Contracts 3 Flashcards
Undue Influence
Geffen v Goodman Estate
In order to establish a relationship in 2b(1), have to contextually determine whether there is a potential for dominating influence, which means that there is either:
- The ability of one party to dominate the will of the other party in relation to the transaction, or
- The potential to exercise a persuasive influence over the other party, or
- The potential for domination adheres into the relationship itself between the parties
Undue Influence
Two types of Presumed Undue Influence
o 2) Presumed undue influence- the court will presume that the contract was produced in circumstances of undue influence, and the onus will shift onto the defendant to justify that the contract was consensual. Subdivided into two types:
A) Deals with recognized classes of relationships. You have to show two things:
* 1) The contract arose in a recognized class of undue influence; and
o Classes include: Doctor-patient; lawyer-client; priest-penitent; parent-child; teacher-student situations
o This does not include spouses or siblings those cases go to 2B cases
* 2) Nature of the transaction: the deal itself was manifestly unfair to the weaker party because the deal was overborne.
B) You have to show two things:
* 1) The relationship itself has the potential for dominating influence. The relationship is one of trusting confidence and influence that has the potential for you to influence me. (eg. spouse, siblings)
* 2) The deal itself was manifestly unfair to the weaker party because the deal was overborne.
Undue Influence
Royal Bank of Scotland c Eltridhe
- New standard for manifest disadvantage:
o Not explicable by the relationship. If manifest disadvantage clearly means unfair to the weaker party. NOW you just have to show it’s suspicious. It’s now easier to prove.
o Things that would make the transaction suspicious:
If it’s manifest disadvantageous to one of the parties (unfair)
Vulnerability of the parties- if one is vulnerable, that would be suspicious
Unconscionability
Uber Technologies v Heller
Two Step Test for Unconscionability: the court can rescind an entire contract or strike out a clause where two things are met:
1. there must be an inequality in bargaining power which arises where one party cannot adequately protect its interest in the contracting process
2. the deal itself must be improvident, meaning that it must be a substantively unfair deal where:
a. the stronger party has been unduly enriched in light of the context, or
b. whether the terms of the contract flout the reasonable expectations of the weaker party to cause unfair surprise
Remedies
McCrae v Commonwealth Disposal
- In order to qualify for reliance damages as an alternative to expectation damages, must show:
1. The money was in fact spent on the reliance of the contract where the money that was spent was causally connected to the performance of the contract, and
2. The money spent was reasonable - Costs that cannot be recovered
1. Money that would have been spent regardless of whether the contract was signed
2. If the money spent still retains value - Reliance damage can include claims for a chance to profit elsewhere had the party not spent all of x time performing contract y
Remedies
Bowlay Logging v Domtar
- A party cannot claim reliance just because they made a bad deal.
- Expectancy Principle: Cannot claim more in reliance than you would be able from Expectancy
- Can now claim depreciation
Remedies
Sunshine Vacation Villas v Governor
Can claim expectancy, or reliance damages. Not both
Remedies
Attorney General v Blake
- In order the qualify for restitutionary damages: the circumstances must be exceptional and all other remedies must be inadequate on the facts
- Expectation damages and reliance damages would be inadequate when the innocent party has a continuing legitimate interest in preventing the continuing profit making of the wrongdoer who breached the contract.
Quantification
Chaplin v Hicks
- For expectation damages, the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying them
- A party is entitled to damages as long as there is some evidential foundation that the party would have received something
Cost of Completion
Two Types of Remedy
1) Cost of Completion – most common – replacement costs, enough to put the party in the place they would have been
a. Arises most commonly because it aligns with the expectation principle
2) Diminution in value approach – what is the reduction of value for the thing they actually did and the thing they should have done, that amount would be awarded
a. Arises when the cost of replacement is too high, particularly if the breacher is an innocent breacher
Cost of Completion
Groves v John Wunder
- Reinforces that cost of completion is the ordinary measure – expectation principle
o Diminution not available because defendant is a cynical breacher
o Grossly disproportionate argument is not a comparative to the value of the asset
Cost of Completion
Nu-West Homes v Thunderbird
- If you want to avail yourself of diminution of value then you can if:
o If the cost of completion is way too great in relation to the defect
Loss of Enjoyment
Jarvis v Swans Tours
Contract law will now compensate for intangible losses such as emotional trauma but its contained for disaster holidays
Punitive Damages
Whitten v Pilot Insurance
- If there is an independent actionable wrong which is any breach of duty such as a tort, breach of duty of good faith, breach of confidence, breach of fiduciary duty plus the highhanded behaviour, then punitive damages claimed
Penalty Clauses
Shatilla v Feinstein
- While taking into consideration the intention of the parties, is the purpose of the clause a genuine pre-estimate of the damages likely to be suffered in relation to this kind of breach?
- YES – treated likely a liquidated damages clause
- NO – treated as a penalty clause
o Must articulate the nature of the breach and the amount of money attached to it
