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LAW2CTB: CONTRACT LAW B
Table of Contents
MISREPRESENTATION ... 5 MISTAKE ... Error! Bookmark not defined.
DURESS ... Error! Bookmark not defined.
UNDUE INFLUENCE ... Error! Bookmark not defined.
UNCONSCIONABLE CONDUCT ... Error! Bookmark not defined.
PRIVITY ... Error! Bookmark not defined.
CONSTRUCTION OF EXCLUSION CLAUSES ... Error! Bookmark not defined.
MISLEADING AND DECEPTIVE CONDUCT ... Error! Bookmark not defined.
STATUTORY UNCONSCIONABILITY ... Error! Bookmark not defined.
UNFAIR CONTRACT REGIMES ... Error! Bookmark not defined.
CONSUMER GUARANTEES ... Error! Bookmark not defined.
EXAM TIPS Reading time 2:00 – 2:30pm
• Read questions and note relevant issue Problem questions (2:30 – 3:30pm)
• Step 1: decide whether it is an issue of ‘trade and commerce’. DO NOT refer to the ACL if the problem is not in relation to ‘trade or commerce’
o If an issue of ‘trade and commerce’, apply the ACL
o If it is an issue of common law (a one-time transaction), apply the general principles.
Essay (3:30 – 4:30pm)
2 1. Misrepresentation
a. Types of misrepresentation i. Fraudulent
ii. Innocent iii. Negligent
b. Elements of actionable misrepresentation i. Statement of fact
ii. Statement of opinion iii. Must be false
iv. Intention v. Partially true
vi. Material Inducement c. Remedies
2. Mistake
a. Types of mistake
i. Common mistake ii. Mutual mistake iii. Unilateral mistake b. Remedies
3. Duress
a. Five step test
b. Duress to the person c. Duress of goods d. Economic duress e. Remedies
i. Rescission ii. Restitution 4. Undue influence
a. Categories of undue influence
i. Where there is a special relationship between the parties (arises a rebuttal presumption of undue influence)
ii. Where no special relationship exists an actual undue influence (difficult to prove/uncommon)
b. Actual undue influence c. Presumed undue influence
i. Class 2A undue influence ii. Class 2B undue influence d. Remedies
i. Rescission 5. Unconscionable conduct
a. Elements
i. Special disadvantage or disability ii. Knowledge
iii. Unconscientious exploitation of the disadvantage b. Defences
i. Independent advice
3 ii. Improvidence
iii. Laches
c. Statutory unconscionability pursuant to ACL
i. Unconscionable conduct pursuant to the unwritten law (s20(1)) ii. Unconscionable conduct in connection with goods and services
(s21(1)) d. Remedies
i. For breaches of ss20-21, remedies available in Ch 5 of ACL
• s232 – injunctions
• s236 – damages
• s243 – ancillary orders
• s224 – civil pecuniary penalty 6. Privity of contract
a. Relationship with the doctrine of consideration b. Remedies
i. Damages at common law
• Exceptions
ii. Specific performance in equity
c. Trident General Insurance v McNeice Bros Pty Ltd d. Exceptions to the doctrine of privity
i. Agency
ii. Exclusion clauses and third parties iii. Covenants on land
iv. Trusts
v. Equitable estoppel vi. Unjust enrichment vii. Statutory exceptions
• Bills of exchange
• Insurance contracts 7. Construction of Exclusion Clauses
a. Elements
b. Exclusion clauses and negligence c. Principles of construction
d. Exclusion clauses and the ACL
i. s64 - Guarantees not to be excluded etc. by contract 8. Misleading and Deceptive Conduct
a. Elements i. Person
ii. Engages in conduct iii. In trade or commerce
iv. Was it misleading and deceptive or likely to mislead or deceive v. Causation
b. Pre-contractual statements
c. Types of cases where misleading and deceptive conduct is likely to arise
d. Six factual categories
i. Comparative advertising ii. Character merchandising
4 iii. Contractual promises
e. Remedies
9. Statutory unconscionability a. s20ACL
b. Historical context
c. Elements of common law unconscionable conduct (s20(1)) d. Elements of statute law unconscionable conduct (s21) e. Breakdown of unconscionable conduct
f. Matters the court may have regard to for the purposes of s21 g. Substantive and procedural unconscionability
h. Remedies
i. Action for damages ii. Civil pecuniary penalties iii. Injunctions
10. Unfair contract regimes a. Summary
b. Elements
i. Consumer contract ii. Standard form contract iii. Unfair term
iv. Consideration of s24(2) c. Examples of unfair terms
d. Remedies
11. Consumer guarantees a. Definition of consumer
b. Definition of ordinarily acquired for personal, domestic or household use or consumption
c. Guarantees relating to the supply of goods i. Title of goods
ii. Undistributed possession of goods iii. Undisclosed securities
iv. Acceptable quality d. Reasonable consumer test
