CONTRACTS NOTES. Cases Legislation Quotes/Terms Table of Contents CONTRACT FORMATION ............................................................................................................... 4 Offer .............................................................................................................................................. 4 Acceptance ................................................................................................................................. 10 Consideration .............................................................................................................................. 15 Promissory Estoppel ................................................................................................................... 20 Intention ..................................................................................................................................... 22 Certainty & Completeness .......................................................................................................... 28 Uncertainty ................................................................................................................................. 31 Result of uncertainty/incompleteness: failure, severance, waiver ........................................... 33 PARTIES TO THE CONTRACT ....................................................................................................... 35 Privity .......................................................................................................................................... 35 Capacity ....................................................................................................................................... 39 TERMS ......................................................................................................................................... 43 Express terms .............................................................................................................................. 43 Extrinsic Evidence: The Parol Evidence Rule .............................................................................. 50 Implied terms .............................................................................................................................. 54 Construction ............................................................................................................................... 57 Interpretation ............................................................................................................................. 57 Classification ............................................................................................................................... 58 Exclusion Clauses ........................................................................................................................ 61 ENFORCEABILITY ......................................................................................................................... 64 Formalities .................................................................................................................................. 64 Contracts for creating or transferring an interest in land ......................................................... 65 Part Performance ........................................................................................................................ 70 Illegality ....................................................................................................................................... 73 Statutory illegality (as a matter of Construction) ....................................................................... 73 Common law illegality (as a matter of Public policy) ................................................................. 76 Consequences of Illegality .......................................................................................................... 84 PROPER CONSENT ...................................................................................................................... 88 Misrepresentation ...................................................................................................................... 88 Duress ......................................................................................................................................... 96 1 CONTRACTS NOTES. Cases Legislation Quotes/Terms Undue Influence ....................................................................................................................... 101 Unconscionable conduct .......................................................................................................... 108 Third Party Impropriety ............................................................................................................ 111 Deceptive and Misleading conduct - Section 18 of Australian Common Law ......................... 114 Rescission .................................................................................................................................. 119 Mistake: Non Est Factum .......................................................................................................... 122 DISCHARGE/TERMINATION OF CONTRACT .............................................................................. 125 Breach ....................................................................................................................................... 125 Repudiation/Anticipatory Breach ............................................................................................. 130 Performance / Actions for payment ......................................................................................... 136 Agreement ................................................................................................................................ 143 Frustration ................................................................................................................................ 147 2 CONTRACTS NOTES. Cases Legislation Quotes/Terms 3 CONTRACTS NOTES. Cases Legislation Quotes/Terms CONTRACT FORMATION A valid contract is an agreement between two or more parties whereby legal rights and obligations are created which the law will enforce. Offer An offer is a clear statement of terms made by the offeror, indicating an intention to be contractually bound. It must consist of a statement of present intent to enter a contract, a definite proposal that is certain in its terms, and it must be communicated (Australian Woolen Mills Pty Ltd v Commonwealth (1954)). The courts adopt an objective approach to determine the existence of an offer (Carlill v Carbolic Smoke Ball Company [1893]). Examples that generally do not amount to offer: - Mere supply of information o Harvey v Facey [1893] o A statement of the minimum price at which a seller would sell, is not an offer - Mere puff o Leonard v Pepsico Supp (1999) - Invitations to treat o HOWEVER: If clear through explicit terms expressing willingness to be legally bound, may be found as an offer o E.g. limiting acceptors amounted to offer to world at large o Lefkowitz v Great Minneapolis Surplus Stores (1957) - Advertisements o Partridge v Crittenden (1968) - Brochure distribution o Grainger and Son v Gough (1896) o Cannot claim a brochure is an offer - Shop displays o Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953) o Consumers considered to be making an offer when they present item to register – not bound until cashier accepts the offer o Fisher v Bell (1961) o Owner of shop displaying flick-knife shop window was not offering the knife for sale - Airline tickets o MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) o Wasn’t a contract because so many exclusion clauses, essentially the same as a ‘voucher’ 4 CONTRACTS NOTES. Cases Legislation Quotes/Terms Unilateral Contracts v Bilateral Contract A unilateral contract is one where the offeree accepts the offer by performing his/her side of the bargain. Made to a single person. - E.g. receiving a reward for finding a lost dog The obligations of one party (offeree) are executed at the time of the formation, while the obligations of the other party (offeror) are executory. - Carlill v Carbolic Smoke Ball Company [1893] o The plaintiff accepted the offer by using the smoke ball - Australian Woollen Mills Pty Ltd v Commonwealth (1954) o The Australian government announced a wool subsidy scheme and the plaintiff claimed it purchased wool ‘in pursuance of the said agreement’ o Argued that a contract had been formed by the offer of a subsidy and was accepted by buying the wool o High Court held that, for a unilateral contract to arise, the promise must be made in return for doing the act o There must be a relation quid pro quo o Thus, no contract A bilateral contract involves an exchange of promises. Can be made to the world at large. - E.g. Paying money for a product The obligations of both parties are executory at the time of formation - United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] Invitations to treat An invitation for others to make offers and enter negotiations. The issue is the intention to be bound – where the offer is clear, definite, explicit and leaves nothing open to negotiate, it will constitute an offer. Objective guide - Merely calling something an offer does not make it an offer - Distinguished by terminology o ‘First come, first serve’ may amount to an offer o Limiting the number of possible