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1. WEEK 9 (Property Law)
2. WEEK 10 (Competition Law)
3. WEEK 11 (Consumer Law)
4. Week 12 (Risk Management)


2 Questions (15 marks each)

Weeks 3-6 (Contract Law)
Weeks 7-8 (Tort Law)

Property Law

Property refers to something, which can be owned, and the rights involved in
owning the property. (FOCUS ON REAL PROPERTY)

It can be classified as:

1. Real Property = Land, fixtures and leaseholds
2. Personal Property = All other property (tangible and intangible including
intellectual property)

Choses in possession are tangible physical property.
- visible, movable things such as cars, furniture
- something that can be possessed

Choses in action are intangible property
- Interests that cannot be seen, held or touch
- Rights of property can only be claimed or enforced by the taking of legal
- E.g. rights to sue, shares in company, intellectual property

Ownership v Possession
A person may own property without possessing it, and a person may possess
property without owning it.

Rights of a person in possession
The person in possession may not be the legal owner, but may have rights
protected by the law.

Armory v Delamirie
- True owner has the most superior title
- When someone possesses a find, they have superior title to all who later
possess it
Bridges v Hawkesworth
- Bank notes found on the floor of a shop
- Notes were never in custody of the shopkeeper before they were found
Waverly Borough Council v Fletcher
- Owner or lawful possessor of land owns all that is in or attached to the

Land include
1. Fixtures (things attached to the land)
- Fixed by means other than its own weight?
- Intention to be permanently fixed for a substantial period or for
temporary purpose?
- Degree of damage on removal?

2. Land extends upwards to the heavens and downwards to the centre
of the earth

Joint tenancy
Co owners of land own the land either as joint tenants or as tenants in common
- Joint tenants cannot sell or leave their share by will during the joint
- Joint tenants have right of survivorship When one party dies, the
other automatically gets their interest and becomes sole owner
- Real Property Act 1900 (NSW)

Tenancy in common
Tenants in common own a separate and an undivided interest in land
- Tenants in common own a proportionate share of the land
- Often used in business e.g. Business partners co owning business premise
- Shares in land may be divided equally or unequally
- No right of survivorship under tenancy in common

Ownership of land: Systems of Title
- Land is owed under the Torrens title or general law
- Registration gives title (ownership) of the land to the registered

The effects of registration includes:
- removes uncertainties of title
- provides proof of title of the registered proprietor so no one else can
claim to be the owner
- provides evidence of the information it records
- gives priority upon registration

Title held under a registered interest is indefeasible by unregistered
Exceptions to indefeasibility of title:
Statutory fraud. Example: Owner became registered by forgery.
Unconscionable conduct
Constructive trust - where registered owner holds the land subject to rights of
A person with an unregistered interest in land can be protected by:
registration (eg a banks mortgage) or
lodging a caveat (freezes title)

Acquiring Property
Ownership of property can be transferred by agreement (sale, gift, declaration of
trust or under a will) or without an agreement (administration, court order or
enforcement of an order)
A property is conveyed to another owner through a process dealt with by solicitors
or conveyancers. The process is preparing the contract, exchanging and signing the
contracts, searchers and inquiries, arranging finances and then settlement
Caveats are written warnings made on the register stop the owner from selling the
property. It can be lodged to anyone by anyone with legal or equitable interest in the
land such as a creditor

Competition Law

Legislation: Competition and Consumer Act 2010 (Cth): promote fair trading
and competition amongst businesses

Applies to:
- Conduct of corporations
- Business and commercial activities of individuals
- Professions
- Business activities of governments

Market is an area of close competition between firms, the field of rivalry between
them. A market is the field of actual and potential transactions between buyers
and sellers amongst whom there can be strong substitution (between products
and supply in response to changing prices).

The competition test questions if the activity will substantially lessen
competition. If it does not, it fails the test and does not breach the law. The Per Se
test states that breaking the rule will mean you have breached the law. In
determining the two tests, it is crucial to define the market by asking Who is the
competition?. Factors to look at includes product, geographic location and
the time period of the market.

