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Codifying Contract Law in Australia: Issues and Obstacles

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Codifying Contract Law in Australia: Issues and Obstacles CODIFYING CONTRACT LAW IN AUSTRALIA: ISSUES AND OBSTACLES JOHN ELDRIDGE A THESIS SUBMITTED IN SATISFACTION OF THE REQUIREMENTS OF THE DEGREE OF DOCTOR OF PHILOSOPHY THE UNIVERSITY OF ADELAIDE SCHOOL OF LAW 2019 ii To Joan Butler, in loving memory iii A NOTE ON STYLE As can be seen upon examining each of the papers which form part of this thesis, each paper is presented in a distinct style. This is due to each paper being presented, so far as is possible, in the house style of the journal in which it will be published. iv TABLE OF CONTENTS CONTEXTUAL STATEMENT……………………………………………………………………1 PAPER ONE……………………………………………………………………………..........26 PAPER TWO………………………………………………………………………………….55 PAPER THREE………………………………………………………………………………..73 PAPER FOUR…………………………………………………………………………………92 PAPER FIVE…………………………………………………………………………………119 BIBLIOGRAPHY……………………………………………………………………………..138 v vi ABSTRACT In March 2012, the Commonwealth Attorney-General’s Department issued a brief but wide- ranging discussion paper which explored the possibility of codifying or otherwise significantly reforming Australian contract law. Though the 2012 Discussion Paper attracted 58 insightful and closely-argued submissions along with a number of thoughtful papers, there nonetheless remains a clear disjunct between the significance and scope of the questions raised by the discussion paper and the response which it attracted. Indeed, though the notion of codifying Australian contract law has been mooted several times in the past fifty years, the merit of such a reform has rarely been the subject of sustained and detailed analysis. This thesis seeks to go some way towards filling this gap. It grapples with a wide range of important issues thrown up by the question of whether the Australian law of contract ought to be codified, with the aim of arriving at a concluded view as to whether that significant step ought to be taken. It shows that there are strong reasons to conclude that the Australian law of contract ought not to be codified. It shows that many of the traditional arguments proffered in favour of the codification of Australian contract law – including the notion that such a reform would promote ‘certainty’ in the law and amount to an ideal mechanism for substantive law reform – begin to break down upon sustained scrutiny. It further shows that there are a number of serious cultural, practical, and theoretical hurdles which would have to be overcome if codification were to be successful. These hurdles are all the more imposing for having been paid too little attention by the proponents of reform. The result is that, in addition to the serious difficulties which attend the positive case for codification, there is also a strong negative case which has received too little serious attention. vii viii DECLARATION This work contains no material which has been accepted for the award of any other degree or award in any university or other institution and, to the best of my knowledge and belief, contains no material previously published or written by another person, except where due reference has been made herein. I undertake that no part of the work will be used in a submission for any other degree or diploma in any university or other institution without the prior approval of the University of Adelaide. I give consent to this copy of my thesis being made available for loan and photocopying upon being deposited in the University Library, subject to the requirements of the Copyright Act 1968 (Cth). I give permission for the digital version of this thesis to be made available on the internet, via the University’s digital research repository, the Library catalogue, and also through internet search engines, unless permission has been granted by the University to restrict access to this work. I acknowledge that copyright of published works contained within this thesis resides with the copyright holder(s) of those works. The first paper in this thesis was published in 2018 in the Journal of Contract Law: John Eldridge, ‘Contract Codification and ‘Certainty’’ (2018) 35 Journal of Contract Law 146. The second paper in this thesis was published in 2018 in the Commercial Law Quarterly: John Eldridge, ‘‘Surrounding Circumstances’ in Contractual Interpretation: Where are we Now?’ (2018) 32(3) Commercial Law Quarterly 3. That paper draws upon some material published in the Australian Law Journal in 2018: John Eldridge, ‘Cherry v Steele-Park’ (2018) 92 Australian Law Journal 249. The third paper in this thesis was published in 2018 in the Journal of Business Law: John Eldridge, ‘The New Law of Penalties: Mapping the Terrain’ [2018] Journal of Business Law 637. The fourth paper in this thesis will be published in 2019 in the Edinburgh Law Review: John Eldridge, ‘Contract Codification: Cautionary Lessons from Australia’ (2019) Edinburgh Law Review (forthcoming). The fifth paper in this thesis will be published in 2019 in the Australian Law Journal: John Eldridge, ‘Reforming the Australian Law of Contract: Some Practical Next Steps’ (2019) 93 Australian Law Journal (forthcoming). Each of these papers contains original research I conducted during the period of my Higher Degree by Research candidature and is not subject to any obligations or contractual agreements with a third party that would constrain its inclusion in this thesis. I acknowledge the support I have received for my research through the provision of an Australian Government Research Training Program Scholarship. Signed Date: 18 February, 2019 ix x ACKNOWLEDGEMENTS There are many people to whom I have incurred debts of gratitude in the course of writing this thesis. In my principal supervisor, Andrew Stewart, I have had an invaluable teacher and mentor. Through his helpful comments, thoughtful advice and unstinting support, he has been instrumental in guiding me through the various stages of this long and complex project. Thanks must also go to my auxiliary supervisor, Alex Wawryk, who has been a tireless supporter of this project from the outset. I have also benefited from the considerable support of Adelaide Law School. I was supported through part of my candidature by a Faculty of the Professions Divisional Scholarship. I was also fortunate enough to be awarded the Baker Scholarship at the beginning of my candidature. Special thanks are due to John Carter, who has been an incredibly important source of advice and support. John’s magisterial command of the law of contract, along with his patience with those at the beginning of their academic careers, have been instrumental in the course of my research. More generally, I owe an immense debt to the University of Adelaide. The first in my family to attend university, I arrived at Adelaide overawed and woefully unprepared. In the course of my five immeasurably happy and enriching years as an undergraduate, I was furnished with everything one could need for a fruitful life and career. Nobody could have asked for a better education. It was, and remains, a privilege to study at this great institution. Between October 2016 and June 2017, I took a leave of absence from this project while reading for the degree of Master of Law at the University of Cambridge. These papers are undoubtedly richer for the many helpful and thought-provoking discussions I had during those nine months. Particular thanks are due to John Allison, David Ibbetson, Neil Jones, Joanna Miles, Jens Scherpe, Brian Sloan and David Waddilove. My colleagues at Sydney Law School have been crucial in urging me on through this project’s final stages. I owe much to the support of Ben Chen, Matthew Conaglen, Penelope Crossley, Michael Douglas, Scott Grattan, Sheelagh McCracken, Barbara McDonald, Kate Owens, Elisabeth Peden, Joellen Riley, David Rolph, Natalie Silver, John Stumbles and Greg Tolhurst. Given the nature of this thesis – which is made up of a series of linked publications – thanks are due to the anonymous peer reviewers who refereed the papers. The editors of each of the journals in which the papers will appear also made a number of valuable comments. Brendan Hord was retained to copyedit the final document – he was provided with a copy of the Australian Standards for Editing Practice. Finally, thanks must go to my friends and family, all of whom have supported me in the course of this long process. To Fiona Cameron, Dom Eldridge, Sarah Eldridge, Tom Eldridge, Daniel Fawcett, Mark James-Matthews, Tim James-Matthews, Tim McCarthy, Helen McEwen, Steve McEwen, Jess McEwen, Rebecca McEwen, Myriam Robin, Alice Wharldall and Gloria Zappala: thank you for your patience and support. xi xii xiii CONTEXTUAL STATEMENT CONTEXTUAL STATEMENT I INTRODUCTION Contract law seldom captures the interest of policymakers. Though it undergirds much economic activity, appetite for its reform and development has for the most part been limited and sporadic.1 March 2012 saw contract law take a respite from anonymity. In a brief but wide-ranging discussion paper, the then Commonwealth Attorney-General, Nicola Roxon, issued a discussion paper which, among other things, canvassed the possibility of codifying Australian contract law so as to achieve a range of ostensibly worthwhile objectives (‘the 2012 Discussion Paper’).2 Though the 2012 Discussion Paper attracted 58 insightful and closely-argued submissions along with a number of thoughtful papers,3 there is nonetheless a clear disjunct between the significance and scope of the questions raised by the discussion paper and the response which it attracted. Indeed, though the notion of codifying Australian contract law has been mooted several times in the past fifty years, the merit of such a reform has rarely been the subject of sustained and detailed analysis. 1 For a recent contract law reform proposal which was met with muted enthusiasm by the Commonwealth, see Attorney-General’s Department (Cth), Australian Government Response: ‘Harmonisation of legal systems within Australia and between Australia and New Zealand’ (2008). 2 Attorney-General’s Department (Cth), Improving Australia’s Law and Justice Framework: A Discussion Paper Exploring the Scope for Reforming Australian Contract Law (2012).
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