms of contract, the identity of the other
party
• Under common law, mistake renders the contract void ab
initio, hence its application is very limited
• Equity allows for broader remedies: - rescission
- rectification
- refusal of specific performance
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Mistake
Types of mistake: common, mutual, unilateral
Common: both parties make the same mistake. Renders
contract void ab initio. But, must be fundamental matter.
• McRae v Cth Disposals Commission: tanker
never existed, so contract not void for common
mistake
• Leaf v International Galleries: mistake about quality
not fundamental
Mutual: parties at cross purposes.
• Raffles v Wichelhaus: contract void because no
common agreement.
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Mistake
• Unilateral: occurs when one party makes a fundamental
mistake when entering the contract and the other is award
of the mistake. Renders contract void or voidable.
Mistake as to terms of contract:
• Smith v Hughes – seller knew buyer under mistake as to
the age of the oats, but said nothing. Not void, unless
seller promised that oats were old. Caveat emptor
applies.
• Taylor v Johnson – negotiations based on option to buy 10
acres at $15,000 per acre, but contract for total price of
$15,000. Held: voidable because buyer acted
unconscientiously, deliberately setting out to prevent seller
becoming aware of the mistake
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Misrepresentation
This is where a person entered into a contract based on some
existing fact or past event that is not true
Edgington v Fitzmaurice: to establish an action in
misrepresentation, a party must prove that the representation:
1) is one of past or existing fact/s
2) is false
3) was addressed to the party misled before or when the
contract was made
4) was intended to induce and in fact induced the other party
into the contract
In sum, the party misled must have relied on the
misrepresentation
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Misrepresentation
• The misrepresentation is one of past or existing fact - therefore it cannot be a statement of opinion. However,
there are exceptions, eg if the representor never held that
opinion or lied about it
• The representation must be untrue - Silence alone is not a misrepresentation at common law.
No duty to disclose material facts (caveat emptor applies) - However, there are some exceptions requiring disclosure:
When a ‘half-truth’ is made, ie when the representor has
failed to make full disclosure
Subsequent discovery the statement is false
The statement was true when made but becomes
untrue later: With v O’Flanagan
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Misrepresentation
• The misrepresentation was addressed to the party
misled before or when the contract was made - Plaintiff must show they were the intended recipient of the
false statement. Only those who directly or indirectly act
on the false statement can obtain a remedy for the
misrepresentation
• The representation was intended to induce and had in
fact induced the other party into the contract - Plaintiff must show the misrepresentation both intended to
induce and was successful in inducing the contract
• Has the innocent party suffered any loss? - If there is no damage suffered from the misrepresentation,
there is no action
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Misrepresentation
Remedies:
• Misrepresentation may make a contract voidable. This may
give rise to the equitable remedy of rescission (or cancellation
of the contract). The innocent party may also possibly claim
damages. The types of remedies available depend on
whether the misrepresentation was:
• Fraudulent: rescission and/or damages for deceit are
available (see Derry v Peek for the criteria for fraudulent
misrepresentation)
• Negligent: rescission and/or damages for negligence are
available (see Shaddock v Parramatta City Council for the
criteria to establish a duty of care in negligent misrep’n)
• Innocent: rescission only: Whittington v Seale-Hayne
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Breach of s 18 of the Australian Consumer Law
(misleading or deceptive conduct):
Use this as an additional or alternative action to
misrepresentation
Apart from the common law action of misrepresentation, the
plaintiff may also claim breach of s18 of the Australian
Consumer Law (‘ACL’) (prohibiting misleading and deceptive
conduct).
Remedies for breach of ACL s 18 include damages (s 236) and
court orders to vary contract, to refund money or to return
goods (s 237)
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Unconscionable Conduct
• Where stronger party takes unconscionable advantage
over weaker party’s special disability
• Action in equity
• Special disability defined as on which “seriously affects
ability of innocent party to make judgment in own interests
(Amadio’s case)
• ACL s 20 prohibits person from engaging in conduct
which is unconscionable within meaning of common law
• ACL s 21 prohibits unconscionable conduct with supply or
acquisition of goods or services
• ACL s 22 lists specified matters court takes into account
deciding whether there has been breach of s 21
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Undue Influence
• Where ascendant party takes improper advantage of
position of dominance over the dependent party
• Certain classes of relationship give rise to presumption
of undue influence: parent and child, solicitor and client,
doctor and patient (Allcard v Skinner). May be rebutted.
