Contracts I - Components

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ContractsI-Components

Index

ContractsI-Components.............................................................................................................1

Overview.......................................................................................................................................4Terminologyincontractlaw...................................................................................................................4Whatisacontract?................................................................................................................................5Essentialelementsofabindingcontract:...............................................................................................5

TypesofContracts........................................................................................................................5Typesvaryaccordingtonature:.............................................................................................................5Typesvaryregardingseal.......................................................................................................................5

Simplecontracts.................................................................................................................................5Formalcontracts................................................................................................................................5

Formalitiesandcontracts.......................................................................................................................6

Thecontents,breachandendingofacontract...........................................................................7Contentsofacontract............................................................................................................................7Breachofacontract...............................................................................................................................7Endingacontract...................................................................................................................................7

Agreement:offerandacceptance...............................................................................................8Agreementmaybereachedwhen:........................................................................................................8Whyofferandacceptance?...................................................................................................................8Therulesofofferandacceptance..........................................................................................................8Whatisanoffer?....................................................................................................................................8Whatisnotanoffer?.............................................................................................................................9

Arequestforinformation...................................................................................................................9An‘invitationtotreat’........................................................................................................................9

Communicationoftheofferandterms.................................................................................................9Cross-offers..........................................................................................................................................10

Battleofforms..................................................................................................................................10Monumentalcase(CarbolicSmokeBall)..............................................................................................10Terminationofanoffer........................................................................................................................11

Revocation........................................................................................................................................11Lapseoftime....................................................................................................................................11Conditioninoffernotfulfilled...........................................................................................................11Deathofaparty...............................................................................................................................11Changeofcircumstances,forexample,astolencar........................................................................11Rejectionbytheofferee...................................................................................................................11

Theofferee’sresponse.........................................................................................................................12Seekmoreinformation.....................................................................................................................12Makeacounteroffer........................................................................................................................12Accepttheoffer................................................................................................................................12Rejecttheoffer.................................................................................................................................12Ignoretheoffer................................................................................................................................12

Offer/AcceptanceAnalysis...................................................................................................................12Whatisanacceptance?.......................................................................................................................12

Requirements...................................................................................................................................12Rulesaboutthe‘acceptance’:..........................................................................................................12


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Intentionnottocreatelegalrelations–commercialagreements

• Wherethereisacontractofacommercialorbusinessnature,itisassumedthatthepartiesdidintendtocreatelegalrelations.–EdwardsvSkywaysLtd[1964]1WLR349

• Needclearexpressionnottobebound;therearetwomainwaysbywhichitcanbeshown thatlegalrelationsarenotintendedinacommercialagreement:

o Anexpressstipulationintheagreementthatitwasnotintendedtobeenforceable inacommercialarrangementRoseandFrankCovCromptonandBrosLtdAC445“not…formalorlegalagreement”,thereforenointention.

o ThewordingoftheagreementitselfSoutervShyambaPtyLtd(2002)11BPR 20269JonesvVernonPoolsLtd[1938]2AllER626“honourclause”=no intention

Lettersofcomfort-justwhatisbeingpromised

• Aletterofcomfortisastatementofintentionoftengiventoacreditorbyathirdpartyasasubstituteforaguaranteeandisgenerallyintendedtobenon-binding.KleinwortBensonLtdvMalaysiaMiningCorporationBhd[1988]1WLR799“policy” statement–nointentionBanqueBrusselsLambertSAvAustralianNationalIndustriesLimited(1989)21 NSWLR502“practice”statement–intention

Administrativearrangements• whereagovernmentdepartmentorauthoritytakessomeactionrequiredofitbylaw

orundersomegovernmentscheme,thisdoesnotnecessarilymeanthatanenforceableagreementexistsbetweenitandtheotherpartyo contractualobligationonlyarisesiftherewasaclearintentionthatthe

agreementistobeenforceableinacourtoflawo AdministrationofTerritoryofPapuaandNewGuineavLeahy(1961)105CLR6

Otherstatementsofintension,butdonotshowanagreementthatistobelegally binding:• Letterofintent• MemorandumofUnderstanding• ProposalforDealing• StrategicAlliance• PreferredDealerProposal

Ambiguouslanguage

• Ifambiguityarisesfromthewordsusedbythepartiesintheiragreement,thecourtscandisregardthewordsusedandascertaintheintentiononthepartiesfromthegeneralcircumstancessurroundingthetransaction

o EdwardsvSkywaysLtd[1964]1WLR349


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Capacity

Principles• Contractsmaynotbeenforceablebecauseoneofthepartiesisconsideredincapableof

enteringintothecontractbecauseofsomephysical,mentalorlegaldisability. Thus,incapacityofapartymakesthecontractvoid.