Anti-competitive agreements
CCA prohibits agreements, which have the purpose of substantially
lessening competition.
Examples of anti-competitive agreements
- Code of ethics
- Market sharing agreements
- Shopping centre leases

Competition Test
Does the conduct have the purpose, effect, or likely effect of substantially
lessening competition in a market?
- Anti competitive agreements except agreements that contain an
exclusionary provision/primary boycott
- Exclusive dealing except third line forcing
- Mergers

Anti-competitive arrangements (Competition Test)
A corporation shall not make a contract or arrangement at an understanding if a
provision in it has the purpose or would have or be likely to have the effect of
substantially lessening competition. Anticompetitive agreements include:
contracts, arrangements or understanding, purpose, effect or likely effect and
substantially lessening competition
Case: ACCC v Visy Industries
- Visy and Amcor held 90% of the market share and agreed to conduct a price
fixing scheme it lessened competition

Exclusive Dealings: s47 (Competition Test)
A corporation supplies a buyer with good or services on a condition that the
buyer will not buy from any other suppliers. Buyer will deal exclusively with
the supplier. Section 47 outlaws exclusive dealings only if it substantially
lessens competition (competition test)

Product Exclusivity
- A supplies B on condition that B will not acquire goods or services from
competitor C (requirement contracts)

Customer Exclusivity
- A supplies B on condition that B will not resupply C
Case: Universal Music Australia v ACCC
- Universal Music threated to stop supplying CDs if retailers were found to be
dealing with other resellers (aimed to wipe out import competition)

Territorial Exclusivity
- A supplies B on condition that B will not resupply in certain places

Mergers: S50 (Competition Test)
A merger is when two firms (corporations) combine into one.
- Merger allows corporations to achieve efficiencies such as economies of
- Provide a market for corporate control where underperforming
corporations are merged and poor managers are replaced for better ones
- Section 50 of the CCA prohibits mergers and acquisitions which
would substantially lessen competition

Section 50(1):
Mergers: s 50
A corporation must not directly or indirectly:
(a)acquire shares in the capital of body corporate; or
(b)acquire any assets of a person if the acquisition would have the effect
or likely effect of substantially lessening competition

Per Se Test
- Impact on competition does not matter
- If you engage in the conduct, you are in breach of the Act.

Cartel Conduct (per se)
Cartel is when businesses agree to act together instead of competing with
each other with the purpose of increasing profits of cartel members while
maintaining illusion of competition

Cartel provision is a provision relating to:
- Price fixing (prices are fixed because they are agreed upon)
- Restricting outputs in the production or supply chain
- Allocating customers, suppliers or territories
- Bid-rigging (one or more parties bid and the others do not)

ACCC can beat a cartel through its immunity policy, where the first person
that admits to being part of a cartel will not be prosecuted.

Exclusionary Provisions/Primary Boycotts

A corporation shall not make a contract or arrangement or arrive at an
understanding if it contains an exclusionary provision
Provision of a contract, arrangement or understanding
Made by parties competitive with one another
Purpose of preventing, restricting, limiting
Particular persons or classes of persons
Need to identify boycott of some other person or class or persons
Section 4D defines exclusionary provisions as occurring when parties (two ore more of
whom are in competition) make a contract, arrangement or understanding in which the
relevant provision has the purpose of 'preventing, restricting or limiting'
'(i) the supply of goods or services to, or the acquisition of goods or services from, particular
persons or classes of persons; or
(ii) the supply of goods or services to, or the acquisition of goods or services from, particular
persons or classes of persons in particular circumstances or on particular conditions'
by all or any of the parties.
It is a defence to the exclusionary provision prohibition to demonstrate that the provision was
entered into for the purpose of a joint venture and it does not have the purpose, effect or likely
effect of substantially lessening competition (s 76C).
Examples of exclusionary provisions includes:
- Two or more competing suppliers agree not to supply, or only to supply
on certain terms would be competitor C
- Competitors who divide the market with agreed shares to each and
- Trade associations members who act together to limit or control access to
Case: News Ltd v South Sydney
- South Sydney was not included in the 14 team NRL
- The prevention was not agreed and unintentional thus not illegal
- There must be intention to do such before it is illegal

Third Line Forcing
A forces B to deal with third party C
E.g. includes
- A supplies B on condition that B acquires from C
- A refuses to supply B because B does not agree to acquire from C

Subject to the per se test
Unlike other subsections of s 47 which are subject to the competition test

Resale price maintenance (Per se)
RPM occurs when a supplier of goods or services fixes the minimum price for the
later seller
E.g. Manufacturer sets price at which wholesalers must resell to
RPM is illegal per se under the CCA

Stating price charged must be within a range of particular figure
Couching price in terms of recommendation does not prevent it from being a price
specified not genuine recommendation
Resale price maintenance deals with price at which the acquirer will re-sell
the goods or services acquired (ie the on-selling/resale price)