• If no particular relationship, dependent party must prove
undue influence (Johnson v Buttress)
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Duress
• Involves illegitimate pressure by stronger party on weaker
party so as to procure a contract
• Distinguish it from hard bargaining
• May be actual or threatened violence (Barton v
Armstrong)
• May be economic duress: threats to a party’s economic
interests, eg North Ocean Shipping v Hyundai
Construction where defendant refused to continue with
construction of ship unless received 10% more. Held:
illegitimate pressure and plaintiff had no choice because
had chartered ship to 3rd party.
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Capacity
• Parties to the agreement must have the capacity to
contract
• The concept of capacity refers to the contracting parties
being able to form an intention to be bound by the
agreement
• A party to an agreement who is under 18 years of age or
who is mentally ill or under the influence of drugs/alcohol
may not have the capacity to contract
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Minors contracts
• Refer to contracts entered into with people under 18 years
• General rule: Contracts can be entered into by minors
• However. while such contracts are enforceable by the
minor, they are not enforceable AGAINST the minor
• Contracts for NECESSARIES such as clothing and shelter
are valid and enforceable against the minor
• The courts take into account the minors needs and
standard of living in determining what is necessary
• Contracts for employment, education and training are also
valid and enforceable against the minor if it is for the
minor’s benefit (Hamilton v Lethbridge)
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Legality
• Contracts illegal under statute:
Need to look at wording of statute:
• may only penalise the conduct, but not invalidate contract
• may invalidate contract, but not penalise parties
• may do both
• Contracts illegal under common law: - contracts to commit a crime or tort are void
- contracts in restraint of trade: use Nordenfelt test: a
restraint of trade is prima facie illegal and void unless it is in
the parties’ and the public’s interests. The restraint of trade
must also be reasonable in time and space - in employment contracts, restraint on confidential info may
be valid (Forster v Suggett), but won’t extend to ordinary info
and skills
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Contents of a Contract
The study of the contents of a contract concerns: - identifying what are the terms of the contract
- interpreting their meaning
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Terms versus Representations
• Why distinguish between contractual terms and
representations?
• How to distinguish them? - fundamentally, terms are statements for which a party
assumes contractual liability (unlike representations) - use the Oscar Chess v Williams criteria:
- How important was the truth of the statement?
- How much time elapsed between the making of the
statement and the final agreement? - Was there reliance on skills/knowledge of other party?
- Was statement put in writing?
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Written Contracts
• Parol Evidence Rule:
- if agreement in writing, presumed that writing
contains all the terms. Any oral statements will not be
admitted as contractual: Mercantile Bank of Sydney v
Taylor - but partly written, partly oral contracts are an
exception: Vann Den Esschert v Chappell
• If contract signed: - parties bound even if did not read the document:
L’Estrange v Graucob - unless the signed contract was misrepresented:
Curtis v Chemical Cleaning & Dye Co
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Collateral Contracts
• They avoid harsh consequences of parol evidence rule
• De Lassalle v Guildford: - lessee would not give signed copy of lease unless lessor
assured him the drains of property were in order. Later,
discovered they weren’t. Held: could not sue for breach of
the lease contract as the promise about drains wasn’t
contained in that document, but could sue on a “collateral
contract” - collateral contracts require:
- promise
- which doesn’t contradict main contract
- consideration for collateral promise (normally, entry
into main contract)
• Also, consider the very powerful s 18 of the Australian
Consumer Law (misleading and deceptive conduct)
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Conditions and Warranties
• Terms may be conditions or warranties
• Condition: vital to contract, so important that its nonperformance
is considered a substantial failure to honour
contract. Remedies = rescission and damages
• Warranty: not of central importance. If breached, injured
party must still perform contract, but may sue for
damages, not rescission.
• How to distinguish between them? Use “root of the
contract” test – is the term essential to the contract? ie
would the party not have entered into contract but for
strict performance of the promise: - Bettini v Gye: breach of warranty, hence only damages
- Associated Newspapers v Bancks: breach of condition,
hence both rescission and damages available
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Disclaimers or Exclusions Clauses
Two issues as to a disclaimer:
(a) incorporation – is it incorporated into the contract? Yes, if:
It is included in a signed written contract: L’Estrange v
Graucob
It was brought to the other party’s attention by reasonable
notice before the contract was formed: Thornton v Shoe Lane
Parking; Causer v Browne
It is implied into the contract from prior dealings: Balmain
New Ferry v Robertson
(b) Interpretation – does it cover what it claims to cover?