Incapacitycircumstances

Minors• LegislationinallStatesandTerritoriesprovidesthatnaturalpersonshavefull

contractualcapacityattheageof18years.• InNSW,theMinors(PropertyandContracts)Act1970providesthat:

o Minorsareboundiftheyunderstandthecontractanditisfortheirbenefit(i.e.for “necessaries”–reasonablecomfortaccordingtolifestylee.g.mobilephonecontracts)

o Contractswithminorsarepresumptivelybindingif:§ Forbenefitoftheminor:s19§ Forsaleorpurchaseofproperty:s20

o Torts:Aminorisgenerallyliableforanytorttheycommitunlesstheactionwouldbeanindirectmeansofenforcingtheagreement.

• Threecategoriesthatmaybeenteredintobyminors:ValidContracts

VoidableContracts VoidContracts

• Thosecontractsfornecessariesand beneficialcontractsofservice,e.g.mobile phonecontracts.

• Validcontractsarethosecontractsthat willmaintaintheminorinreasonablecomfortaccordingtotheirlifestyle.

• Forgoodstobeconsiderednecessaries, theplaintiffmustbeabletoestablish:o Thattheunpaidgoodsor

services arecapableofbeingnecessariesfor apersonintheparticularcircumstances–BojczukvGregorcewicz[1961]SASR128

• Beneficialcontractsofservice–contracts ofemployment,apprenticeship,trainingoreducation.

1. Enduringcontracts• Contractsunderwhichtheminor

will obtainalastingbenefit.• Bindingunlessrepudiatedbytheminor

duringtheirinfancyorwithinareasonable timeofturning18.

• Minorwillremainliableforanyobligations thatmighthaveaccruedupuntilthetime ofrepudiationunlesstheminorreceived nobenefitatall–SteinbergvScala(Leeds) Ltd[1923]2Ch452.Iftheminordoesreceivebenefitunderan agreementthatisvoidable,theylosetherighttoclaimbackanymoneysalready paid.

2. Temporarycontracts• Notofacontinuingnature• Requireexpressratificationofthe

minor, afterattaining18yearsofagetomake thembinding.

• Aminorisnotliableonabillofexchangeorcontractsprovidingsecuritytorepay moneys.

• Aminorcannotcontracttogiveanundertakingofsecuritytorepayan advanceofmoneys,evenifthemoneywas topurchasenecessaries.


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Classificationoftermsofthecontract

Conditions Warranties Intermediate/InnominateEssentialtermmajorterm Notessentialterm;

minor/ancillarytermEitheressentialtermornon-essentialterm

Breach?InnocentpartycanaffirmthecontractandclaimdamagesORcanterminatethecontractandclaimdamages

Breach?Innocentpartycanclaimdamagesonly(cannotterminatecontractsomuststillperformanyremainingobligations)

Breach?DamagesonlyifconsequencesofbreacharenotseriousDamagesandterminationofthecontractifconsequencesofbreachareserious

conditionorwarranty?“Thequestionwhetheraterminacontractisaconditionorawarranty,i.e.anessentialora

non-essentialpromise,dependsupontheintentionofthepartiesasappearinginorfromthecontract.Thetestofessentialityiswhetheritappearsfromthegeneralnatureofthecontractconsideredasawhole,orfromsomeparticulartermorterms,thatthepromiseisofsuchimportancetothepromiseethathewouldnothaveenteredintothecontractunlesshehadbeenassuredofastrict,orasubstantial,performanceofthepromise,asthecasemaybe,andthatthisoughttohavebeenapparenttothepromisor….

