CONTRACTS
Exam Notes
LLAW2312
Page 1 of 6 Contents
Formation ... 3
Elements of formation: ... 3
Agreement – offer and acceptance. ... 3
Consideration – price paid for the promise. ... Error! Bookmark not defined. Intention – to enter a legally enforceable agreement. ... Error! Bookmark not defined. Capacity – parties must be legal persons and not incapacitated. ... Error! Bookmark not defined. Legality – cannot contract for something illegal. ... Error! Bookmark not defined. Mutuality – agreement must be mutual. ... Error! Bookmark not defined. Types of contracts: ... Error! Bookmark not defined. Content and Construction ... Error! Bookmark not defined. Terms and Conditions ... Error! Bookmark not defined. Classification of terms ... Error! Bookmark not defined. Express terms ... Error! Bookmark not defined. Implied terms ... Error! Bookmark not defined. Onerous Terms ... Error! Bookmark not defined. Prior course of dealings ... Error! Bookmark not defined. Interpretation ... Error! Bookmark not defined. Parole Rule ... Error! Bookmark not defined. Privity... Error! Bookmark not defined. Vitiating Factors ... 5
Unconscionable conduct... 5
Special Circumstance of Disadvantage ... 5
Wife as surety for husband’s debt ... 6 ACL ... Error! Bookmark not defined.
Duress and undue influence ... Error! Bookmark not defined.
ASIC Act 2001 ... Error! Bookmark not defined.
Implied Duty of Good Faith ... Error! Bookmark not defined.
Unfair Terms ... Error! Bookmark not defined.
Misrepresentation/Misleading Conduct ... Error! Bookmark not defined.
• Innocent Misrepresentation ... Error! Bookmark not defined.
• Something is not a misrepresentation of fact if it was: ... Error! Bookmark not defined.
• Future Intent ... Error! Bookmark not defined.
• Silence not a defence ... Error! Bookmark not defined.
• Warranty or representation? ... Error! Bookmark not defined.
• Collateral contract ... Error! Bookmark not defined.
• Inducement and materiality ... Error! Bookmark not defined.
• Recission ... Error! Bookmark not defined.
Page 2 of 6
• Damages for misrepresentation ... Error! Bookmark not defined.
• Misrepresentation as Tort ... Error! Bookmark not defined.
• Excluding or Limiting Liability ... Error! Bookmark not defined.
• ACCC misrepresentation cases of importance. ... Error! Bookmark not defined.
• Deceptive Practices in the ACL – can go alongside s 18 claims... Error! Bookmark not defined.
Performance, Discharge and Termination ... Error! Bookmark not defined.
Performance ... Error! Bookmark not defined.
Standard of Performance ... Error! Bookmark not defined.
o Discharging performance ... Error! Bookmark not defined.
o Substantial performance ... Error! Bookmark not defined.
o Part performance ... Error! Bookmark not defined.
o Time of Performance ... Error! Bookmark not defined.
o Order of Performance ... Error! Bookmark not defined.
Termination ... Error! Bookmark not defined.
o Termination by frustration: ... Error! Bookmark not defined.
o Termination by mutual agreement: ... Error! Bookmark not defined.
o Termination by operation of law: ... Error! Bookmark not defined.
o Termination by repudiation ... Error! Bookmark not defined.
o Termination for breach: ... Error! Bookmark not defined.
o Termination for non-fulfilment of contingent condition / conditions precedent ... Error! Bookmark not defined.
Remedies ... Error! Bookmark not defined.
Damages ... Error! Bookmark not defined.
Compensatory / Actual loss... Error! Bookmark not defined.
Calculating damages ... Error! Bookmark not defined.
Rectification damages ... Error! Bookmark not defined.
Reliance damages ... Error! Bookmark not defined.
Loss of profit ... Error! Bookmark not defined.
Loss of bargain... Error! Bookmark not defined.
Causation... Error! Bookmark not defined.
Not too remote ... Error! Bookmark not defined.
Mitigation ... Error! Bookmark not defined.
Quantification of Damages ... Error! Bookmark not defined.
Liquidated Damages and Penalty Clauses... Error! Bookmark not defined.
Specific Performance Orders ... Error! Bookmark not defined.
Injunctions ... Error! Bookmark not defined.
Restitution ... Error! Bookmark not defined.