Misuse of market power: S46
Misuse of market power is not an outright prohibition (a per se of itself offence)
and is assessed by its effect on competition
A corporation must not:
1. Take advantage of its substantial degree of power in a market
2. Engage in predatory pricing by selling goods or services for below cost
3. eliminating or substantially damaging a competitor preventing entry
deterring or preventing competitive conduct
Factors to decide whether if a corporation has abused its power
1. was conduct materially facilitated by the power of the corporation in the
2. Did the corporation engage in the conduct in reliance on its substantial
degree of power in the market?
3. Is it likely that the corporation would have engaged in the conduct if it did
not have power?
4. Is the conduct related to the corporations degree of power
Case: QLD Wire v Broken Hill
- Qld ire wanted BH to supply the Y-bar fencing so it could supply Y Bar
- Broken Hill wanted to keep its market share, offered to sell the Y-Bar
component at such a high price to Qld wire that it was not affordable
- Broken Hill was found to be misusing its market power

Authorisation (Australian Competition and Consumer Commission)
ACCC can give an authorisation (exemption) to agreements affecting competition if:
The benefit of the conduct outweighs any anticompetitive detriment
There is a public benefit: Business efficiency Expansion of employment Promotion of
industry Growth in exports Economic development Assistance to small business
Lodgement fee payable
Penalties: Competition Provisions
Penalty payable by corporation for breach of Pt IV is the greater of the following:
$10m; or three times value of the illegal benefit; or 10% of turnover
in preceding 12 months
Individuals: civil penalty of up to $500 000 per offence
Cartel conduct:
criminal penalty for individuals up to 10 years jail and/or fines of up to $220 000 per offence

Consumer Law

Aim of consumer protection laws includes:
- Preventing businesses from harming consumers
- Promoting fair competition between businesses by preventing businesses
from gaining an unfair advantage in the market at the expense of
customers and competitors

Competition and Consumer Act 2010 is a federal statute that:
- Regulates restrictive trade practices to produce greater competition and
efficiency in the market for the benefit of consumers; and
- Protects the interests of consumers of goods, services and land against
unfair practices

Australian Consumer Law (ACL)
The ACL promotes good business conduct by prohibiting conduct such as:
- S 20-22: Unconscionable conduct
- S 18: Misleading or deceptive conduct
- S 29: False Representations

Australian Competition and Consumer Commission (ACCC) ensures
individuals and businesses comply with Commonwealth consumer
protection, fair trading and competition/trade practices laws

A consumer is a person (or business) if they acquire goods/services for:
- Up to $40K: S3(1)(a)
- More than $40K and products or services are normally used for personal,
domestic or household purposes

A person who purchases products or for resupply or use in manufacture or
repair is not a consumer

1. Unconscionable conduct
Business behavior may be seen as unconscionable if it is particularly harsh e.g.
deliberate actions that involves serious misconduct (unfair and unreasonable)

Stronger party knowingly takes advantage of a weaker party in a position of
special disability

One party may be at a disadvantage because of
- Age
- Sickness
- Illiterate
- Financial needs
- Lack of explanation (understanding)
- Language (minimal English)

Section 20
A person must not, in trade or commerce, engage in conduct that is
Apply common law principles presented in Amadios case to business disputes

Section 21
Prohibits statutory unconscionability in connection with the supply or
acquisition of goods or services

Section 22
- Bargaining positions of the parties
- Did consumer have to comply with the conditions that were not
reasonably necessary?
- Did consumer understand the documentation/terms in contract?
- Was there any undue influence, pressure/duress or unfair tactics
- Could the consumer have obtained the same goods or services elsewhere?

Commercial Bank of Australia v Amadio 3-step test

1. Weaker Party is in a position of special disability which includes age,
financial status, language barrier, inexperience or ignorance
2. Stronger party knew about or ought to have known the parties special
disability (plaintiff substantially affected their ability to protect
3. Stronger party took unfair advantage of the weaker partys special
disability actions of defendant were unconscionable

2. Misleading or deceptive conduct

Section 18 (ACL)
A person shall not in trade or commerce, engage in conduct that is
misleading or deceptive or is likely to mislead or deceive

Anyone can sue for misleading or deceptive conduct the plaintiff does not have
to be a consumer

Section 18 is made up of the following elements
1. Conduct by a person
2. Activity of supplying goods and services in trade or commerce
3. Who has engaged in misleading or deceptive conduct or conduct that is
likely to mislead or deceive

Conduct is misleading if:
- Lead a consumer astray in action or conduct or
- Lead a consumer into making an error

Test: question of the fact to be determined in context of evidence/facts of each

Taco Company of Australia Inc v Taco Bell Pty Ltd
- Both companies complained the use of the name by the other
- Taco Company of Australia won, as it was first opened in 1977 opposed to
Taco Bell in 1981. The Bondi restaurant had a reputation throughout

Whether conduct is misleading or deceptive is determined by the court using a
objective test of: whether a reasonable person would be mislead or

Silence may be a misrepresentation at common law and may be misleading or
deceptive conduct if there is a reasonable expectation of disclosure of relevant

False Representation
Business must not make false or misleading representations (claims) about
goods or services the ACL promotes true and correct information in the

Examples includes unfair practices such as bait and switch, pyramid selling,
referral selling, harassment
Breach of section 29 will result in:
- Prosecution by the ACCC for a criminal offence
- Injured party being provided with civil remedies (e.g. damages)
This section prohibits the making of false representations in connections with
promotions and supply of goods and services.

