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1. AGREEMENT
1.1 UNDERSTANDING THE CONCEPT OF THE OFFER
An offer is the expression of person showing willingness to be legally bound by the states terms o Australian Woollen Mills v CW (1954) Halsburys LA: the expression of willingness to contract on terms stated: what is allfed to be an offer must have been intended to give rise, on its acceptance, to legal relations

1.1.1 OFFERS IN BILATERAL CONTRACTS

each party undertakes to the other party to do or refrain from doing something, and in the event of his failures to perform his undertaking, the law provides the other party with a remedy o United Dominions Trust v Eagles Aircraft Services Offer, if accepted, binds both parties to perform their require undertaking A party failing to perform the respective promise will be in breach of contract

1.1.2 OFFERS IN UNILATERAL CONTRACTS

Arises less frequently otherwise described as if contracts, - one party, the promisor, undertakes to do or refrain from doing something, but the promise does not hismmelf undertake to do or to refrain rom doing that thing o United Dominions the position in such cases is that the consideration on the part of the offeree is completely executed by the doing of the very thing which constitutes acceptance of the offer o Aus Woollen Mills Examples o Offers of reward Gov offering reward of an amount of money in exchange for info leading to conviction of murderer: The Crown v Clarke (1927) Owner offering a reward for the finding and returning of lost property : Aus Woollen Mills o Offers for prizes Offerees can be anyone who provides info or satisfies stipulations required to receive the prize Differs from bilateral contracts as it does not immediately impose an obligation on either party to perform Obligation on the offeror only arises if the offeree has performed the reqiored task The offeree will never be under an enforceable onligation to perform

1.1.3 OFFERS MADE TO THE PUBLIC AT LARGE

1.1.3.1 Carlill v Carbonic Smoke Ball Company
FACTS

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HELD

D was the MF of a product called the CSN which was designed to precent the user of the smoke ball from contracting the flu To promote the product, the company advertised in a newspaper to pay 100 pounds to any person who contracted the flu after using one of their smoke balls in the specified manner for a specified period The P, relying on the ad, purchased one of the smoke balls and used it in the prescribed manner and for the prescribed period. P contracted the flu and sued the company to recover the 10 pounds

By the Eng CA, that the P was entitled to recover Rejected companys argument that the promise was not binding because it was not made with anyone in particular Depending on the terms in the ad, the ad may constitute an offer, which if accepted forms a unilateral

1.1.4 OFFERS MADE THROUGH THE INTERNET

where G&S are advertised for sale over the Internet, and provided that Aus law governs the transaction, some of the traditional contractual terms will still be relevant the fact that an offer is made electronically, reaching a potentially wider audience does not in itself affect the legal principles, o but the wide nature of the audience receiving the offer may influence the decision in determining whether the communication was an offer or an invitation to treat

1.2 WHAT IS NOT AN OFFER

1.2.1 MERE PUFF
Statements which are mere puffery claims which were made only for advertising purposes and meant nothing: Carlil v Carbonic Smoke Carlil v Carbonic Smoke: deposit of 1,000 ponds in the bank was an indication of the MFs intention that the offer was genuine Byers v Dorotea (1987): o FACTS: Units were being constructed and sold were described as bigger and better than those in a nearby building o Held: by the Federal Court, in the circumstancrs, such a statement could not be regarded as a mere puff. Pepsi Point case: o FACTS: advertisement by Pepsico, soft drink MF, suggesting that a person collecting sufficient Pepsi Points may have a chance to win a Harrier Jump Jet (valued at US$23millions) o o HELD:

1.2.1.1 Manufacturers Material Insurance v John H Boardman (1992)

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In determining whether the advertisement is a mere puff or an offer capable of being accepted and forming a contract, the court considers and objective test to see whether a RP in the position of the offeree would interpret the advertisement Relevant factors Vagueness of the statement Any other details in the advertisement which would be relevant in considerations

1.2.2 SUPPLY OF INFO

HARVEY V FACEY FACTS: HELD: No contract The P made two enquiries of the owners: whether they were willing to sell and what the lowest price was The owners responded to the second question by supplying the into One party was anxious to purchase property of another, Bumper Hall Pen, sent a telegram to the owners with the following Will you sell us Bumper Hall Pen? Telegram lowest cash price The owners responded lowest price for Bumper Hall for 900 pounds The purchasers alter brought an action for specific performance when the owners refused to complete the purchase

1.2.3 INVITATION TO TREAT

Where a person invites others to make an offer It is an indicator of a persons willingness to negotiate entry into contract Falls just short of a valid legal offer the party doing the inviting does not indicate a willingness to be bound on terms contained in the invitation the invitation cannot be used by the other party to conclude that an agreement had occurred. Carlil v Carbonic Smoke o Offers for negotiation, issues of advertisements is not an offer o Advertisements in catalogues, display of goods in a supermarket, will generally be invitations to treat Wenzel v Australian Stock Exchange (2002): when a company prospectus invites members of the public to apply for shares in the company o Application for shares is the offer Pharmaceutical Society of GB v Boots Cash Chemist [1953] o FACTS: D ran a self service chemist shop which was a novelty back then Stock, including drugs was on shelves in the shop. Customers would select their needs from selves and then take them to the register A registered pharmacist was at the cash register

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The D was prosecuted under the Pharmacy Poisons act 1933 (UK) which prohibited the sale of prohibited drugs unless under the supervision of a registered pharmacist. o ISSUE: was the goods on the shelves with the prices an offer<? What time was the contract of sale formed? o HELD: Display of goods on shelves, even with marked prices was an invitation to treart Offer took place when the customer selected goods from the shelves and took them to the pharmacist at the cash register Pharmacist could then choose to accept or reject this offer Fisher v Bell [1961]: goods on display in a shop window were considered to be an invitation to treat. The test: how would the statement be regarded by a RP in the position of the offeree?

1.3 CATEGORISING TRANSACTIONS

1.3.1 ADVERTISEMENTS
They are generally considered invitations to treat

1.3.1.1 In a catalogue or through a circular

CATALOGUE-wide public circulation CIRCULAR printing and delivery of circulars to individual catalogues Categorisation may be significant: o When offer of sale of particular items are regulated by statute o Partridge v Crittenden [1968]: when legislation may restrict or regulate the extent to which certain kinds of goods may be offered for sale o Where a retailer has exhausted the stock of advertised items. The advertiser will only be in breach where the advertisement is regarded as an offer. Invitations to treat: providing info about items for sale, and their prices. o A person playing an order will be the one making the offer. o The offer could then be accepted/rejected

1.3.1.2 In newspapers and magazines

Will only be an invitation to treat if it only provides info about the items and their prices: Patridge v Crittendon Could be considered an offer, if it is couched in terms that indicate the retailers willingness to be bound, if the specific terms are accepted. o Re Mount Tomah Blue Metals [1963] - FACTS: an advertisement and a circular distributed to shareholders of a company requesting shareholders to send in money to assist the companys financial situation. In exchange the SH were to receive debenture stock. HELD: the ACT SC held that both were an offer that could be accepted by the SH forwarding a cheque to the company The more specific the advertisement the more likely it could be itnerpretted by the RP to be considered an offer: Carlil v Cabonic Smoke

1.3.1.3 Appearing on the internet

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Legal status is likely to be determined by same legal principles One which is open to the general public invitation to treat o Esp where sites provide info advising potential customers that the price will only be debited to the specified credit card when the retailer has established that the particular product is in stock. EBay International AG v Creative Festival Entertainment [2006] HELD: a contract to purchase tickets for Big Day Out was formed on terms displayed on a website where a purchaser, though clocking on the relevant buttons agreed to displayed terms and condictions. The purchaser was immediately required to make payment and received an email confirmation of the purchase.

1.3.1.4 Display of goods

The display of an article together with its price invitation: Fisher v Bell [1961] A customer who selects the item and takes it to the counter for payment makers the offer. o It is up to the retailer to decide whether or not to accept the offer.

1.3.2 AUCTIONS
(a) Where subject matter is unique Common: sales of land Advertisements for an auction used to attract maximum number potential bidders Usual description o Actual property o Location of auction o Does not bind the auctioneer to carry out the auction o An auctioneer may withdraw carious lots at the auction itself or to cancel the auction altogether without incurring any liability from potential bidders: Harris v Nickerson (1873) o liability may flow if the auctioneer advertises an auction, and at the time of the advertisement, he or she did not intend to hold the auction: Warlow v Harrison (1859) (b) Auctions with a reserve Reserve price = minimum price which the item could be sold for Akin to invitation to treat o Acceptance of the offer occurs when the auctioneer knocks the property down to the successful bidder Payne v Cave (1789): because the agreement is not formed until a bid is knocked don, a bidder can withdraw a bid (offer before this time (c) Auctions without a reserve Where it is advertised the property will be sold to the highest bidder not settled Warlow v Harrison is not clear authority FACTS: an auctioneer pledges himself that the sale shall be wthout reserve and that he or she in fact contracts that it shall be so; and the contract shall be made with the highest bidder. Barry v Davies FACTS: auction was advertised as being without reserve. Two engineer analysers (each valued at 14,000 pounds) were withdrawn from ale as the highest bid was 200 pounds for each. The unsuccessful bidder recovered 27,600 pounds, the difference between the bid and the market price, for breach of a collateral contract to sell to the highest bidder

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Legal status of bids: o Reserve: bidders make the offer, which is accepted if and when the auctioneer knowcks down the proper. o Without reserve: AGC (Advances) v McWhirter - FACTS: the auction was originally advertised as being with a reserve, but was ultimately sold without one. The auctioneer knocked the property down to the second highest, not the highest bid. The highest bidders lodged a caveat over the property on the basis that they were the purchasers of the property, the contract having been formed when they made the highest bid. The sellers then brought an action against the highest bidders for removal of the caveat. HELD: the caveat should be removed as the sellers had not entered into a contract with them. Even without a reserve, each bid represents an offer that could be accepted/rejected by the auctioneer. Since the offer was not accepted, contract had not formed. (d) Internet auctions Usual course: o Parties need to become registered users of the online auction site o Parties accept the relevant TCs of the site o Acceptance of the Cs will normally occur when the paertis click on the accept button Smythe v Thomas o FACTS: owner of aircraft, a registered eBay user listed the aircraft with a notiation of a minimum bid of $150,000. Another registered user made a big in accordance with eBay rules for $150,000. Both parties received a notification from eBay to the effect that the bidder had won the aircraft Despite having agreed to eBays TCs which required a seller to honour winning biddings at or above the sellers minimum bid, the owner of the aircraft denied any contractual obligation to sell on the basis that the owner had only contracted with eBay and not the bidding party o HELD: A binding contract had been formed between the two eBay users By listing the item on the site with a disclosed reserve the owner offered to sell the aircraft to the bidder who was the highest of any bidders within the specified period Be becoming registered users, the parties agreed to allow eBay or its computer to automatically disclose the bidding at a fixed time and generation of the winning bid is equivalent to the fall of the hammer in traditional auctions The traditional right of an auctioneer to execute a contract on behalf of the buyer or seller will not be a feature of online auctions Seiveweright v Brennan (2005): o A bid is accepted by the auctioneer, signified by the fall of the hammer. o Until the hammer falls, the auctioneer may decline a bid even if there had been a previous indication that the bid is accepted o HZD c McInnes [2007] Warlow v Harrison (1859)

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FACTS: relates to liability of the aucrioneer where thee auction was stated to be without reserve, not issue of contract formation HELD:

1.3.3 TENDERING
Used by both private and public sectors Owners who want to ensure they receive a range of competitive quotes may invite builders to tender for the project Builders submit tenders that contain a price for which the project can be provided, based on specifications by the owner The owner has the option of accepting the most attractive bid Can also be used to obtain competitive selling prices o Eg when a seller has a qty of stock which is no longer needed. o Seller may invite the public or a section of the public to tender for it o Once tenders are submitted, seller chooses to sell to the person submitting the most attractive selling price (a) Advertisements for tender Similar to an advertisement promoting an auction: Smythe v Thomas Most are designed to maximise tenders Legal status is generally the same as an auction with a reserve: It is an indication of a persons readiness to receive offers like an invitation to treat: Spencer v Harding (1870) Liability will depend considering each case of its own circumstances: Spencer v Harding Two potential situations where liability may arise o Where advertisement inviting tenders indicates the highest (or lowest) bid will be accepted. Acceptance occurs when a person submits the tender that turns out to be the highest tender: Harvela Investments v Royal Trust Company of Canada [1986], also dicta in Spencer v Harding (1870) o Blackpool v Fylde Aero Club v Blackpool Borough Council FACTS: no denial of the general proposition, a person could however, incur contractual liability for failing to comply with the agreed tendering process. The specific invitation to tender in this case indicated that all tenders submitted in the correct form by the due date would be considered which was sufficient to contract between the parties seeking the tender and the tenderer. Failure to consider tender put the party in breach of contract. (Aus case) Hughes Aircraft Systems v Airservices Australia (1997) FACTS: a letter setting out details of the tendering process including evaluation criteria, priorities, evaluation methodology, which was prepared by the body calling for tenders and signed by the two prospective tenderers. HELD: Upon signing the letter was held to constitute a binding contract binging on the party calling for tenders consideration for this process was the tenderers participation in the tenderers process. Wenzel v Australian Stock Exchange [2002] - FACTS: agreement giving rise to contractual obligations arose when a person applied for membership of the Aus Stock Exchange. BEFORE SINGLE JUDGE: the payment of the membership fee together with the submission of the application, the statutory declaration and the provision of the private and confidential info constituted consideration for

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the pre-admission contract. ON APPEAL: case distinguished from Hughes case, on basis that the application did not involve a preparation of complex documentation involving considerable expense (as in Hughes case) Lefkowitz v Great Minneapolis Surplus Store BAIT ADVERTISING: the practice of advertising certain goods at extremely low prices to attract customers to the store with the intention of selling them other goods at normal prices, rather than, or in addition to, those advertised. o Use ss35 ACL 2010 (Cth) (b) Individual tenders The advertisement itself will usually make it clear the there is no obligation to accept payments Blackpool case would also apply where an advertisement may constitute an offer being accepted by a person submitting the highest conforming tender.

1.3.4 STANDING OFFERS

It is an indication by one part of their willingness to provide goods or services over time. Example: A may be successful in a tender to supply a government department with stationery for twelve months. The parties may agree that A will provide various items that the dept may order from time to time during that period, at specified priced. Because the offer of A, unless withdrawn, be effective for twelve months, it is referred to as the Standing Offer. o It is accepted every time an order for stationery is placed by the governmental department o After placing the order, the contract is formed and parties are bound to that particular order. o If goods are not delivered, the offeror (A) will be in breach of contract: The Great Northern Railway Co v Witham (1873) o The offeror is entitled to withdraw the offer at anytime before acceptance of the offer by placing an order o Unless the parties expressly agree to the contrary, there is no obligation by the offeree to order stationary from the offeror: Colonial Ammunition v Reid (1900)

1.3.5 OPTIONS
Ordinarily, an offeror may revoke an offer at any time before it is accepted. This is the case even if the offeror promises to keep the offer open for a time: Routledge v Grant (1828) If the offeree provides consideration eg by paying money, for the offeror to keep the offer open this arrangement becomes the granting of an option o Eg purchaser of land may wish to purchase a particular block (Block A) if he or she can also puchase the adjoining block (Block B). in exchange for a payment of a sum of money, the seller of block A gives the purchaser an option, for a specified period to buy that block. This is an example of a conditional sale. The sale become unconditional if and when the seller exercises the option and does what is required of them to complete the transaction: Traaywinds v Cooper [1989], Laybutt v Amoco Australia (1974) o If the seller fails to keep the offer open for the agreed period, and sells to another party, they will be in breach of contractual situation

1.3.6 PURCHASE OF TICKETS FOR TRANSPORT

contracts in this context can take a variety of forms

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generally: o passenger will receive a ticket of some kind, o issues of contract formation (esp when it will take place) are important o exemption and exclusion clauses are important, and common, and will only assist the carrier if they are introduced before the contract has been formed. (a) Tickets from automatic vending machines Presence of machine ready to accept money, constitutes the offer When the passenger inserts money into the machine, they are seen to accept the offer o After this, no further terms can be introduced into the contract, to govern the transaction o Any terms appearing on the ticket issued by the machine that were not drawn to the passengers attention, could not be regarded as forming part of the contract (b) Purchase of tickets prior to carriage Use of display notices, depending on their prominence, may be incorporated into the contract: Where a ticket which is issued upon payment, has additional terms, I: Passenger makes an offer to pay for transport, the offer being accepted by the carrier when the money is handed over and the ticket is issue. It would be too late for any terms to be incorporated. II: passenger makes an offer to pay for transport. A counter-offer is then made by the carrier, who issues a ticket containing new terms. Counter offer is accepted, if the passenger does not return the ticket after a reasonable time to read the terms and consider the suitability. A crucial factor which decide whether the facts would fall in one of the two options is the time which a passenger has to read the terms before actual carriage. Different ways in which a contract of carriage can be formed: o Example A: a person wants to catch a ferry to the city. When the ferry docks, an agen of the carrier stands at the entry of the ferry. As each passenger boards, the agent, takes the fare and gives the passenger a ticket. No chance to read the terms on the ticker nor to decide whether or not the passenger would want to be bound by the conditions of carrirage. Same situation when the person boards the bus, pays fare, receives ticket and then takes a seat contract is formed when fare ishanded over and ticket is received: Wilkie v London Passenger Board [1947] If ticket is prepaid MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) FACTS: to secure a flight with the airline, a passenger would approach the company, and if there were avl seats, the passenger would pay the fare and be issued with a ticket. The stage of that transaction would be considered the contract formation. HELD: in this context, the ticket would be the offer. The passenger accepted the offer on the terms in the ticket or by conduct (boarding the plane) or by not returning the ticket after having a reasonable time to read the terms Where tickets a prepaid, it could be argued that the contract was formed at time of payment and terms on ticket were subsequent, which did not form part of the contract Oceanic Line Special Shipping Co v Fay (1988) FACTS: At the time of purchase, the passenger received an exchange order which was exchanged

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for a ticket on the particular cruise upon boarding: HELD: by the HCA that contract was formed when the earlier exchange order was received by the passenger. Terms on the ticket did not form part of the contract Hollingsworth v Southern Ferries Ltd (The Eagle) [1977] it was suggested that there would be an implied term in a contract of carriage that a shipowner could dispose reasonable rules on passengers for their safety and for the proper running of the vessel Where the passenger prepays, and upon arrival at airport, collects a boarding pass instead of a ticket then they are not advised that the contract is subject to any terms. It is likely that the contract is formed at time of phone call, when the booking was made. In absence of express terms, a court may decide that contract is subject to the usual terms that govern these types of contracts. o Example B: an intending passenger approaches an airline counter at an airport. The airline issues a ticket in exchange for payment of money by the passenger. The ticket facilitates carriage of a passenger to a particular destination. (c) Purchase of ticket during court of carrirage Contract is formed before the purchase What is the actual offer/acceptance will bear little practical legal significance

1.3.7 AUTOMATED BENDING MACHINES

after the offer has been accepted, it is too late to impose additional terms: Thornton v Shoe Lane Parking [1971] o FACTS: involving an automatic ticket issued to a customer. Once the car approached the machine, a ticket was dispensed immediately by the machine. ISSUE: whether the terms referred to on the contract issued automatically by the machine as the car approached formed part of the contract. HELD: these terms did not. The CA considered that generally for vending machines, the offer is made when the proprietor of the machine holds it out as being ready to receive money.

