TOPIC 2(G): FORMALITIES

TOPIC 2(g): FORMALITIES  Common law: contract need not be in any particular form (Beckham v Drake 1841)  Many statutes prescribe formal requirements for contracts of particular types (protect consumers)

Requirements of form of contracts to:  Reliable evidence of contract and allow terms to be identified more easily  Promote caution – draw attention of parties to potentially serious consequences of agreement  Protect vulnerable parties – force strong party to set out terms, more likely to be understood  Channelling function – identify particular types of transactions.

General rule:  Contracts need not be in writing to be enforceable  Exceptions o must be made by deed  written on …  names had to appear  sealed  delivered  Examples - gratuitous promises, transfer of old system land  Governed by s38 Conveyancing Act, 1919, NSW e.g. signature, name of parties, date, witness, expressed to be sealed and delivered o must be totally in writing  bills of exchange, cheques and promissory notes  marine insurance  assignments of copyrights and patents  home building contracts o must be evidenced (certain things) in writing  Statute of Frauds 1677 (Imp), s4, 17  Conveyancing Act 1919 (NSW), s54A(1) o

Statute of Frauds (1677 English statute)  No action can be brought on contracts of particular types unless agreement or memorandum/note of agreement is in writing and signed.  Purpose: “the prevention of many fraudulent practices which are commonly endeavoured to be upheld by perjury and subornation of perjury.  Types of contracts affect: contracts of guarantee, consideration of marriage, sale of interest in land, not to be performed within space of 1 year from contract formation, sale of goods for price of £10 or more. English Law Revision Committee – type of contracts seem to be selected on random.  Widely criticised: o Produces injustice – avoids contracts which have been made but did not comply o Give legislation narrow operation. o Developed exceptions  Not all judges criticise: modern legislatures show strong disinclination to remove safeguards of Statute.  Modified, repealed, part re-enacted in all States/Territories.

Formalities Required:  Written: plaintiff may rely on written contract  Verbally: plaintiff may rely on a memorandum or note of the agreement (doc that evidences existence of verbal agreement). Issues arise in determining whether something is a memorandum/note:  Contents of memorandum/note: o Must contain all terms or all essential terms other than those the law will imply. Parties, subject matter and consideration must be identified in the doc along with other essentials eg. terms. o Pirie v Saunders (1961): solicitors notes of instructions to prepare draft lease NOT adequate. Contemplated special conditions relating to certain matters to be formulated at a later time. Eg of subject matter needed (which house on which piece of land?) o Tooth & Co Ltd v Bryen (No 2) (1922): party may be described rather than named, provided description is sufficient (eg. “owner” of particular property). o Cowley v Watts (1853): subject matter may be described in general terms, provided it points to some particular property. “my house” accepted, with oral evidence to identify the house. o A doc saying “part of” a property is inadequate – does not identify which part (Pirie v Saunders (1961)).  Time of creation of memorandum/note: o Must come into existence after contract has been made. o If made earlier, cannot establish that contract was made but only indicate probability that a contract would be made (Haydon v McLeod 1901). o Exception: written offer, accepted verbally o Pirie v Saunders (1961): solicitors notes – may have intended that no binding agreement be made until formal document was executed.  Joinder of documents (more than one doc to satisfy): o Eg. terms of transaction in one document (letter) and other terms/signature in another document (replying letter). o Joinder allowed with physically connected letters: letter and envelop in which it was posted (Pearce v Gardner [1897]). o If not physically connected: reference in one doc to the other. Issue: how specific ref? o Thomson v McInnes 1911: HC found doc acknowledging a sum (deposit and first part purchase money) as insufficient. Must refer to another doc, rather than to a transaction/event. o Harvey v Edwards Dunlop and Co Ltd: less stringent approach. Reference to transaction, may give evidence as to what transaction was and if transaction contains all the terms in writing – then sufficient joinder. o Tonitto v Bassal (1992): Bryson J - letter did not specifically mention the option document. NSW COA – not clear enough, oral evidence could be admitted to resolve doubt.  Must be signed by party to be charged, or their authorised agent. o Victoria: agent must be authorised in writing. o Authenticated signature fiction - if name of party to be charged appears on doc, that is signature, provided doc has been “authenticated” or recognised by party as final record of contract. Schneider v Norris (1814). Does not apply to printed name in doc where parties intended to affix their hand signatures Farrelly v Hircock (1958). o Not applied to docs not recognised as memorandum/notes: Pirie v Saunders.  Documents in electronic form: o Electronic Transactions Acts (ETAs): a transaction is not invalid because it took place wholly/party by means of one or more electronic communications. o Signature: requirement met if an appropriately reliable method has been used to indicate the person’s approval and the person consents to the requirement being by that method. Consequences:  Statue of Frauds and successor provision – do not make contracts void, just that no action shall be taken to enforce them.  May still give rise to enforceable rights: o Rely on contract as defence . Thomas v Brown (1876): vendor willing to proceed with verbal contract of sale of land relied on contract as defence to an action by purchaser to recover money paid as a deposit . Perpetual Executors and Trustees Association of Australia Ltd v Russell (1931): HC overturned trial judge. “neither at law nor in equity can a claim unenforceable by action because of the Statute be enforced by counterclaim or defence”. o Specific performance of contract available under doctrine of part performance . Acts carrying out the contract. Cannot be acts of other party. . Plaintiff has performed some acts that establish existence of the contract – equitable relief only  specific performance or equitable damages . Does not provide basis for an award of damages at common law. . Actions taken in preparation for performance of contract not allowed (Cooney v Burns 1922). . Does not need to be obligations under the contract, only that they were “pursuant to the contract” (Regent v Millett 1976) . Acts prove existence of contract:  Maddison v Alderson 1888: woman worked as housekeeper without wages for years on condition that employer would make will leaving her life interest in farm property. Restrictive approach, acts must be unequivocally referable to some such agreement as that alleged, and be explicable on no other basis. HOL: insufficient – woman might have remained in employment of some present comforts and expectation of future provision, though no such contract had been ever dreamt of.  Broad view: need only point to balance of probabilities to existence of some contract, and be consistent with alleged contract. Held by HOL in Steadman v Steadman. But court follow restrictive, because history of earlier cases.  Ogilvie v Ryan [1976]: contrast between narrow/broad exemplified. D worked cinema and lived in adjoining cottage owned by company. Managing director of company came to live with her in cottage for many years until company sold cinema and cottages. Director proposed that D move into another house with him, look after him for rest of his life and house would be hers. He died without mentioning her in his will. Satisfied broad test easily. But not narrow test: actions could be explained by love/affection and expectation of reward in some other way. o Constructive trust or equitable estoppel: . Circumstances surrounding verbal contract for sale of land may give rise to a “common intention” constructive trust or equitable estoppel. o Restitution: recover money or a reasonable sum for goods or services . Pavey and Matthews Pty Ltd v Paul (1987) o Where only part of agreement is unenforceable, possible to sever it. . Parts must be independent and not implicated with unenforceable parts.

Variation and Termination:  Oral agreement terminating the contract  effective.  Oral variation to contract  not effective. Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1956)