e. If the ‘unacceptable quality’ was bought to the consumers attention f. Fitness for disclosed purpose
g. Supply of goods by descriptions (advertisements) h. Supply of goods by sample or demonstration i. Repair of facilities
j. Express warranties
k. Guarantees relating to the supply of services l. Fitness for a particular purpose
m. Excluding or limiting liability n. Limitation for goods
o. Limitation of services
p. The consumer may also argue no limitation clause should apply because it is ‘not fair or reasonable’ for the person who supplied the good or service to rely on that term of the contract
5 q. Remedies
MISREPRESENTATION
Statements that are made during pre-contractual representations may become part of a contract which is subsequently made. Where those statements are false the innocent party has a right to seek damages for breach of contract.
In addition, the innocent party may be able to terminate the contract depending upon whether the terms are classified as conditions, warranties or intermediate terms.
Whether such statements constitute terms or not is a matter of ascertaining the parties intention.
If such statements are not contractual terms, they may be ‘misrepresentations’.
Misrepresentations give rise to certain remedies that may be available to the
innocent party. The primary remedy is rescission (restore the parties to their original status before the contract was made). If representation was fraudulent or constitutes a negligent misstatement, the representee can pursue remedies in the torts of deceit and negligence respectively.
Furthermore, representations will usually also amount to misleading and deceptive conduct as defined in s18 of the ACL, in which case the representee will be able to seek the appropriate statutory remedies set out in ch5 of the ACL.
The misrepresentation must be of a fact past or present. It must be a misrepresentation of fact, not law.
Types of misrepresentation:
1. Fraudulent 2. Negligent
3. Innocent (not actionable)
Elements of misrepresentation (actionable)
To establish actionable misrepresentation, the party to whom the representation has been made (representee) must show, before or at the time of making the contract, the person who made the misrepresentation (representor) directly or indirectly –
1. Made a false statement of fact;
6 2. That was intended to induce the representee (innocent party) to enter into the
contract and;
3. That it did in fact operate as an inducement to enter into the contract It need not be the sole inducement.
The onus of proof is on the party whom the representation has been made (representee).
The representation made must be a statement of fact A representation must be of past or present fact.
§ Requirement excludes statements of law (different in context of mistake) Statements of law
§ If the misstatement is both a statement of fact and law, it can be misrepresentation.
§ Misstatements as to a person’s private rights, the effect of a private instrument and the effect of private Acts of parliament can amount to misrepresentations. Public Trustee v Taylor
§ If the misstatement of law is deliberate or wilful it can amount to misrepresentation. Public Trustee v Taylor
Advertising puffery cannot be regarded as misrepresentation.
§ A puff is a promotional statement that no reasonable person would believe to be a statement of fact. Mitchell v Valherie
Statements of fact
Promises or assurances as to the future are not statements of fact for the purposes of misrepresentation. Civil Service Co-Operative Society of Victoria v Blyth
However, this does not mean all statements made in the future tense are not
statements of presently existing facts. Balfour & Clark v Hollandia Ravensthorpe NL Statements of future intention are not misrepresentations unless:
a) The maker makes the statements without the genuine intention of fulfilling them; or
b) There are no reasonable prospects of fulfilling those expectations.
Statements of opinion
Where a person makes a statement of intention or opinion it can be implied that their state of mind is consistent with that intention or opinion. If that is not the case, the representation will be regarded as fraudulent.
Statements of opinions are generally regarded as statements of fact. Bisset v Wilkinson
Thus, if the statement of opinion is made upon the basis of facts known to the representor, but unknown to the representee, the statement will be regarded as one of fact. Smith v Land and House Property Corporation
