CONTRACT LAW NOTES TABLE OF CONTENTS Agreement... 4 Offer... 4 Not Offers... 4 Revocation... 5 Acceptance... 5 Certainty... 7 Sufficiently Certain... 7 Sufficiently Complete... 8 Illusory Promises... 8 Consideration... 10 Rules of Consideration... 10 Intention... 12 Assumption of Intention... 12 Government Policy Without Contractual Intention... Error! Bookmark not defined. Subject to Contract... 13 Formalities... 15 Authenticated Signature Fiction... 15 Doctrine of Part Performance... 15 Law of Restitution... 16 Estoppel... 17 Factors of Estoppel... 18 Other Cases... 18 Express Terms... 19 Pre-Contractual Oral Statements... 19 Signatures... 19 1
Incorporating Terms By Notice... 20 Unusual Terms... 21 Electronic Documents... 22 Course of Dealings... 22 Negotiations or Term... 23 The Parol Evidence Rule... 23 Collateral Contracts... 25 Incorporation of terms by Reference... 25 Implied Terms... 27 Terms Implied in Law... 27 Terms Implied in Fact... 28 BP Refinery Test... 28 Terms implied By Custom... 29 Duty of Good Faith... 30 Construction... 32 Ambiguity and the Codelfa Rule... 33 Appellate courts... Error! Bookmark not defined. Exclusion Clauses... 34 Privity... 38 Trident General Insurance v McNiece Bros... 39 Mason and wilson Judgement... 39 Brennan j (Dissenting)... Error! Bookmark not defined. Deane j... 40 Gaudron... Error! Bookmark not defined. Exceptions to the privity rule... 41 Agency... 41 Assignment and novation... 42 Ways to overcome the privity rule... 43 Remedies... 44 Frustration... 44 2
Limits on the Doctrine... 46 Consequences of Frustration... 47 Termination... 48 Termination By Agreement... 49 Termination by Subsequent Agreement... 50 Termination by abandonment... 51 Discharge By performance... 51 Substantial performance... 52 Deposits... 53 Failure Of A Contingent Condition... 54 termination for breach... 57 Termination for Repudiation... 61 Anticipatory Breach... 61 Termination for Delay... 65 Notice... 65 Consequences of Termination... 67 Affirmation... 67 Termination... 68 Restrictions on the RIght to Terminate... 69 Readiness and Willingness... 69 election... 70 Estoppel... 72 relief against forfeiture... 72 Unconscionable terminations and Good faith... 73 3
AGREEMENT Contractual obligations must be voluntarily assumed through agreement Agreement exists when an offer made by one party is accepted by the other party However, the offer and acceptance analysis doesn t fit all cases o Mutual assent can be present without formal offer and acceptance o In situations such as collaborative documents, it can be hard to see who made what offer and who accepted. Brambles v Bathurst CC (2001) NSWLR 153 o Dispute over whether Brambles agreed to save money from higher charges to consumers to build a new facility Started charging higher prices but did not save the money o Whilst they did not formally agree and raised their concerns in writing, mutual assent was proven by their action of raising prices o Therefore a reasonable person would assume that through the act of raising prices, they had assented by conduct Governments win almost all contract disputes in court OFFER An offer is a statement of willingness by one party to be bound to the terms immediately upon acceptance by the other party without further negotiation Judging whether an offer is an offer is determined from a reasonable persons perspective o Depends on words and circumstances o How would words be reasonably construed? o Circumstances could involve if the contract is simple or complex, which parties are involved, and the method of communication between parties o The word offer might not be used in a formal offer o Or the word offer might be used in an informal way that is not an official offer Offers have to be able to be accepted or rejected they cannot be a command o Voluntary obligation essential Offers can be made to the whole world (Carlill v Carbolic Smoke Ball) or to groups or to individuals Offers can be withdrawn at any time before acceptance o However an option contract can t be withdrawn when the offereror is given something Unilateral promises are contracts which promise something in exchange for an act o In such agreements, the performance of the act is acceptance o Don t need formal acceptance before performing A rejection or counter-offer kills the original offer NOT OFFERS The display of goods in a shop is not an offer o Illogical: by picking up a good from a display, customers would therefore be accepting an offer and could not legally change their mind about the purchase o See PBS Society of GB v Boots Chemists o In this case, circumstances are used to infer what is reasonable Government policy statements are not offers 4
o See Woollen Mills v Commonwealth The Government stated it would provide a subsidy to the manufacturers of all wool products in order to keep prices low. Woollen mills went out and bought loads of wool and put it into all of its products, then went to the government and asked for it s payment. o Words needed negotiations would be expected in such a case and therefore a lack of which suggests it is not a formal offer Communication is not an offer if just providing information or partial consensus Auction bids o Each bid is considered an offer Tender bids Tickets Invitation to treat an invitation to make an offer o This is distinguished from an actual offer by the intention of the parties REVOCATION An offeror can revoke an offer any time before acceptance, as long as it is communicated Unless consideration is given to keep the offer open for a certain period of time o Goldsborough Mort v Quinn o This is called an option contract. It is common in real estate contracts Revocation must be communicated to the offeree, but it can be inferred from conduct o Dickinson v Dodds o When selling a property, the buyer has said he wants to buy the property, but needs a few days to read and sign the contract. He then hears that the seller is negotiating with someone else. This conduct meant the offer was revoked. o This revocation by conduct was the conduct of the offeror if someone else makes an offer it does not mean the offer is revoked. o The information about the revocation in this case came from a reliable source. If not reliable, the rule may not apply The postal rule does not apply for revocations Unilateral contracts can be revoked o Mobil Oil v Wellcome International o In a complex unilateral contract, where there are a series of acts requested, the contract can be revoked before all of the acts are completed (even if some have been completed) Reliance damages are the damages you occurred by acting in accordance with a contract that was subsequently broken ACCEPTANCE Acceptance is an unqualified assent to the terms of an offer Acceptance must be communicated to the offeror, but can be inferred through conduct Silence cannot be an acceptance Empirnall Holdings v Machon Paull Partners o Architecture firm worked alongside builders governed by contract. Architects continued work, and never heard back from builders. Builders had seen the draft work that the architects were creating, and didn t say that they weren t continuing with work just didn t reply. Court found that their silence was an acceptance because they knew architects were still working and didn t say anything. 5