Defences used for breach includes:
- due to reasonable mistake
- reliance on information provided by someone else
- caused by another persons fault
- accident/beyond defendants control

Extent of remedies depends on the breach
- Economic fines
- Injunctions
- Cancellation of contracts
- Warnings/community service
- Shutdown of business

Risk Management

Risk management involves identification, assessment, management and
communication risks including market risk, credit risk, reputational risk and
legal risk.

Compliance is all about meeting particular obligations that are mandatory.
Risk management involves ensuring that compliance is completed through
responses such as:
- Training of staff
- Implementing control procedures
- Monitoring/auditing procedures and programs
- Resource allocation
- For example, an organisation must comply with the Competition and Consumer
Act 2010 (Cth): how does senior management ensure employees operate
within the ambit of the Act?
Compliance is only beneficial to stop breaches and not to manage breaches that
have occurred.

Need for companies to develop a culture of compliance and compliance programs
To comply with the law AND For better business management (best practice) Good corporate
Why? Extensive range of laws governing business Heavy monetary penalties for contravention
Commitment of management time

Due Diligence
Due diligence process is a complete and comprehensive effort to determine: what could
happen to cause a business venture to go wrong the various
negative effects that could occur if a venture does not perform
as planned or actually fails
Applies to any business venture, regardless of size or ownership For example, someone
working on starting or purchasing a business would conduct due
diligence on the various elements that could negatively impact the
business' success, such as: competition, capital access, location,
product availability, financial records, etc
Corporations Act 2001 (Cth)
Have all reasonable inquiries been made in the circumstances?
If yes, did the person believe on reasonable grounds that s/he took all
reasonable care/precautions to avoid a contravention?
Auditors and Risk Management/Compliance
Discipline of auditing report your conclusions ACCURATELY
External auditor do the accounts show a true and fair view of the organisations
financial position?
Internal auditor adds value by providing Senior Management with an
independent assurance that the organisations objectives are being met
Internal auditor does a system or activity meet managements
objectives? what opportunities exist to improve effectiveness
and business efficiencies, identified by the audit process?
What if a breach is detected?
Organisation must have taken all reasonable steps to respond appropriately and to prevent further
similar offences
Organisation must make any necessary modifications to its risk management strategies and/or to its
compliance program to detect and prevent further violations of the law
In other words DO NOT IGNORE a breach!

Contract Law

A contract can be defined as:

An agreement concerning the promises made between two or more parties with
the intention of creating certain legal rights and obligations upon the parties to
that agreement which shall be enforceable in a court of law

Australian case law is made up of:
- Case law decisions (judgments) which gives effect to community values
and attitudes
- Legislation (statute, Acts of Parliament) e.g. legislation may require that
contracts must be in writing

A contract is an agreement containing promises, which the law will enforce:
- The person who makes the promise is the promisor
- The person who promise is made to is the promisee

Essential elements of a contract
1. Intention to enter into a legally binding contract
2. Agreement Is there an offer which has been accepted
3. Consideration (or price)
4. Legal Capacity Are people in contract of legal age
5. Genuine Consent What was actually agreed?
6. Legality of purpose Can you make a contract for an illegal purpose?

Contracts can be classified as:
- Writing: some contracts are not enforceable in court unless there is
evidence in writing of the contract (includes names of parties, subject
matter, consideration and signature)
- Verbal

1. Intention to create legal relations
Contract Law requires evidence whether expressed or implied that the parties
intended to do more than make an agreement

Notice of offer may be directed to one person; group of people; or the world at

Carlill v Carbolic Smoke Ball Co
- Carbolic Smoke Ball Co offered 100P to any person who contracted the flu
after using the smoke ball. Carlill caught the flue.
- Defenses was rejected on the basis that 1000P was deposited at the bank
was clear evidence of an intention to pay claims (to contract)
- Offer (advertisement) was a unilateral contract promise accepted
by performing an act
- There was consideration flu suffered from Carlill in using the smoke ball.

Counter offer is a rejection of the original offer
Cases: Hyde v Wrench

- Counteroffer negates the original offer.
- Hyde rejected Wrenchs offer to sell and made a counter offer which
terminated the offer. Offer was never accepted and cannot be revived
later. Therefore no contract because there was a rejection of the
original offer

2. Agreements
An offer is undertaking the offeror made with the intention that it will bind the
offerer as soon as it is accepted by the offeree (person to whom it is addressed)
- Offer will become an agreement if it is accepted
- Agreement becomes a contract when all six elements of a contract is
An offer must be distinguished from an invitation to treat. An invitation to treat
is an offer to consider offers and cannot create and agreement. E.g.
advertisements those who reply make an offer, which you can accept or reject.

