LAWS1015 Lecture 9

Question 1

Rectification

Answer 1

D: an equitable remedy which applies to contracts mistakenly recorded, was agreed upon but was omitted. Courts will alter the contract in order to reflect the parties actual intention. Courts may allow rectification in circumstances where it would be unconscionable for 1 party to apply the contract inconsistently with what the common intention of the parties was at the time of formation.

Question 2

(Pacific Carriers v BNP Paribas)

Answer 2

T: Objective approach: what a reasonable person having all the background knowledge available to the parties would have understood the terms to mean?

Only objectively known background facts can be used in construction of a contract. Evidence which only illustrates a party’s subjective intention (e.g. prior negotiations (codelfa), subsequent conduct) cannot be used.

Question 3

(Electricity Generation Corporation v Woodside Energy).

Answer 3

P: The meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood the terms to mean

This requires consideration of the surrounding circumstances such as the genesis of the transaction, commercial purpose, the market etc.

F: reasonable endeavours to make a max daily quantity of gas available. plant explosion. Woodside had the physical capacity to continue to supply, however woodside was entitled to take into account the commercial and operational matters affecting business interests.

Question 4

Surrounding Circumstances

Answer 4

2. PER prevents use of extrinsic evidence as an aid in construction to explain meaning of words in a written contract.

The use of surrounding circumstances to assist interpretation of a contract is unclear in Australian law. The current principle laid down in the HCA judgement of (Codelfa) has been applied in different ways.

One approach is that evidence of surrounding circumstances cannot be admitted unless to interpret ambiguities (Western Export Services v Jirah International).

However, the more frequently applied approach, is that surrounding circumstances are generally admissible and can influence interpretation, but cannot be used to improve on or contradict the written terms of that contract.

Question 5

(Royal Botanic Gardens)

Answer 5

F: lease ambiguous. Surrounding circumstances reinforced the non-commercial character of the transaction: both public authorities, contract for provision of a public service.

Question 6

(Mount Bruce Mining)

Answer 6

P: The surrounding circumstances cannot be used to “depart from the ordinary meaning of the words used by the parties merely because the court regards the result as inconvenient or unjust.”