Contract Law B notes

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ELEMENTS OF MISREPRESENTATION - What has to be shown to constitute actionable misrepresentation? 7 *Forms of misstatement of Fact 7 *Forms that aren't a misstatement of fact 8 What is a material inducement? 12 The issue of materiality 13 Exclusion Clauses and Misrepresentation 14 Quick points to note 15 Mistake must be an operative mistake to affect validity of contract: Brennan v Bolt Burdon (a firm) [2005]. 15 How common law and equity treat mistake. 16 Salient points to note about Mistake. 16 Common mistake. 17 Were there any machines? 18 When can a contract be avoided for common mistake? 19 Mutual mistake 21 Unilateral Mistake 22 Unilateral mistake of identity 22 Unilateral mistake of terms of a contract 23 Mistake as to nature of document (Non Est Factum or “It is not my deed”.) 24 What is duress? 25 Distinguishing Duress form Undue Influence and unconscionability: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) NSWLR. 25 There are cases where a threat may be illegitimate when coupled with demand for payment even if the threat is one of lawful action. 26 Lawful duress 26 Three categories of Duress 26 Duress of the person 26 Money paid under duress is recoverable. Why? 27 How about moral pressure? 27 Duress of goods 27 Economic duress. (p 338) 27 Delay in action is a valid defence: 28 Ordinary commercial pressure to sign guarantee for a deal is acceptable: 28 The pressure must play a part in the decision of a party to sign a contract: 28 Pressure in matters of loans of sums of money: 28 What are the remedies available for duress? 29 How do you identify undue influence? 29 Categories of undue influence 30 Actual undue influence 30 Presumed undue influence 30 Class 2 A undue influence 31 Class 2 B undue influence 31 Undue influence and third parties 32 Rebuttal of undue influence 32 Independent advice 32 Lack of improvidence 32 General equitable defences 33 Undue influence and third party guarantees. 33 Yerkey v Jones principle - Related to spousal guarantees 33 What are the remedies that the weaker party may utilise? 34 What is unconscionable conduct? 35 Equitable relief 35 Elements/What constitutes an unconscionable transaction? 36 Unconscientious exploitation of the disadvantage 40 What are the defences available to the stronger party? 40 Remedies 41 Unconscionability and Undue Influence. 41 Statutory unconscionability pursuant to Australian Consumer Law 46 A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of unwritten law from time to time. 46 Unconscionable conduct in connection with goods and services-Section 21 of the ACL. 47 Remedies under the ACL 47 Privity and its relationship to the Doctrine of Consideration 48 What remedies may be had against the promisor who breaches an obligation to pay a third party? 49 Damages in Common Law 49 On behalf of non-economic loss from family on holiday. 50 Carriage of goods where parties have interest in goods - The Alberzo [1977] AC. 50 Specific performance that 3rd party can seek in equity - Exceptions of Fact 51 LEGITIMACY OF DOCTRINE OF PRIVITY 51 Exceptions to the doctrine of privity - Law of Agency - Exceptions of Fact 53 Another exception (by Fact) to Doctrine of Privity in Shipping case. Exclusion clauses and protection of third parties from liability altogether or limiting liability for a fixed sum ( of txt) 53 AREA of law extends to carriage of good by road. 55 Exception (by Fact) by Covenants on land 55 Exception (by Fact) by Trusts 56 For trust relationships to arise two points need to be examined: 56 Exception (by Fact) by Equitable Estoppel 56 Exception (by Fact) by Unjust enrichment 56 Statutory Exceptions (refer to text book) 56 Insurance Contracts 57 What is an exclusion/exemption/exception clause? 57 Three issues that may need to be determined in cases involving exclusion clauses: 57 CONSTRUCTION OF EXCLUSION CLAUSES 57 Finding normal and ordinary meaning of term - using contextual approach 58 Exclusion Clauses and Negligence 59 When is negligence excluded? 59 In other words, what is regarded as sufficiently wide enough to exclude liability for negligence if there is no express reference to negligence? 60 An application of part of third rule in the Canada Steamship case, and that is, if the words used are wide enough to cover negligence. 60 If the breach is negligence and the exemption clause relates to negligence, then the clause will stand. 60 Why did the decision go against the drafter of the exclusion clause in White v John Warwick? 60 The Canada Steamship principles apply in Australia 61 Other relevant principles of construction 61 Deviation cases 61 Four Corners Rule 62 Exclusion Clauses and Legislation 62 Introduction to the ACL 63 MISLEADING AND DECEPTIVE CONDUCT (PART ONE) 64 "A person must not, in trade or commerce, engage in conduct that is misleading and deceptive or likely to mislead or deceive." 