Cases: Invitation to treat
Pharmaceutical Society of Great Britain v Boot Cash Chemists (southern) Ltd

- Pharmaceutical Society of GB condemned Boot Cash Chemists for
breaching pharmacy legislation which prevented the sales of prescribed
drugs unless made under supervision of a registered pharmacist
- Goods on display are an invitation not an offer; the customer makes an
offer when they take the goods to the register
- Pharmacist is under authority to make acceptance, thus contract is not
made until pharmacist accepts the purchase.

Acceptance must be made strictly in response to the offer.
R v Clarke
- Reward of 1000P for any information that will lead to arrest of criminals
- Clarke was arrested and charged with murder but later on gave
information which led to arrest of Y
- Clarke could not claim 1000P as he only gave information to clear himself
out and not in reliance to award

Acceptance must be communicated and can be done either by words (expressed)
or conduct (implied)
Felthouse v Bindley
- Acceptance cannot be assumed if there is no notification of acceptance or
implied through action
- You cannot impose obligations on an unwilling party
- Silence is not acceptance

Postal Rule
- Offer by letter is not effective until received by the offeree
- Acceptance is effective as soon as it is posted
- If the offer is to be cancelled, the offeree must receive notice of
cancellation before their letter of acceptance is posted.

- Exchange of promises from each party
- Consideration turns an agreement into a contract

Cases: Consideration must move from the promise

Dunlop Penumatic Tyre Co Ltd v Selfridge and Co Ltd
- C promised B that they would not sell tyres below As list price
- C sold below the list price and A wanted to get injunction against C under
the A/B contract
- A could not sue C as; A was not part of the B/C contract, A did not
provide any consideration for Cs promise not to discount.

Consideration must be present or future but not in present

Cases: Past consideration (promise given after act has been performed)

Roscorla v Thomas
- Ps consideration (buying the horse) was past consideration for the
warranty given now (horse not suitable).
- For Ds warranty to be enforceable, P would have had to give a new
consideration for it.

Case: Consideration does not need to be adequate in terms of value

Chappell & Co Ltd v Nestle Co Ltd
- Provision of the wrappers were part of the consideration even though
Nestle claimed it had no value

Promissory estoppel is a legal principle, which stops a person from going
back on their word it allows a promise to be enforced even if there is no

Central London Property Trust Ltd v High Trees House Ltd
- Plaintiff agreed to reduce rent with defendant till the war ended
- Once the houses were full to capacity, defendants must pay full amount of
- However if Central London tried to sue for full payment from 1940
onwards (during the war) then they would failed

Genuine Consent
- Once a valid contract has been made, it cannot be unmade unless there
was a misrepresentation or fraud by the seller

Duress: Forcing a person to do something against their will

Unconscionable contracts
- Weaker party was in a position of special disadvantage
- Stronger party knew about the weaker partys disability
- Stronger party took an unfair advantage of the weaker partys special
Special disability includes: age, sex, financial, illness, illiterate, inexperience

Commercial Bank of Australia vs Amadio
- Amadios signed a mortgage for the bank to secure loans for their son
- They were not well informed about the details of the mortgage, and
clearly were not given further explanation along with their limited
English and age
- Amodios were in a disadvantaged position making it an unconscionable

Exclusion Clauses
E.C is a term of the contract which excludes or limits the rights which a party
would have.

A contract can be divided into two category:
1. Representation
- non contractual statement
- made during pre negotiations
- not intended to be legally binding
2. a term (expressed or implied)
- contractual statement
- intended to be legally binding
- breach of term gives rise to action for breach of contract

Term or misrepresentation?
1. How important was the truth of the statement?
2. Was the statement so important that the plaintiff would not have
contracted unless it was true?
3. What time period was there between the statement and the final
4. Was the innocent party asked to check the statement?
5. Was the statement (made by defendant) with the intention of stopping
the innocent party from finding any defects?
6. Was the statement later omitted when the contract was put in writing?
7. Did the party who made the statement have special knowledge or skill
regarding the subject matter?