1.4 COMMUNICATION OF AN OFFER

Acceptance must take place in reliance of an offer If person performs a particular act which corresponds to the terms of the offer, without knowledge of the offer, NO AGREEMENT, NO CONTRACT When party hears about an offer through a third party: o Generally, for the offer to be valid, it must be communicated to the offeree: Cole v Cottingham (1937) o The communication must be made by the offeror or someone authorised by the offeror: Cole v Cottingham (1937) Different legal ramifications for when the offer is made to the oublic at large o Where the person does not hear about the announcement of the offer, but hears it through someone else, then it must be clear from the ad that the offer could be accepted by anyone fulfilling the requirements of the offer The method of communication is irrelevant

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1.5 TERMINATION OF AN OFFER

1.5.1 WITHDRAWAL BY OFFEROR
GR:: an offer can be withdrawn by an offeror at any time before the acceptance: Goldsborough Mort v Quinn (1910) o Applies even when the offeror has promised to keep the offer open for a period: A valid withdrawal of ffer requires actual communication of the withdrawal to the offerre: Byrne v Leon Van Tien Hoven (1880), Sommerville v Rice (1912) o No equivalent Postal Rule in this context: Effect communication can only be made by the offeror or someone authorised by the offeror. Dickinson v Dodds [1876] o FACTS: Owner offered to sell his property and advised offeree that he would keep the offer open until 5th Jan. Before 5th Jan, offeror had sold property to a third party The original offeree was advised of the sale by another unauthorised third party Offeree subsequently purported to accept the original offer o HELD: the offer to sell to the offeree had been validly withdrawn. no requirement for express/actual withdrawal of offer Byrne & Co v Leon Van Tienhoven [1880] o FACTS: VT posted a letter of goods for sale from Cardiff in the UK to Byrne in New York. Byrne had received the letter on 11th Oct and accepted it by telegrame on the same day. Byrne then posted a letter of confirmation through telegram on 15th Oct. During this, VT had posted a letter of withdrawal on the 8th of Oct which did not reach Byrne until the 20th. o HELD: Letter of withdrawal was ineffective, the contract was completed on 11th October with sending of the telegram Shue v United States (1875) where an offer has been made to the world at large; concerning a proclamation published in newspapers offering a reward to anyone providing info leading to the arrest of a named individual who was believed to have been involved in the assassination of President Lincoln. Offer was revoked by proclamation that was publicised in a similar manner. Unaware of the revocation, Shuey provided the info which was sought. o HELD: Claim rejected on the grounds that the offer had been revoked effectively by the publication of the second proclamation James Baird Co v Gimbel Bros Inc (1933) o Facts: to prepare a tender for a building project, Baird used a quotation obtained from Gimbel for the supply of a component needed in the project. Subsequently, Gimbel discovered that the quotation was incorrect and it was withdrawn. Bairds tender was successful and it then sought to accept Gimbels quotation o Held:no contract existed as Gimbel has withdrawn the offer before Bairds acceptance had occurred The United Nations Convention on Contract for the International Sale of Goods, 1980 o Applies to international contracts for SOGS o Has force in Aus by virtue of Sale of Goods (Vienna Convention) Acts in each S&T

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Art 16 (1) until a contract is concluded an offer may be revoked if the revocation reaches he offeree before he has despatched the acceptance (2) however an offer cannot be revoked (i) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable or (ii) it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. (a) Withdrawal in unilateral contracts An offeror cannot effectively withdraw an offer after the offeree has commenced acceptance of it: Abbott v Lance (1860) Vievers v Cordingly (1989): MacPerson J framed the position where the offer is made in exchange for the doing of an act or acts in the following way (a) acceptance takes place when he offeree elects to do the relevant act or acts; (b) the offer becomes irrevocable once the act or acts, which constitutes the consideration, has been partly performed. Mobil Oil v Lyndel Nominees (1998) o HELD: Fed Court did not agree that there was a GR that an offeror could not revoke an offer after acceptance had been commenced o Even if in a particular case, there was an implied promise not to revoke the offer after the acceptance had been commenced. Any purported revocation by the offeror would be ineffective. (b) Withdrawal where offer is to world at large If the offeror takes steps to use the same medium (if possible) to communicate the withdraw, they may be able to maintain that the offer was validly withdrawn even if one or more offerees were not made of the withdrawn (no current Aus authority)

1.5.2 REJECTION BY THE OFFEREE

if offeree rejects the offer, the offer is terminated: Stevenson Jaques v McLean (1880), Baker v Taylor (1906) effective rejection must be communicated to the offeror in rejecting the offer, the offeree does not revoke the offer: if the offeree responds by changing terms in the offer - amounting to a counter offer, then this will still operate as a rejection of the initial offer: Hyde v Wrench (1840)

1.5.3 LAPSE OF TIME

The offeror specifies the date or time when the offer will lapse When the date/time has passed, the offer lapses and the offeree is unable to accept it to form an agreement Where there is no specified lapse of time, then the offer will lapse within a reasonable time after the offer has been made: Ramsgate Victoria Hotel v Montefiore (1866) FACTS: Montefiore applied for shares on 8th June but was not told until 23rd Nov that his offer had been accepted and that shared had been allotted to him and the balance owing on the shares was now due. Montefiore refused to pay and the company threatened to sue, alleging breach of contract. HELD: the offer to purchase shares had not been accepted within a reasonable time and the offer had lapse. NO CONTRACT.

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Manchester Diocesan Council v Commercial & General Investments: two possible bases for the rule that an offer will lapse within a specified time: (1) it is implied into the offer that if not accepted within a reasonable time, it is withdrawn [what is reasonable must be determined at the date of the offer, based on the circumstances existing at that time and circumstances reasonably likely to arise during the continuance of the offer ](2) if the offeree does not accept the offer within a reasonable time, the offeree must regard it as having refused it [actual conduct would be more appropriate to asses]

1.5.4 FAILURE OF A CONDITION IN A CONDITIONAL OFFER

offers can be expressly or implied subject to conditions esp when parties are in a lease and certain conditions must be complied with for the lease to exercise an option to renew the lease: Gilbert J McCaul v Pitt Club [1959] Financings v Stimson [1962] o FACTS: A offers to buy a qty of Bs stock which A has previous inspected. As offer to buy at a specified price is expressed to be subject to the goods being in the same condition as when earlier inspected by A. o HELD: by the Eng CA - where stock has deterioted, the condition has not been satisfied and the offer cannot be accepted. A contract did not come into existence because an implied condition of the offer was not fulfilled.

1.5.5 DEATH
(a) of the offeror Dickinson v Dodd: if a man who makes an offer dies, the offer cannot be accepted after he is dead, for it makes performance of the offer impossible o Applied in Fong v Cilli (1968) If contract relates to personal services it would be the intention of the offeror that the offer would lapse on the offerors death o Different for the sale of property (could be continued by the deceaseds estate) (b) Death of the offeree Reynolds v Atherton (1921): o HELD: the offer, having been made to a living person who ceases to be a living person before the offer is accepted, there is no longer an offer. o Indicates the test is one of intention if the contract is one for the offerees personal services, it would have been intended that the offer would be ceased on the offerees death. Different for sale of property (c) Options GR: options could be exercised despite the death of either parties Effect of death on an option may depend on its legal nature: Laybutt v Amoco Australia (1974) If an option is a conditiona contract, the option may confer on the offeree a right of specific performance. o The right may be enforced by the deceaseds estate If the option creates an irrevocable offer the offer may not be considered capable of acceptance following death:

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Carter v Hyde (1923): Issacs J regarded an option as an irrevocable offer, yet considered the right of the offeree to exercise the option to pass to executors to the offerees death.

1.6 REQUIREMENTS OF AN OFFER

Two general requirements: (1) the offeree must accept the terms of the offer and (2) the acceptance must be communicated to the offeror

1.7 OFFEREE MUST ACCEPT TERMS OF OFFER

Acceptance must be o Unqualified o There must not be an attempt to introduce new terms Implicit to acceptance the offeree must have knowledge or and be responding to the offer

1.7.1 OFFEREE MUST HAVE KNOWLEDGGE OF AND ACT IN RELIANCE ON, OFFER
consensus ad idem Tinn v Hoffman & Co (1873) o FACTS: A is aware that B wants to sell hr car. A leaves B a note in her letterbox offering to buy the car for $3,000. By coincidence, B rings A and leaves a msg on As answering machine, that she would be happy to sell her car to Anna for $3,00 o HELD: There were two separate offers, no acceptance R v Clarke (1927) o FACTS: Clarke had been arrested on a murder charge. He gave info which lead to the arrest and conviction of the real murderers and as a result was subsequently released. When he claimed the reward of 1000 pounds being offered by the gov for info leading to the arrest of the perpetrators, the gov refused to pay him o HELD: Clarke gave info to ensure that he was not charged with the murders, not in reliance of the reward.

1.7.2 A COUNTER-OFFER IS NOT ACCEPTANCE

Hyde v Wrench (1840) o FACTS: seller offered to sell his farm for 1,000 pounds. Buyer replied that he would buy it for 950. Seller refused. Buyer later purported to accept the sellers original offer to buy farm for 1000 o HELD: no contract ever existed. By making the counter offer, the buyer rejected the original offer. Butler Machine Tool Co v Ex-cell-o Coporation (Eng) (1979) FACTS: Seller of machinery quoted a price on a standard form. The form contained a clause entitling the seller to cary the price. The seller placed an order for the same machinery on its own order form. The order form contained different standard conditions. The seller acknowledged the order by returning the acknowledgement form to the buyer o HELD: by the Eng CA that the seller was not entitled to rely on the price variation as it did not form part of the contract.

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The buyerss order constituted a counter-offer as it contained different terms from the sellers original offer Stevenson, Jacques and Co v McLean (1880) o Facts: Stevenson, in response to a written offer from mcLean, telegrammed the latter asking whether the time of delivery and payment were negotiable. McLean treated this as a rejection and sold the items in qt for info, with the result that Stevensons question to a third party. o HELD: it was merely request for info. Contract was found. The current Aus position is that even if there is an agreement on the fundamental terms of the transaction, if the offeree adds an additional term, the counter-offer is made o Turner Kempson v Camm [1922] FACTS: offeree purported to accept an offer to sell a qty of raspberry pulp at stated price a contract was HELD not to eist because the offeree purported to add a term requiring delivery in three separate lots, with approx. 10 days in between each delivery. Brambles Holdings v Bathurst City Council (2001) qualification to this rule o HELD: contract was found to exist, despite the offer having been rejected by the offeree, on the grounds that the offeree had subsequently acted in a manner that would have caused a RP in the position of the offeror to believe the offer had been accepted. Maxitherms Boilers v Pacific Dunlop [1998] o FACTS: M submitted a quotation to P for installation of an autoclave. This quotation was subject to T&Cs attached; but none were attached. On 22nd March 1989, a fax was sent to P saying supply would be on Maxitherms standard terms as per previous quotation. Immediately upon this, this fax was accepted orally by P. further discussions took place between parties concerning specifics and on 3rd April, a document setting out Ms standard terms was sent to P. P then prepared an amended purchase order form and sent it together with a checque for 25% of the price to M. the form contained no terms other than a reproduction of one of Ms standard terms dealing with the method of payment. The autoclave was MFs and installed on ps premise. Unfortunately it exploded causing extensive damage to those premises. As a result, P sued M for breach of contract. By way of a defence, M relied on an exclusion clause contained in its TC. At first instance, it was held that these terms were not part of the contract. o Held: P and M did not reach a concluded agreemen on 22nd March 1989. o In determining whether and when a contract is made in the course of ongoing series of communications it is necessary to consider communication as a whole: Husey v Home Payne (1879)

For sale of international goods OPPOSITE POSITION UNCCISOGS, 1980 o Art 17: an offer, even if it is irrevocable, is terminated when a rejection reaches the offeror o Art 19: (1 )reply which is intended to accept but contain additional terms is a counter offer; (2) if the modications do no materially alter the terms of the offer, then it would constitute acceptance unless without undue delay, the offeror objects orally to the changes, if he does not do so, it is a contract; (3) additional items which extent one partys liability is considered to materially alter a contract. (a) Acceptance couched in different language It is arguable then that the offeree did not accept the same terms offered by the offeree

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Determination of whether acceptance arose, will depend on terms of the offer and acceptance If party has reached agreement on the terms, it is likely that a contract has come into existence despite differences in language between offer and acceptance: Carter v Hyde (1923), Cavallari v Premier Refrigeration (1952) Quadling v Robinson (1976) (b) Request by offeree for modification of performance Expressions of dissatisfaction by the offeree will not prevent contract formation if the offeree also indicates acceptance: Joyce v Swann (1864) Agreement is not prevented if the offeree, at the time of acceptance, seeks a concession from the offeror in terms of contractual performance: Clive v Beaumont (1848) (c) Divergence from terms of offer for benefit of offeror If conduct does not correspond to the terms of the offer, theres generally no agreement On the rare occasion, the offerees conduct represents terms more favourable to the offeror than those in the offerors offer, a court is likely to find that agreement exists: Ex parte Fealey (1897)

1.7.3 ACCEPTANCE MUST BE UNQUALIFIED

not enough for the party to agree to all the terms it is possible for a party to agree to all the terms, and make the agreement subject to contract o acceptance will depend on intention of the parties

1.7.4 MERE INQUIRY DOES NOT CONSTITUTE ACCEPTANCE

if an offerees response is regarded as a mere inquiry into the terms of the offer, it does no operate as a rejection of the offer: Stevenson Jaques v McLean (1880) o nor would it be an acceptance

1.8 ACCEPTANCE MUST BE COMMUNICATED TO OFFEROR

Outward manifestation Agreement is not complete unless communication has been made to the offeror: Powell v Lee (1908)

1.8.1 METHOD OF ACCEPTANCE

if the offeror has not specified the way in which the offeree should advise the offeror of the acceptance, the appropriate method will depend on the intention of the parties o variety is usually open o provided that acceptance is communicated, acceptance will be effective to conclude the agreement but acceptance must be communicated by the offeree or a duly authorised agent of the offeree: Powell v Lee (1908) (a) method of acceptance stipulated by offeror where the offeror states that acceptance would occur by performance of terms of the offer need for communication would be implied waived in such a case: if it is by return post indication of quick response failure to respond in manner specified may bar a contract from formation if offeree accepts in a manner other than that required by the offeree, then in some cases, it may not be fatal to contract formation

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if it has been accepted in a manner, more advantageous to the offeror, acceptance will be valid: eg replying my telephone or facisimile through a return post requirement likely to constitute acceptance: Tinn v Hoffman (1873) o if it was inserted for the offerees convenience, the offeree mat waive the benefit of the clause and accept in a different way: Manchester Diocesan Council v Commercial & General Investments [1970] o even if manner of acceptance was one prescribed in the offer, it may not be the only method of effective acceptance: Manchester case [1870] (b) acceptance by silence it is not open to an offeror to make an offer and advise the offeree that an agreement will have been formed unless the offeree communicates rejection of the offer.: Felthouse v Bindley (1862) where the seller delivers goods together with a notice that unless the goods are returned, within a specified period, or rejection of the offer is communicated in another way, the byer will be taken to have agreed to by the product NOW BANNED Refer to ss64, 65 TPA (c) acceptance by conduct if the offeror states that performing certain acts amounts to acceptance of offer, then they waive the need for offeree to communicate acceptance unilateral contracts communication of acceptance is impliedly waived: Carlils case Brogden v The Directors of the Metropolitan Railway Company: the courts may infer acceptance of an offer from the conduct of the parties, even if it was contemplated that acceptance would originally occur in a more formal place. Empirnall Holdings v Mahon Paull partners (1988): o FACTS: Property developer engaged an architect to undertake a property development Architect forwarded a printed contract to the property developer The developer preferred not to sign contracts and the architect was told of this Building work proceeded and a number of progress claims were paid by the developer to the architect In a claim for payment of outstanding feeds, the developer denied the existence of a contract o HELD: by the NSW CA, a contract EXISTED between the parties. o To protect consumers against being lulled into a contract by their inactivity, or liability that may arise in torts as a gratuitous bailee: S41 ACA 2010 (liability etc of recipient for unsolicited goods)

1.8.2 INSTANTANEOUS COMMUNICATION

(a) general rule GR: contract will be formed when acceptance has been communicated to the offeror: Entores v Miles Far East Corporation [1955] Intention of parties must also be considered : Brinkibon v Sttahag [1983] (b) Meaning of instantaneous communication Eg via telephone: Entores v Miles Far East [1955] Telex: Entores [1955] Fax: Rese Bros Plastics v Hammons Sobelco (1988) NOT POST

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1.8.3 POSTAL ACCEPTANCE RULE

(a) Exception to the GR rule that the offerees acceptance is effective when it is communicated to the offeror Statement of the rule: Henthorn v Fraser [1892] where the circumstances are such that it must have been within the contemplation of the parties, that according to the ordinary usages of mankind, the post might be used as a means of communicating an offer the acceptance is complete as soon as it is posted Its likely to be the case where the offer was made by post: Adam v Lindsell (1918) May be the case if the offer was made in person but parties live a considerable distance apart: Henthorn v Fraser [1892] May be appropriate where the offer is capable of being accepted by more than one person and is made to the world at large, eg through a newspaper It does not matter if the letter of acceptance takes longer than usual to reach the offeror, or is completely lost in the post, the offeror bears this risk: Household Fire v Grant (1879) Police behind the rule In Adams v Lindsell, the courts view was that if the offeror should not be bound until actual receipt of the acceptance then the offeree should not be bund until actual receipt of advice that the offeror received the acceptance (etc) In Entores v Miles Far East, similar justification Promotes contractual certainty To what communication does the rule extend? NOT: telex, fax, and telephone: see above Telegram: Cowan v OConnor (1888) Document exchange service (DX system): Coot v Admin Management When is the PR displaced? PR only applies when the post might be used as a method of acceptance, not as a method of revocation: Byrne v Van Tienhoven (1880) This will likely be concluded by the court if the offer was made by post or the parties live a considerable distance away from each other Bressan v Squires: o FACTS: Buyer was given an option to buy land. The option was to be exercised by notice in writing addressed to me at any time on or before 20 Dec, 1972). Notice was posted on 18th Dec but not received until 21 Dec Offeree argued that the PR applied and acceptance took place on 18th Dec o HELD: PR did not apply Wording of option implied the seller required actual notice by the specified date which was not fulfilled by posting a letter of acceptance PR id displaced depending on intention of the offeror The circumstances of the case might itself indicate a displacement of the PR: Talleman v Nathans Merchandise o Also Nunnin v Tullamarine Estates [1994] - FACTS: contract for sale of land, which was to be effected by an exchange of contracts. Hedigan J did not apply the PR t this case because although the parties may have contemplated use of the post to exchange

(b)

(c) (d)

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contracts, correspondence from the offerors solicitor indicated that the contract would be formed by the receipt of the offerors solicitor of a contract signed by the offeree. (e) Revocation of acceptance prior to receipt no definitive Aus authoritiy In Nunnin case (Vic SC case) it was assumed that if the PR rule applied, the contract was formed when the acceptance was posted and a subsequent telephone call withdrawing acceptance would be ineffective

1.8.4 ELECTRONIC COMMUNICATION

a contract is formed at the time acceptance is communicated to the offeror: Powell v Lee (1908) (a) traditional classification: instantaneous or non instantaneous applicability of PR in for instantaneous communication is yet to be decided in Aus: Chee Kin Keong v Digilandmall.com [2004] in Entores, it was recognised that telex msg were not completely instantaneous (b) alternative classification despite confusion surrounding classification of communication systems, ultimately contract formation must be solved by reference to the intentions of the parties by sound business practice and in some cases, by a judgement of where the risks should lie will have greater signf: Brinkibon v Stahag [1983] (c) legislative interpretation Electronic Transactions Act 1999 (Cth) and Electronic Transactions Act 2000 (NSW) Time of dispatch: if a statute requires info to be ldged or documentation to be produced, the legislation allows it to be done electronically: Provisions for time and place of receipt and dispatch of communication o S14(1) Cth and s13(1) NSW Ss14(3),(4) of the Electronic Transactions Act 1999 (Cth) and the equiv state act estbl some basic rules for time of receipt for elec communications o (it is arguable that) this provide some indication of when elc communication is received: when it comes to the attention of the adresseee. In the case of acceptance via email, as a GR, an acceptance is effective at the time of communication could be used in conjunction with legislation to clarify time of receipt o One interpretation (another interpretation) legislation does not impact the time of contract formation. Previously courts have determined the point at which a contract is formed by differentiating between instantaneous and other forms of communication o The legislation only provides guidance as to when the communication is received and not when acceptance is effective The intention of legislation is to remove any legal impediments which may prevent a person from using electronic communications to satisfy legal obligations o It is more likely that the courts prefer the view that legislartion does extend to contractual issues

