Module 6 Flashcards
Determining the required performance
• When performance under a contract is disputed the court must interpret the terms of the contract to ascertain exactly what the obligations were
• The court takes an objective approach to interpreting those terms:
1. The courts give the words their ordinary and natural meaning
2. Applying an objective test to ascertain the intended meaning of the terms
3. Resolving ambiguities in commercial agreements to avoid commercial inconvenience or nonsense
4. Basing the decision on the actual agreed terms in the contract
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310;
Facts; Hide & Skin exporters of animal products. The buyers of these products often paid for them up to six months after purchase and to finance their ongoing business they needed a third party to advance payment for goods sold but not paid for.
Issue; when oceanic gave notice to terminate contract they believed they were not obliged to give advance payments for money that would only be repaid after the contract ended. Whose interpretation of the agreement was correct?
Decision; the agreement had the meaning suggested by H&S
Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99
ABC to pay APRA an annual license fee for certain musical works performed on the radio and TV
Formula intended to provide against depreciation in the value of money and the formula implemented into the contract doesn’t
Issue; was it open to the court to interpret the formula differently?
Decision; It is not the function of a court to attribute to the parties an intention for which their express words do not provide.
When both parties voluntarily perform their obligations under a contract, these obligations are————- and the contract comes to an end
discharged
In some rare situations performance of the obligations in excused e.g. when a ———–event occurs that makes performance impossible
frustrating
If a breach occurs the court will generally
——— ——— instead of -
award damages (instead of) enforcing the defaulting party to perform
supervening impossibility
Intervention of event after contract entered into making agreed performance impossible
Necessary conditions for frustration of contract:
• Must be a supervening post contractural event;
◦ Which causes fundamental change to nature of contractural rights
◦ Neither party responsible for the supervening event
◦ Supervening event must have been unforeseeable
◦ Unjust to hold parties to the original bargain
Maritime National Fish Ltd v Ocean Trawlers (1935) AC 524
Facts; I would like to charter the St Cuthbert from you to use for fishing, I had applied for five licenses but the govt only issued me three. As a result I was unable to obtain a license for St Cuthbert. Can you please take the trawler back as our contract is frustrated
Issue; is the contract frustrated?
Decision; No he could choose to use the StCuthbert
Codelfa Construction v State Rail Authority (1982) 149 CLR 337
Residents had an injunction placed so that the construction could not work all hours of the day and therefore unable to meet original date the state rail authority took them to court
Decision; its unfair for the construction to be held to timeframe
Courts discharged the contract.
• Non performance
◦ Where one of the parties has completely failed to perform their obligations under a contract by either;
‣ Not taking actions to satisfy their obligations under the contract or
‣ Doing something that was completely different to what they were required to do under the contract
Varley v Whipp (1900) QB 513
Whipp would you like to buy my machine it is 1 year old, only cut 50 crops or so
The machine was old and he refused to buy
When Whipp tried to enforce it the court said no the condition of the machine was non performance.
• Partial Performance
◦ Where some level of performance has been rendered by a contracting party but as a whole performance of their contractual obligations is incomplete
◦ Because complete performance is required to discharge a contract rendering incomplete performance will constitute a breach
◦ Where there has only been partial performance the innocent party can terming and claim damages
◦ In essence partial performance of a contract amounts to a significant breach of condition
Steele v Tardiani (1946) 72 CLR 386
Facts; Tardiani employed to cut firewood at a rate of six shillings per ton n wood cut in six foot lengths and split six inches in diameter. Tardiani and other cuts 1500 tons of timber but split it into pieces ranging six - fifteen inches in diameter
Issue; was Tardiani entitled to payment for work done?
Decision; the contract was not substantially completed, it was only partially performed. Steele was obliged to pay for the value of the work done by the woodcutters. Court found that Steele had accepted the benefit of the partial performance he was bound to pay the woodcutters for the actual value of the work they had done.
Substantial Performance
- If the breach of contract is minor and the innocent party still receives the expected benefit of the contract
- When substantial performance has been rendered the innocent party is entitled to claim damages to compensate for the minor breach but they cannot terminate the contract
- Substantial performance of a contract only involves breach of warranty