Case: Oscar Chess v Williams
- Williams bought a 1948 model car (both believed to be) from car seller
however he discovered it was a 1939 model and claimed damages for
breach of a term in the contract
- Williams was unsuccessful because the statement about age was not a
term of the contract (innocent misrepresentation) thus no right to claim

Case: Bentley Productions v Harold Smith (Motors)
- Bentley told Harold that the car for sale had travelled only 20000 miles
- Smith found out that the car was close to 100,000 miles
- There was a breach of contract (1), (2), (7)

Terms can be either expressed (written/oral) or implied (from previous
For terms to be implied into the contract they must be:
- reasonable and equitable
- be necessary to give business efficacy
- capable of clear expression
- not contradict and expressed term in the contract

Case: The Moorcock
- implied terms: business efficacy
- Shipowner contracted to wharf owner to unload cargo
- Both knew that Ps ship would hit the bottom at low tide but neither
expected this to cause damage to the ship. Ship was damaged
- P sued D. D had impliedly represented that reasonable care had been
taken to determine that the river bed could be safely handle the ship

Condition (essential term going to the root of contract/allows injured party of
ending contract and/or suing for damage)

Warranty (lesser importance/allows injured to recover damages but must fulfill

Cases: Bettini v Gye
- Singer contracted to promoter and contract required the singer to be
there without fail atleast 6 days before rehearsal
- Singer was 4 days late. Promoter tried to cancel contract
- However 6 days early was not a condition because it did not go into the
root of contract
- Thus singer only liable for breach of warranty not condition

Cases: Poussard v Spiers
-Poussard not able to sing. Promoter cancelled her contract on condition that she
could not perform
- Condition was root in the contract

Exclusion Clauses
- Exclude liability of the defendant
- Effectiveness depends on the contract itself
- Exclusion clause must be given before the contract is made
- Person is bound by an exclusion clause in a document they have signed
Previous dealings may have suggest that there has been sufficient notice
of the exclusion clause (you are bound by what you sign)
- May exclude liability for negligence if this is clearly expressed
- Terms that appears in like tickets/vouchers/receipts (non contractual
document) may not be binding in a contract unless they are properly
incorporated into the contract
- Sufficient notice given/customer aware/clearly brought to customers
attention before signing

Case: LEstrange v Graucob
- P bought vending machine from D and signed a standard form document
called a sales agreement which included clauses in small print in which P
did not read
- P was bound by the terms whether or not she has read them

Curtis v Chemical Cleaning
- Receipt stated and employee explained that the dry cleaning could not
accept responsibility for liability for damage to the beads (exclusion
clause). Curtis signed but true exclusion clause stated that it exempted D
from any damaged cause to the dress
- After the cleaning, the beads were fine but there was a stain on the dress
- Curtis was able to claim damages for compensation only because Ds
agent had misrepresented the effect of the document.

Case: Olley v Marlborough Court
- Exclusion clause of any damages were found to be behind the door
- Olleys room was burgled and hotel tried to rely on notice on the door
- Notice could not be given effect because Olley had no notice of it when
they made the contract at the front desk

Privity of contract
- Only a party to the contract has any rights under the contract
- Contract imposes obligations only on the parties to the contract

Case: Beswick v Beswick
- Widowed was not a party in the contract and had not signed anything,
even though she was a beneficiary under the contract (A accepted to pay
5 pounds per week to Bs widow, Mrs C)
- She successfully sued on behalf of B because conditions were not met but
could not sue for herself as she was not part of the A/B contract

Termination of a contract
By Frustration:
- Performance of contract may become impossible to fulfill if something
unexpected happens where both party has no control
- Neither party caused the unexpected event
- Neither party contemplated the unexpected event when the contract was
entered to

Cases: Codelfa Contruction v State Rail NSW
- Codelfa was contracted to perform construction on the train lines
- Work include blasting (which made a lot of noise and vibration)
- Residents complained and they were restrained to do any work from
- Codelfa could not complete the contract on time and incurred additional
costs and loss of profits
- Contract has been frustrated by injunctions as performance of contract
had become different

Torts Law

The Law of torts concerns the obligations of persons:
- to respect the safety, property, reputation and business and economic
interests of their neighbours
- as a matter of cause and effect and
- as a duty to compensate for wrongfully caused harm after the fact
Tort law is concerned with remedies and providing compensation for the injured
party usually damages and or injunction

Civil Liability Act 2002

Three Step Test of Negligence

5B(1) A person is not negligent in failing to take precautions against a risk of
harmless unless:
a) the risk was foreseeable (that is, it is a risk which the person knew or
ought to have known) and
b) the risk was not insignificant, and (significant)
c) in the circumstances, a reasonable person in the persons position
would have taken those precautions

5B(2) In determining whether a reasonable person would have taken
precautions against a risk of harm, the court is to consider the following
(amongst other relevant things):
a) the probability that the harm would occur if care were not taken
b) the likely seriousness of the harm
c) the burden of taking precautions to avoid the risk of harm,
d) the social utility of the activity that creates the risk of harm

Suing for negligence
1. A duty of care this is a duty owed by one person to another because of
the relationship between them which might cause injury
2. Breach of duty of care this is the standard imposed by the law to decide
if there is or is not negligence
3. Damage a failure to fulfill the duty of care which results in actual
damage to the person who the duty of care was owed to

In other words, to be liable for negligence to another person, a person must
owe a legal duty of care to that other person.