1.8.5 ACCEPTANCE COMBINING TECHNOLOGIES

its possible for an offeree to accept an offer by using more than one method of technology Express Airways v Port Angus Air Services [1980] o FACTS:

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Acceptance was by telegram to the Post Office. The Post Office communicated this via telex to the telex machine of the offeror Applying the rules, if acceptance was sent through telegram, PR would apply. If response by telegram is regarded as instantaneous then PR does not apply o HELD: the rule in Entores applied so that acceptance occurred only when communication was received by the offeror Leach Nominees v Walter Wright [1986] o FACTS: Offeree accepted by telephoning the msg to a public telex operator, who sent it to the offerors telex machine. o HELD: rationale for the PR applied equally to this case. He parties contemplated the acceptance would be by public telex and when the msg was committed to the public telex operator, the offeree had no way of knowing whether it was effectively communicated to the offeror. Since bth parties intended the acceptance to be by public telex, it was enough to indicate the offerors willingness to waive communication of acceptance before being bound

1.9 ACCEPTANCE IN UNILATERAL CONTRACTS

1.9.1 ACCEPTANCE COMMONLY BY CONDUCT
requirement for communication if often impliedly waived: Carlil Errington v Errington [1952] o FACTS: a father bought a house for his son and daughter-in-law financed through a mortgage taken out on the property. He promised them that if they made payments under this mortgage the house would be theirs upon his death. They did this and occupied the house. Nine years later, the father died leaving the house to his widow. After the couple separated, although the wife continued to occpy the house and pay the instalments, the widow sued for possession. Her claim failed at first instance. o HELD: the couple were never bound to pay the instalments. The law should not imply a term unless it is necessary. o The whole arrangement of the father promising the house to the couple as soon as they paid off the mortgage. The parties did not discuss what was to happen if they fail to make the instalments, the father would not be bond to transfer the house to them. The promise was a unilateral contract. It could not be revoked by him once the couple entered on performance of the ct, but it could ease if they left it incomplete and unperformed (which they did not do). Since they did not complete the instalments, they could not claim for it, Mobil Oil Australia v Wellcome International (1998) o Facts: at a convention held for its dealers, Mobile represented that a dealer who performed at a prescribed level for six years would be given a franchise for a further nine years at no cost to the dealer (the nine-for-six offer). Mobile later discontinued this scheme. In the proceedings, a number of dealers claimed mobiles conduct amounted to a breach of contract, misleading conduct contrary to the then existing s52 of the TPA or constituted an estoppel. o HELD

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Topic 2 In the case of unilateral contract, it may remain within the offerees power unilaterally to complete the act of acceptance and thereby to furnish the executed consideration sought. The weight of authority suggests that a person who makes an offer susceptible of acceptance by performance of an ac, may not revoke that offer after the offeree has embarked upon performance of the act. There is no universal proposition that an offeror is not at liberty to revoke the offer once the offeree commences performance of the sought act of acceptance. Even if it be assumed that an offeror has impliedly promised not to revoke in consideration of a commencement of performance of the act of acceptance, it would not follow that a purported revocation would be ineffective. In the absence of specific relief in respect of that promise, the offerors revocation would be effective, although the offeror would be liable in dmg

1.9.2 WITHDRAWAL OF OFFER AFTER ACCEPTANCE COMMENCED

once the offeree has begun to accept the offer by performing the acts stipulated, it is likely to be too late for the offeror to withdraw the offer and claim there has been no contract formation

1.10 WHO MAY ACCEPT OFFER

Only by someone to whom the offer has been made: Reynolds v Atherton (1921) o Whether the person falls within the class of person which the offer applies, is a matter of construction Carlils case offer being made to the public at large, where the contract is capable of being accepted by numerous offerees thereby creating a number of contracts Robinson v MEwan (1865): where more than one offerees qualify for the contract but only can be accepted by the first person to come forward Where contract has a subject mtter where only one contract can be performed but has been more than one purported acceptanr o Eg when person offers to sell their real estate to more than one person if offer is accepted by one person and before the offeror withdraws offer to he other, the other also accepts, then two valid contracts have formed: Patterson v Dolman [1908] Only one of them if capable of being performed, the offeror will then be in breach of contract with the other offeree and potentially be liable for damages.

1.11 CONTRACT INFO: TIME AND PLACE

Time: Relevant if and when the offeror wishes to withdraw their offer Place: determining which laws would apply

1.11.1 INSTANTANEOUS COMMUNICATION

face to face, telephone, telex, fax in each case. Contract is formed when and where the offeror receives communication of the acceptance: Entores v Miles Far East Corporation [1955], Hampstead Meats v Emerson & Yates [1967]

1.11.2 POST
If PR applies, then contract is formed when and where the letter of acceptance has been posted

1.11.3 ELECTRONIC COMMUNICATION

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Undecided in Aus law To overcome legal vacuum, traders will regularly transact business in a way which involves agreeing on issues surrounding contract formation

2 CONSIDERATION
Whether or no a promise is part of an agreement can be enforced, depends on, amongst other things, whether the promisee has given consideration for the promise C must be legally recognised A moral obligation is not sufficient to constitute consideration Only in rare cases is a contract not supported by consideration Stand alone lease problems have no problems in consideration it is only when parties vary the arrangement between themselves. English case of Williams v Roffey Brothers and Nicholls (Contractorss) may be open to criticism for pushing the boundaries of the rules on consideration o The decision reflects the commercial reality of operating in the construction industry The occasional judicial pronouncements eg Toohey J in Trident General Insurance v NcNiece Bros [1988] suggest that at least in limited circumstances, the absence of consideration may not prevent enforcement of promise. Development of promissory estopel answer to enforcement of a contract which lacks consideration NATURE OF THE CONSIDERATION

2.1

2.1.1 DEFINITIONS AND EXAMPLES

It is an act or forbearance (not to do ) or promise by one party that is the price for the other partys promise: Dunlop Penumatic Tyre Company v Selfridge & Company [1915] A valuable consideration, in the sence of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other : Currie v Misa (1875) Examples regarded as some right, interest, profit or benefit accruing to the promisor: o Agreement for sale of land by A to B for $200,000 o Agreement for A to paint Bs house for $5,000 payment to be made on completion o Agreement for A to provide tennis coaching to C and D if B (C and Ds mother) provides remedial mathematics to E (As son) Examples of some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other, the promisee (B) o A and B are neighbours and in dispute over the fence line, claiming it is built on her property. They agree that if A pays B $3,000, B will not litigate on that matter o A needs transport for a week but does not own a car. A and B agree that if B lends her car for A for this time, A will pay to service the car. o Agreement between A (employer) and B (employee) that if B assumes higher duties, she will be paid an increased salary. o A company that manufactures smoke balls (A) promises B that if B uses he smoke balls in the matter directed and still contracts the flue, A will pay $1,00

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2.1.2 CONSIDERATION IN BILATERAL EXAMPLES

United Dominions Trust (Commercial) v Eagle Aircraft [1968] when parties enter bilateral contracts, each party undertakes to the other party to do or to refrain from doing something . The price paid for the promise (the consideration) is the other persons promise

2.1.3 CONSIDERATION IN UNILATERAL EXAMPLES

United Dominions [1968]: in a unilateral contract, the promisee does not himself/herself undertake to do or refrain from doing a particular act No exchange of promises Eg Carlill v Carbonic Smoke Ball Company The act/forbearance rather than the promise constitutes the consideration

2.1.4 EXECUTED AND EXECUTORY CONSIDERATION

Executed: present Executory: future Different implications for a unilateral contract: executed consideration only applies

2.2 RULES GOVERNING CONSIDERATION

2.2.1 CONSIDERATION MUST MOVE FROM THE PROMISEE: DUNLOP PNEUMATIC TYRE COMPANY V SELFRIDGE [1914]
Dunlop case: o FACTS: Dunlop entered into a contract with Drew & Co to sell Dunlop tires at a discount price. The consideration for this discount price was that the purchaser would not sell at less than the lift price. Drew & Co then entered into a contract with Selfridge to sell Dunlop tires. Selfridge did not honour the undertaking and was sued by Dunlop o ISSUE: Dunlop was not a party to the relevant contract, could they still sue? o HELD: in favour of Selfridge (a) Benefit need not move to the promisor (b) Joint promisees Coulls v Bagots Execution and Trust Company (1966) o FACTS: a husband granted mining rights to a company to mine his land. In return, a royalty was to be paid to himself and his wife. The wife provided no consideration for the agreement. When the husband died, the company stopped paying the royalties and the wife attempted to enforce the agreement o HELD: by the HCA that while consideration must move from the promisee, where the promise is made to multiple promisees, consideration need only move from one of them in order for the promise to be enforceable. (c) Overlap with doctrine of privity Tweedle v Atkinson (1861) o FACTS: a man (the Pl) and a woman were engaged to be married. The Ps father and the deceased (the womans father) agreed for each other to each pay specified amounts to the P, upon the marriage. The Deceased died without paying the agreed sum, the P sued thee deceaseds estate to recover the amount

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HELD: P would not succeed. The reason provided was an action could not be brought upon a promise where the P is a stranger to the consideration Trident General Insurance v McNiece Bros (1988): Toohey J states that it was difficult to extract an exact ratio from the Tweedle case he concluded the P in Tweedle was not a party to the contract and did not provide consideration

2.2.2 CONSIDERATION MUST BE BARGAINED FOR

Notion of bargain involves both the promisor and the promisee Action or forbearance from action of the promisee must be in reliance on the promisors promise o It must also be done in the request of the promisor o There must be the requisite quid pro quo between the promise and the act or forbearance of the promisee: Australian Woollen Mills (1954) In unilateral contracts, the act/forbearance is done on the faith of the promise and at the request of the promisor, express or implied: Combe v Combe [1951] Combe v Combe [1951] o Facts: after a married couple separates, the husband promises to pay the wife 100 pounds per year. Because of this promise, the wife did not apply to the Divorce Court for maintenance. The husband failed to pay the money as promised. The wife brought an action to recover the payments. o HELD: found for the husband. The parties did not enter into a contract for the 100poundsm as the wife did not provide consideration for the husbands promise. Wifes forbearance from brining an action for maintenance was not done at the express or implied request of the husband. Australian Woolen Mills v the CW (1954) o FACTS: CW implemented a subsidy scheme to lower the purchase price for wool for local; manufacturers. When the scheme stopped, a local mf sued the CW for breach of contract to recover the outstanding subsidy. The mf claimed that a contract was in existence between it and the CW, the MF buying quantities of wool in consideration fot the CWs promise to provide a subsidy o HELD: in favour of the CW. The contract had never come into existence. There was no indication that the CWs promise was made to induce the MF to purchase the wool, nor that the MF purchased the wool because of the CWs promise Wygan v English and Scottish Law Life [1909] o FACTS: A debt executed a mortgage of an insurance police in favour of his creditor who knew nothing of the mortgage and had not forborne to sue on it. After the death of the debtor, Wigan learnt of the assignment and tried to claim the insurance money. o ISSUE: had Wigan provided consideration for the promise? o HELD: claim failed Wigan gave no consideration for it

2.2.3 CONSIDERATION MUST BE SUFFICIENT

(a) General principle To be valid, the price paid by he promisee for the promisors promise must be sufficient. It must be something which is of some value in the eye of the law: Thomas v Thomas (1842)

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The usual case in a commercial context is that theres no dispute over the sufficiency of the consideration. Chappel & Co v Nestle [1960] o FACTS: to promote the sales of their chocolate bars, N offered a record for one shilling and sixpence plus three wrappers from sixpenny bars of chocolate. Chappel brought proceedings for infringement of copyright and N offered to pay a statutory royalty based on the shilling and sixpence. They did not include the value of the wrappers o ISSUE: while the wrappers were of no value (as they were thrown away), should they be included as part of the basis for determining the royalty to be paid using the purchase price of a bar as a benchmark? If a person wanted a record, they had to buy three sixpenny bars, o HELD: the wrappers formed part of the consideration because the one shilling and sixpence alone was not enough to obtain a record. Nestle had to pay a royalty based on three shillings. (b) Consideration need not be adequate The court is not interested in ensuring that a promisee provides value for the promisors promise o Not the courts role to ensure market value has been exchanged (c) it can be nominal Thomas v Thomas [1842] Niesmann v Collinridge (1921); Barnett v Ira L & AC (1952) (d) Sustainability of sufficiency principles Example: a father promises to transfer real estate to his daughter in consideration of I: the daughter paying him $100,000 - Enforceable II: daughter paying him $1. - enforceable III: daughters love and affection for her father - not enforceable by the law IV: daughter agreeing to conduct herself with sobriety and in a respectable, orderly and virtuous: Dunton v Dunton [1892] - some authority to suggest this is considerable it may be of value in the eyes of the law V: his faughter agreeing to complete the sale of an original Dobell painting to her father, the contract of sale having been entered into one month earlier. - Unenforceable; consideration not off value. Insufficient consideration for the promisee to promise to perform a pre-existing legal duty owed to the promisor (e) Repeating an existing duty imposed by the law A person cannot recover money they have been promised in return for performance of, or promise to perform, a duty imposed any the law because there would be no legal detriment Glasbrook Bros v Glamorgan Council Council [1925] o FACTS: industrial trouble at Glasbrook Bros coal mine resulted in the police being called in. the police felt that a mobile patrol would be sufficient to protect the premises, but the mine owners insisted that the police being billeted on the premises, with the mine owners to pay for this service at a special rate. The mine owners later refused to pay. o ISSUE: were the police doing more or nor more than what they were legally required?

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HELD: the police provided protection which was above and beyond what they considered effective and this was sufficient consideration to support the promise of payment by the mine owners. (f) Repeating an existing duty imposed by the law Insufficient consideration no detriment Stilk v Myrick [1809] o FACTS: a number of seamen signed on in London for a voyage to the Baltic and back. during the course of the voyage, two of them deserted and because the captain was unable to find two replacements, he promised the remaining sea men the wages of the two deserted seamen if they would work the ship safely back to London . this agreed to and the return journey was successfully completed by the owners refused to pay. o ISSUE: was the captains promise enforceable? o HELD: the sailors had undertaken all they could under the normal conditions of the voyage to bring the ship safely to port. The desertion of the two seaman did not extend the remaining seamans existing contractual duty; no new consideration Acts done in excess of duty would be good consideration: Hartley v Ponsonby (1871) o FACTS: nearly half the crew deserted the ship in port Phillip in 1852 and to encourage the remaining 19 sailors to complete the voyage back to Liverpool via Bombay, the captain promised them extra wages. Because the ship was so undermanned it was unseaworthy. When they arrived back in London the owners refused to pay the crew extra wages. o ISSUE: Did the crew provide more than was originally contracted of them? o HELD: sailing the ship back in an unseaworthy condition was more than the original contract required. Legal duty to care for children Jennings v Brown (1842): context where only the mother had a legal DOC for illegitimate children; a father promise to pay a sum of money if mother continued to care for the child was legally enforceable If the promisor derives some additional benefit by avoiding problems that can be associated with a promisee not performing,t he courts will be prepared to find that there is sufficient consideration to support a subsequent agreement: Williams v Roffey Bros [1990] o FACTS: carpenter entered into contract for a fixed sum, experienced financial difficulties midway through the job as he had underquoted. When carpenter told the D he was not able to fulfil his obligations, the D offered to pay him an extra sum to complete the work and have the project finished on time. The D ran the risk of having a penalty clause in his contract with a third party being imposed if the project was not finished on time. Williams continued to work but when the D failed to pay more of the contract price, he stopped work and claimed the balance owing under the original contract along with the additional payment. o ISSUES: was the promise of the additional payment enforceable or was it unsupported by consideration as the P was already under an existing legal duty? o HELD: Ds promise was enforceable. There was commercial benefit for the D in having the work completed on time and this amounted to sufficient consideration. o After reviewing relevant authorities, Glidewell LJ summarised what he considered to be the existing state of the law through a number of propositions (i) If A has entered into a contract with B to do work for, or to supply goods or services to B, in return for payment ny B; and

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At some stage before A has copeltely performed his obligations under the contract, B has reason to doubt whether A will or will not be able to. Complete his side of the bargain (iii) B thereupon, promises A an additional payment in return for As promise to perform his contractual obligations on time (iv) And as a result of giving his promise, B obtains in practice a benefit or obviates a disbenefit and (v) Bs promise is not given as a result of economic duress, or fraud on the part of A (vi) The benefit off B is capable of being consideration for Bs promise so that the promise is legally binding. Musumeci v Windadell (1994) o FACTS: the Pls (lessees) and the Df (lessor) had entered into lease of premises in a shopping centre. because the lessor had given a lease to a competitor of the Pl, lesses, the lesees trade was affected and they were unable to remain viable while continuing to pay for full rent. The parties therefore entered into an agreement under which the lessees were permitted to pay only two-thirds of the rent originally specified. o ISSUE: o HELD: found in favour of the lessees on the basis that the original lease had been altered. There had been consideration for the lessors promise to decrease the rental the practical benefit of continuing with the lessees as viable tenants rather than having to find other tenants and suing the lessees for the rental shortfall. o WILLIAMS V ROFFEY BROS should not be followed (1) failing to enforce such an agreement may protect a promisor from extortion that could result from a promisee threatening to abandon the contract unless granted a concession (2) the promise should not be enforced because the promisee does not receive any legal detriment by performing what they were already obliged to do and the promisor does not receive any legal benefit from receiving what was already due. (3) the effect of Williams v Roffey would be to leave no operation for the Stylk v Myrk rule. o Stylk v Myrick should still continue to operarte where the promisors promise was wholly gratuitous o For Williams to apply, and for the promise to be enforced, the promisee must be able to demonstrate that the promise to perform an existing contractual obligation was of sufficient practical benefit to the promisor (in that case, breach of the contract was worth more than the performance). (g) Promises to pay lesser amounts (h) Where promise is made to a third party: Scotson v Pegg (1861) o FACTS: P had contracted to sell goods to a third party, the goods to be delivered to the third partys nominees. The third party nominated the D. subsequently, the P and the D agreed that in consideration of the D unloading the same goods from the Ps ship at a specificed rate, the P would deliver the goods to the D. o ISSUE: o HELD: agreement between the P and the D was valid even though the P promised to do no more than to carry out the existing contractual duty owed to the third party. o Applied in New Zealand Shipping Co v A M Satterthwaithe [1975]: a valid contract existed between the shipper and the stevedore to unload the vessel, even though the stevefore was bound to its contract with the carrier to do the same. Performance of its