65 What has to be established? 65 The perpetrator 66 Difference between Misleading conduct and Misrepresentation 66 What is conduct 'in trade and commerce'? 66 Private sales by individuals is not in the course of trade or commerce. 67 The meaning of Engage in Conduct 67 Silence or 'refusing to do any act' 67 Misleading or deceptive conduct must be deliberate 68 Some relationships require facts to be disclosed. 68 When silence won't lead to misleading or deceptive conduct 68 Two categories of Silence in cases 69 What is regarded as in the course of trade and commerce? 69 How do you establish misleading and deceptive conduct? 69 In short, as long as the state of misled mind is brought about by the misrepresentation then it is an actionable misrepresentation or deception. 70 No break in chain of causation between misleading or deceptive statement and the impact the statement has. 70 MISLEADING AND DECEPTIVE CONDUCT (PART TWO ) AND STATUTORY UNCONSCIONABILITY 71 Misleading and deceptive conduct. 71 Recurring categories of conduct 71 Comparative advertising campaigns 71 Character merchandising 71 Silence or failure to act 71 Representations about the future 71 Opinions and predictions 71 The questions to ask as to whether the behaviour/ conduct constitutes misleading and deceptive conduct. Based off the Gillette v Energizer These are: 71 Section 18 of ACL 72 The distinction between misleading and deceptive conduct and mere puffs 72 Who can rely on s 18 ACL? 73 How do you evaluate? 73 SUMMARY OF EVALUATIVE PRINCIPLES 73 Scope of s 18 ACL 74 Comparative advertising campaigns 74 Application of 4 principles 75 Character merchandising 75 Case studies: 76 What is the bottom line for commencing an action for misleading and deceptive conduct? 76 Silence and a failure to disclose 77 See ACL 2(2). 77 Silence or failure to act as misleading or deceptive conduct 78 Points to consider from Demagogue. 78 Reasonable expectation of disclosure 78 Relevance of Intention 78 What about an inadvertent failure to disclose? 78 This was followed in: 79 Semrani v Manouni 79 Where is the certainty? 79 I would venture to say it depends on the effect that such failure to disclose has on the other party. 79 Future Representations/opinions & promises 80 Opinions 81 Background: Seafolly made and sold ladies swimwear, was in competition with company owned by Ms Madden. Ms Madden thought Seafolly 'ripped off' her own designs and made a Facebook album of pics saying that were copied. 81 Representations 81 Future representations - presumption of misleading conduct 82 Statutory Unconscionability 82 ACL -SECTION 20 83 Dissecting ‘unconscionable conduct’. 83 The Amadio principles in relation to unconscionability 84 Special disadvantage 84 Unconscionable conduct in relation to Section 21 of ACL. 85 What does 'Unconscionable' in ACL s 21 mean? 85 Unconscionable conduct in ACL s 20(1) has a different meaning to ACL s 21. 85 For ACL s 20 86 For ACL s21 86 What about Section 22? 86 How does one interpret Section 22? 86 Consequences of breach 88 Unfair Contract Terms under the ACL 88 Structure 88 Why is there a need for it? 88 Substantive or procedural unconscionability 89 Features of ACL Ch Pt 89 Contracts covered 89 Consumer Contract 90 Standard form contract? 90 Definition 90 Rebuttable presumption 91 When is a term unfair? 91 When is a term transparent? 91 Limbs of an unfair term. 91 Terms that were unfair: 92 Unfair terms - transparency and contract as a whole. 94 When is a term transparent? 94 Contract as a whole 94 Examples of unfair terms as set out in Section 25(1) of ACL. 94 Exemptions from unfair contract terms - s28 95 Orders and remedies available 95 Part 2-3 -- Unfair contract terms 95 Consumer Guarantees under the ACL scheme. 97 When is there a statutory basis for seeking remedies, that is, in what circumstances? 97 Who is the consumer Acquiring goods and services as a consumer. 98 First ground 99 Aggregation 99 Second Ground - Objective test 100 How do you apply the above principles? 101 The following factors should be noted. 102 Guarantees as to acceptable quality - ACL ss 54, 55. 102 Difference between acceptable and merchantable quality of merchandise. 104 Under Section 55, note that the goods have to be transacted pursuant to trade or commerce but not a sale by auction. 104 In respect of Section 56, 105 In respect of Section 57, 105 In Section 58, the manufacturer’s guarantees as to repairs and spare parts of goods supplied must be upheld. - manufacturer's guarantees. 105 For false or misleading representation see Section 29 (1) (m). 106 Guarantees relating to services under Sections 60 to 62 of the ACL. 106 ACL s 60: 106 ACL s 61: 106 Due are and skill 107 ACL s 62 107 Section 64 - Excluding liability 107 S 64 107 S 64 A 108 NOTE THE EXCEPTIONS. 109 First exception 109 Second exception 109