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Negligence

Definition: Omission to do something which the reasonable man, guided upon those considerations which would ordinarily regulate the conduct of human affairs, would do, or do something which a prudent and reasonable man would do. 4 steps to show: o 1: The defendant owed a DUTY OF CARE to plaintiff o 2: Defendant breached the proper STANDARD OF CARE o 3: Negligence caused plaintiffs loss (Causation) o 4: Harm suffered was reasonably FORSEEABLE (Remoteness) Step 1: Duty of Care o Two elements: Reasonable foreseeability of injury to neighbor Touchstone of duty to exist, but not enough because in hindsight a reasonable person may say/do anything foreseeable Has close relationship to NEIGHBOR Persons who are so closely and directly affected by my act Early test - proximate relationship 1. Physical 2. Circumstantial 3. Causal 4. New Approach Incremental/Salient features o Perre v Apand Plaintiff (Perre) was vulnerable and defendant owed duty of care to take reasonable care not to injure the plaintiff in that event Other factors will be considered in determine whether a duty exists in new situations Indeterminate class of person Plaintiffs vulnerability Defendants knowledge of this vulnerability Defendants assumption of responsibility Duty of care test Considers incremental/salient features 1. Reasonable foreseeability 2. Tortfeasor had power/control to prevent injury 3. Victim was vulnerable 4. Tortfeasor knew of risk 5. No supervening policies to deny duty of care 6. Examples:

Manufacturers Donoghue v Stevensons = Manufacturers owe a duty to exercise reasonable care so not to cause foreseeable injury. Levi v Colgate-Palmolive Pty Ltd = No duty owed because injury not foreseeable Distributors Fisher v Harrods Duty of care to make adequate enquiries of product McPhersons Ltd v Eaton No duty, because Eaton should have known that he was selling a dangerous substance Professionals Chapel v Hart Negligence in failing to warn patient about dangers although there was no negligence in surgery. Rogers v Whitaker Owes duty of care not only in the performance, but also advice regarding procedure. Occupiers Australian Safeway Stores Pty Ltd x Zalzuna Duty owed to customers invited into premises Nagle v Rottnest Island Authority Liable, because failed to install warning signs

2: Standard of Care o An objective one and the standard required is that of a reasonable person with the same skills and expertise as a person exercising the particular trade or profession. o Negligence is about the failure to take reasonable care o SOC = how a reasonable person would have responded to the foreseeable risk, courts decided: Consideration of the magnitude of the risk and the degree of the probability of its occurrence along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. o Weighing test Magnitude of risk Probability of occurrence Expense Difficulty Inconvenience o Wrongs Act s48(1) Person is not negligent on failure to take precautions against a risk of harm unless: Risk of injury was reasonably foreseeable

Risk as not insignificant In the circumstances a reasonable person in the position would have taken these precautions o Likelihood of risk Must be real risk, not possibility Wyong Shire Council v Shirt 1. Higher risk, higher standard of care Seriousness of harm Amount of care required increases in direct proportion with amount of harm Examples Standard of Care and design of goods 1. Producing evidence to establish design fault ODwyer v Leo Buring Pty Ltd Defendant owed SOC because reasonably foreseeable that first-time users are not aware of the force plastic stopper could be ejected from bottle. 2. Care in choosing and installing component parts Rasbora Ltd v JCL Marine Installed defective electrical system in boat, hence breached standard of care Standard of Care and production of goods 1. Difficult to prove negligence if manufacturer has QC processes designed to prevent foreseeable injury. However, not a defence to argue that consumer should have checked for defects when no reasonable person would have checked. Grant V Australian Knitting Mills Ltd Accepted AKM evidence of reasonable precautions taken. However, Grant appealed to Privy Council, which decided in his favor. 2. Reasonable care extends to packaging, where there is an obligation to take reasonable steps to ensure containers are stored and transported reasonably. Adelaide Chemical & Fertilizer Co. Ltd. v Carlyle AC&F held negligent for using jars that were not suitable for HCl. 3&4: Causation & Remoteness o Causation Must be a loss Loss must be caused in fact by the careless action (factual causation) Injury/damage must not be too remote

But For test Plaintiff must show that loss/damage would not have occurred but for the negligent act/omission of defendant March v Stramere Pty Ltd 1. Defendant should not have obstructed traffic, but causation not broken by new negligent act of plaintiff. Burden of liabilities portioned to 30% - March and 70% Stramere o Remoteness Whether consequences of breach are reasonably foreseeable Risk must be real/not far fetched Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty Ltd (The Wagon Mound No 2) 1. Reasonably foreseeable that oil on water can catch fire 2. Damage to other ships are hence reasonably foreseeable 3. Defendant held for damages Damages o To place injured party in the position as if tort never happened Defenses o Voluntary assumption of risk No Duty of Care owed Breach of defendant neglected o Contributory Negligence Plaintiffs must not be careless Blame is apportioned Reduces overall liability of defendant Moore v Woodforth 1. Woodworth owed duty of care not to injured Moore. 2. Defense of voluntary assumption of risk not proved. 3. Contributory negligence, because showed lack of care for safety.

