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1Copyright Guy Harley 2008
Revision
2Copyright Guy Harley 2008
Elements of Misrepresentation
Statement of material fact Statement was false Statement was addressed to the
representee before or at the time that the contract was entered into
Statement induced the representee to enter into the contract
Statement caused loss
3Copyright Guy Harley 2008
Statement is a Fact
Statement of past or present fact Not
a mere puff A misstatement of the law Statement of future intention
Unless no real intention at time of representation
Usually, not an opinion
4Copyright Guy Harley 2008
Statement is a Fact
An opinion can be a fact where:
No genuine or actual belief in its truth No reasonable person could hold opinion The representor has special knowledge The existence of an opinion can be a fact
5Copyright Guy Harley 2008
Statement is a Fact
Silence will not normally suffice Except
Distortion of a positive representation (half truths)
Altered circumstances Where there is a fiduciary relationship Where contract is of the utmost good faith
(e.g. insurance)
6Copyright Guy Harley 2008
Categories of Misrepresentation
Fraudulent misrepresentation Negligent Misrepresentation Innocent Misrepresentation Misleading & Deceptive Conduct Term of Contract
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Negligent Misrepresentation
There was a misrepresentation Representor owed a duty of care to
representee Representor failed to exercise the required
standard of care Loss, which was a reasonably foreseeable
consequence of the misrepresentation, was caused by misrepresentation
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Discharge of Contract
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Discharge of Contract
A contract can be brought to an end by:
1. Performance
2. Agreement
3. Frustration
4. Breach
5. A Term of the Contract
6. Operation of Law
10Copyright Guy Harley 2008
Termination by Performance
Where the parties wholly or substantially perform their obligations under the contract, the contract is discharged
Hoenig v Isaacs
11Copyright Guy Harley 2008
Entire Contract
If contract requires entire performance then obligations must be strictly completed
Entire performance required where anything less than full performance would significantly devalue the worth of the contract to the other party
Cutter v Powell
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Entire Contract
Exceptions Substantial performance Partial performance Divisible contracts Tender of performance Prevention of performance
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Substantial Performance
Contract discharged by completion of main part of contract
Performing party paid full price less value of shortfall
Hoenig v Isaacs Bolton v Mahadeva
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Partial Performance
Innocent party accepts incomplete work Quantum meruit paid to performing party for
reasonable cost of completed work Acceptance must be a genuine choice Sumpter v Hedges
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Divisible Contracts
Contract split into divisible parts for purposes of payment
Performance of each part requires party to pay for that part
Treated as several separate contracts
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Tender of Performance
• If preforming party offers to complete contract and offer refused then performing party is discharged
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Prevention of Performance
Where performing party is prevented from completing his obligations by the other party
Performing party is discharged from contract Performing party can sue for
breach of contract Quantum meruit
De Barnaby v Harding
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Discharge by Agreement
Parties to the contract agree to discharge their obligations to one another
This latter agreement will only be binding if: It is a valid contract; or Promissory estoppel arises
19Copyright Guy Harley 2008
Discharge by Agreement
The contract to discharge is subject to usual contractual rules e.g. economic duress
Bilateral dischargeMutual release of obligations under original contract can be sufficient consideration
Accord & SatisfactionWhere one party has performed contract, the non-performing party must provide fresh consideration
20Copyright Guy Harley 2008
Termination by Frustration
Where: An intervening event; Not contemplated by the parties; Makes performance
impossible; or Radically different to that originally
contemplated
the contract is automatically terminated
21Copyright Guy Harley 2008
Termination by Frustration - Examples
Destruction of Subject Matter Taylor v Caldwell
Personal Service Condor v The Barron Knights Ltd
Non-occurrence of an Event Krell v Henry Event must be central not merely a motivation Herne Bay Steamboat Co v Hutton
22Copyright Guy Harley 2008
Termination by Frustration - Examples
Supervening Illegality Performance becomes illegal due to change
in law Denny, Mott & Dickson Ltd v Fraser & Co Ltd
Not just because performance becomes difficult or expensive Tsakiroglou & Co Ltd v Noblee Thorl
23Copyright Guy Harley 2008
Termination by Frustration (Cont.)