Donoghue v Stevenson
1. Supply of ginger beer to shopkeeper by manufacturer for payment
2. Sale of ginger beer to Donoghues friend for payment
3. Friend of Donoghue gift to Donoghue (No contract between Donoghue
and anyone else, so no action lies in contract action in tort)

Neighbour test
You must take reasonable care to avoid acts or omissions which you can
reasonably foresee would be likely to injure your neighbour.
- Proximity of relationship (Recognised duty of care)
e.g. Builders owe duty of care to homeowners/public, suppliers
Manufacturers liability (product liability) to consumers, users

Duty of cares prerequisites
1) Reasonable foreseeability: Stevenson held a duty of care because it
was reasonably foreseeable that failure to ensure the products
safety would lead to harm of consumers (Donoghue)
2) Reasonable reliance is important element of duty of care.
3) Knowledge tortfeasor (defendant) knew of the risk
4) Control or power to stop injury: if person has power they owe a duty to to
exercise the power with reasonable care for the other persons safety
5) Compassion does not create a duty of care
6) Vulnerability of the plaintiff to harm from the defendants conduct is
therefore ordinarily a prerequisite to imposing a duty of care

Case: Grant v Australian Knitting Mills
- Grant contracted dermatitis after he wore two new woolen singlets and
pants (contained traces of chemical left over)
- Plaintiff failed under the Sale of Goods Act (breach of consumer guarantee
of acceptable quality) and negligence (not ensuring product safety
presence of chemicals).

Non-delegable Duty of care
- Higher level of responsibility to ensure that all reasonable care is taken
- Employers are under a non-delegable duty of care to their employees to
provide a safety working environment

Case: Northern Sandblasting Pty Ltd v Harris
- The tenants daughter living in the landlords house was electrocuted
when turning off an outside water tap and suffered brain damage
- Landlord was negligent for renting the premises in a dangerous condition
- Landlord was in breach of its non delegable duty of care owed to the

Breach of duty of care

What is the standard of care required (common law test)
1. General standard of care should be reasonable care in all circumstances
2. Being negligent is doing something that a reasonable person would not
have done in the circumstance
3. Deciding what is the standard of care involves the size and probability of
the risk of harm with the costs (e.g. expenses, difficulty, inconvenience) of
taking preventative measures
Under 5B(10 of the Civil liability Act 2002, whether a breach of duty of has
occurred is determined by asking:

would a reasonable person in the persons position have taken precautions?

To answer this the court can consider the factors in 5B(2)

1. Probability of harm (Bolton v Stone)
- Stone was hit in the head by cricket ball
- Evidence showed that it was foreseeable that someone on the road might
be hit (previous incidents e.g. cricket ball has been hit on the road many
- Ball hitting a person probability was so small that a reasonable person
would have been justified in disregarding it

2. Seriousness of harm (Paris v Stepney Borough Council)
- Mechanic had lost an eye due to a previous injury and had lost the other
one due to work making him completely blind
- Employer was under the duty of care (safety work environment by
providing goggles) thus employee sued for negligence
- There were increase risk since employee had a disability

3. Burden of taking precautions to avoid the risk of harm (Romeo v
Conservation Commission)
- Drunk girl fell off a cliff at a beach managed by the conservation
- Defendant was not in breach of its duty of care (entrants will take
reasonable care for their own safety)

4. Social Utility of the activity (Agar v Hyde)
- Two rugby union players suffering from spinal injuries failed to sue the
rugby board for negligence
- When drafting the players, the players were exposed to the unnecessary
risk involved in the game

Causation (But for test)
- Cause of conduct (breach of duty) and the damaged suffered
- Did the defendants conduct cause the plaintiffs personal injury
- But for test (without the defendants breach, the damage would have
not occurred)
- Need to prove: Negligence was a necessary condition (result) of the
occurrence of the harm (factual causation)
- E.g. a defendants conduct could not be the cause if the damage (heroin
addiction) would have happened anyway
Case: Yates v Jones
- A young woman injured in a car accident was offered heroine to control
her pain and became an addict
- She was successful in claiming damages of her car accident but could not
be awarded for her becoming an addict (she could not prove that the
driver was the cause of her heroine addiction)

Civil Liability Acts confirms that the plaintiff must prove causation and the test is
the balance of probabilities e.g. did the defendants conduct (negligence) cause
Ps personal injury?
1. Negligence was a necessary condition of the occurrence of the harm and
2. that it is appropriate for the scope of the negligent persons liability to
extend to the harm so caused (scope of liability)

