La1106 – Exam Notes

LA1106 – Exam Notes

LA1106 – Exam Notes 1

Lecture 1 2

Discharge by Performance 2

Time of performance 2

Order of performance 2

Nature of obligations 2

Standard of performance 2

Divisible obligations 2

De minimis non curat lex 3

Substantial performance 3

Acceptance of partial performance 3

Quantum meruit 3

Prior Agreement 4

Contingent conditions 4

Condition precedents 4

Condition subsequent 4

Consequences of non-fulfillment of contingent condition 4

Duty to co-operate 4

Subsequent Agreement 4

Consideration required 4

Formal Requirements 5

Abandonment 5

Assignment and Novation 5

Discharge by operation of law 5

Lecture 2 6

Classification of terms of a contract 6

Promises or undertakings 6

Termination for breach 6

Conditions 6

Warranties 7

Determining if a term is a condition or warranty 7

Innominate (or intermediate) terms 7

Determining the outcome of an innominate term 8

Repudiation 8

Effect of repudiation 8

Anticipatory breach 8

Conduct amounting to repudiation 9

Lecture 3 11

Termination for delay 11

Terms – time of performance 11

No term as to time 11

Time is of the essence 11

Time is not of the essence 12

When will delay constitute repudiation? 12

Making time of the essence 12

Notices 12

Extension of time 13

Termination and affirmation 13

Procedures and consequences 13

Election to terminate the contract 13

Ready, wiling and able 13

Restrictions on termination 14

Consequences of termination for the parties 14

Election to affirm the contract 14

Termination 14

Consequences for innocent party 15

Consequences for defaulting party 15

Lecture 4 16

Frustration 16

A contract has been frustrated if: 16

Substantial Impact 16

Categories of frustrating events 16

Illegality 16

Substantive Delay 17

Destruction/Unavailability of subject matter 17

Unavailability of a person 17

Destruction of the foundation of a contract 17

Method of performance impossible 17

Application to contracts for sale of land 17

Fault 18

Can paid money be recovered? 18

Lecture 5 19

Remedies 19

Right to terminate 19

Right to damages 19

Damages as compensation 19

Expectation Damages 19

Loss of profit/Loss of bargain 19

Damages for loss of profit on basis of termination clause 19

Loss of chance/opportunity 20

Disappointment 20

Loss of reputation 20

Loss of use of money 20

Payment of Interest 20

Reliance Damages 20

Damages under statute 21

Pre-estimated damages clauses 21

Lecture 6 22

Limitations on the award of damages 22

‘But for’ test 22

Remoteness 22

The two limbs of breach 22

Extent of loss contemplated 23

Mitigation 23

Lecture 7 25

Equitable Remedies 25

Main equitable remedies 25

Specific performance 25

Injunctions 27

Restraint of trade clause 27

Equitable damages 28

Lecture 8 29

Vitiating Factors 29

Mistake 29

Common mistake 30

Mutual mistake 31

Unilateral 32

Lecture 9 34

Misrepresentation 34

Lecture 10 41

Abuse of power 41

Duress 41

Undue Influence 43

Lecture 11 46

Impropriety by third parties 46

Unconscionability 46

Lecture 12 49

Illegality 49

Consequence 49

Pleading illegality 49

Express statutory illegality 50

Implied statutory illegality 50

Incidental illegality 51

Illegality at common law 51

Consequences of illegality 52

Lecture 1

Discharge by Performance

Contract has been performed completely to the satisfaction of the parties

Consider: Time of performance

Order of performance

Standard of performance

Time of performance

• 
  Contracts may stipulate a time for performance
  
• 
  Time may be of the essence
  
• 
  Where there is no stipulated time, the court may impose one
  
• 
  What is reasonable depends on the nature of the obligations
  

Order of performance

• 
  Some contracts may stipulate an order of performance of obligations
  
• 
  If not, order will be determined by nature of obligations
  

Nature of obligations

• 
  Independent obligations – parties must perform irrespective of other parties obligations
  
• 
  Dependent and concurrent – obligations must be performed at the same time
  
• 
  Dependent obligations – one party must perform their obligation before the other
  

Standard of performance

• 
  Exact performance
  
• 
  General rule: In order to discharge the contract, performance of the contract must be exact
  
  • 
    Cutter v Powell
    
• 
  Many exceptions:
  
  • 
    Divisible contract
    
  • 
    De minimis rule
    
  • 
    Substantial performance
    
  • 
    Acceptance of partial performance
    

Divisible obligations

• 
  Entire obligations: Where complete and exact performance is required before the contract price is to be paid
  
  • 
    Cutter v Powell
    
• 
  Divisible obligations: Contract split into separate obligations each one capable of being paid for after completion
  
  • 
    Steele v Tardiani
    
  • 
    Property Law Act 1974, ss 231, 232
    
  • 
    Nemeth v Bayswater Road Pty Ltd
    
• 
  Contracts may be divisible even if it is a lump sum or paid in installments
  

De minimis non curat lex

• 
  “the law does not concern itself with trifles”
  
  • 
    Shipton Anderson & Co v Weil Bros & Co
    
• 
  If the performance is close enough to exact, it will be considered exact
  

Substantial performance

• 
  A promisor who substantially performs a contract will be entitled to claim the contract price subject to a deduction for defects in the performance.
  
