Performance & Breach

 

Termination by Agreement

Failure of Contingent Condition

Termination for Breach

Termination for Repudiation

Termination for Delay

Termination

(Need to choose one)

Damages

(available for every breach of contact

unless contract excludes damages)

Unliquidated

Liquidated

Express term, Subsequent Agreement, Implied Agreement

Order, standard, and method of performance

Contingent condition/condition

Anticipatory Breach/actual breach

Notice to complete

Electing to Terminate

Affirmation

Restrictions on Termination

Election, estoppels, and waiver

Specified amount claimed

No specified amount claimed **placed in the same position if the

contract had been properly formed**

Cannot recover more then what you lost

Not to prove: • He/she suffered loss or damage and the extent of

the loss or damage; • the loss or damage was caused by the defendant’s

breach; and • the loss or damage was not too remote Exceptions: • Plaintiff can claim damages for mental suffering,

anxiety, injured feelings, and disappointment – if physical hurt due to the defendants breach

• Plaintiff can recover damages for mental suffering when a plaintiff has sustained physical inconvenience due to the defendants breach

• Plaintiff can recover damages for distress, vexation (annoyance) and frustration where the very object of the contract has been to provide pleasure, relaxation or freedom from molestation.

***Civil Liability Act 2002 (NSW)***

• Loss of Reputation e.g. applies to actors etc • Loss of Use of Money • Reliance damage e..g put in money expecting to loss

money to make money • Diminished Value OR Reinstatement Costs for

Defective Building Work? • Net loss only recoverable • Causation • Remoteness – 1st limb (flowed naturally) and 2nd limb

(defendant had knowledge) • Duty to Mitigate – once a contract is breach - This

means that the plaintiff must take reasonable steps to keep loss to a minimum and do nothing to inflate the loss.

• Contributory Negligence - Law Reform (Miscellaneous Provisions) Act 1965 (NSW) e.g. doctor patent

• Date for Assessment – damage assessed date of breach

• The ‘once and for all’ rule – asses damage and put the lump sim through

• Damages difficult to assess – still can put a claim through

• Agreed Damages Clauses, if amount specified to high will be a Penalty clause

• Accelerated Payment Clauses – if you’re late with payment need to pay whole sum straight away.

• Actions for Debt • Recovery of Debt after Termination • Exceptions to Exact Performance

o Severable or Divisible Contracts e.g. contract for a year but paid weekly

o De Minimus Non Curat Lex (the law is not concerned with small things)

o Substantial Performance – don’t enough to be paid for the part you have done

o Partial Performance or Implied Contract – paid in a pro rata way

• Obstruction • Recovery of deposits • Recovery of Debt Following Affirmation

Do not need to prove the elements in agreed damages clause

Common law remedy for contract breach is damages

Injunctive Relief

Prohibitory Injunctions Mandatory Injunctions/ Specific Performance

The requirements for an award of injunctive relief: 1. Valuable consideration 2. Enforceable contract 3. Inadequacy of Damages 4. Breach of Contract 5. The defendant must be within the jurisdiction of the court

Misrepresentation

Misleading & Deceptive Conduct

*** make sure you look at statue The Australian Consumer Law

Elements:

1. Was a false statement (representation) made? – Silence not false/vitiating relationships

2. Was the false statement one of fact? – is it puffery or fact/negotiations… 3. Was the false statement addressed to the party misled? Statement is reasonbale... 4. Was the false statement intended to induce entry into the contract, and did it so

induce entry into the contract?

Type of Misrepresentation: Fraudulent – rescind contract Negligent - tort Innocent – only remedy rescission Remedies: Whether they chose to affirm or rescind the contract

Section 29 to 37 Elements of section 18 1. Conduct 2. In trade or commerce 3. Misleading or likely to mislead REMDEIES – SEE PAGE 36

In answering a question on misrepresentation you need to first assess whether a false representation was actually made – i.e. that it went beyond being a puff, that it was a false statement of fact, addressed to the party misled, and intended to induce entry into the contract.

Then you need to assess what category of misrepresentation the statement falls into. This will then guide you to the appropriate remedy that applies to the case – e.g. damages in tort for fraudulent and negligent misrepresentation, and rescission of the contract. Remember that there are restrictions placed upon rescission of the contract, especially in the case of innocent misrepresentation where equitable damages are not available to supplement rescission in the case that precise restitutio in integrum cannot be achieved. We will explore this in depth in Week 10.

This can be seen in the following summary of established principles in relation to establishing misleading or deceptive conduct:

1) Question of fact: it is a question of fact whether the conduct in question was misleading; 2) Positive conduct: most examples of misleading conduct in the context of contract negotiations

take the form of express or implied representations which hare both factual and false; 3) Silence: although, generally, silence will not be misleading conduct, silence may be conduct

in a broader range of cases than under the general law of misrepresentation; 4) Burden of proof: the burden is on the party alleging misleading conduct to prove both the

conduct and the reliance; and 5) Reliance: if the conduct alleged to be misleading was a representation which by its nature

was calculated to induce the representee to contract, and the representee entered into a contract, reliance will be inferred.

