FORMALITIES Flashcards
General Rule:
Contracts do not have to be in a particular form
Oral contracts can be enforced
Exceptions to the general rule:
Legislation imposes formal requirements for the following contracts Sale of land Consumer Credit Sale of motor vehicle Residential tenancy Building contracts
Statute of frauds
Sets out the requirements for formalities in terms of in writing
Encompassed in the Instruments Act 1958 (Vic) S126
Instruments Act 1958 (Vic)
Types of contracts covered
Guarantees
Sale or disposition of an interest in land
Formalities required
Must be in writing (agreement or memorandum or note)
Signed by the person to be charged
Guarantees:
Promise to pay another person’s debt if that person defaults (fails to uphold the contract)
Guarantee is a second liability (only liable if the principle debtor is liable)
Must be in writing
Indemnity (exemption for liability for damages)
A promise to ensure a person suffers no loss arising out of a transaction (One party agrees to pay for potential losses or damages caused by the other party)
Indemnity is a primary liability to the person who is the beneficiary
Contract to answer for the debt, default or miscarriage of another who is to be primarily liable to the promisee
Yeoman Credit Ltd v Latter - issue
Whether Owen was a guarantor in the car lease contract so therefore not liable, or whether he was a beneficiary in an indemnity contract
Yeoman Credit Ltd v Latter - rule
Contract was an indemnity, and Owen had a primary obligation to Yeoman Credit, contract was enforceable, deposit contract being void between Yeoman Credit and Latter (who hired the car)
Contracts for the sale/disposition of land (or interest therein)
includes:
Contracts for the sale and purchase of land
Leases
Mortgages
Options to purchase, lease or mortgage or to acquire another interest in land
Agreements to transfer land that a party intends to acquire in the future
A contract to declare a trust in relation to a piece of land
A promise to leave land in a will
Essentials in formalities (five)
Content- How much detail must the document contain
Timing- When must the document come into existence
Joinder- Must it be a single document or can separate documents be read (joined) together
What is a signature- When is a document taken to be “signed”
What if the document is an electronic communication- What kinds of electronic communications satisfy the statute
How much detail must the document contain
At least all the essential terms (parties, subject matter, price etc)
TIming - when must the document come into existance
Note or memorandum of agreement must be evidence or a prior agreement
Note or memorandum must be made after the agreement is concluded, not during negotiations
Exception to timing (when can document come into existance before the agreement?
Exception- Where there has been a written offer that has been accepted orally on the basis that once accepted the offer document can be regarded as an agreement in writing
Must it be a single document or can separate documents be read (joined) together
Can be joined together where:
Documents are physically connected
One document refer to another document
Tonitto v Bassal
Issue
Do the option agreement and the subsequent September letter together constitute a sufficient memorandum or note to satisfy the Statute of Frauds requirement
Tonitto v Bassal - rule
Can have two different documents
Words used in a document are capable of referring to another document and oral evidence can be used to resolve the ambiguity
September letter referred to the option agreement and therefore the two documents could be joined to constitute a note or memorandum of the agreement
When is a document taken to be ‘signed’
- who must sign
- what constitutes a signature
- authenticated signature fiction
Who must sign:
By the person to be charged by a person lawfully authorized in writing by that person- person who the contract is being enforced
Notion of signature is liberally interpreted:
Mark, cross, part of the full name or initials are allowed
Can be signed by an agent or someone acting on behalf of the person
Authenticated signature fiction: (Pirie v Saunders)
If there is no signature, but the persons name is placed on the document in such a manner as it indicates recognition of the writing being an authenticated expression of the contract it is allowed
Endorsement of their name (eg. Name on email)
What if the document is an electronic communication
Similar to the authenticated signature fiction, endorsement of their name constitutes a recognition of the contract
Pirie v Saunders - issue
Did the solicitor’s notes constitute a “note or memorandum” of the agreement, and was it ‘signed’ by Pirie and Cripps
Pirie v Saunders - rule
Solicitors notes are not a sufficient note or memorandum of an agreement
Memorandum note must contain all essential terms- did not contain all essential terms, did not specify the property to be leased, did not contain the terms of the proposed lease- formulated at a later time
Memorandum or note must be made after the contract is formed- was not a record of a prior contract, still in negotiations
Authenticated signature fiction- approved, if the name of a party to be charged is on a document it is to be treated as a signature. However not applicable here because they were merely standing by while the solicitors took notes
What kinds of electronic communications satisfy the requirements of signature
If the signature is required then the requirement is said to be met if
A method is used to identify the person and to indicate the person’s approval of the information communicated
The methods used were:
As reliable as appropriate for the purpose for which the electronic communication was generated or communicated including any relevant agreement
Proven act to have fulfilled the functions by itself or with further evidence
Person who signature is required by consents to the requirements being met by way of the use of the method mentioned
Popiw v Popiw [1959] VR 197 - issue
ISSUE:
• Was she entitled to enforce her husband’s promise to her?
• Can the affidavit be relied on as a memorandum of the contract?
Popiw v Popiw [1959] VR 197 - rule
• A contract which is not sufficiently formal is not void, it is unenforceable
Consequences of non-compliance - if not enforceable
○ May be possible to rely on the contract as a defence in some circumstances
○ Specific performance may be available under the doctrine of part performance
○ May give rise to a constructive trust or equitable estoppel
○ Misleading and deceptive conduct (will be covered in Contract B)
May be the subject of a claim in restitution
Part Performance
A party who has performed some of the obligations that establish the existence of a contract should be able to get some equitable relief where that contract is unenforceable
○ Actions taken in preparation for performance of a contract will not allow a plaintiff to invoke the doctrine of part performance ○ Part performance may be established by acts done pursuant to the contract even where they are not required by the contract
Part performance - Narrow approach: Lord Selbourne LC (Maddison v Alderson)
○ “Acts relied upon as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged”
○ Acts must establish the existence of a contract of the general nature alleged by the plaintiff
- Broad approach: Steadman v Steadman (1974)
○ Acts need only point, on the balance of probabilities, to the existence of some contract and be consistent with the contract alleged by the plaintiff
Oglivie v Ryan - issue
Had Ryan executed part performance of the agreement with Oglivie sufficiently to constitute a contract
Ogilvie v Ryan - decision
If Broad view applied, court concluded the acts of part performance were sufficient
If Narrow view applied, court concluded the acts were consistent with acts of ove and and affection they were not indicative of a promise to give her an interest in Ogilvie’s property
Court bound to apply the narrow test, therefore Ryan failed
Found there was a constructive trust that entitled Ryan to occupy the house, however did not acquire the property