Negligent Advice
4 Steps: 1. Does the defendant owe the plaintiff a DUTY OF CARE 2. The defendant has Breached the DUTY OF CARE (Standard of Care) 3. Defendant caused the plaintiff physical/economic loss? - CAUSATION 4. Harm suffered by the plaintiff was reasonably foreseeable REMOTENES DUTY OF CARE o Plaintiff and defendant must have special relationship 1. Speaker must be aware that he/she is being trusted by the representee to give info/advice which representee believes the speaker possesses/has access to. 2. Subject matter of the information/advice must be of a serious or business nature 3. Speaker must realize that the representee intended to act on the advice/inducement 4. Must be reasonable for representee to rely on the speakers info/advice 5. Must be within determinate class. o Disclaimers: 1. Will be taken into consideration when establishing duty of care 2. Depends on the circumstances of the case regarding the advice STANDARD OF CARE o He is merely required to exercise reasonable care in preparing himself to speak in conveying information, in exercise of his judgment and in expressing the information or advice which he chooses to convey 1. Mutual Life and Citizens Assurance Co Ltd v Evatt o In advising the client who employs him the professional man owes a duty of care to exercise that standard of skill and care appropriate to his professional status and will be liable both in contract and in tort for all losses which is client may suffer by reason of any breach of that duty. 1. Caparo Industries plc v Dickman Whenever payment is paid, can sue for breach of contract/tort Causation o Whether there is a causal connection o A caused B 1. Kenny & Good Pty Ltd v MGICA But for the negligent valuation, MGCICA would not have agreed to insure loan. 2. Lowe Lippman v AGC (Advances) Ltd Auditors not negligent because no intention to induce, only representation in signed accounts 3. Esanda Finance Corporation Ltd. v Peat Marwick Hungerfords PMH audited Excel for the year ending June 1989 Audit prepared for Excel

Esanda loaned money to other companies associated with Excel PMH did NOT owe Esanda duty of care because no specific request/intention/responsibility o Tip for lenders: Tell court that Auditors said do X because of Y Prove intention to induce

Contract Law
Simple contracts 1. No need for formal document 2. Does not need to be written 3. Requires consideration 4. Certain contracts must be in writing Bills, promissory notes Cheques & payment orders Hire & purchase contracts Real estate contracts Formal contracts 1. No consideration required Determining whether a contract is legally enforceable 1. Basis of agreement (Offer & acceptance) Meeting of minds 2. Legally enforceable Requires payment in some form (consideration) An intention to be legally bound: to go to court to enforce (Intention to be bound) No social + domestic agreements Forming a contract 1. Offer must be made 2. Offer must be accepted 3. Parties must intend to contract 4. Consideration must be provided. 1. Offer Expression of willingness to be bound by certain specific terms Must distinguish from 1. Mere intention 2. Mere supply of info/request of info 3. Mere puff 4. Invitation to treat Offeror 1. Person making the offer Offeree 1. Person receiving offer Mere Information 1. Harvey v Facey Privy Council deemed Facey merely giving information as requested, no intention to make an offer. Only Harvey made offer. Mere puff 1. If puffing or vaunting an article that was offered for sale was a criminal offence for every trader in the commercial world would be committing an offence twenty times in the course of each day

2. Invitation to treat An invitation to another to make an offer Auctions 1. Auctioneer calling for bids not calling to make offer, but invitation to treat 2. Goods Act s64 Auction for sale of goods is complete upon fall of auctioneers hammer, until that time, any bid may be retracted Tenders 1. Call for tender = request for others to make offers. Tenderer makes offer, not person calling for tenders Displays 1. Windows with price attached. Fisher v Bell o Display in shop window merely invitation to treat, not offer. 2. Shelves Pharmaceutical Society of Great Britain v Boots Cash Chemists o Offer made when customer presents items @ checkout counter. Advertisements 1. Catalouges/newspapers 2. Offer made when person reading advert sends $ or purchases in the usual manner 3. Depends on traders intention. Revocation of offer 1. Communication of revocation must be received before acceptance Bryne v Van Tienhoven Lapse of time 1. Once specific period expires, offer ceases to exist 2. No specific time, reasonable time Ramsgate Victoria Hotel Co Ltd v Montefiore Method by which offer was made Nature of transaction Terms of contract as a whole Actions of parties between making of offer and purported acceptance Any evidence that offeror has intimated an appropriate time frame. Options 1. Goldsborough Mort & Co v Quinn Consideration had been given to keep offer open Offer cannot be withdrawn Rejection 1. Offer once rejected cannot be accepted Hyde v Wrench Death of parties