Frustration does not apply where: The event was caused by the party seeking to
rely on the frustration Maritime National Fish Ltd v Ocean Trawlers
Ltd Contract makes specific provision for the event
Clark v Lindsay The party seeking to rely on frustration foresaw
the event
24Copyright Guy Harley 2008
Effect of Frustration
Contract is void from date of frustration (not ab initio)
Parties released from all further obligations All contractual obligations owed before date of
frustration must be performed Chandler v Webster
Prepayments can be recovered where a compete failure of consideration Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd
25Copyright Guy Harley 2008
Frustrated Contracts Act 1988
Changes common law position Court may order
a refund of monies paid under a frustrated contract
Compensation for any performance that occurred prior to frustration
26Copyright Guy Harley 2008
Discharge by Breach
Cannot terminate for any breach no matter how slight
Can only terminate for breach of a condition Other terms are called “warranties” Breach of conditions allows the innocent party to
terminate the agreement and sue for damages Breach of a warranty only entitles the innocent
party to seek damages
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Discharge by Breach
Types of Breach Failure to perform contract Anticipatory breach
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Anticipatory Breach
Before time for performance, one party indicates intention not to perform contract Anticipatory breach Hochster v De La Tour
Contract not automatically discharged Innocent party may:
Treat contract as repudiated and claim damages, or
Perform the contract and claim contract price Avery v Bowden
29Copyright Guy Harley 2008
Termination by a Term of the Contract
Parties may have agreed that the contract would be terminated upon the happening or non-happening of a certain event
The term may be automatic or merely provide an option to terminate
Term may give only one party the option to terminate
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Procedure for Termination Terminating party must not affirm contract Once terminated, terminating party cannot
change mind Termination means that the parties are
relieved from all future obligations. Termination does not affect rights and
obligations that have already accrued If not terminated, other party must continue to
be able to perform contract
31Copyright Guy Harley 2008
Restraint of Trade
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Illegal Contracts
A contract must be legal Consideration must not be
illegal or contrary to public policy
Otherwise contract is void
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Public Policy
Injurious to public life Contrary to the nations foreign affairs (trading
with the enemy) Interference with administration of Justice “injurious to the public good” but not serious
enough to be illegal Immoral contracts Prejudicial to family life Restraint of trade
34Copyright Guy Harley 2008
Restraint of Trade
One party agrees to restrict their right to carry on a trade or business
Examples Employee agrees not to work for employers
competitor after end of employment Vendor of business agrees not to open similar
business Business agrees to take supplies exclusively
from one supplier
35Copyright Guy Harley 2008
Restraint of Trade
Restraint of Trade clauses are void because Prevents person from earning a living Deprives public of persons expertise All citizens should be free to ply their trade
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Restraint of Trade
A restraint of trade clause is only enforceable to the extent that it is reasonable Nordenfelt v Maxim Nordenfelt
It will only be reasonable if it is In the public interest (having regard to protection of
competition), and no wider than is reasonably necessary to protect the
legitimate interests of the party relying on it ICT v Sea Containers Peters (WA) Ltd v Petersville Ltd
37Copyright Guy Harley 2008
Restraint of Trade
Factors to determine if restraint is reasonable The nature of the activities being restrained
Protection of trade secrets is validFoster v Suggett
Solely preventing competition is not validHerbert Morris v Saxelby
Time span Geographic extent
Papstravou v Gavan
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Trade Secrets
Is it in the public domain or secret? Does the employee have sufficient knowledge of
the trade secret to exploit it Did employee acquire this knowledge in the
course of his employment
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Restraint of Trade
Invalid part can be severed to allow valid part to remain
Can be enforced by injunction