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contractual duty constituted acceptance of the shippers offer. In relation to the sufficiency of this conduct as consideration, the Privy Council noted that an agreement to do an act which the promisor is under an existing obligation to a third party to do, may well amount to valid consideration and does so in the present case o Pao On v Lau Yiu Long [1980] FACTS: the Pl (owners of shares in a private company) had in a prior agreement with the public company, undertaken not to sell 60% of the shares for at least one year. However the promise could also constitute consideration in a later agreement with a different party (the df the majority shareholder in the company), under which that party provided the P with an indemnity aganst loss. HELD: contract of indemnity could be enforced Aus a promise to carry out a pre-existing contractual duty owed to a third party can provide good consideration: Port Jackson Stevedoring v Salmond (1978) (i) Promises to pay lesser amounts Part payment of a debt Foakes v Beer (1884) o FACTS: a creditor, Mrs Beer, obtained judgement against the debtor (Dr Foakes) for 2,090.19 pounds. As the debtor was unable to pay this amount, the parties entered an agreement which the debtor paid the amount off over a period of time. If the payment was made in accordance with the agreement, the creditor undertook not to take any proceedings whaever on the said judgement. A judgement creditor is entited to be paid interest on a judgement debt until payment of debt is received in full. o ISSUES: if the agreement was enforceable, the creditor would not be able to be entitled to bring action for the interest o HELD: creditor enetitled to creceive the interest. The debtor had not provided consideration for the creditors promise to forgo interest Where this GR will not operate o Parties enter into a deed; here consideration is no required. Ss 188A of the Bankruptcy Act 1966 (Cth) sets out the requirements for a personal insolvency agreement; here, creditors may agree to accept payment of something less than the full amount owing, in exchange for the debtor being released to a specific extent from his or her provable debts o Accommodation to benefit the creditor. Eg if the circumstnces surrounding the payment are altered to accommodate the wishes of the creditor so that the creditor received some benefit from the new arrangement, it may be good consideration Where time and place of payment of the debt is altered for the convenience of the debtor, this will NOT provide consideration for the creditors promise to forgo the balance of the debt: Vanbergen v St Edmunds Properties [1933] Amount owing is disputed o if this occurs, parties may enter into a compromise agreement. The rule in Pinnels case will not apply to this agreement. o There must be a genuine dispute about the amount owing H B F Dalgety v Moreton [1987] FACTS: real estate agent was appointed by sellers to find a seller for their farm. It was agreed that the real estate agent should be paid in accordance with the professional scale of charges adopted by the Real Estate Institute of NZ. After the sale, the sellers were invoiced for $9,786.98 in accordance with the scale. The sellers forwarded to the real estate agent a checque for $2,450.000 being the sellers estimate of costs on a work done basis. The cheque was banked by the real estate. The agent

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subsequently sued for the balance of the commission due; HELD: in favour of the real estate agent. The fact that the sellers were reluctant to pay the amont owing did not mean that there was a genuine dispute about the amount owing to him. Part payment by a third party o Hirachand Punamchand v Tenple [1911] FACTS: Debtors father wrote to the creditor and offered to pay a lesser sum in full discharge of his sons debt. He enclosed a draft for the lesser sum which the creditor cashed. The creditor subsequently brought an action against the debtor for the abalnce of the debt. ISSUE: did the offer of the smallr sum by the father (a third party) and the acceptance of it by the creditor ioerate as a discharge of debt? HELD: creditor lost. To do so would in effect be fraud on third party. The third party had paid the smaller sum in the belief that it was acceptable to discharge the debtors liability to the creditor. Legal ramifications between debtor and creditor afterwards creditor unlikely to recover owing amount after third party has paid off a lesser sum Welby v Drake (1825); Hirachand Punamchand v Temple [1911] o Hirachand Punamchand v Temple [1911] agreement between creditor and third party operated to extinguish the debt Criticism of Pinnels case o The rule does not reflect the expectation of reasonable people, or modern commercial realities o Rule does no allow business people to enter agreements that may provide each with a commercial benefit o When the creditor cannot pay the full amount, it may be more beneficial for the creditor to accept the smaller amount rather than spend further in legal costs in pursuit of the full amount o Rule does not apply when a third party intervenes to pay a smaller amount, or when the creditor and debtor alter terms to their agreement o Commercial realities prevented the landlord from recovering the tenant in Musumeci v Winadell (1994) (agreement by parties to decrease the rent payable was held enforceable) o The rule is consistent with the notion that a promise to perform a pre-existing contractual duty does not constitute good consideration

2.2.4 CONSIDERATION MUST NOT BE PAST

(a) General principle - PAST CONSIDERATION: generally not enforceable: Roscorla v Thomas [1842] (Promise that horse being sold for was in good condition after transaction went through) If executed promise also pertains to the future, then that part of the promise will be enforceable: Anderson v Glass [1869] Can be good consideration where a subsequent promise to pay a specific amount to be plaintiff can be directly connected to the defendants original request to the plaintiff to perform some service: Lampleigh v Braithewait (1615) (b) Past consideration distinguished from executed consideration Executed = just performed The legal position must be examined at the time the relevant promise is made o If at the time the act/forbearance or promise that is claimed to be consideration has already, the consideration is past.

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2.3 CONSIDERATION AND FORMAL AGREEMENTS

All contracts can fall into the dichotomy of formal or simple agreements: Rann v Hughes (1778) Formal agreements are signed under seal and referred to as deeds Due to the seriousness of the manner of executing these documents, the CL has recognised that they are valid even without consideration being provided b the parties o EXCEPTION: where the parties execute a deed, but do not intend to operate as a deed: Rose & Burgess v Commissioner of stamps (SA) (1979) Can be oral/written

2.4 SPECIFIC EXAMPLES

2.4.1 MORAL CONSIDERATION
To be good consideration the act/forbearance or promise must be of value in the eyes of the law: Thomas v Thomas (1842) Eastwood v Kenyon (1840) o FACTS: upon the death of a girls father, the fathers executor (the Pl) looked after the girls interests and investments and spent his own money in the process. When the girl attained majority, she undertook to repay the Pl. this promise wad adopted by the girls husband (the Df) when she married. The Pl brought an action against the D to recover the amount promised. o ISSUE: o HELD: Pl unsuccessful. Pl could not have provided any consideration for the husbands promise. A promise made because of the love and affection that the promisor and promisee for each other, or that the promisor has for the promisee, is not legally recognised: White v Bluett (1853) Thomas v Thomas (1842) o FACTS: on his deathbed, a testator indicated that he wanted his wife to receive his house. The house was conveyed to his wife in consideration of such desire. In same agreement the wife was required to pay the executors 1.10 pounds towards the rent payable in respect of the house, and to keep the house in repair. The executors refused to transfer the property. o HELD: executors were required to transfer the house to the wife. The wifes promise to pay 1.10 pounds was consideration for the promise to transfer the property Dunton v Dunton (1892): o FACTS: after a couples separation, the husband promised to pay the wife maintenance if she, amongst other things, promised to conduct herself with sobriety, and in a respectable, orderly and virtuous manner o HELD: valuable consideration. Hamer v Sidway (1891): promise to give up tobacco and liquor untilperson turned 21 for payment of $5,000 GOOD CONSIDERATION. Jamieson v Renwick (1891) - promisee promised, amongst other things, not to live in a particular area or visit or annoy the promisor, in exchange for payment of an annual sum of 25 pounds GOOD CONSIDERATION White v Bluett (1853)

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FACTS: a son was disappointed about the way his father had distributed some property and made some repeated complaints about this distribution to his father. The son and father agreed that if the son ceased complaining about the distribution and also because of the natural love and affection the father had for his son, the son would not have to pay the money owing to the farther. HELD: the son had NOT provided good consideration for the fathers promise. The son had no right to complain because his father had a right to distribute property in anyway he say fit. The son promising not to do what he had no right to do NOT good consideration. Also authority that consideration must be real and identifiable.

2.4.2 PERFORMANCE OF EXISTING DUTIES 2.4.3 PART PAYMENT OF DEBT 2.4.4 COMPROMISE AND FORBEARANCE TO SUE
To prevent settlement of potential (r actual) legal claims, the court is willing to accept the validity of these agreements To constitute valid consideration, the party who promises, must be acting in good faith. He/she must have an honest belief that the claim may be successful Hercules Motors v Schubert (1953) o FACTS: S purchased a new car from HM and after a short time, found the paintwork faulty. HM acknowledged that something would have to be done and it was agreed that HM would repaint the car and restore it as new condition. It was also agreed that the work would be supervised by a paint company representative, who would detwrmine if the work was satisfactory. His report was unfavourable. o ISSUE: was this promise to restore the car to avoid being sued by S, capable of amounting to good consideration. o HELD: there was a genuine dispute between the parties and that the agreement to repaint, was a compromise of that dispute. The compromise was a good consideration for a new contract. (NZ authority) that the claim must not be vexatious or frivioulous: Miles v New Zealnd Alford Estate (1886), Couch v branch Investments [1980] o Wigan v Edwards (1973): this HC did not make the same requirement The promise/compromise not to sue must be bargained for: If the promise is to postpone enforcing a legal entitlement for a period or indefinitely (rather than compromising an entitlement under the contract), there must be evidence that this promise was made at the request, either express or implied of the other party: Player v Isenberg (2002)

2.4.5 BARGAINED-FOR CONDUCT ALREADY PERFORMED

Lampleigh b Braithwaite (1615): o FACTS: the D (Braitherwaite had been convicted of murder and asked the P (Lampleigh) to do what he could to obtain a pardon from the King. The P acted upon this request,

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incurring personal expense in the process. After the P carried out these services, the D promised to pay him 100 pounds. The P sued to recover this amount. o HELD: P won. Although the promise to pay 100 pounds was made after the P had performed the services, it was presumed by the parties at the time the D requested the services that they would be paid for. The p performed the services on the basis and the later promise to pay was part of that same transaction Re Caseys patients: where services were performed and the subsequent promise for payment was held to be enforceable o Now extends to promise to act (or not to act) in a particular way: Pao on v Lau Yiu Long [1980] Pao on v Lau Yiu Long [1980] o FACTS: P owned the capital of a private company. The private company owned a building that a public company wished to acquire. To effect the transaction, the Ps sold their shares in the private company to the public company. In exchange, the Ps received shares in the public company. The Ds (majority shareholder in the public company) requested that the ps give the public company an undertaking not to sell 60% of those share for one year. This was to ensure that the market was not flooded with shares in the public company (effectively lowering the share price) To ensure that the Ps would not be disadvantaged, if the shares decreased n value, the D agreed to buy 60% of the shares after the period experied at $2.60 a share. Subsequently the ps realised that, should the second be carried out, the Ps would not benefit from an increased in the share price. Accordingly the Ps and Ds entered into an agreement to replace the previosu agreement to purchase the shares at $2.50 each, underwhich the D agreed to indemnify the Ps for any loss in respect of 60% of their holding, which would occur if the market closed at the end of the period less than $2.50. Share prices dropped and the Ps sought to rely on the contract of indemnity. The D refused to indemnify them on the basis that the Ps did not give consideration for promise to indemnify. o HELD: Ps won. In the circumstances of the case the Ps had provided consideration of the Ds indemnity. Consideration was the Ps promise made to the public company under the 1st agreement not to sell the shares for a year. This was given at the Ds request. The parties understood that at the time, the Ps needed to be compensated for any drop in price that may take place o Authority for when a benefit is conferred upon the promisee (where a promisee seeks to enfrce a pro

3 PROMISSORY ESTOPPEL
In tesponse to the injustice which would a result when a person could not enforce their legal promise (where the promise was not supported by sufficient consideration moving from the promisee Where equitable estoppel is applied, a person will be prevented from going back on his or her word (legal promise)

70211 Contract Law There must be evidence of unconscionability before this will be applied

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3.1

COMMON LAW ESTOPPEL equitable estoppel is different from common law estoppel in particular, CL estoppel by conduct (CL in pais) o CL estoppel is referred to as a rule of evidence because it may help form the factual foundation for an action (but cannot be a cause of action on its own) o Estoppel relates to the existence of a contract between two parties the legal relationship is determined by reference to the terms of the contract o if during the state of affairs, the contract confers a cause of action on the party raising the estoppel, the cause of action may be enforced o source of legal obligation: the assumed contract ; estoppel is not a source of legal obligation only operates in relation to representations of past or existing fact does not compel adherence to representations of intention or promise same thing with equitable estoppel: Jordan v Money (1854) CL in pais: o Prevents a person from unjustly departing from an assumption/representation of past or existing fact that the other party has adopted or relied upon - unless that assumption/representation will cause the other party to cause detriment: Thompson v Palmer (1933) DEVELOPMENT OF THE DOCTRINE OF EQUITABLE ESTOPPEL

3.2

3.2.1 HIGH TREES AND PROMISSORY ESTOPPEL

Actual case name: Central London Property Trust v High Trees House [1947] Case drew from dicta from two cases (1) Hughes v Metropolitan Railway Co (1877) and (2) Birmingham & District Land v London and North v Western Railway Co (1888) Hughes v Metropolitan Railway Co (1877): o FACTS: landlord gave six months notice to a tenant to carry out repairs on the premises being leased. After, the landlord and tenant entered into negotiations concerning the possibility of the landlord purchasing the tenants interest. When negotiations didnt go through, the landlord attempted to rely on the failure of the repairs within the stipulated six months as entitling to terminate the lease. o HELD: It is a rule of equity that is parties enter into contract and then negotiate, which has the effect of leasing one party to suppose strict rights under the contract will not be enforced or will be suspended Birmingham & District Land v London and North v Western Railway Co (1888) o FACTS: Parties to a building contract tacitly agreed that periods stipulated that periods stipulated under the contract would not run while building work was suspended o HELD: Bowen LJ interpreted the Hughes principle as meaning that : where a paety to a contract A, induces through his conduct, the other party to believe rights under the contract will not be enfoced or will be suspended for a time, equity will not let A

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Facts HELD:

enforce those rights until the time passes without the parties being in the same position as before Both these case held the general principal that either due to negotiations or the conduct of one of the parties, a party to the contract could not insist on certain rights under the contract

The D leased a block of flats from the P at a certain ground rent. When WW2 roke ou, there was a downturn in business and the flats were not fully occupied. When it was clear that the D could not pay the rent out of profits from subletting the flats to others, it was agreed that the rent should be reduced by half, indefinitely At the end of the war, the busness recovered and the flats were all occupied The receiver of the landlord company commenced an action claiming it was entitled to full rent for the entire period

Denning, relied on the dicta from the above two cases and said that where a promise id made which to the knowledge of the person making the promise, is going to be acted upon by the person to which it is made to, the promisor will not be allowed to enege or act inconsistently with the promise

Combe v Coombe Principle in High Trees was clarified The principle: o Where one party, through their words/conduct , made a promise or assurance, which was intended to affect the legal relations between them and to be acted upon accordingly, then the promise/assurance cannot be revoked o Principle restricted to the limited sense of not allowing the promisor to act inconsistently with the promise o Case was not authority for creation of a new action in dmg for breach Principle then approved by the Privy Council in Tool Metal Manufacturing v tungsten Electric Motor Co [1955] Principle then adopted by the HC in Legione v Hately (1983)

3.2.2 RECOGNITION OF EQUITABLE ESTOPPEL

promissory estoppel is not the only type of estoppel ; the relation between the different forms was considered in Waltons Stores v Maher (1988) Walton Stores v Maher (1988) o FACTS: owner of land entered into contract negotiations with Waltons that the owner would demolish the building on the land and construct a new one to Waltons specifications which Waltons would then lease. Waltons made it clear to the owner it was working to a tight timetable. The necessary dcuments were prepared and Ws solicitors wrote to the owners solicitors stating they thought that Waltons approval would be forthcoming and they would let them know in the next few days of any amendments were to be made

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Several days later, the owners solicitors herd nothing, and submitted a document signed by the owner, by way of exchange. Owner proceeded with the demolishing A week later, Waltons underwent a restructuring that included a reconsideration of whether it wished to proceed with the transactions. It instructed the solicitor to go slow with the proceeds, and was aware that the demolition was proceeding Two months later, it informed the owners that it did not wish to proceed; building was 40% completed by then at no time had there been an exchange of contract necessary for the conclusion of a binding contract o HELD: By the majority The owner had been led to believe, and had acted upon the belief that an exchange of contracts would take place Equity will relieve a plaintiff on the notion that it would be unconscionable on the party of the other party to ignore the assumption All the various estoppels have been subsumed into one single doctrine o Difficulties for the owner in seeking relief (1) to seek relief on the basis of estoppel would be to rely on it as a source of rights rather than as a defensive tool as it had been applied in Combe v Combe, and (2) in the absence of an agreed consideration, to grant a remedy would be tantamount to enforcing a gratuitous promise. o The court recognised that there was more than one type of estoppel which would be applied through in equity; the common thread was that equity will come to the relief of a P who has acted to his detriment on the basis of a basic assumption in relation to which the other party has took part in that assumption and it would be unfair or unjust if he were left free to ignore that assumption Grundt v Great Boulder (1937) Equitable estoppel can both a sword (creation of new rights) and a shield (upholding existing rights) : Walton Stores Brennan points out the different between equitable estoppel and contract: o Contractual obligations arise by arrangement of parties. Equity created by esotppel may be imposed irrespective of what was agreed to between parties o Contractual obligations must be supported by considerable, estoppel does not o Measure of contractual obligations depends on terms of the contract; estoppel it is applied wherever necessary to prevent detriment resulting from unconscionable conduct Estoppel needs to be enforced with contract principle: Giumelli v Giumelli (1995) o Where there is a necessary prerequisite to an agreement having legal effect (eg having the agreement evidence in writing) this cannot be circumvented by estoppel Can be used against a public authority o Provided it does not hinder the exercise of statutory discretion in the public interest

3.2.3 A UNIFIED ESTOPPEL ?

Issue was considered in Commonwealth v Verwayen (1990) outcome: NO o The CL estoppel is concerned with rules of evidence (existing rights which can be conferred from the contract) whereas equitable estoppel is concerned with creation of new rights

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Representations or assumptions concerning the future, can only be dealt with through equity

3.3

ELEMENTS OF EQUITABLE ESTOPPEL

3.3.1 GENERAL
equitable estoppel may apply in absence of pre-existing relationship of any kind: Walton Stores v Maher (1988), Birtstar v The Proprietors Ocean Breeze [1997] unconscionable conduct denotes a creation or encouragement by the D in the other party, of an assumption, that a contract will come into existence or a promise will be performed and for the party to rely on that assumption to their detriment: Walton Stores (1988) Walton Stores v Maher (1988) six points 1. P assumed a particular legal relationship existed between the P and the D or expected that one would come into existence 2. D induced P to assume 3. P acted to their detriment in reliance of that assumption 4. The D knew or intended the P to do so 5. The Ps action/inaction will occasion detriment if the assumption is not fulfilled 6. The D has failed to act to avoid that detriment o Note that numbers 2,4,6 reflect the elements of unconscionable conduct - Silvori v Babaro (1988) elements must be positively and will rarely be inferred esp the case where detriment is suffered: CW v Verwayen (1990) ; this also applies to all other elements Chellaram v Hina Shipping Co [1991] in the situation where parties have subsequently executed a formal contract that differs from pre-contractual negotiations (authority suggests that) if it is UC in the circumstances for the party to insist on his or her strict rights then an estoppel may arise even if it amounts to outflanking consideration or the principles concerning collateral contracts: State Rail Authority (NSW) v Health Outdoor (1986) (only influential) where a collateral contract is inconsistent with the main contract, the subsequent written contract will not preclude an equitable estoppel based on the prior promise if the necessary UC is present: Wright v Hamilton Island Enterprises [2003] Where parties subsequently execute a formal contact, which is expressed to constitute the entire contract between the parties, but then one party asserts that the other is estopped from relying on rights created by the written contract due to an assumption formed during negotiations: Skywest Aviation v CW (1995) o The parole evidence rule operates to exclude evidence of the alleged estoppel o Preceding statements are seen as being superseded by he later written document : Johnson Mathey v A C Rochester Overseas Corp (1990) o It would be a threat to stability of commercial relationships where dealings where precontractual statements become a sufficient basis for which to reject a valid contract: Skywest Aviation

3.3.2 ASSUMPTION OR EXPECTATION

(a) a future state of affairs the assumption is one that a contract will come into existence or a promise will be fulfilled: Waltons v Maher (1988)