Contra proferentem rule interprets disclaimer narrowly: White
v John Warwick
Disclaimer does not cover conduct not falling within the ‘four
corners’ of contract: Sydney City Council v West
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Remedies
(1) Rescission: termination of contract for breach of:
• a condition: - Associated Newspapers v Bancks
• an intermediate term, breach of which has serious
consequences: - Cehave v Bremer
(2) Damages: available for breach of condition or warranty
or for fraudulent or negligent misrepresentation
(3) Injunction: a court order restraining a party from doing
an act
(4) Specific performance: a court order directing the
breaching party to perform their contractual obligations
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Damages
Damages: compensate plaintiff for losses flowing from the
breach.
Losses that can be recovered:
Use the rule in Hadley v Baxendale:
(a) damages are recoverable for direct losses, ie for
losses that flow naturally from the breach
(b) damages are only recoverable for indirect losses (ie
for losses that don’t ordinarily result from the breach), if
the defendant was made aware of them before the
contract
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Quantum of Damages
General damages compensate plaintiff for actual financial
losses
Nominal damages may be awarded for the breach where
there is no actual loss arising from the breach.
Damages may also compensate for loss of expected profits
from the contract and cost of expenditure (McRae v Cth
Disposals Commission)
Damages for distress and disappointment are not
usually awarded in breaches of contract. However, if
purpose of contract was to provide plaintiff with enjoyment
(eg holiday travel), damages for distress and
disappointment may be awarded: Baltic Shipping “The
Mikhail Lermontov” v Dillon.
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End of Contract (or Discharge of Contract)
A contract can be discharged:
• by performance of the contract
• by agreement
• by breach of the contract
• by lapse of time
• by law
• by the doctrine of frustration
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Discharge by Performance
Contract discharged where both parties fulfil precisely their
contractual obligations
Three exceptions:
1 if the contract is divisible
2 where partial performance is accepted: party who
partially performed the contract may ask for a ‘quantum
meruit’: Steele v Tardiani
3 if party has substantially performed their obligations, right
to quantum meruit: Hoenig v Isaacs
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Discharge by Agreement
A contract can be terminated by another agreement
If one of the parties has completed their part of the
contractual obligations then ‘accord and satisfaction’ will
be required before the other party is released from their
contractual obligations.
A contract may contain a term that allows one of the parties
to terminate the contract.
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Discharge by Breach
If one of the parties to the contract commits an actual
breach of a condition of the contract then the other party
has the option to terminate the contract and claim damages
for losses incurred as a result of the breach.
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Discharge by Frustration
Where an event occurs making completion of the contract
impossible.
The event must:
a) Radically alter the contractual position of at least one party
b) Was not within the parties’ contemplation at the time of the contract
c) Was not caused by either party
d) It would be unjust to hold a party to the original contract - see Taylor v Caldwell; Krell v Henry.
Where a contract is frustrated all amounts paid are
recoverable and all amounts payable cease to be payable:
Australian Consumer Law and Fair Trading Act 2012 (Vic) s
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Consumer Protection:
Australian Consumer Law
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Australian Consumer Law (ACL)
• In force since 1 January 2011
• regulates misleading and deceptive conduct (s 18) and
unconscionable conduct (ss 20-22)
• provides guarantees: - to “consumers” (defined in s 3)
- against suppliers (ss 51-57 re goods, ss 60-62 re services)
that are non-excludable: s 64 - against manufacturers (ss 271-273 re goods)
that are non-excludable: s 276.
• provides remedies to persons against manufacturers for - loss, damage, injury arising from goods with safety defects:
ss 138-141 - any exclusion of liability is void: s 150
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Consumer
• Guarantees are provided to “consumers”
• “Consumer” defined in s 3: - a person is a consumer when the goods/services cost
- $40,000 or less; or
- if >$40,000, the goods/services are of a kind ordinarily
acquired for personal, domestic or household use or
consumption - but, must NOT be for re-supply or to be used up or
transformed in trade or commerce
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Guarantee as to acceptable quality: s 54
• Under s 54, there is a guarantee that goods supplied to a
consumer are of “acceptable quality”
• Goods are of “acceptable quality” if they are as:
a) fit for all purposes for which goods of that kind are
commonly supplied
b) acceptable in appearance and finish
c) free from defects
d) safe; and
e) durable
cont’d ….