Page 3 of 6
Formation
Elements of formation:
Agreement – offer and acceptance.
o Offer
o A clear statement of terms that the party is prepared to be bound by – can be express or implied.
o Cannot be a command, must be open to rejection – Brambles Holdings v Bathurst City Council
o The last offer before acceptance in ‘battle of standard forms’ is the basis of the contract – Butler Machine Tool Co Ltd v Ex-cell-O Corp.
o Depending on the circumstances offers can lapse after a ‘reasonable’ time – Bortolo v Hancock.
o An offer is not:
▪ Mere supply of information Harvey v Facey
▪ An invitation to treat is not a promise to accept - just open to offers.
• Supermarket putting something on sale, auctions, tenders, advertising.
o Conditional offers are only valid if the condition is met – Financings Ltd v Stimson
▪ Conditional offers lapse if it is objectively apparent that the willingness of the offeror has been fundamentally undermined by the change of circumstances – Neilsen v Dysart Timbers Limited
o An offeree cannot accept an offer after offeror’s death where aware of death – Fong v Cili
o Death won’t terminate the offer where the offer is not personal to the offeror, but about a company, and the offeree was unaware of the death – Smith v Woods.
o Offers to the world at large.
▪ A public announcement – eg reward for missing dog poster
Page 4 of 6
▪ Carlill v Carbolic Smoke Ball Co - company offered a $1000 reward for anyone who used their product and then got the flu. Someone used their product and got the flu (this was consideration, detriment to P and benefit to D), sought the reward, and as such accepted the contract.
o Online offers
▪ Online contracts must be conspicuous, so the reader is made aware of them – Specht v Netscape Communications Corp
• If there is not adequate notice of the terms, the user will not be bound – Southwest Airlines
▪ The wording cannot encourage readers not to read the terms – it is unconscionable – Scarcella v America Online
o Terminating an offer
▪ Revocation – formal withdrawal of offer
• Before acceptance.
• Must be communicated – but can be communicated in any manner, even by third party – Dickinson v Dodds (1876)
• Offers to the world at large can be revoked using the same means of communication as they were given, or any means of reasonable communication.
▪ Unilateral contract where acceptance is by action, and the action has been started but not finished – how to terminate?
• Action must be completed to constitute acceptance – Veivers v Cordingley ; Mobil Oil v Wellcome International
▪ Test for unilateral contract or conditional gift
• 'First, the principal test is whether the “offeror” has expressly or impliedly requested the doing of the act by the “offeree”.
Secondly, the court can look to whether the “offeror” has stated a price which the “offeree” must pay for the promise. Thirdly, the court can ask whether the offer was made in order to induce the doing of the act.' Must be a quid pro quo to be a contract–
Australian Woollen Mills v Commonwealth.
Page 5 of 6
▪ No universal principle not to withdraw, depends on the circumstances of the contract, if there was an implied contract not to revoke, or grounds for estoppel – Mobil Oil v Wellcome International.
o Rejection
▪ If an offer is rejected it cannot be accepted at a later date.
▪ Offering a counteroffer is rejecting the first offer.
▪ Asking a question is not rejection – but whether statements are inquiries or counter offers depends on reasonable interpretation.
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Vitiating Factors
Unconscionable conduct
Special Circumstance of Disadvantage
o It is unconscionable to take unfair advantage of a special circumstance of disadvantage and contracts under these terms cannot be enforced –
Commercial Bank of Australia Ltd v Amadio
o Must be aware of the special disadvantage and with that awareness deliberately fail to allow for that disadvantage before transacting, with the purpose of exploitation – Kakavas v Crown Melbourne Limited [2003]
o The special disadvantage must be such that the innocent party’s ability to make a judgment as to their own interests is seriously affected – Thorne v Kennedy.
o Examples of special disadvantage include:
▪ limited English understanding, not being advised to get independent advice – Amadio
▪ A rich man’s gambling addiction is not a special disadvantage – Kakavas v Crown Melbourne Limited [2013]
▪ Cultural norms and practice not unconscionable in Australian
Securities and Investments Commission v Kobelt.
Page 6 of 6
o Inequality of bargaining power does not automatically create an unconscionable deal – ACCC v CG Berbatis Holdings Pty Ltd [2003]
Wife as surety for husband’s debt
o If a wife consents to surety, as a volunteer (no benefit from the surety) but doesn't understand the key elements of what that entails, and where the creditor accepts that without further action, she has a right to have it set aside – Yerkey v Jones (1940)
o Increased unconscionability when husband pressures and no effort by bank to suggest she get advice – Garcia v National Australian Bank Ltd [1988]
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