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Silvori v baboro (1988): the principle operates on representations or promises as to future conduct Brennan in Maher the ssumption that a particular legal relationship then exited or would exist between the P and the D (and in the second case) that the D would not be free to withdraw from the expected legal relationsip. EK Nominees v Woolworths [2006] o There does not always need to be an expectation or assumption that the D wil not be able to withdraw o Whether it is UC for one party to withdraw, will depend on the nature of the risk of his/her withdraw which the other prty was induced to assume and the extent of to which reliance acted to the other partys detriment Austotel v Franklins Self Serve (1989): o FACTS: store premises were constructed and adapted to suit the purposes of a supermarket proprietor. The supermarket proprietor acquired special equipment and fittings and moved to terminate the lease on its existing premises. Negotiations failed to produce an agreement as to the rent payable for the new premises. o HELD: Silovi v Barbaro: (expansion) an assumption or exp that a contract will come into existence or a promise be performed or an interest granted to the P by the D (b) Clear and unambiguous The assumption must be clear and unambiguous: Legione v Hately (1983) UC is usually difficult to establish if the representation is ambiguous or unclear: Australian Crime Commission v Gray [2003] Estoppel requires a greater degree of certainty than is required for contractual undertaking: Woodhouse AC Israel v Nigerian Produce Marketing [1971] Representation cannot be clear and unequivocal if important indo is omitted: Mobil Australia v Lyndel Nominees (1998) A promise may be definite in the sense that there is a clear promise to do something even though that something is not precisely defined: FLinn v FLinn (1999) Where a P had the right to elect to have a license renewed, the absence of essential details such as the means and timing of the exercise of the right to elect, will not be fatal o The requirement of reasonableness would be implies and uncertainty would not fit into the objective criterion of this element: Wright v Hamilton Island [2003] o Promise cannot be open ended: Aus Crim Commission v Gray [2003] Aus Crim Commission v Gray [2003] o FACTS: The National Crime Authority identified Mr Gray as having transferred large sums of money on behalf of a drug syndicate. He subsequently agreed to provide evidence against the syndicate in return for immunity and witness protection for him and his wife While the Grays acted out of fear and the wish to obtain immunity they also relied on a statement by an NCA inspector who had explained the witness protection programme including the promise they would not suffer an financial disadvantage. In reliance of the statements, the Grays suffered substantial disadvantages including the loss of their identities, limits on their contact with friends and

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Topic 2 family, Mr Grays inability to earn income and their need to sell Mrs Grays hairdressing business at a loss. While in protecton the Grays received money for accommodation, electricity, telephone and sustenance. After 6.5 years, the threat to the Grays was assessed at being minimal and their placement in the programme ended. A year later, they received an income tax assessment on the money that had been paid to them by the NCA; not long after Mr Gray died from lung and liver cancer

HELD: Both the Grays and NCA officer must have understood the promise of no financial disadvantage by entering the programme subject to the constraint of reasonableness Reasonableness measured in context of the case also that there would ne no ambiguity in the promise Promise was interpreted as the NCA providing support not only during the period of protection but also for a reasonable period (judged to be three years) thereafter to allow the Grays to be rehabilitated into the community Ambiguity is not a bar to UC relief would be granted in the form of minimum equity to do justice Where the originator of ambiguous document(s) intends for it to be relied upon, he or she may be obliged to bear the consequences of the ambiguity for which they are responsible for: Woodhouse AC Israel v Nigerian Produce [1972] Where a representation may have more than one meaning, it might still be regarded as clear and ambiguous if in the circumstances it would be reasonable for the representee to have interpreted the representation in a particular way o BUT the representation may be regarded as uncertain if in the circumstances it is not reasonable for the representee to rely on it: Galaxidis v Galaxidis [2004] Legione v Hately: it is not necessary for a representation to be clear in its entirety so long as it was sufficiently satisfies the estoppel requirement o A representation that a particular right would not be asserted for X days will not be unclear or unequivocal merely because the words used as to whether the words used are equivocal (c) Assumptions may be of fact or law Lorimer v State Bank of NSW (unrep, 5/07/1991) o Facts: a cotton farmer acted on the assumption that his bank would finance the hire purchase of cetain machinery in the development of his land o HELD: the farmer may have honestly but mistakenly believed that his assumption was as to the true facts (mistake of fact) or that what were the true facts amounted to a contract that obliged the bank to finance his plans (mistake of law) Also in Waltons v Maher o Mistake of fact: that an exchange of contracts would take place in due course o Mistake of law: that there would be a future legal relationship o

3.3.3 ENCOURAGED OR INDUCED

(a) words or conduct a representation does not have to be express, it could be implied from words or adduced from a failure to speak where there was a duty to speak or from conduct: Legione v Hately (1983)

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in certain circumstances of encouragement by the D for the P to adhere to an assumption/expectation he or she had already formed OR as a resulted of being lulled into a false sense of security by the Ds failure to object to the A/E on which the P is known to be conducting: Walton Stores v Maher (1988); S&E Promotions v Tobin Brothers (1994) silence: o is usually no unequivocal there can be multiple reasons for a party to remain silent: Moratic v Lawrence James Gordon (2007) o will only be UC only where there is an attempt afterwards to assert a legal relationship different from the one which, to the knowledge of the silent party, the other assumed or expected. In this circumstance the onus is on the silent party to either (1) warn the other party that he or she denies the correctness of the assumption/expectation or that (2) to act so as to avoid an detriment that the other party may suffer in reliance of the a/e: Walton Stores v Maher (1988); Mathews v Doctrieve Corp (2003) the D must know or ought to know of the mistake being made to the P: Ampol v Mathews (1991) o wilful blindness is no excuse Ampol v Mathews (1991) o FACTS: The construction business of a corporate customer of Ampol was taken over by a new company bearing a similar name. the change was reflected in the repainting of he company vehicles and the printing of the letterhead. The bank accounts, or at least the number of the accounts, remained the same and checques were drawn on the accounts, sometimes in the old name more often in the new Nothing was done to close the acc with Ampol, in the name of the old company or create a new acc in the name of the new one No further steps were taken to revoke a guarantee of the old business obligations given to Ampol by the principals of the old company Business continued to be run in the same way as it did before and Ampol continued to supply the new company in the same way as it had previously supplied the old company o HELD: Failure of the old company to bring to notice of Ampol That the company had cased to trade and thereafter, Ampol should look to the new company for payment of accounts amounted to UC Estoppel given Lorimer v State bank of NSW (Unrep, 5.07/1991) o FACTS: bank was unaware that one of its farmers, a cotton farmer was acting under the assumption that the bank would finance his development plans. o Held: unable to rely one estoppel, two bank officers made it quite clear before he committed himself that they could give no assurance that the bank would provide the funding. It will be insufficient if the P orchestrates matters so that it appears that the Ds conduct allowed the P to adopt the assumption where the reality is otherwise: Skywest Aviation v the CW (1995)

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FACTS: SA provided surveillance services off the North Aus coast directed principally at illegal fishing and unauthorised landings on the Aus territory. After SAs contract was not renewed, a contract was awarded to amman Aviation (which was promply terminared by the CW When Aus Customs Service again invited tenders for the Costwatch contract, Skywest submitted a tender based on three Westwind aircradft appropriately modified for surveillance operations Found by the trial judge that when Skywest submitted their tender, it was aware that the cost of the modification of the aircraft avl to it to purchase, would exceed the amount it had stated in its tender. In the course of negotiations, the Chief Executive of SA and project manager both adopted a strategy or introducing into convos, the concept of equalisation (intending for the CW to be resp for the extra costs) in such a way that the Customs Service officer did not know what the duo had meant Skywest was awarded the tender. They subsequently claimed that the CW was estopped from denying responsibility for the costs of the modification of the aircraft it purchased o HELD: all the fostering of assumptions occurred on SAs behalf. The Customs Service Officer did nothing to induce a belief that the CW would pay for or contribute to any of the cost or modification outside of the tender Skywest knew that the officer was not aware of the meaning of the term equalisation and intended to keep the situation in that way o Similar result will follow if the representation made by the D was induced by the Ps misrepresentation: Office Trustee in Bankruptcy v Tooheys (1993) (b) Mere hope The D must have played such a part in the adoption of the A/E that it would be unfair or unjust if he were left free to ignore it: Walton Stores v Maher (1988) If a party places no part in the adoption of the A/E then there will be no UC by that part: Canberra Bushrangers v Byrne (Unrep, 21, December 1997) Where an A/E was formed even when there was an express statement made to dissuade that belief no UC: Lorimar v State Bank oF NSW Valbirn v Powprop [1991] o FACTS: despite clear indication by a restaurant proprietor that it would not lease particular premises, the owner of the premises risked the expense of making design and lay ut changes to its buildings in the hope that it might succesfully secure the proprietor as a tenant Negotiations fell through, o HELD: proprietor held not be estopped from denying there was an agreement to lease. Mere hope may be seen in operation where a particular interpretation is placed on an ambiguous representation by the party claiming estoppel: Chellaram & Co v China ocean Shipping Co [1991] o FACTS: solicitors for the D wrote to the Ps solicitor with we trust it will not be necessary for your client to commence proceedings until the settlement has been fully explored o When the time limitation on the action for breach of the contract expired, the P alleged the solicitors letter estopped the carrier from relying on the time bar

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HELD: noting in the solicitors statement suggested or justified the conclusion that nothing further needed to be said or done about the limitation period (c) Unauthorised representations No estoppel will arise if the rep is made by an agent who has no actual or ostensible authority to bind their principal (and the party who claims the estoppel knows this): State Rail Authority (NSW) v Health Outdoor (1986) The mere fact that a rep is not unauthorised will not necessarily prevent an estoppel from being estbl o Where it is made to the knowledge of the principle in circumstances where the principal knows or ought to know that the statement will be relied upon, a failiure to deny the statement may amount to the principals encouragement, for others to believe that the statement is authorised : Corpers (No. 664 v NZI Securities Australia (1989) Corpers (No. 664 v NZI Securities Australia (1989) o FACTS: D was an Aus subsidiary of a NZ finance company, and the mortgagee of a building in Syd CBD The owner of the building was continually in default wne went into receivership. The D unsuccessfully tried to sell the building by the mortgagees auction After the auction, representatives of the P approached a senior officer of the D, with a proposal involving the Ds officer lending the P $65million to buy the building. 3 days later the offiver advised the reps that he had referred it to NZ and they have approached it. The following day he supplied a letter setting out the terms on which the D would provide the financing and on the same dya, the P entered into an agreement to purchase thebuilding. In the mean time, the D and its NZ parent company were undergoing changes in its mgmt., and the executives were issued with written instructions limiting their lending authority. Following a daw of review, the D indicated that there was no way they would proceed with the deal o HELD: Although the officer had no actual/obs authority, a CL estoppel or alternatively and equatiable estoppel, had been made out. Ds conduct in knowingly and silently watching the D enter into the contract to purchase the building when it must have known it was only doing so because of the letter (promising finance) gave rise to estopell D bound by contract tolend the P the money

3.3.4 RELIANCE
the P must act or abstain from acting in realiance on the a/e: ASC v Malborogh Goldmines (1993) o reliance must be reasonable o departure from an a/e that is unreasonably formed or unreasonably relied upon will not normally constitute UC conduct by the D: ASC v Malborough Goldmines (1993) o in determining this, the Ps actual knowledge is relevant not any contructive notice (incl that the a/e was untrue): Standard Chartered Bank Aust v Bank of China (1991)

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this req may be a signf impediment from successfully seeking estoppel on basis of noncontractual promise o a P may be reasonably expected to appreciate the fact that a voluntary promise does not form part of a binding contract, they cannot rely on it: Walton Stores v Maher (1988) o similar situation when a party is seeking to uphold a transaction, expressed to be subject to contract: Attorney-General (Hong Kong) v Humphreys Estate [1987] o this may also be a reason for why the court will not uphold estoppel for a respresentation by someone lacking the actual/osb authority to bing the D assessing the reasonableness, the following the relevant o characteristic of the P o whethere they were being advised by solicitors art the time: Kirton v nethery (unrep, NSW, 15/07/1996) Capital Market Brokers v Hamelyn UPC (unrep, NSW SC 02/05/1989): o No estoppel o Parties were stockbrokers and merchant bankers experienced in commerce who intended to have their soliciors prepare formal documentation Autotel Pty Ltd v Franklin Self Serve (1989):both parties were of substantial enterprises, well resourced and advised dealing in a commercial transaction having a great value they did not reach the point of agreement in terms which could have been enforced The mere fact that parties may have the benefit of legal advise or were contracting according to customary practice will not, by itself, necessary prevent an estoppel from arising : Walton Stores v Maher (1988) Its still possible for unreasonable reliance to form the basis of an equitable estoppel o (1) where a principle is aware of an unauthorised rep but takes no steps to disprove that rep and effectively adopts that as their own: important here the principles knowedge and the other partys reliance on unreasonable reliance o (2) failiure by D to disuade the P from relying on an A/E can amount to encouragement of that a/e - Where there has been reasonable reliance, and the D would have dissuaded the P from relying on the a/e: Walton Stores v Maher (1988)

3.3.5 KNOWLEDGE OR INTENTION

the party who induces the adoption of the a/e must know or intend the other party to act/abstain from acting in reliance on the a/e: Walton Stores v Maher (1988) o but in Waltons, if there has been inducing of an A/E already formed, it may be difficult to establish the partys intention/knowledge: Walton Stores v Maher (1988). Eg in the course of negotiations, the D stipulates or communicates special req or specs and subsequently becomes aware that the P is acting with the obvious intent of fulfilling those reqs/intent but remains silent: eg in Marvan v Yulara Development (1989) Marvan v Yulara Development (1989): P was lulled into a false sense of security when they renovated or constructed premises to meet the Ds req in anticipation of the execution of a lease. The D knew this but did not make an objection to or cautioned the P: S&EPromotions v Tobin Brothers (1994)

3.3.6 DETRIMENT
the relevant detriment must be the Ps detriment, not the Ds: Gobblers Inc v Stevens (1993) o there must also be a link between the a/e created/encouraged and the detriment suffered: Re Ferdinando (1993)

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this detriment must be the result of adopting the [assumption] in a position of material disadvantage if departure from A/E is permitted: Thompson v Palmer (1993) eg the P pursuing a particular course of action, such as failing to take the necessary steps to become ready and willing to perform the contract, where that is required: Foran v Wright (1989) insufficient if the P, merely relying on the money they have already planned to spend at an earlier time, resulting in no altered mode or living or other disadvantage: Lorimer v Bank of NSW ( unrep, 05/07/1991) detriment is determined at the date the D seeks to resile from the A/E or expectation he or she has encouraged/induced he other party to rely on it: Hawker Pacific v Helicopter Charter (1991) its insufficient for the P to change his/her position upon the a/e: Potter Partners v Balander (30/06/1989) something like a small peppercorn may constitute as valuable consideration such this small loss would not amount to signf disadvantage as req by estoppel: Hawker Pacific v Helicopter Charter (1991) disadvantage need not be substantial o Je Maintiendrai v Quaglia (1980): relevant detriment found where the P had been required to pay arrears of rental in a bulk amount rather than on a periodic basis o Stevens v Standard Chartered Bank (1989); where P had been required to negotiate an agreement for the removal of a caveat o Collin v Holden [1989]: where P had been forced to return to court and to fight a case on its merits after the D reneged on a settlement agreement reached by counsel involved in the case. No estoppel if the P suffers detriment after learning the assumption or expectation on which they relied on was without basis: Milchas Investments v Larkin (1989)

3.3.7 FAILURE TO AVOID DETRIMENT

Walton Stores v Maher: the object of estoppel is to avoid the detriment D may be req to do no more than to o warn the P that the A/E is mistaken: Lorimer v Bank of NSW (unrep 05/07/1991) o give reasonable notice of intended departure from the A/E: CW of Aus v Verawyn (1990) before the P incurs irreversible detriment

3.4 RELEVANT REMEDY

Remedy is the courts discretion: Austotel v Franklins Self Serve (1989) There should be proportionality between the remedy and the relevant detriment: Birstar v The proprietors Ocean Breeze Building Units Plan [1997] The court will determine what is the ;minimum equity to do justice for the P : Crabb v Arun District Council [1976] Although the object of estoppel is to avoid detriment, it is possible to enforce a promise o Eg in Walton Stores v Maher (1988) The courts may order compensation based on the Ps reliance los rather than his or her expectation loss: CW v Verawyn o FACTS: Willmott pp 196 reversals of CWs policy regarding liability for ship crash

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HELD: the CW was no entitled to defences in negligence Two judges decided it on the bases of equity Deane J applied a general doctrine of estoppel by conduct extending to representations about future facts and held that there was a prima facie entitlement to relief based on the assumed statement of affairs. The other judges who also decided on basis of equity held that the minimum equity to do justice was to compensate the P for his reliance loss o Case is authority that the court should only grant a remedy that is the minimum necessary to do justice between the parties o Note a number of cases which have granted a remedy based on the Ps expectation: Edwater Grazing v Pincevic Nominees [2001] o Maximum for remedy each was would be determined by question of degree it would be more appropriate for the reliance to be fulfilled where there has been reliance for an extended period or where there had been a substantial and irreversible detriment suffered o that reliance; where ill health, worry and stress might suffice if it can be proved. o Since the majority majority preferred the minimum justice method use this Giumelli v Giumelli (1995): expectation in reation to acquisition of an interest in property o Considered the different approaches to estoppel in CW v Verawyn, and held it was possible to grant relief to a prima face enetitlement o Cases which have followed Giuelli usually involve the acquisition of property. And tend to lead to the fulfilment of the entitlement; o The other cases: prima facie entitlement may be inequitably harsh Sullivan v Sullivan [2006] since Giumelli, Verawyn is probably not law. Any factors which may diminish the expectation: o Where the P has not done equity: Giumelli o If the expectation is uncertain or extravagant : Donis v Donis [2007] Whether relief should be granted so that it ay have an adverse effect on the rights of third parties o Silvori v Babaro (1988): remedy awarded was the grant of a personal license to the Ps, could with an interest in the nature of a profit a prendre, together was sufficient to prevent the equitable interest of the purchaser (acquired through contract for sale of and) from prevailing over earlier equitable rights. o It may affect the method of granting relief Giumelli v Giumelli, court was obliged to consider the matters that stood in the way or a simple order to convey the land to the P in accordance with the assumption he had been encouraged to make (court substituted an order for payment of money to the value of the land secured by a charge over the property for the lower courts order that the land be transferred to him o Forbes and Bundock v Aus Yachting Federation (unrep 04/04/1986): where a two man yachting crew had suffered detriment in reliance upon Olympic selection criteria published by the D. REMEDY was compensation for the wasted expenditure they had incurred (buying and air-freighting boating equipment at their own expense, to mitigate the competitive adv they would have otherwise suffered rather than denying the nomination of another third party crew to allow the plaintiffs to participate).

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4 INTENTION TO CREATE LEGAL RELATIONS

consider the rebuttable presumption developed by the HC o but also note other approaches

4.1 STATEMENT OF THE RULE

Before a contract can be created: parties must have intended to enter into legal relations: Rose and Frank Co v JR Compton & Bros [1923] o Can be express/implied Merrit v merit [1970] s objective test

would reasonable people in the position of the parties, have considered the agreement as intended to be binding? Ermogenous case: relevant considerations: o Subject matter of agreement o Status of the parties to the agreement o The parties relationship to one another o The language used by the parties o The context in which the agreement was made. Ermogenous had recently case doubt over the traditional approaches of applying presumptions the correct is to look at all the circumstances, including the context in which agreement was formed and asses whether from an objective perspective, the parties can be regarded as intending their agreement to have legal cosnequences.