The defendant is not always liable for all the damage caused by their breach of

Case: The Wagon Mound Case
- The Wagon Mound shipped spilled oil on the wharf
- The oil caused a fire damaging the wharf
- Unsuccessful in claim as it would not be fair to hold a person liable for all
the consequences of their negligence
- Real risk of fire from the oil spill in this case was unforeseeable from a
reasonable person
Other e.g. A policy officer not caring for his buddy and his buddy suffers from
post traumatic stress disorders would not be foreseeable and would not be
significant enough to amount to a breach of duty of care

Proving Negligence
The person must establish that:
- he or she was owed a duty of care
- duty was breached (standard of care not reached)
- breach caused the damage
- damage suffered was a foreseeable consequence of that breach

Contributory Negligence
- Contributory negligence is the failure by the plaintiff to take care of his or
her own safety (e.g. careless pedestrian crossing the road and gets hit by a
- An injured person cannot get compensation if they have suffered
damage which as caused or contributed to by their own negligence
- Liability can be reduced by 100% thus defeating the claim for damage

Voluntary Assumption of risk
- Defendant knew of the risk and agrees with plaintiff and gets injured,
Defendant voluntarily ran the risk (D agreed to take full legal
responsibility assumption)

Vicarious Liability
- One person is responsible for the wrongful act of another person because
of the legal relationship between them, even if the first person is not a
- This includes employer/employee relationships where employers are
liable to third parties for the actions of their employees in the course of
their employment
- Employer are not vicariously liable for the actions of employees who act
outside the scope of employment
- Employer may claim indemnity from employee (contractual rights)

Week 2

Remedies In torts damages
A damage award aims to put the plaintiff in the position in which P would have
been if the tort had been committed

Damages are awarded under different categories
1) Property/Person, Personal injuries
2) Financial/non economic loss

Case: Caltex Oil v The Dredge
- The dredge damaged pipelines used for carrying oil
- Caltex sued for negligence and claimed damages for economic loss
- Liability was based on foreseeability and reach of duty of care

Damages for property damage
- only person who owns or has an interest in the items at the time they
were damaged can sue for damages for property damage
- loses of damage can be insured against

Damages for personal injury
- damages can be claimed for loss of earning capacity (not able to work),
medical expenses, personal care cost, pain and suffering, loss of

Negligent Misstatement
Negligent can involve either actions or words (of an adviser)

Cases: Ultramares Corporation v Touche
- Ultramare (plaintiff) made loans to Touches clients after relying on
Touches financial statements
- Touches defendant went bankrupt and tried to sued them for negligence
in financial reporting
- An accountant may be liable to a third party who relies on his financial
reporting (if reports can be proved to be fraudulent) courts back then
did not say this
- Compliance with standard of ones peers is the standard expected in the
case of alleged negligence for the professional service in the cause of
personal injuries claims

Cases: Hedley Byrne v Heller and Partners (adopted Candlers case)
- Hedley Byrne placed some orders for their clients. Byrne wanted a credit
check on his clients before the proceedings of the order takes place.
- The Bank (Heller and Partners) responded and Byrne relied on the bank
reference and placed the large orders
- Byrnes clients went into liquidation
- There was an establishment of the tort of negligent misstatement but
the bank was not responsible because of an exclusion clause
- Duty of care exists where there is reliance on advice given
- Anyone with special skill is under a duty of care to give accurate
written or oral advice or information

MLC v Evatt (Barwick CJs test)

The Barwick test:
Special skill of defendant gives rise to an assumption of responsibility by the
defendant (ie: because of the defendants special skill)
Defendant must realise s/he is in a position of trust and must realise the plaintiff
intended to act on the information or advice given by the defendant to the plaintiff
Subject matter is of a business/serious nature
The circumstances of the case must make the reliance reasonable Does not matter if
advice given is free: L Shaddock & Assoc Pty Ltd v Parramatta City Council BUT: excludes advice given a
social occasions with no thought given
Negligent misstatement (the duty to third parties):
To be successful Third Party C must prove that:
- A (defendant, adviser) knew that the information they give to B(As
client) would be communicated to C
- Information A gives would likely to lead C into entering a transaction
- Likely that C would enter a transaction in reliance on the information or
advice from A and thereby risk incurring an economic loss if given wrong

Case: Esanda Finance Corporation v Peat Marwick Hungerfords
Mere foreseeability of possibility that: advice might be communicated to someone other than
client; and
that person might enter into a transaction and suffer loss, not sufficient to establish duty of care
between auditor and third parties
Duty of care owed to public investors under Corporations Act 2001.