Elements  of  Duress  

On McHugh’s reasoning, we

Fundamental elements are

1. Pressure 2. Inducing contract 3. Illegitimacy of the pressure.

There may be other specific issues we can raise to assist us in identifying duress:

1. Pressure a. Threats of violence b. Death threats c. Threats of imprisonment

i. These can be against the party or someone else d. Threats to detain goods owned by the party e. Threats to destroy or damage goods owned by the party f. Threats to breach contract with the other party

2. Inducing the party contract a. This may be the sole reason b. It may be one of several reasons c. It must be an operative reason d. If the threat is to breach a contract, the innocent party must not be able to follow a reasonable legal alternative such as court

proceedings or arbitration 3. Illegitimacy of Pressure

a. The pressure is illegal b. The pressure is unlawful c. The pressure amounts to unconscionable conduct d. The pressure is knowingly made without lawful claim.

Duress [stranger]

Illegitimate pressure

Duress to the person

Duress to goods

Economic duress

Unconscionable Conduct Distinguished from Undue Influence

Generally, in cases of unconscionable conduct (as opposed to undue influence), there exists no presumption against the transaction by reference to the

relationship of the parties. The focus in unconscionable dealings is on the position of the parties, at the time they enter the contract, and whether one takes

advantage or exploits the position of the other. It is not concerned with relationships of influence, although there can be some overlap between the two doctrines.

Amadio, for example, would not have succeeded as a claim for undue influence (nor duress, for that matter). It is clearly a situation where one party has taken

advantage of the special disadvantage of another. Deane J’s judgment in Amadio is helpful to examine to understand this distinction further.

Undue Influence

[someone you know/existing relationship]

There are three relevant categories:

1. Established class of relationships where undue influence is presumed to exist

2. Relationship falling outside the established class, where claimant proves an actual relationship of

dependance/servience/trust which would justify presuming the specific transaction was produced by undue

influence.

3. Relationships falling outside 1 and 2 where actual undue influence has to be positively proven to have

produced or tainted the specific transaction.

Remedies - Recession

Unconscionability [disadvantage in not understanding what is happening e.g. other person is aware person the person entering into the contract is disabled, drunk, old etc

Elements

Special Disadvantage

Knowledge

Taking advantage

Constitutional disadvantage – age, illness, poverty etc

Situational disadvantage – emotional dependency, marriage etc

It is sufficient to show that the stronger party need only be aware

An Equitable Remedy

Was there genuine consent to the

transaction by both parties?

Contracts of Sale

Contracts of Guarantee

The Effect of Unconscionability - Where a contract is vitiated by unconscionable conduct, it is considered voidable at the election of the weaker

party. At common law, the transaction is generally set aside and the parties are returned to their pre-contractual position

Legislation

Unjust contracts under the Contracts Review Act 1980

(NSW)

Unconscionable conduct as prohibited by Australian

Consumer Law (ACL) and the unfair contract terms

regime of the ACL.

Section 7 – confers jurisdiction on court - unjust “Unjust” is defined under s4(1) and public interest 9(1) other factors 9(2) – subject of negotiation - Whether independent advice was obtained by a party seeking relief;

There are three classes of prohibited unconscionable conduct under the ACL: 1) unconscionable conduct in connection with the supply of goods or

services of a kind ordinarily acquired for personal, domestic or household use or consumption (ACL s 21, replacing Trade Practices Act 1974 (Cth), s 51AB);

2) conduct which is unconscionable within the meaning of the unwritten law, from time to time, of the states and territories (ACL s 20 – replacing TPA s 51AA). The common law principles explored in Amadio were encapsulated in s51AA of the TPA. The main difference here lies in remedies, as the ACL (and former TPA) provide greater flexibility in the range of remedies; and

3) unconscionable conduct in business transactions (ACL s 22 – replacing TPA s 51AC).

Unconscionable under the unwritten law

Unconscionable conduct in business transactions

Unfair contract terms

1) it would cause a significant imbalance in the parties’

rights and obligations arising under the contract;

2) it is not reasonably necessary in order to protect the

legitimate interests of the party who would be

advantaged by the term; and

3) it would cause detriment (whether financial or

otherwise) to a party if it were to be applied or relied

on.

***Contracts that are vitiated – you look at recession not termination

If contract has been breached look at termination***

Rescission

[Remedy for vitiating contracts]

Voidable contracts

Restitutio in Integrum

To rescind a contract means to set aside the contract and put the parties back to their original pre-contractual positions

- The more the contract has been performed the more harder to sue in rescission

Partial Rescission

Usually a contract must be rescinded as a whole, but in some cases where substantial restitution in integrum is impossible a court can make a declaration for partial recession.

Before proceedings commenced the contract could have been rescinded

*** prevents rescission*** Election

Once you affirm – binding you cannot rescind it

Third Party Rights

The right to rescind will be lost if a third party has bona fide acquired for value an interest in the subject matter of the contract. This follows from two rules. First, the rule that the contract, though voidable, remains valid until it is rescinded. Thus title can pass from the purchaser to a third party up to the point of rescission. Second, rescission is only available where restitution in integrum is at least substantially possible. If title has passed, the purchaser cannot return the property, so restitution is not possible.

The rule of Seddon’s Case

The rule is that rescission for innocent misrepresentation is not allowed where the contract has been executed on both sides. In this case ‘executed’ means that all obligations on both sides have been fully performed

STATUTORY REMEDIES

Australian Consumer Law

Misleading and deceptive conduct

Unconscionability and unfair terms

Damages, other orders and injunctions (preventing)

*go to common law first*

 

Illegality

Contracts expressly

Impliedly prohibited by statute Check how legislation drafted Contracts affected but not prohibited by statute

Statue

General rules A contract is illegal or prohibited by:

A rule of public policy

A contract that is not illegal may be void or unenforceable

Restraint of trade

The effect of Illegality