4.2 DOMESTIC AND SOCIAL RELATIONS

4.2.1 THE TRADITIONAL APPROACH
agreement within a marriage lack of intention Merrit v Merrit [1970] Jones c Padavatton [1969]: principles only apply within the relations between a marriage couple (father son, etc) Heslop v Burns [1964] extension of presumption eg between friend Presumption can be easily rebutted

4.2.2 NEW APPROACH

doubt the presumption actually indicates intention between parties the relevant inquiry: onus is on the parties which had intention: Ermogenous

4.2.3 CASE EXAMPLES

(a) husband and wife Balfour v Balvour: o Facts: Wilmott pp 120. o Held: agreement was unenforceable since parties were in a domestic relationship and would not have intended for legal consequences to flow on from the arrangement Reformation of Balfour principle to reflect modern day social relations o Re Dickson Catering [2002]: de facto relationship agreement about payment of wages to another was not intended to have legal consequences

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Pura v Kormehl [2004]: legal intention existed where two people in a romantic relationship entered into an agreement under which the woman would give up her employment and move in with the man and be paid $50000 per month by him for the rest of her life. (b) Separated couples Merrit v Merrit [1970]: parties had the intention when agreeing to the arrangements for the house. This was of a serious nature concerning a financial settlement between couples (c) Other family relationships Agreements here, based on natural love and affection no intention by parties Jones v Padavatton [1969] o Facts: Wilmott pp 122 o Feld: mother won, there was no legally binding agreement between the parties regarding the provision of maintenance (and then later the offer to live in the mothers house). It was only an agreement formed on goof faith despite the seriousness of the nature of the actions of the daughter in reliance of the offer Wakeling v Ripley (1951) o FACTS: PP 123 o HELD: more than a family/social arrangement. What was relevant was the serious consequences for the Ps, the P had to give up his salaries position and person and both having to move permanently to Aus. Todd v Nicol [1957]: elderly woman invited her sister and niece to move from Scotland to South Aus, in return for both being able to live with her. HELD: parties had intention Gors v Henderson; Henderson v Perpetual Trustee (WA) (1999) (Ds gave up accommodation and employment to live with and look after their step grandmother of the D in exchange for receiving real property upon her death. Held: lack of intention) Roufos v Brewster [1971]: intention where a business arrangement has been estbl between parties (who are related to each other) o Facts: pp 123 o Held: Brewsters unsuccessful. The court did hold that the parties entered unto a binding contract the agreement occurred in a commercial context. Ermogenous: onus is on party asserting legal relations existed then assess objectively all the factors relevant in determining whether this existed. (d) Social relations Heslop v Burns: no intention between friends o Facts: pp 124 This wil not be the case even when the arrangement has been made in the social setting o Simpkins v Pays [1995] parties who pool funds to enter a competition in one persons name may have legal intentions

4.3 COMMERCIAL AGREEMENT

4.3.1 TRADITIONAL: PRESUMPTION AND REBUTTAL
parties have legal intention: Rose and Frank Co v JR Compton [1923] agreement must relate to a business matter: Edwards v Skyways [1964] o the onus is heavy to disprove presumption: Edwards

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when there is a dispute about an agreement having taken place in a business setting: Esso Petroleum v Comissioners of Customers and Excise [1976] o FACTS: There was legal intention upon a customer buying petrol in order to receive the gold coins of no intrinsic value. Promotion took in context of a business setting. And sales were promised as a result of the coins also the scheme had a potentially large commercial benefit to Esso. No intention can be proved by: o Express clause stating no intended legal consequences o Overall tenor of the particular document

4.3.2 NEW APPROACH

Ermogenous: instead of a presumption applying, an inquiring should determine whether parties intended to have legal relations o Onus is on the party alleging the legal relations o Onus can be easily discharged GOVERNMENT ACTIVITIES

4.4

4.4.1 COMMERCIAL AGREEMENTS

Eg contracts to purchase stationary, construct buildings, purchase government vehciles Intention to form legal relations is usually not an issue: Rothmans of Pall Mall (NZ) c Attorney General [1991] Coogee Esplanade Surf Motel v CW of Aus (1976): contract to sell motel to the CW. o FACTS: pp 127 o HELD: parties had not formed the requisite intention. settlement of contract might have a different effect if it was in the context of a personal seller and personal buyer There needs to be more formality before intention can be proced.

4.4.2 POLICY INITIATIVES

The Administration of Papua New Guinea v Leahy (1960) o Facts : pp 127 o Held: arrangement between parties was not contractual in nature. It was an administrative arrangement in pursuance of the agricultural policy (to give assistance to an owner) Administration = social service (generally not legally binding) Australian Woolen Mills v The CW (1954) similarly decided to Leahy case

4.5 VOLUNTEER ASSOCIATIONS

Did the parties intend to create legal relations when joining sporting clubs and the likes? Cameron v Hogan (1934) FACTS: wilmot pp 128 o No declaratory or injunctive relief, given. The rules of the Aus Labour Party did not give the P any enforceable contractual rights. o Such parties are estbl on a consensual basis o There was a clear positive indication that there was intention: the rules of governance for an association would not be treated as tantamount to an enforceable contract. o The outcome would have been different if the member had a propriety interest in assets of the association

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Baldwin v Everingham (1993): facts, Wilmott pp 129 o QLD SC prepared to declaratory relief, o Cameron v Hogan was distinguished (changing social and political views), on basis of increased statutory recognition conferred on voluntary associations; political parties are now beyond a mere voluntary association Confirmation in Galt v Flegg [2003] Importance of proprietary interests and rights: Finlayson v Carr [1978]. Facts pp 129 o Membership of the Aus Jockey Clun carried important propriety rights. Rules for intentional legal relations needs to be constructed fund Ermogenous v Greek Orthodox of SA (2002): facts pp 127 o Intention was found when parties entered into an employment contract. o Archbishops employer was the Community, not the Church o If agreement was entered with the Church certain aspects would have still give way to legal relations: o Considered: subject matter of agreement (employment), conditions of employment in absence of any property, income or reputational interests involved, the court has no jurisdiction to decide issues giving rise to remedies for a non contractual relationship: Rush v WA Amateur Football League [2007] o pride and costs were not sufficient

4.6 CIRCUMSTANCES INDICATING ABSENCE OF INTENTIONS

4.6.1 HONOUR CLAUSES
Its open to parties ot purposely not create legal relations can be done through honour clauses Rose and Frank co v JR Compton [1925] o Existence of honour clause in Rose and Frank case prevented an action from being brought Jones v Vernons Pools [1938] clause inserted on back of a football coupon by a company running pools on football matchs

4.6.2 PROMOTIONAL PUFFS AND FREE GIFTS

the courts look at the entire context in which the advertising takes place if such language is used in a business setting or to promote a commercial end, a court may be persuaded that the necessary intention existed: Esso Petroleum v Commissioners of Customs and Excise [1976] Carlil v Carbonic Smoke Ball Company: advertising was more than a promotional puff. o Intention was evidence by the company depositing 1000 pounds in a bank for purpose of payment

4.6.3 EX GATIA PAYMENTS AND WITHOUT PREJUDICE OFFERS

Ex gratia payment: where parties are negotiating to resolve a particular matter and one party offers to make a payment to the other Without prejudice letter: eg when someone (often a solicitor) sends a letter to the other party in which an offer is made to conclude the matter between parties Edwards v Skyways [1964]: redundancy package for crew members negotiated between an airline company and the British Air Line Pilots Association

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Despite the use of words ex gratia payment in negotiations, the parties did intend to create legal relations Ex gratia does not indication that an agreement is to be without legal effect. It indicates that he party agreeing to pay does not admit any pre-existing liability on his party.

4.6.4 LETTERS OF COMFORT

It is often made to a subsidiary company, the lender may request the holding company to guarantee performance of the borrowers obligations o If the holding company is not prepared to give a guarantee, the lender may request that a letter of company be provided,; it gives an assurance or at least a suggestion that the subsidiary company will be able to meet it obligations when they fall due (parent company promising to pay for subsidiary companys obligation) To determine whether legal relations were intended, the court looks at the construction of the document and the circumstances surrounding its sending (esp in a commercial context): Banque Brussels Lambert SA v Aus National Industries (1989): FACTS, Willmot pp 133 o The case held that what needs to be considered is: (i)the letters construction were sufficiently promissory in nature and (ii) the letter was part of a commercial transaction The knowing use of legal phrases and concepts may indicate a promissory intent to be bound: Gate Gourmet Aus v Gate Gourmet Holding AG [2004] subject to clauses Coogee Esplanade Surf Motel v CW (1976)

4.6.5
Letter of intent was inconsistent with the existing contract to buy. It was relevant in determining that neither parties had intention. Eg if a solicitor writes to a prospective client to place on record the understanding that all legal work or and incidental to the completion of a particular project , and that understanding is accepted - unlikely that parties had intention: JH Milner & Son v Percy Bilton [1966] o phrasing was too vague o

5 CERTAINTY AND COMPLETENESS

A contract or a particular term must be sufficiently certain, that is, it must be both clear and complete: Thorby v Goldberg (1964) If a contract is not certain it is said to be void: Australia & New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] If a term is not certain it may be excised from the contract provided that it can be severed without undermining the agreement as a whole. If severance is not possible, that is, the uncertain term is an essential term, then the whole contract is void. Essential terms include the parties, the subject matter, the price and the principal promises: Twigg (t/as Adrian Twigg & Co) v Kung (1994) o In this case, it was held that the principles relating to uncertainty apply to all agreements, including a costs agreement between a solicitor and client. The fiduciary relationship imposed additional dbusstuties, including a duty that the agreement should be fair and reasonable.

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strict approach can be justified on the basis that it is not the task of the courts to write the agreement for the parties, nor can the courts formulate a remedy if it is not clear what the rights of the parties were in the first place. A contract rendered void by uncertainty may generate a right to a reasonable remuneration. Thus o if services are rendered under a void agreement, the person providing the services may sue for a reasonable payment (quantum meruit, ie "as much as he [or she] deserved"): Stinchcombe v Thomas [1957], LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) o if goods have been supplied, a reasonable amount must be paid for them (quantum valebant, that is, "as much as they were worth"): o If goods can be recovered then the supplier may do so because no title passes under a void contract. But, apart from these ameliorative measures, the parties are left without any rights. GR: a court should do all in its power to uphold the arrangement that the parties have made, even if it is defective. o These are now unusual, though nevertheless still found, where a court will declare a contract void for uncertainty. o The courts use their interpretive powers to make sense of difficult or ambiguous language and, at times, are prepared to resort to the implied term to fill a gap: Twigg (t/as Adrian Twigg & Co) v Kung (1994)

5.1 GENERAL RULE G SCAMMELL AND NEPHEW V HC AND JG OUSTON [1941]

a prerequisite to a valid contract is for parties to express themselves so that their meaning can be determined with a reasonable degree of certainty forms (these raise issues of uncertainty 1. Uncertainty may be found either because the language is uncertain and words used cannot be given a definite meaning, or because the agreement is incomplete: Thorby v Goldberg (1964), G Scammell v HC and JG Ouston [1941] 2. Even if theres no ambiguity, if parties have not agreed to the essential terms of a contract, the contract will not be enforceable: (illusory promise) 3. A contract will be unenforceable if it reserves a discretion for a [arty to not carry out theirobligation: Thornby v Goldberg (1965)

5.2 AMBIGUITY AND UNCERTAINTY

5.2.1 INDIVIDUAL TERMS
clauses that are vague, ambiguous or uncertain will cause the contract to be void meaningless clause: cannot be assigned a meaning: Fitzgerald v Marsters (1956) o treated the same way as an uncertain clause

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if it is uncertain because it could have multiple meanings, its unlikely that itll be void foro uncertainty. The court, upon construction will decide the appropriate meaning: , Council of The Upper Hunter County District v Australian Chilling And Freezing Co Ltd 1968 any illusory clause: Whitlock v Brew (1968) - again the parties put a term in their sale agreement that the purchaser would lease part of the land to Shell (to run a service station on it) on such reasonable terms as commonly given under such a lease. The court held the agreement void for uncertainty. No evidence was led as to standard industry terms so 2 essential terms length of lease and rent were missing. . An agreement is not enforceable if it leaves out vital matters eg price or at least a way to fix a price In Hall v Busst (1960) 104 CLR 206 the vendor could re-buy the land at a future time at price plus an amount for additions and improvements less a reasonable sum to cover depreciation of all buildings and other property on the land. The Court said the contract was void for uncertainty as it could not tell which method of depreciation the parties had intended to use and hence the price was uncertain. Heffey, Robertson and Patterson say that if the High Court today considered the same facts it might construe the contract with more liberty. Scammell v Ouston [1941]: agreement too uncertain, no common hire purchase terms and the agreement required further agreement of the parties. o Facts: Willmott pp 89 Fitzgerald v Masters (1956) 95 CLR 420 the contract was to sell a farm. The last term said the sale included a set of further terms (the usual conditions of sale in use or approved by the Real Estate Institute of New South Wales relating to sales by private contract of lands under the Crown Lands Act). But these terms did not exist so that term was meaningless and therefore void. The term was severed from the rest of the contract terms. Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 the court emphasised that it would make decisions on certainty using an objective standard. An employment agreement provided that the salary would be supplemented by the option of the employee sharing in a senior staff equity share scheme, but such scheme was never implemented so the court held that term was void. Lend Lease Financial Planning v Southcap [1998]: agreement for lease in relation to outgoings, the tenant agreed to pay a proportion based on the area of the tenancy to include air-con electricity costs. This was sufficient certain o Approach indicates that the court is willing to uphold an agreement entered into by parties, esp when the facts indicate intention to be bound by the agreement. State of NSW v Banabelle Electrical (2002): clause in construction contract provided that disputes that arose between parties would be resolved by an expert as agreed between the parties or, if they did not agree, an expert nominated by a person named in the Annexure. No such person was named. HELD: VOID

5.3

SAVING AMBIGUOUS OR MEANING LESS CONTRACTS

5.3.1 LINK TO EXTERNAL STANDARD

Only where it is possible

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Parties may provide for a standard, machinery or formula designed by the parties to take the place of their own agreement : Hawthorn Football Club v Harding [1988] Reference can be made in a direct way eg by incorporating standard hire purchase terms used by the particular hiring company: Scammell v HC and JG Ouston [1941] (but here, there were numerous forms of hire purchase transactions with various) Hillas and Co v Arcos (1932): facts Wilmott pp 91 o specifics agreed to in the original contract was sufficient to hold an option where the parties had a choice to pursue in future. Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 the court emphasised that it would make decisions on certainty using an objective standard. An employment agreement provided that the salary would be supplemented by the option of the employee sharing in a senior staff equity share scheme, but such scheme was never implemented so the court held that term was void.

5.3.2 LINK TO REASONABLENESS STANDARD

Hillas and Co v Arcos (1932): the court may determine, on the basis of what is just and reasonable, a term in which the contract is silent in detail but the parties intentions are clear

5.3.3 SEVERANCE
test to see whether term can be severed from contract- The possibility of severance depends upon the intention of the parties. If you cannot sever, then the whole contract is void. (Fitzgerald v Masters (1956) if the offending clause forms an important part of the contract, parties will not have intended to be bound by its absence: Whitlock v Brew (1967) (facts, Wilmott pp 93) an uncertain clause can be saved if the offending part of that clause can be severed, leaving the clause still intact: MacDonald Holdings (Qld) v Nikolas [2007]

5.3.4 DIVISIBLE OBLIGATIONS

The Life Insurance Company of Aus v Phillips (1925) FACTS, Wilmott pp 93 o If the ambiguous part of an agreement can be severed from the insurance policy, the remainder of the policy can still be upheld o If the term is an independent divisible obligation , it could be severed from the agreement, o Infer using the parties intentions

5.3.5 WAIVER OR REMOVAL OF UNCERTAINTY

A vague or meaningless clause may be waived if it is a clause that is purely for the benefit of one of the parties: Perri v Coolangatta Investments Pty Ltd (1982) GR: a clause purely for the benefit of one party may be waived by that party also applies to such a clause when it is defectively drafted. o Meehan v Jones (1982): o Bradford v Zahra [1977] Qd R 24, the Supreme Court of Queensland allowed an uncertain subject to finance clause to be waived by the purchaser. The purchaser had in fact found finance Domestic arrangements will often give rise to a potential uncertainty argument because in the very nature of such arrangements the parties are unlikely to use precise language: Shiels v

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Drysdale (1880) (An agreement, by a married woman, that she should attend upon her aged father and mother as long as they lived, and provide them with necessary services, and in consideration thereof her father should, when requested, transfer to her his interest in land, was Held, void for uncertainty.) o Whether or not a court is prepared to give effect to vague domestic arrangements depends in part on the extent to which the parties, or one of them, have materially committed themselves: Palmer v Bank (NSW) [1973] (Promise to "look after" aged person till his death S by will provided that if N, a woman with whom he was living, did not survive him for 30 days, he appointed the plaintiffs, two friends of long standing but younger than himself, to be his executors and gave them the whole of his estate. Shortly afterwards, on a visit by the plaintiffs to S and N an oral arrangement was made between them that S and N would leave the property on the death of the survivor of S and N to the plaintiffs, and the plaintiffs, a husband and wife, would move to live in S's house on the death of S or N and look after the survivor of S and N for the remainder of his or her life. N subsequently died, and the plaintiffs went to live in S's home where they cared for him until his death. Held, that the undertaking of the plaintiffs to "look after" the survivor of S and N referred to services which were, in the circumstances of the case, of a sufficiently definite character to constitute a legal obligation, and accordingly the oral arrangement between S and N and the plaintiffs constituted a legally binding and enforceable contract. Per curiam A court can never be bound by authority to hold that a particular form of words used by unprofessional people is so uncertain in meaning as to require that its use must always render any arrangement into which it enters too uncertain to be legally binding.) Where there is a generic description of some important term, and that description is not sufficient to identify the contents of the term, the court will hold that the contract is uncertain unless evidence is adduced regarding what was meant by the description: Palmer v Bank (NSW) (1975) Whitlock v Brew (1968), the words "upon such reasonable terms as commonly govern such a lease" were not sufficient to identify what those terms would be If evidence can be adduced to provide the missing content, then this type of defect may be cured: o Allcars Pty Ltd v Tweedle [1937] ("your usual hiring agreement"). o In Myam Pty Ltd v Teskera [1971] made it clear that, had evidence been adduced of the charge commonly used by the company, the clause would have been enforceable. McAuley v Greater Paramount Theatres (1922) FACTS, Wilmott pp 94 o Uncertainty removed before action commenced specific performance of contract was ordered.

5.4

INCOMPLETE AGREEMENT agreement to agree: when parties have not reached final agreement on the essential aspects of the case , leaving a matter or matters to be agreed at a later stage: Brooker Industries v Wilson Parking (1982) if an agreement to negotiate : Sometimes parties in their negotiation are not yet at the stage of entering into a detailed specific terms agreement, but wish to have a relationship with the other

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party such as a joint venture. Their preliminary agreement is often known as a heads of agreement which contains terms to require the parties to negotiate further. Leading decision - Coal Cliff Collieries v Sijehama Pty Ltd (1991) FACTS, Wilmott pp 96 o Agreement to negotiation can be enforceable where (i) parties provided good consideration (ii) terms of the agreement to negotiate was sufficient certain o Also see Aiton Australia v Tansfield (1999): if parties indicate intention to be contractually bound in the future and the language of the agreement is such that the courts can attribute meaning to it, the agreement can be enforceable o LMI Australisia v Baulderstone Hornibrook [2001]: despite elements of the agreement be unenforceable, if the remaining elements are sufficiently cohesive, and coherent to stand as a contract in their own right, then it is enforceable. Vivian Fraser & Asociates v Shipton [1999]: no express Agreement to negotiate, noneed to consider its enforceability

5.4.1 AGREEMENT CONTAINS MECHANISM TO COMPLETE

(a) reference to a third party parties may leave aspects, incl essential terms to be decided by a third party: Godecke v Kirwa (1973) where parties provide for a matter to be agreed to by themselves and if there is conflict, for the issue to be resolved by a third party often am arbitrator: State of NSW v Barnabelle (2002). o Parties are not required to agree in the futre o Does not affect the completeness of the contract: Hawthorne Football Club v Harding [1988] FACTS, Wilmott pp 98 HELD: machinery put in place did no require further agreement between parties in the future o Also, Brooker v Wilson Parking (Qld) (1982): lease which contained an option for a new term, the rent to be mutually agreed between the lessor and lessee and the failing agreement then such rental as ay be fixed by an arbitrator held to be valid. The mechanism provided that a hired party would decide the rental, so no further agreement between parties was required. (b) Discretion retain by contracting party A contract which leaves essential matters for later determination by one of the parties, it is unenforceable: May and Butcher Ltd v The King [1934] Exceptions: o Godecke v Kirwan (1973) FACTS, Wilmott pp 98; HELD: subsidiary matters would be subject to one of the contracting partys discretion, with contract still valid. Where partys matter is illusory - If a party can choose whether or not to perform a contractual obligation it is an illusory promise and thus void for uncertainty: Placer Development Ltd v the Commonwealth (1969) o Godecke v Kirwan (1973) 129 CLR 629 a preliminary agreement which required if needed a purchaser to sign a further agreement with additional terms inserted by the vendors solicitor was held to be binding. Here the discretion was to be exercised by a third party and was subject to not being inconsistent with the preliminary agreement. o Meehan v Jones (1981) 149 CLR 571 o In MacRobertson Miller Airline Services v Commissioner of Taxation 1975 an exemption clause was so wide that it was construed that the clause rendered the promise illusory and so there was no enforceable contract.