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Guarantee as to acceptable quality: s 54
as a reasonable consumer fully acquainted with the state
and conditions of the goods would regard as acceptable
having regard to the following matters:
a) the nature of the goods
b) the price of the goods
c) any statements about the goods
Goods are of acceptable quality regarding aspects
specifically drawn to the consumer’s attention: s 54(4)
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Fitness for any disclosed purpose: s 55
• Under s 55, there is a guarantee that goods are
reasonably fit for any disclosed purpose and for any
purpose for which the supplier guarantees that they are
reasonably fit
• A disclosed purpose is a particular purpose for which the
goods are being acquired by the consumer and that the
consumer makes known to the supplier or manufacturer
• The s 55 guarantee does not apply where the consumer
did not rely, or that it was unreasonable for the consumer
to rely, on the skill or judgment of the supplier or the
manufacturer
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Other Guarantees:
• Guarantee that the goods correspond to their description:
s 56
• Guarantee that in a sale by sample, the goods correspond
with the sample in quality, state and condition: s 57
• Guarantee that supplier has the legal right to dispose of
the goods: s 51
• Guarantee that the goods sold are not subject to any
undisclosed security: s 53
• Guarantee that manufacturer will ensure repair facilities
and spare parts for a reasonable period after supply of
goods: s 58
• Guarantee that manufacturer and supplier will comply with
any express warranties they have given: s 59
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Guarantees as to services: ss 60-61
• Under s 60 there is a guarantee that services supplied to
a consumer will be rendered with due care and skill
• Under s 61 there is a guarantee that any services and
any product resulting from the services will be fit for
a purpose that the consumer made known to the
supplier
• Under s 62 there is a guarantee that services will be
supplied within a reasonable time
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Remedies
• are available:
to consumers
to persons who acquire goods from consumer as a gift (s 266)
• the nature of the remedy available depends on the nature of the
supplier’s failure to comply with the guarantee
• if it is not a “major failure”: - consumer may require supplier to remedy the failure within a
reasonable time; if supplier does not remedy the failure,
consumer may reject the goods or recover all reasonable costs in
remedying the failure: s 259(2)
• if a “major failure” occurs: - consumer may reject goods or recover compensation for any
reduction in value of goods below the price paid: s 259(3))
• In either case, consumer may recover damages for any reasonably
foreseeable loss or damage caused by non-compliance: s 259(4)
• Similar remedies apply for breach of services guarantees: s 267
• Exclusions of statutory remedies are void: s 64
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“Major failure”: s 260 for goods and s 268 for services
A “major failure” occurs where goods/services:
• would not have been acquired by a reasonable
consumer who was fully acquainted with the nature
and extent of the failure
• are substantially unfit for a purpose for which
goods/services of the same kind are commonly supplied
and they cannot be easily and within a reasonable time be
remedied to make them fit for such a purpose
• are unfit for a disclosed purpose
• are not of acceptable quality because they are unsafe
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Manufacturer’s Liability for Non-Compliance
• “affected person” may recover damages from manufacturer if
goods not of acceptable quality: s 271(1) ); or
where goods don’t match description: s 271(4)
• Damages against a manufacturer for breach of these guarantees
cover:
(a) any reduction in the value of the goods
(b) any loss or damage that was reasonably foreseeable for breach
of the guarantee: s 272
“Affected person” is:
• a consumer
• person who acquires goods from the consumer
• person who derives title to the goods through the consumer: s 2(1)
Exclusions/modifications to statutory remedies are VOID: s 276
Manufacturer liable to indemnify supplier: s 274
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Manufacturer’s Liability for Goods with Safety Defects
Manufacturer liable:
• to compensate an individual if goods supplied by it have
a “safety defect” and the individual suffers injuries
because of the defect: s 138
• to dependents of individual for loss as a result of injuries
to or death of individual caused by a safety defect: s 139
• for loss of other goods ordinarily acquired for personal,
domestic or household use (s 140) or loss of land,
buildings or fixtures acquired for private use caused
by the defective goods ( s 141)
• Goods have a “safety defect” if “their safety is not such
as persons generally are entitled to expect” having
regard to manner in which marketed, packaging,
instructions, warnings, etc: s 9(1)
• Any exclusion of liability is VOID: s 150
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Starting a Business
Common types of business structure:
• Sole trader
• Partnership
• Company
• Trust
Sole traders and partners are personally liable for business
debts.
A company, on the other hand, is a separate legal entity.
Shareholders have limited liability.
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