JordanCJinTramwaysAdvertisingPtyLtdvLunaPark(NSW)Ltd(1938)CLR633

“Testofessentiality”-isitanessentialpromise?TramwaysAdvertisingPtyLtdvLunaPark(NSW)Ltd(1938)CLR633 ‘Lunapark’• Summary:AmusementparkrentedadvertisingspaceontramsinSydneyforperiodof3

years.Advertisementson53boardsweretobedisplayedontheroofsofthetramcars.Clauseincontract:"Weguaranteethattheseboardswillbeonthetracksatleast eighthoursperdaythroughoutyourseason."AfterthesecondseasonLunaParkobjectedthatthedisplaycontractedforwasnot beingprovided

• Issue:Isitacondition?• Held:Yes–LunaParkcouldterminatecontract(andnothavetopay advertisingfeesfor

thethirdyearofthecontract)

“[aconditionis]astipulation[which]goestotherootofthematter,sothatafailuretoperformitwouldrendertheperformanceoftherestofthecontractathingdifferentinsubstancefromwhatthedefendanthasstipulatedfor.”BettinivGye(1876)1QBD183at188perBlackburnJ ‘Lateforrehearsal,B&G’• Summary:ContractforBtosinginanopera/concertsover3months.Termincontract

thatB hadtoarriveinLondon6daysbeforefirstconcertforrehearsals.Barrived2daysbeforeconcert.Gtriedtoterminatethecontract(onlybreachofaconditioninthecontractwould entitleGtotreatcontractatanend).

• Issue:Arrivinglateforrehearsal–Isitaconditionorwarranty?• Held:Warranty–damagesonly(nottermination).

ContrastAssociatedNewspapersLtdvBancks(1951)83CLR 322 ‘newsprintshortage’• Summary:ContractforBtosupplyNewspaperwithacartooneachweek.Newspaper

agreedtopublishcartoononfrontpageofthecomicsection.Duetonewsprintshortage,comicappearedonpage3for3consecutiveweeks.Bsoughttoterminatecontractforbreachofcondition.

• Issue:Condition(termination+damages)orWarranty(damagesonly)?• Held:Condition–Bwouldnothaveenteredcontractonthatbasis.


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Tortofnegligence

Index

Tortofnegligence.........................................................................................................................1Whatisatort?........................................................................................................................................3Whatarethedifferenttypesoftorts?...................................................................................................3Whatistherelationshipbetweentorts,crimesandliabilityincontract?.............................................4

LiabilityinContract–civilaction........................................................................................................4Torts–civilaction...............................................................................................................................4Crimes–criminalaction.....................................................................................................................4Overlap?.............................................................................................................................................4

Tortofnegligence..................................................................................................................................4Negligenceisaformofcarelessness,recognizedbylawanditcarrieslegalconsequences..............4

Elementsofanegligenceaction.............................................................................................................4DutyofCare........................................................................................................................................4Breachofdutyofcare........................................................................................................................5CausationandRemoteness................................................................................................................5

DonoghuevStevenson[1932]AC562...................................................................................................5• Facts...........................................................................................................................................5• Issue............................................................................................................................................5• Thegenerictestfortortiousliability–thedutyofcarequestion...............................................5LordAtkin’sneighbourprinciple.........................................................................................................5

Element1–DutyofCare........................................................................................................................6• Thequestionoflaw....................................................................................................................6Reasonableforeseeability..................................................................................................................6Establishedcategoriesofdutyofcare................................................................................................6

“Therecognisedcases”–dutyofcareowedby:...........................................................................................6SalientfeaturesTest:..........................................................................................................................8

Element2-Breachofdutyofcare...........................................................................................................9Whatistheforeseeableriskofharm?................................................................................................9

Element3-Causation..........................................................................................................................11Element4-Remoteness......................................................................................................................13Sourcesofthelawoftorts...................................................................................................................13Momentumforchanges.......................................................................................................................13ReasonableForeseeablility...................................................................................................................13VicariousLiability.................................................................................................................................14ThemainthrustoftheCivilLiabilityAct2002(NSW)...........................................................................14DefencetoNegligenceclaims...............................................................................................................14

Contributorynegligence...................................................................................................................14Voluntaryassumptionofrisk............................................................................................................15Civilliabilityreform..........................................................................................................................15

5LNoliabilityforharmsufferedfromobviousrisksofdangerousrecreationalactivities........................155INoliabilityformaterialisationofinherentrisk......................................................................................15

Wideacceptedcompetentpractice..................................................................................................155OStandardofcareforprofessionals.......................................................................................................15

CivilLiabilityAct2002(NSW)................................................................................................................15DutyofCare......................................................................................................................................15

5BGeneralprinciples.................................................................................................................................155GInjuredpersonspresumedtobeawareofobviousrisks.....................................................................16


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Whatisatort?• Atortisawrongfulactthatleadstocivilliabilityandcivilwrong.• Torts-civil(private)wrongswhichgivearemedytoapersoninjuredbyanactoromission

ofanother• Wrongdoer-knownas‘tortfeasor’• Injury-maybephysical,proprietaryoreconomic• Usualremedy-compensationintheformofdamages

Whatarethedifferenttypesoftorts?• Alltortsinvolveunlawfulinterferencewiththeinterestsofothers.