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Where there is a very wide discretion, the party is considered to have not made a promise at all: Loftus v Roberts (1909) [FACTS, Wilmott footnote 99) If discretion only relates to the way the parties carry out the obligation, contract is enforceable: Thornby v Goldberg (1965), Yaroomba Beach Development v Coeur de Lion (1989) (FACTS WILMOTT, PP 99)

5.4.2 BREAKDOWN OF MECHANISM TO COMPLETE

The court will not substitute a mechanism because to do so would be to compelte the agreement for the parties: Milnes v Grey (1807) Brooker Industries v Wilson Parking (Qld) (1982) FACTS, Wilmott pp100 o A clause which determines price or rent where the manner of calculation was essential to parties meant that completion of the contract was conditional upon the determination of price or rent in the manner specified o Where there is a clause which requires parties to ascertain a reasonable price a rent here the court could interfere Sulbrook Trading Estate v Eggleton [1983] FACTS, WILMOTT, PP 101; both parties had a say in the choice of valuers (to determine the property price) o The specific mechanism was aimed to estbl a fair and reasonable amount if it broke down, the court could interfere and substitute its own machinery to determine a fair and reasonable price. Where sale of goods price is determined by ss 14 Sales of Goods Act 1923 (NSW) o Where party cannot/does not provide a clause for third party evaluation the agreement is void: ss 14(1) o If inability to obtain third party valuation is due to the fault of one party, the other party may seek an action in damages: ss 14(2) o If any of the goods has been delivered to and appropriated by the buyer, the buyer must pay a reasonable price for them: ss 14 (1) SAVING INCOMPLETE AGREEMENTS

5.5

5.5.1 IMPLICATION OF TERMS

Hillas and Co v Arcos (1932): option in a contract to sell Russian softwood timber, which did not specifcy the price or quality of the timber nor the dates doe delivery o Use of verba ita sunt intelligenda ut res magis valeat quam pereat (words are tobe construed so that the thing may avail rather than perish) It does not mean that The court completes the agreement for the parties Infers a new meaning A contractual obligationmust be performed within a reasonable time when the contract has not stipulated a date by which performance should occur: Perri v Coolangatta Investments (1982) Limits to what the courts will imply o Where agreement has not occurred on the essential terms o The greater number of terms not agreed upon, the less likely the courts are to infer: Hall v Busst (1960) (essential matters are the parties subject matter and price)

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Where parties have gone beyond the negotiation stage and intend to be legally bound, its more likely that a term will be imlied and the agreement enforced: Hildas v Arcos (1932) SOGS if property has been delivred and title passed, the court will seek to imply a term necessary for the validity of the agreement: Hall v Busst (1960)

5.5.2 FAILURE TO SPECIFY PRICE

GR, for SOG: no binding agreement if there is no agreement to price: Hall v Busst (1960)

(a) Contract is silent on price Contracts for sale of goods courts more likely to imply a term if the purchaser is willing to pay a reasonable price: Hall v Busst (1960) o Strengthened by intention of both parties to be bound eg when contract is partly executed and property in goods has passed Hall v Busst (1960) o Affirmed by ss 13(2) SOG Act 1923 (NSW) Courts will not imply a reasonable price for sale of land: Stock & Holdings v Arrowsmith (1964) (b) Contract provides for parties to agree in future Case authorities not entirely consistent SOG: courts may implu a term that foods will be sold at a reasonable price, upholding the contract: Foley v Classique Coaches [1934] o Where parties have not agreed to agree on a price in the future, it does not mean they have fixed the price: ss 13(1) SOG Act 1923 (NSW) Buyer is required to pay a reasonable price - ss 13(2) SOG Act 1923 (NSW) For sale of land or rental (option to renew rental) , not the case: Stock & Holdings v Arrowsmith (1964) (c) Contract makes provision for mechanism to complete Likely to be valid refer to above notes (d) Contract provide for payment of a reasonable price Inconsistent authorities Whether an agreement is sufficient certain depends on the nature of the subject matter. o Sale of goods reasonable price: an objective standard, does not require further agreement between party. If one party breaches the agreement, the court can assess the price to be attributed to the goods, and award damages: British Bank of Foreign Trade v Novinex [1949] Courts applying external mechanism for determining reasonable rental when the mechanism estbl by parties broke down: Brooker Industries v Wilson Parking (1982) South Syd City Council v Royal Botannical Garden [1999]; The Amble Inn v Ryan [2001] FOLLOWED Hall v Bussts approach with land contracts.

5.6

SUBJECT TO AGREEMENTS

5.6.1 SUBJECT TO FNANCE

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When purchaser entered into an unconditional contract, and cannot contain finance to pay the vendor, they will be in breach of contract and may pay dmg: o Sub ject o finance clauses can be used, immediately binding on both parties; will com to an end when the purchaser cannot find finance Meehan v Jones (1984) authority

(a) Satisfactory finance Meehan v Jones (1984) clause was inserted for purchasers benefit who could determine whether finance was satisfactory o Needs to act honestly (b) Steps to be taken to obtain finance The purchaser is required to do all that is reasonable to obtain finance: Meehan o More purchasive if purchasers undertake to use their best endeavours to obtain finance: Jet City v Yenald Nominees (un rep, 09/04/1999) (FACTS, WILMOTT PP107) (subject to finance clause conferred a duty on the purchaser to act honestly and reasonably)

5.6.2 SUBJECT TO CONTRAC

Masters v Cameron (1954) 3 categories 1. the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. In this situation there is a binding contract. 2. a case in which the parties have completely agreed upon all terms and intend no departure, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. In this situation there is a binding contract. 3. one in which the intention of the parties is not to make a concluded bargain at all, until they execute a formal contract. In this situation there is no contract. Baulkam Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) fourth category: parties intend o To be bound immediately o Expecting to make a further contract, substitution the first one (which contains, by consent, additional terms) Where subject to contract is express, then theres no binding contract: Masters v Cameron o Esp where it is a substantial commercial transaction: Masters v Cameron What needs to be considred: o Intention o Language used in agreements Federation Properties v Tzioras [2001] (negotiators experienced in buying and selling real property, knew the legal implications of using the terms offer and accept) o Conduct of parties Marek v Australisian Conference Association [1994] (engaging in solicitors to prepare a contract for sale of land, indicates party DO NOT intend to be bound until a formal document is excecuted) o Subject matter

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(a) M v C, category one Branca v Corbarro [1947] (FACTS, WILMOTT, PP 109) o Relevant: use of the words provisional and until in the agreement and payment of a deposit (b) Mv C, category two Niesmann v Collinridge (1921)- pp 109 o All essential elements had been agreed upon in the first agreement o Only item to be relevant on execution of formal contract was the date for payment of purchase money (c) MvC, category three M v C payment to seller (deposit) was made on the basis that if a formal contract was executed, the payment would be considered a deposit (d) Fourth: LMI Australasia v Hornibrook [2001]

5.7

TYPES OF UNCERTAINTY AND THEIR RESOLUTIONS They are: (1) uncertainty is due to imperfect or imprecise drafting. (2) deliberate omission where the parties have sketched out the structure of their agreement and have decided to leave certain matters for later resolution Vague or unclear language or a failure to reach agreement on some essential matter indicates a o lack of contractual intention: Horton v Jones (1935) (promise by defendant to leave his fortune to the plaintiff if she would look after him for the rest of his life held not to be couched in the language of contract.) Note: Schaefer v Schuhmann [1972] (A testator by codicil gave the house in which he lived and its contents to his housekeeper if she should still be employed by him as housekeeper at his death. The codicil had been prepared by the testator's solicitor on the testator's instructions given during the month following the first employment of the housekeeper. It had been posted to the testator. The testator's eyesight was not good and he asked the housekeeper to read it to him. She then called a taxi to take the testator to the bank where he executed the document that day. When the time came for the testator next to pay the housekeeper the wages due to her he told her that he did not propose to pay her any more because he had left her the house. He provided her with money to meet such household expenses as were paid for in cash but he paid her no wages thereafter. He died some five months after the execution of the codicil. Daughters of the testator made a testator's family maintenance application in respect of his estate) Held: o is evidence that no concluded bargain was reached o cannot provide the court with a basis for enforcing the supposed agreement;3 or renders the consideration illusory: Placer Development Ltd v Commonwealth (1969)

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the courts do not like to hold a contract void for uncertainty, particularly if performance of the apparent agreement is well advanced: Sinclair v Schildt (1914), Turner v Bladin (1951) Upper Hunter County D C v Australian Chilling & Freezing Co Ltd (1968): As long as it is capable of a meaning the court will decide its application no narrow or pedantic approach is warranted.

5.7.1 UNCERTAIN LANGUAGE

Usually solved through the courts interpretation problems Extrinsic evidence (other than the parties' own understanding of the agreement) may be used to clarify ambiguities (Life Insurance Co of Australia Ltd v Phillips (1925)) or to establish the background and evident purpose of the agreement: Quainoo v NZ Breweries Ltd [1991] 1 NZLR 161 (CA) (the word "advances" in the context of a guarantee agreement covered advancing credit for the purchase of goods). o Exceptionally, evidence of the parties' subjective intentions will be admissible if the objective test simply does not work: Raffles v Wichelhaus (1864); FACTS: parties were at cross-purposes because there were two ships which met the description "Peerless" sailing from Bombay. HELD: A reasonable bystander would not have been able to determine which one the parties meant. There was no contract. The courts may construe o an apparently meaningless clause: Meehan v Jones (1982) (purchaser's subject to finance clause "on satisfactory terms and conditions" held to be sufficiently certain). Tonelli v Komirra Pty Ltd [1972] (current bank overdraft rate") ; o reconcile contradictions within the contract: Australian Guarantee Corp Ltd v Balding (1930) o may exercise their powers of informal rectification6 In doing so, the courts will prefer to interpret an ambiguous clause so that it provides for a sensible rather than an irrational meaning: Watson v Phipps (1985) Words that are plain but that nevertheless lead to an absurdity will be modified to accord with the evident intentions of the parties: Watson v Phipps (1985) - [T]he grammatical and ordinary sense of the words may be modified so as to avoid that absurdity or inconsistency, but no further." Sometimes a court must simply choose between two equally tenable but mutually exclusive meanings: Modifications Pty Ltd v Doyle [1991] NSW ConvR 55-578 (NSWCA) o But a court may conclude that no choice can be made: Mercantile Credits Ltd v Harry [1969] (guarantee referred to a lease, but there were two leases neither of which could be definitely identified as the one referred to). Obvious errors, such as the omission of a word, can be amended by the court reading into the agreement the missing word: o Fitzgerald v Masters (1956 (word "inconsistent" read as "consistent" but even so clause was meaningless and was ignored); o Watson v Phipps (1985) (words granting a lessee the right to "offer to purchase" at a certain price construed as an option agreement); o Ex parte Whelan [1986] (FC) (omission rendering a rent review clause meaningless read in by the Court)

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Words that are included in error can be excised: Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) Words that are obviously erroneous may be corrected: Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) The courts may look to the subsequent conduct of the parties to find a meaning to a clause that is obscure, or to fill a gap: Carr v Brisbane CC [1956]; eg o W & J Sharp v Thomson (1915) - (showing of a sample clarified what goods were being sold) o Kell v Harris (1915) (one party precluded from arguing uncertainty when both had willingly acted on particular interpretation of the agreement) Clauses that provide for o choice of performance: Head v Kelk (1961) o price variation: Peters American Delicacy Co Ltd v Champion (1928) (although an alteration of price may require buyer's consent if contract is to continue); York Air Conditioning & Refrigeration (Australasia) Pty Ltd v Commonwealth (1949) (price variation clause in favour of buyer); Lewandowski v Mead Carney-BCA Pty Ltd [1973] (salary within a range); Kabwand Pty Ltd v National Australia Bank Ltd [1989] (variable interest clause "conforming with general movements in the bank's interest rates" held enforceable) o are not uncertain, though at times they may come close to being illusory, if they involve an unfettered discretion concerning whether to perform or not: Placer Development Ltd v Commonwealth (1969); Biotechnology Australia Pty Ltd v Pace (1988) (option to participate in a non-existent equity sharing scheme held to be either illusory or uncertain); Bailes v Modern Amusements Pty Ltd [1964] (promise to repay loan when company considered it was in a position to do so held to be either illusory or uncertain)

Generally, agreements to agree will not be enforced if there is no external criterion or method of fixing the term or terms left unsettled: o Finality of agreement is one of the essential hallmarks of a contract. Where the parties have left an important part of the deal to be decided by later agreement, the courts regard this as an incomplete agreement: Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) Qualifications to this GR

(1) The rule ispractically inconvenient. Commercial people often wish to defer agreement on some important matter while they agree on the other essentials: In order to do so without risk of the agreement being held to be incomplete, the parties must provide either a formula within the contract, or machinery such as an arbitration clause, in the event of failure to agree on the deferred term.

(2) The rule, like the ambiguity rule, does not apply to inessential terms: JB Rogers Ltd v Harry Lesnie Ltd (1927)

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(3) The rule does not apply to sale of goods contracts in which the price is to be agreed later: Sale of Goods Act 1923 (NSW), s 13 If no agreement can be reached a reasonable price must be paid: rule is uncertain - Aus and NZ Banking Group v Frost Holdings [1989]

(4) In some cases the courts have shown a marked propensity to find a way around the rule.7 One particular device is the implied term. However, invoking an implied term to fill a gap deliberately (as opposed to inadvertently) left by the parties may not conform to the normal test applied for the implication of terms: Aus and NZ Banking Group v Frost Holdings [1989]

(5) It has been suggested that a contract that defers agreement on some essential term imposes an obligation to bargain in good faith to come to an agreement on the deferred term This approach avoids the drastic result of striking down the agreement and provides a remedy in the event of one of the parties failing to bargain in good faith: At the very least the courts will find an implied obligation to do all that is necessary to make a machinery provision work (eg obtaining a valuation).11

(6) An agreement to agree must be distinguished from a valid agreement to contract. a valid contract is an informal agreement that is immediately binding in which one of the terms is to enter into a more formal agreement later: Masters v Cameron (1954). If the content of the latter agreement is too uncertain, then the parties may only be bound by the preliminary agreement: Tern Minerals NL v Kalbara Mining NL (199

(7) agreements that are subject to some contingent condition- under which either the whole contract is suspended until the condition is satisfied or a particular obligation is suspended If the clause providing for this is itself uncertain, it would seem that the clause may be waived by the party for whose benefit it was inserted, despite the uncertainty: Meehan v Jones (1982 This is consistent with the principle that subsequent events may remove an initial uncertainty.

6 FORMALITIES
6.1 GUARANTEES
Certain building contracts require a gurantee must be in wirting and signed by a party to be charged in order to be enforceable - Home Building Act 1989 (NSW), s 7,

6.1.1 NATURE OF A GUARANTEE

Guarantee is a contract to answer for the debt, default or miscarriage or another who is to be primarily liable to the promise: Yeoman Credit v Latter [1961]

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where one occurs, there are two transactions (1) the principal one is between the lendor and the debtor (2) contract of grantee is entered into between the lender and the guarantor the secondary transaction guarantor is secondary liable to the lender. Liability will only arise if the principal transaction between is lender and debtor is valid and there has been a default in the principal transaction

6.1.2 TRANSACTIONS THAT ARE NOT GUARANTEES

(a) contracts of indemnity surety undertake primary liability surety may be liable notwithstanding the principal transactions unenforceable: Yeoman Credit v Latter [1961] Yeoman Credit v Latter [1961], facts 363 o Issue: was contract one of guarantee or indemnity ? o HELD: document was an indemnity. The surety had undertaken primary liability for the obligations of the minor under the hire-purchase agreement so was liable to Yeoman Credit (b) Promise of guarantee made to debtor The guarantor promises the lender that if the debtor defaults, he or see will pay amounts to the lender It is possible for a person to promise the principal obligator (debtor) that he or she will pay the debt of the debtor, since the promise is not made to the person with whom the principal obligator contracts (lender) the contract is not one of guarantee: Eastwood v Kenyon (1840) (c) Person agrees to take over debt of another Gray v Peason (1877), facts, Wilmott pp 364 o Contract not required in writing as it was not a guarantee (d) Agreement that imposes no personal liability Where person proffers his/her property as security to the promise under the principal transaction Harvey v Edwards, Dunlop (1927) Harvey v Edwards, Dunlop (1927), facts Wilmott pp 364 o Not a guarantee, did not require writing o Mr Harvey had not promised to answer for the debt of the company. o If proceeds of sale of Mr Harveys property were insufficient to cover the debt there was no obligation on Mr Harvey to pay out of his other assets. It would have been the case if the contract for a guarantee (e) Letters of comfort Guarantees are obtained when the creditor is concerned that the debtor may be unable to meet their contractual liability under the principal transaction Where 3rd parties are not prepared to provide a guarantee to the lendor they can issue a LOC so give assurance about the likelihood of the debtor meeting obligations under the principal contract Commonly given by a director of shareholder where an advance is made to a company or by a holding company where an advance is made to a subsidiary company Common info: o 3rd party isaware of facility the lender is providing to debtor

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Terms of the facility are accepted with the consent and knowledge of the 3rd party ; it is the policy of the 3rd party to ensure that the debtor (holding company/subsidiary) is at all times in a position to meet its liabilities when it falls due Whether it is binding as a contract depends on its construction Was there an intention by the 3rd party and lendor to enter into legal relations? The presumption is that parties do intend if they enter into a commercial transaction. The onus is then on the 3rd party to show that despite the LOC, they did not intend to establ legal relations: Banque Brussels Lambert SA v Australian National Industries (1989)

6.1.3 REQUIREMENT OF WRITING: CONTENT

an enforceable guarantee must be in writing or there must be some memorandum or not of the promise to be in writing Harvey v Edwards, Dunlop (1927)the document must contain all essential terms of the agreement (a) Information particular to the guarantee (1)Names of the arties o Where theres reference to a party without their express identification, a description will be sufficient even if the description used can be explained by extrinsic evidence without having to resort to evidence to prove intention of the author: Rosser v Austral Wine & Spirit [1980]( HELD Vic SC held there was sufficient description and parole evidence rule was admissible to identify who such members were) (2) relevant terms must be stated- amount of debt to be guaranteed must be specified o Nb Vetro Glass v Fitzpatrick (1963) o If it is a guarantee of the amount advanced by the lender (with interest on that amount), the interest payable should also be specified Two important caveats o (to do with disclosure of consideration for valid contract of guarantee) although the lender must provide valudable consideration to the guarantor for a valid contract of guarantee, the nature of the consideration is not required to be contained in the guarantee: - NO APPLICATION TO NSW (LEGISLATION) o Where a material term has been omitted, there are limited circumstances inw hciht he guarantee will still be enforceable If it is for the benefit of the lender, the lender is entitled to waive the benefit of the oral term and enforce the guarantee as modified: Hawkins v Price [1947] (failiure to disclose interest rate, lender may choose to waive the benefit of the oral term concerning recovery of itnerest) (b) Acknowledgement of the agreement More related to statutory provisions for contracts concerning land

