Wk 9 - Contracts: Enforceability, Terms And Remedies

Question 1

Enforceability

Answer 1

Contract may not be enforceable, even if the three requirements are present, if there is lack of consent

Question 2

Lack of consent

Answer 2

. Duress
. Undue influence
. Unconscionability

Question 3

Duress

Answer 3

If one party compels the other party to enter into the contract by expressly/impliedly threatening harm, then there is lack of consent

Question 4

Duress - the threat may be:

Answer 4

. To the personal safety of the other party or to that of their loved ones
. To the safety of the other party’s goods/property
. To the other party’s economic/financial well-being - economic duress

Question 5

Undue influence

Answer 5

Parties of contract may have a pre-existing relationship where one party has a degree of influence/dominance over the other
If the stronger party uses this influence such that the weaker party is not really exercising their independent judgement, the contract will be undue influence

Question 6

Undue influence will be presumed in certain relationships:

Answer 6

. Doctor and patient
. Lawyer and client
. Trustee and beneficiary

Question 7

Undue influence - there are 2 situations:

Answer 7

1. Presumed relationship
   Responsibility is on the stronger party to show that, despite the relationship, they did not exert their influence over the other
   If stronger party can’t do this, contract is void
2. Other relationship
   When relationship between parties is not one of these recognised relationships, influence will not be assumed. However, one party may still be able to show that the other party had a controlling influence over their decision making
   If the weaker party can show the stronger party did have a controlling influence, the responsibility is then on the stronger party to show that they did not use thag influence

Question 8

Unconscionability

Answer 8

When all three:

1. One of the parties to the contract has a special weakness/disadvantage (can include sickness, illiteracy, lack of education, being in love)
2. The other party knows about or should know about the special weakness/disadvantage
3. Other party takes unfair advantage of that special weakness/disadvantage

Question 9

Two types of contractual term:

Answer 9

Express terms
Implied terms - any relevant statutory terms (wk 10)

Express terms + terms implied by court + statutory terms = terms of contract

Question 10

Express terms

Answer 10

. Terms explicitly agreed upon by the parties
. Can be writing or agreed upon verbally
. If contract is turned to writing, and the contract is signed, then the terms are what is in the written and they are binding even if one party hasn’t read the written
. If terms aren’t followed the contract is breached
. Contract can be written, verbal or combination

Question 11

Not all statements are terms of the contract. Distinguish difference between terms of the contract and non-contractual representations

Answer 11

If a representation is made during negotiations but is not intended to become a term of the contract then it is a non-contractual representation
These do not form part of the contract, so even if they are breached, no action can be taken for breach of contract

Question 12

Express terms - what would a reasonable person, aware of the circumstances of the case, believe to be the parties’ intention, given:

Answer 12

1. Time lapse between statement and final agreement
   . The longer the time, less likely it was intended to be a term
2. Importance attached to the statement
   . The more important, the more likely it was intended to be a term
3. Whether the parties had special skill or knowledge
   . If the party making the statement had special skills, the more likely it was intended to be a term

Question 13

Parol evidence rule

Answer 13

In the event of an inconsistency between a written term of an apparently complete contract and a verbal representation/promise, the court will favour the written term and disregard the verbal representation/promise
This rule only applies if the written contract appears to be a complete record of the agreement

Question 14

Note that if a representation is not a term of the contract, other options may be available if the representation turns out to be false:

Answer 14

. Breach of collateral contract
. Misrepresentation
. Contravention of the Australian Consumer Law

Question 15

Collateral contract

Answer 15

Secondary contract, the consideration for which is the entry into the main contract. If the representation turns out to be untrue the other party can sue for breaching the collateral contract
Since its the CC that has been breached and not the main contract, other party cannot terminate main contract. But they can claim damages

Question 16

Misrepresentation

Answer 16

False statement of fact made by one party to induce the other party to enter into a contract, and that induced the other party to enter into the contract. If this happens, contract is voidable

Question 17

What does misrepresentation not include?

Answer 17

. Promises
. Statements of opinion
. Statements of a highly exaggerated nature
. Silence

Question 18

Types of misrepresentation

Answer 18

1. Fraudulent misrepresentation
   . Statement-maker knowingly/recklessly makes a false statement intending it to induce/persuade the contract
   . Can revoke contract and get damages
2. Negligent misrepresentation
   . Statement-maker is under a duty of care and carelessly makes a false statement
   . Can revoke contract and get damages
3. Innocent misrepresentation
   . Statement-maker genuinely believe the statement of fact to be true
   . Can revoke contract but not entitled to damages

Question 19

Disclaimers

Answer 19

Common terms in a contract
It is a statement that a party will not be in breach despite failing to perform one or more of their contractual obligations
E.g. no liability for loss or injury
No liability if goods are stolen or missing

Question 20

Disclaimers must be:

Answer 20

1. Incorporated into the contract
2. Interpreted narrowly
3. Not misrepresented

Question 21

Incorporating disclaimers

Answer 21

Will be part of the contract if:
. Set out in a written contract that has been signed by the parties
. Is brought to the attention of the other party by reasonable notice given before the contract was formed
. Is implied into the contract as a result of prior dealings between parties

Question 22

Interpreting disclaimers

Answer 22

. If it is contained in a contract with a consumer, the court will interpret the disclaimer contra proferentem, or against the interest of the party seeking to rely upon it

Question 23

Interpreting diclaimers - four corners rule

Answer 23

. If it is not clear whether the disclaimer protects the business in all circumstances or within the ambit (four corners) of the contract, the court will prefer the narrower interpretation

Question 24

Misrepresenting disclaimers

Answer 24

Even if disclaimer is brought to the attention of the other party before the contract is formed, the disclaimer cannot be relied on if the effects of the disclaumer has been misrepresented

Question 25

Remedies

Answer 25

If one party breaches a term of the contract and they are not protected from liability by an effective disclaimer, there are a # possible legal remedies available to the other party

Question 26

Remedies - partial performance

Answer 26

When a party complies with some terms but breaches one or more other terms of the contract

Question 27

Conditions

Answer 27

A term of the contract of fundamental importance. In the absence of the term, the party favoured by the term would not have entered into the contract in the first place

Question 28

Breach of condition gives the other party the right to:

Answer 28

. Confirm the contract and recover damages

. Terminate the contract amd recover damages

Question 29

Warranties

Answer 29

Term of lesser importance. In the absence of the term, the party favoured by the term would have entered into the contract right away
If warranty is breach, the injured party must still perform the contract but may have the right to sue for damages for loss suffered bc of the breach

Question 30

Damages

Answer 30

Party will be entitled to damages when there has been:
. A breach of contract by other party
. Breach of collateral contract by other party
. Fraudulent/negligence misrepresentation by the other party

Question 31

Objective of the court in making an award of damages is to:

Answer 31

Restore the other party to the position they would have been in if the breach/misrepresentation had not occurred - if the contract had been performed properly

Question 32

Equitable remedies

Answer 32

If an aggrieved party can demonstrate to the court that an award of damages is not a satisfactory remedy, the court may decide to provide an equitable remedy, such as specific performance, or injunction

Question 33

Equitable remedy - order of specific performance

Answer 33

A court order directing the party in breach to fulfil their contractual obligations

Question 34

Equitable remedy - injunction

Answer 34

Court order forbidding someone from engaging in particular conduct that will be a breach of the law or that will infringe the legal rights of another