Unlawfulinterferencemaybe: Intentionalorunintentional

‘Trespasstoperson’PersonalRights Assault–threatofdirectforcetoanother

Battery–unauthorizedphysicalcontact FalseImprisonment–unlawfuldetention

PropertyRights Defamation–damagetopersonalreputation Trespasstogoods–wrongfullyinterferingwithanother’spossession

ofgoods Conversion–wrongfullydealingwithanother’sgoods Detinue–wrongfullydetaininganother’sgoods Trespasstoland–unauthorizedentrytoanother’sproperty Nuisance–interferencewithanother’suseandenjoymentofland

EconomicInterests

Passingoff–misrepresentingthatgoods/services/businesshavesomeconnectionorassociationwiththebusinessofanother

Procuringbreachofcontract–inducingapartytoacontracttobreachtheirobligationsunderthecontract

Injuriousfalsehood–wordsspokenorwrittenorconductintentionallydisparaginganother’sgoodsorbusiness

Deceit–fraudulentuntruth/misrepresentation

• Atortisabreachofdutyimposedbylaw,asopposedtodutyimposedbyagreements• “themainobjective[oftortslaw]istodiscourageunnecessarilyharmfulbehaviourbythe

impositionofcompensationliabilityonthepersonwhocommitsatort” Liptonetal


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Misleadingordeceptiveconduct/Unconscionableconduct/UnfairtermsACLss18-25

Index

Misleadingordeceptiveconduct/Unconscionableconduct/Unfairterms.................................1

ACLss18-25...................................................................................................................................11.Misleadingordeceptiveconduct......................................................................................................2

Whichprovision?................................................................................................................................3s18:Elements.........................................................................................................................................4

Person.................................................................................................................................................4intradeorcommerce.........................................................................................................................4engageinconduct..............................................................................................................................4engageinconduct-Silence?..............................................................................................................4engageinconduct-Conductorconduit?...........................................................................................4engageinconduct-Disclaimers.........................................................................................................5engageinconduct-Conductaimedatidentifiedpersons?................................................................5engageinconduct-Predictions,opinions,forecasts..........................................................................5Misleadingordeceptive.....................................................................................................................5Misleadingordeceptive-Intent?.......................................................................................................6

ExampleofApplyingtheelements.........................................................................................................6Liabilityissues.........................................................................................................................................62.UnconscionableConduct–ss20-22...................................................................................................6

Definition............................................................................................................................................7s20–Commonlawunconscionability................................................................................................7ss21,22–Statutoryunconscionability................................................................................................7

s21.................................................................................................................................................................7Whys21?.......................................................................................................................................................8ACCCvColes(notacasebecauseofconsentorders)...................................................................................8ACCCvLuxPtyLtd[2004]FCA926................................................................................................................9TestforUnconscionability.............................................................................................................................9s22.................................................................................................................................................................9ACCCvSimplyNoKnead(Franchising)PtyLtd............................................................................................10

3.UnfairContractTerms......................................................................................................................10S23-ConsumerContract..................................................................................................................10S27-Standardformcontract...........................................................................................................10S24-Unfaircontracts.......................................................................................................................11S25-Whatmightbeunfairterms?..................................................................................................11

ACCCvBytecard(consentorders)...............................................................................................................12ACCCReview................................................................................................................................................12FutureDirections.........................................................................................................................................12

ReferenceLectureslidesofCLAW1001byUniversityofSydneyTerry,A.andGiugni,D.2016BusinessandtheLaw6e


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IntellectualProperty[IP]TypesofProperty

Whatis‘intellectualproperty’?

• Intellectualproperty[IP]referstoavarietyofrightsconferredbylawfortheprotectionofcreativeeffortandtheeconomicinvestmentthatunderliesit.

• “Intellectualpropertyrepresentsthepropertyofyourmindorintellect.Inbusinessterms,thisalsomeansyourproprietaryknowledge.”IPAustralia

• IPrightsallowcreators,orowners,ofpatents,trademarksorcopyrightedworkstobenefitfromtheirownworkorinvestmentinacreation.

TypesofIntellectualProperty

Documents

Contracts I - Components