6.1.4 REQUIREMENT OF WRITING: SIGNED BY PARTY TO BE CHARGED OR AGENT

the promise or note or memorandum of the promise must be signed by the party to be charged or by some other person by the party lawfully authorised: upon debtors default, the lender will seek to enforce the guarantee against the gurantor o the guarantor is the party to be charged within the meaning of the statutory provision guarantor needs to sign the gurantee o usually no problem

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o where solicitors are involved then there are less difficulties( if any) Durrell v Evans (1862), facts pp 367- ISSUE whether printing of the Ds name at the top of the sales note by the agent was sufficient to satisfy the statutory requirement o HELD: CITING Johnson v Dodgson (1837), when it is ascertained that the peron meant to be bound by it as a complete contract, the statute is satisfied, there being the note in writing showing terms of the contract and recognised by him o The court was satisfied that the agent was also acting as the agent for the D, statute had been satisfied o Refered to as the authenticated signature fiction concept o Used by HCA in Pirie v Saunders (1960) Pirie v Saunders (1960): if the name of the party to be charged (not the usual signature) is placed ont the document, it is to be treated as a signature for the purposes of the statute if such party expressly or impliedly indicates that they recognise the writing as being an authenticated expression of the contract o Durrell v Evans (1862) it does not matter where the name appears in the document or whether initials or some kind of mark is used to authenticate the document

6.2 CONTRACTS RELATING TO LAND

Conveyancing Act 1919 (NSW) s54A: requires formality

6.2.1 NATURE OF CONTRACT NEEDING WRITING

the following types of contracts require writing formalities o sale of land o any interest in land o contract for the other disposition of land or any interest in land disposition wide term which includes o mortgage of land o lead o declaration of trust in relation to land Power Cell v Cuzeno [2004], facts, pp 369 (joint venture) o The arrangements entered into between parties, which the new vendor had agreed to take over the sale of units had to be in writing to be enforceable o The arrangement obliged the vendor (Cuzeno) to dispose of an interest in land, to be in writing This was the case even though the disposition was to a third party and not the other party to the contract o Even if the agreement was to take over as seller formed part of a larger contractual agreement, writing was still needed to enforce that part of the contract (in relation to disposition of land)

6.2.2 CONTENT
No guidance by statute Harvey v Edwards, Dunlop & Co (1927): the document must contain all essential elements of the agreement

(a) info particular to the contract

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(2)

(3) (4)

Twynam Pastoral v Anburn (1989): There are four matters which must be recorded in order to satisfy the statutory requirement The document must contain the parties to the contract: Williams v Byrnes (1863) o Provided that intention of parties is clear, then extrinsic material can be used to establish who unidentified parties are (if any): Rosser v Austral Wine & Spirit [1980] Property must be adequately described: South Cost Oils v Look Enterprises [1988] o If property is party of a set, then particular care needs to be taken to identify the one that is the subject of the contract: Pirie v Saunders (1961) o If freehold property is sold subject to an existing leasehold and the leasehold interest is known to the purchaser there is authority to suggest that the property if sufficiently described even if theres no reference to the lease: Timmins v Moreland Street Property [1958] The consideration for the promise (namely the price) must be recorded: Wain v Walters (1804) The principal terms of the contract must be disclosed: if parties require that time is off the essence then the condition should be included into the contract If a material term is omitted, which is for the benefit of the P, the P may be entitled to waive the benefit of that clause and seek enforcement of the contract without that clause: Petrie v Jensen [1954](facts, pp 370; HELD specific performance for the buyer, the clause regarding the undertaking to quit was inserted solely for the buyers benefit. Buyer entitled to waive the benefit and insist on performance of the contract) o This onus is on the P to prove the benefit was for themselves. o If the term is of benefit for both parties, then it cannot be waived and the contract will not be enforceable: Hawkins v Price [1947]

(b) acknowledgement of agreement Tiverton Estates v Wearwell [1875]: writing needs to contain an acknowledgement of agreement to satisfy statute o Adopted by Pirie v Saunders (1961), Woden Squash Courts v Zero Builders [1976], Coogee Esplanade Surf Motel v CW of Australia (1976) o Writing must include ack of agreement and of terms of the agreement Ackd can be express/implied Writing is sufficient (to imply) where there is no express denial of contract:

(c) signed by party or to be charged or agent If theres a purported contract to sell land and the seller claims not to be bound, the seller will be the party to be charged with for the purposes of any action brought o Same thing applies if the buyer makes the claim A person is considered to have signed a document even if their signature has not been recorded on the document o If the name of the party is placed on the doc, and the party has expressly/impliedly indicated that they recognise the writing as being an authenticated expression of contract, this is sufficient: Pirie v Saunders (1961), o Even if a person engages a solicitor to negotiate contract for sale of land, this is not sufficient to authorise the solicitor to execute the contract on the clients behalf

70211 Contract Law o Authorisation by agent must be express, need not be in writing

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6.3

JOINDER OF DOCUMENTS this happens when not all relevant info for a contract is contained in the one document. Instead, documents are joined together so as to contain all material terms Harvey v Edwards, Dunlop and CO (1927): it is possible to join documents either (i) by reference to another document or (ii) to some other transaction o Any document signed by the person to be charged or by someone authorised, which contain all essential terms of the agreement is a sufficient memorandum o The memorandum need not be contained in one document, it can be made out in several documents if they can be connected together o If you refer to another document, you are at liberty to give evidence as to what that other transaction is, and if that other transaction contains all the terms in writing, then you get a sufficient memorandum within statute by reading the two together: Stokes v Wicher [1921] o Affirmed by Woden Squash Courts v Zero Builders [1976]

6.3.1 REFERENCE TO A DOCUMENT

Tonitto v Bassal (1992), facts pp 372.issue: whether the option agreement could be joined to the solicitors rejection letter (which contained reference to option to purchase and the option agreement thereby acknowledging they had received the agreement) could be joined o HELD: could be joined. The terms were sufficient to incorporate the terms of the written option agreement

(a) documents that are physically connected Can be joined: MEwan v Dynon (1877) Eg the ability to join an envelope to a letter. o Where the letter is signed by the defendant and sent to the pl, but the letter does not on its own, contain all the necessary info, the envelop can be joined with the letter. o There will be a note or memorandum of the info on the envelope, namely the name of the plaintiff: Pearce v Gardener [1897]

(b) documents that are executed at the same time Its not uncommon for a buyer to write a cheque for a deposit, send it to the seller and later receive a receipt from the seller (if seller is he party to be charged) its likely that the cheque could be joined to the receipt (document signed by the party to be joined): Saunderson v Purchase [1958] If buyer is to be charged the seller is unlikely to join receipt to the cheque since it is executed later than the checque it would be difficult to suggest that the cheque contained any express or implied reference to the later document If writing and exchange of cheque occurs concurrently: Timmins v Moreland Street Property [1958], facts pp 375 (oral agreement). ISSUE: whether there was a sufficient note or memorandum. o HELD: where cheque and receipt are signed and exchanged at the same meeting as part of the same transaction, they are said to be contemporaneously signed

70211 Contract Law o

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Document signed by party to be charged should be treated as incapable of referring to the other document merely because the latter, on a minute investigation of the order of the events at the meeting is found to have come second in the order of prep and signing:

6.3.2 REFERENCE TO A TRANSACTION

joinder allowed on basis of a reference to a transaction rather than another document to facilitate enforcement of an oral agreement: Fauzi Elias v George Sahey and Co (Barbados) [1983] facts pp 375 o since the receipt made reference to the property agreed to be sold, this was a reference to a transaction namely to sell the Defendants property to the P o where there is a reference to a transaction, parol evidence can be given to explain the transaction and to identify any documents, relating to it other examples of references to transactions have been considered sufficient to justify hearing oral evidence about whether the documents exist in relation to that transaction o reference in a letter to the fact that the buyer was pleased to mutually agree terms for the purchase of [the] Holiday Camp : Burgess v Cox [1951] o reference in a receipt to a sum received as a deposit on the purchase of certain land: Long v Millar (1879) o receipt signed by seller facilitating joinder of cheque signed by buyer: Stokes v Whicher [1920] Thomson v McInnes (1911) restrictive approach applied where reference to purchase money was held to be insufficient to allow reference o FACTS: P had to show a reference to another document rather than to a transaction to satisfy the test for joinder o Reference to purchase money today will have different results today Issue not solved: extent to which a cheque as a document signed by the party to be charged can be regarded as an implied reference to a transaction (or other document) - Timmins v Moreland Street Property [1958] o Facts: exchange of cheque occurred at the same time. The plaintiff seller sought to rely on info contained in both the cheque and receipt to satisfy requirement of writing. Cheque was signed by the party to be charged, the buyer Seller confronted with an additional hurdle, the payee of the cheque was the sellers solicitor not the seller himself, yet the receipt by given by the seller. the issue of whether the receipt could be joined to the cheque (the buyer being the party to be charged) if payee of the cheque was the same person who signed the receipt - UNRESOLVED o Timmins v Moreland Street Property [1958]: theres a possibility but it was no decided. It was not possible to spell out from the cheque any reference, express or implied, to any other document or to any other transaction other than the order to pay a sum of money by the cheque itself. The cheque gave no inidication whatever of the purpose for which the payment was to be made the mere fact that the payment was for some purpose of consideration cannot reasonably beheld to amount to a reference to some other document or transactions: Where an earlier document signed by the party to be charged (PTBC) to contain an implied reference to a transaction evidenced by a later unsigned document, a joinder is not allowed:

70211 Contract Law

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Todrell v Finch [2007], facts pp 377) (receipt to first developer did not adequately identify the parties, the price, the provision of a personal guarantee by a director of the purchasing entity; IT DID, acknowledge that it was paid in context of land sale transaction) o Issue: could the acknowledgment be joined with the later formal documentation (which the seller refused to sign)? The formal do did not exist when the receipt was signed o HELD: NO joinder, except in cases of contemporaneity, the document which is to be connected to and read with, the signed document, to create a sufficient memorandum, must exist at the time of the signature so it can be a document capable of being referred to by the signed document

6.4

ADEQUACY OF ELECTRONIC WRITING AND SIGNATURE http://www.galexia.com/public/research/articles/research_articles-art30.html writing in the traditional sense exists where a party to a contract is sent an elec communication containing relevant details of the info prints that info out: McGuren v Simpson [2004] (pp 378) o the Limitation Act 1968 (NSW) should be construed so as to accommodate technological changes. The email amounted to a written document o after clarifying issue of written documentation, the common law rules apply to determine whether the sender can be regarded as to have signed the document. Where a computer generated facsimile of the persons signature is used it is likely that the test will be satisfied, unless the person can prove that they did not cause the signature to appear on the document If elec com is not printed, theres US authority to support that it will suffice if it is capable of retrieval and reproduction in a visible form (doesnt matter whether it is eventually printed): Bazak Interntional Corp v Tarant Apparel Group (2005) The Electronic Tranactions Act 1999 (Cth) o S 9 and 10: relevant where under a law of the CW, a person is required to give info in writing and where the signature of the of a person is required (respectively) This will not apply to S&T legislation Electronic Transactions Act 2000 (30 November 2001) similarly requires info to be in writing or requires the signature of the person to be given o S5(1): word "transaction" is broadly defined in the Electronic Transactions Acts in the States and Territories to variously include contracts, agreements or other arrangements, and non-commercial transactions. o S7: transaction is not invalid because it took place by means of one or more electronic communications o Ss 8-9: transaction is not invalid because it took place by means of one or more electronic communications o S14: However, the purported originator of an electronic communication is bound by it only if the communication was sent by the purported originator or with his or her authority o S 8: The writing or the written note or memorandum required under the statute in relation to guarantees can be provided in electronic form with the creditors consent o S 9(1): a signature is taken to have been met in relation to an electronic communication if: o General exemptions: Some general activities or requirements may be exempt from the relevant ETA. These exemptions do not refer to a particular legal requirement

70211 Contract Law

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set out in a specific piece of legislation. Rather they refer to a broad category of activity.
Categories Witnesses Wills Personal Service/Post Court Documents Power of Attorney Exempt? Yes No Yes Yes No Part 2 Division 2 Part 2 Applicable Provisions of the Electronic Transactions Act Part 2 Division 2 -

Exempt legislation - The requirements of specific, named pieces of legislation may be

exempt from the relevant ETA:

Legislation Consumer Credit (New South Wales) Code 1995 (NSW) (and regulations) Conveyancing Act 1919 (NSW) Election Funding Act 1981 (NSW) Freedom of Information Act 1989 (NSW) Legal Profession Act 1987 (NSW) Local Government Act 1993 (NSW) Parliamentary Electorates and Elections Act 1912 (NSW) Poisons and Therapeutic Goods Act 1966 (NSW)

Applicable Provisions of Exempt Act All Section 23C - Instruments required to be in writing All All All Chapter 10 - How are people elected to civic office? All All

Applicable Provisions of the Electronic Transactions Act Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2 Section 7(1) Part 2 Division 2

(1) a method is used to identify the signatory and the signatorys approval of the information communicated; (2) having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate; and

70211 Contract Law

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(3) the creditor consents to the formal requirements being met by the use of the method specified in (1). Faulks v Cameron (2004) (only judicial decision which has considered the application of the electronic transaction legislation) o Case appear to have presumed that printed emails constituted writing o More concerned with resolving whether a type-written signature on an email meant that the agreement had been signed McGuren v Simpson [2004], facts pp 282 o the Electronic Transactions Act (2000) NSW did not apply (the relevant electronic communication was sent prior to the commencement of the Act o the communication in question was a very short email with a simple name typed in plain text at the end of the email - the most common form of electronic communication. The specific legal requirement in question was Section 54(4) of the Limitation Act (1969) NSW, which states: o Section 54 (4): An acknowledgment for the purposes of this section must be in writing and signed by the maker. Section 54 (4): An acknowledgment for the purposes of this section must be in writing and signed by the maker. Court applied the authenticated signature fiction: where the PTBC appears on the alleged note or memorandum, because it has been typed in by the other parties, the doctrine will only apply where the PTBC expressly or impliedly acknowledges the writing as an authenticated expression of the contract so that the typed words will be deemed to be his signature o The doctrine does not apply to a document which is not recognisable as a note or memorandum of an agreement o In this case, the Ps name appeared in the email and the email contained an authenticated expression of a prior agreement. Email was considered a note of a concluded agreement and the Ps type written name was deemed to be a signature Emails which ended with the type written words Regards Angus and Regards Angus Cameron were held to be signed: Faulks Electronic signatures are not appropriate in all types of transactions o EFFECT OF STATUTORY NON-COMPLIANCE: COMMON LAW

6.5

6.5.1 CONTRACT IS UNENFORCEABLE

where a contract fails to satisfy formality requirrements, means tht the contract is unenforceable - where one of the parties refuses to complete action cannot be taken by the other to enforce the contract. Specific damages cannot be sought: Tiverton Estates v Wearwell [1975] Damages for breach cannot be breach : Timmins v Moreland Street Property [1958] A defendant is unable to rely on an unenforceable contract to resist a claim by a P - Gray v Ellis [1925], facts pp 386

6.5.2 CONTRACT VALID TO PASS TITLE

70211 Contract Law

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a contract failing to comply with statutory requirements will still be a valid contract of the contract is performed by parties, good title will pass: Watson v Royal Permanent Building Society (1888)

6.5.3 RECOVERY OF MONEY PAID UNDER UNENFORCEABLE CONTRACT

where o parties enter into oral contract for sale of land o a buyer, pursuant to the contract, pays the seller a deposit or other amount of money o if one of the parties refuses to complete the purchase, (relying on failiure to comply with statutory requirements)

(a) recovery of deposit a deposit is paid by a buyer to earnestly bind the bargain: Howe v Smith (1884) if sale is not completed due to the buyers default the deposit is liable to forfeiture to the vendor: Freedom v AHR Construction [1987], facts pp 387 o HELD: partial payment of $47,000 by the Pl was more than a third of the purchase price, could not be considered a deposit A deposit generally represents 10% of the PP Defendant entitled to keep $14,000 (which was the 10% of the purchase price), even though the contract did not comply with formality requirements Where sale is not complete because of the sellers default the deposit is recoverable by the buyer. This is because the money had and received upon a total failiure of consideration where the consideration for which it was paid for was transfer which had not taken place: Fullbrook v Lawes (1876) o Action is brought in restitution

(b) recovery of amount more than deposit Fullbrook v Lawes (1876)- see above

(c) other restitutionary claims may be available Builders Licensing Act 1971 (NSW)ss 45 applied in Pavey v Mathews (1986), facts pp 388 o Held: P could claim on a quantum meruit basis for the value of the work done and materials supplied under an oral contract. Recovery permissible on retiturioanry grounds. Now the Home Building Act 1989 (NSW) applies: o S7 form of contract (1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it. (2) A contract must contain: (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and (b) the number of the contractor licence, and (c) a sufficient description of the work to which the contract relates, and

70211 Contract Law (d) any plans and specifications for the work, and (e) the contract price if known, and (f) any statutory warranties applicable to the work, and

Topic 2

(g) in the case of a contract to do residential building work-a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA. (3) The contract must comply with any requirements of the regulations. (4) If the contract price is known, it must be stated in a prominent position on the first page of the contract. (5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known. (6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it may reasonably be mistaken to be, the holders name. (7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Act 2002 from also referring in such a contract to the business name. o S10 enforceability of contracts and other rights

1) A person who contracts to do any residential building work, or any specialist work, and who so contracts: (a) in contravention of section 4 (Unlicensed contracting), or (b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), or (c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph, is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. (4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act.

6.6

EFFECT OF STATUTORY NON COMPLIANCE: EQUITY

6.6.1 DOCTRINE OF PART-PERFORMANCE

70211 Contract Law

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If parties enter into an oral contract for the sale of land and relying on that contract, one party does certain acts, the courts may be willing to grant the person specific performance provided that four conditions are satisfied: Powercell v Cuzeno [2003]

(a) (b) (c) (d)

Acts are unequivocally referable to some such contract as that alleged Acts done in reliance on the agreement and with knowledge of other party Acts done by party seeking to enforce contract Oral contract must be otherwise enforceable

E1: unequivocal acts The P needs to estble a denus between his/her acts and the contract which theya re seeking to enforce test see below Aus in McBride v Sandland (1918) adopted the strict approach on Maddison v Alderson (1883) (acts relied upon as part performance must be unequivocally and in their own nature, referable to such an agreement alleged) (acts of housekeeping held not be be evidence of contract, let alone one which concerns the deceaseds land) o Developed further in Regent v Millet (1976) Regent v Millet (1976), facts pp 389 HELD in addition to the Maddison test, o the giving and taking of possession by itself was a sufficient act of part performance o case acknowledged that it was possible that possession may be referable to some authority other than the contract alleged. Australia and NZ Banking Group v Widen (1990)- ANZ successfully enforced a mortgage agreement that was not sufficiently evidence in writing. The following acts of part-performance was held to be sufficient: o Provision of financial accommodation to the debtor o Obtaining an indemnity agreement o Taking a mortgage in blank and an authority to complete it Darter v Malloy [1993] facts pp 390. The court relied on the following PP o Allowing the defendant buyer into possession (parents continuing to occupy the premises) o Accepting a decreased rental from the parents pending settlement of the contract. The court in Darter in applying the Maddison test, considered the retention of existing possession, if coupled with reduction in weekly rent, was referable to a new contract between the buyer and seller. Lighting by Design (Aust) v Cannington Nominees [2008] (considers part performance in a contract formed by inference), facts pp 391. In split (2-1) decision, the following acts of PP were held to be sufficient: o The tenant remaining in possession of the premises coupled with the payment of rent at an increased rate subsequent to a rent review o Retrospective payment of increased rent o Payment of utilities o The delivery of certificates of insurance

70211 Contract Law Entry into possession o th

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Roger v Millett makes it clear that allowing and taking possession of premises if couple with payment and improvement of theproperty, will be enough for a buyer to enforce the contrac

6.7

VARIATION AND TERMINATION OF CONTRACT

6.8 D

7 ACCEPTANCE