• 
  Doctrine does not apply to:
  
  • 
    Expressly stated entire contracts (condition precedent)
    
  • 
    Dependent and concurrent obligations
    
• 
  Hoenig v Isaacs
  
  • 
    Substantial performance has occurred
    
  • 
    Nature of defect is minor
    
• 
  Bolton v Mahadeva
  
  • 
    Nature of defect is major
    
  • 
    Remedy costs a fair percentage of original price
    
  • 
    Substantial performance has not occurred
    
• 
  Factors to consider:
  
  • 
    Nature of defects
    
  • 
    Cost of rectifying the defect compared to contract price
    
• 
  Therefore a question of substantial performance is a question of degree to be determined by the court taking into account all relevant facts
  

Acceptance of partial performance

• 
  A free and willing acceptance of partial performance of the contract implies a promise to pay for the part performance
  
• 
  If there is no choice (as in the case of a house or another permanent fixture), then it cannot be inferred that you will pay
  

Quantum meruit

• 
  Restitutionary claim based on principle of unjust enrichment
  
• 
  Available only where there is no subsisting contract between the parties, i.e.
  
  • 
    No contract
    
  • 
    Void or unenforceable contract
    
  • 
    Contract with no price stipulated
    
• 
  Elements
  
  • 
    Plaintiff must have provided a benefit to the defendant
    
  • 
    Benefit must be provided at the expense of the plaintiff
    
  • 
    Unjust for defendant to retain that benefit
    
  • 
    Defendant must have a choice
    
  • 
    Plaintiff must not be in breach
    
    • 
      Sumpter v Hedges
      
    • 
      Steele v Tardiani
      

Prior Agreement

• 
  Express terms – may refer to
  
  • 
    Period of notice/termination at will
    
  • 
    Procedure to be followed
    
• 
  Implied terms
  
  • 
    Crawford Fitting Co v Sydney Valve & Fitting Co
    

Contingent conditions

• 
  Term stipulating that the formation or performance of the contract is conditional on occurrence of event
  
• 
  Contingencies affect the existence or operation of the whole or part of the contract.
  

Condition precedents

• 
  Term stipulating that a specific event must occur before contract comes into existence (formation) or before obligation arises under the contract (execution)
  
• 
  Parties are not bound to perform until the condition is fulfilled
  
  • 
    Pym v Campbell
    
  • 
    Masters v Cameron
    

Condition subsequent

• 
  Term stipulating that a right to end further performance of the contract may arise upon the occurrence or non occurrence or a specific event.
  
• 
  Parties are bound to perform until the condition is fulfilled.
  

• 
  Meehan v Jones
  

Consequences of non-fulfillment of contingent condition

• 
  Two possibilities:
  

• 
  the contract is automatically terminated.
  
• 
  parties can elect to terminate.
  
• 
  Party who benefits from the condition has the right to terminate or to waive the condition.
  
  • 
    Perri v Coolangatta Investments Pty Ltd
    

Duty to co-operate

• 
  Parties have a duty to ensure that the condition can occur.
  
• 
  Party cannot elect to terminate a contract for non-fulfilment of a contingent condition if s/he hindered the fulfilment of the condition.
  

Subsequent Agreement

In order to be binding the subsequent agreement must have all the elements of a binding contract, including consideration and formalities

Consideration required

• 
  Bilateral discharge
  
  • 
    Both parties have outstanding obligations
    
  • 
    Agreement to discharge the other amounts to consideration
    
• 
  Unilateral discharge
  
  • 
    Only one party has ourstanding obligations
    
  • 
    Need deed (of release) or fresh consideration – accord and satisfaction
    
• 
  Promise not to sue may be considered fresh consideration
  
  • 
    McDermott v Black
    
• 
  British Russian Gazette v Associated Newspaper Ltd
  

Formal Requirements

• 
  Where a contract is required to be in writing pursuant to legislation (Statute of Frauds, Property Law Act), no such requirements exist for an agreement to discharge the contract.
  

Abandonment

• 
  By the parties’ conduct (i.e. non-performance) it can be inferred that the parties have agreed to abandon the contract.
  
• 
  “There can be no doubt that where what has been called an inordinate length of time has been allowed to elapse where no party has attempted to perform or called upon the other party to perform a contract made between them, it may be inferred that the contract has been abandoned.”
  
• 
  Fitzgerald v Masters
  

Assignment and Novation

• 
  An assignment is a transfer of rights from one party to another.
  
• 
  Assignment at law must conform with requirements under the Property Law Act.
  

• 
  Must be absolute
  
• 
  Must be in writing
  
• 
  Must give notice to the debtor
  

• 
  Novation involves the creation of new rights and liabilities with new parties to the contract.
  

Discharge by operation of law

• 
  Merger
  
• 
  Bankruptcy