1. Offer dies with offeror/Offeree Dickinsons v Dodds (offeror) Carter v Hyde (offeree) 3. Acceptance Basic rules: 1. Must be clear response to offer With knowledge of offer and by the persons to whom the offer is made: i.e. the offeree. Powell v Lee o Acceptance must be communicated Acceptance must be absolute, final and unqualified o Condition precendent A term that delays the operation of the rest of the contract until the term is satisfied No other rights in the contract take effect until it is satisfied For example: I agree to buy BUT if I can get finances from National Bank (Meehan v Jones) Masters v Cameron o Arrangement made subject to contract is not binding 3 Possible outcomes of subject to contract clause: o It may be one in which the parties have reached finality in arranging all the terms of their bargains and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restate in a form which will be more precise but not different in effect = This is BINDING contract Plastyne Products Pty Ltd v Gall Engineering Co Pty Ltd Shows intention to be bound. o Or it may be a case in which the parties have completely agreed upon all terms of their bargain and intent no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of those terms conditional upon the execution of a formal document o Or thirdly , the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract Conditional acceptance Acceptance with a condition is NOT a condition precedent Not a binding contract

Agreements to agree (binding because both parties offered to fixing the price in the event they are unable to agree) o Hawthorn Football Club v Harding o Terms are as agreed between parties as being fair and reasonable = uncertain. If method for certainty is provided, = binding 2. Methods of Communication Post o Postal acceptance rule Acceptance is effective when it has been communicated, when it is posted, sent. Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd o For postal rule to apply, there must be evidence that offeror has accepted the post as method of acceptance Must be expressly stated in the offer This option may be expressed by you by notice in writing posted to me Implied Intention not stated in offer Must be reasonable to use post By posting the letter of offer. Applies to public telegraph/public telex NOT PRIVATE Not applied to instantaneous communication Email o Electronic Transactions Act 1999 o When an information system is designated, either : Subject to an agreement between parties Receipt is when it enters the information system o If no information system is designated, when it comes into the attention of the addressee Telephone/face to face conversation Conduct o Brogden v Metropolitan Railway Corp Co. Held: contract came into existence when defendants first order was then filled by plaintiff. 3. Intention to be legally bound Agreement is insufficient, must be intention to create legal relations o Balfour v Balfour

Wife too ill to return to Ceylon so stayed permanently in England. Husband ceased to pay monthly allowance agreed. Court held not a legal contract but mere domestic agreement o Todd v Nichol Contract, but not enforceable o Rose and Frank Co v J R Crompton & Bros Ltd No contract because no intention to create legal relations o Letters of Comfort Not formal guarantee Kleinwort Benson Ltd v Malaysia Mining Corp. Berhad o It is our policy to ensure that the business of MMC Metals Ltd is at all times in a position to meet its liabilities to you o Mere representation Approach to decide Intention o What did parties intend? o Are parties serious about agreement o What would reasonable bystander viewing parties behavior think? o Person seeking to prove legal agreement bears burden of proof

Consideration
A valuable consideration in the sense of the law may consist either in some right, interest, profilt or benfit accruing to one party, or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other. o Currie v Misa Promoisee receives the benefit of the promise; promisor makes a promise Consideration must be sufficient but need not be adequate o Thomas v Thomas Promise to pay nominal rental of 1 GBP per year. Reasonable Whenever parties agree: o Executory consideration o Executed consideration Both valid o Past consideration Not valid Roscorla v Thomas Undertaking made after contract existed Eastwood v Kenyon Moral obligation not sufficient Consideration must have something of value o Moral obligation/motive/natural love & affection Be sober & virtuous respectable in circumstances giving up liberty Dunton v Dunton o Mr D agreed to pay his divorced wife monthly sum provided that she conduct herself with sobriety, in a respectable, orderly and virtuous manner. o Held that Mrs Ds promise was too uncertain and illusory to constitute consideration o Forbearance to sue Wigan v Edwards Held that Edwardses believed that defects in house gave them right to refuse to proceed with purchase. By agreeing to settle dispute in return for Wigans promise, they impliedly gave up this right. Therefore provided good consideration o Performance of public duty Glasbrook Bros. Ltd v Glamorgan County Council Police provided more than normal public duty, thus promise to pay extra was enforceable. o Performance of an existing contractual duty is not good consideration Stilk v Myrick Seaman with rate pay at 5 GBP per month. 2 out of 11 from crew deserted

Captain promised crew could have wages of the 2 deserted seamen Sue when Captain refused to pay Held: Stilk not entitled to money, because was already under contractual duty to provide services, even when shorthanded. Hartley v Pansonby Ps ship contained 36 crew, 17 jump ship P promised 40 GBP to H of the crew to continue voyage to India because now dangerous to sail. P didnt pay H sued Held: There was new element which discharged parties from original contract, fresh contract existed, so can claim. o Performance of existing debt Pinnels Rule Payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole, but the gift of a horse, hawk or rove etc. In satisfaction is good. For shall it be intended that a horse, hawk or robe etc might be more beneficial. = Request earlier payment, remaining cannot be sold. Foakes v Beer o Beer received judgment against F. An agreement to pay the amount owed by monthly instalments. B agreed in return to not act upon the judgement. o F paid in full, B sued for interest. o Held No consideration for Bs promise. o But if part payment was done by a 3rd Party, then that would be good consideration or if there was composition with creditors. Renegotiating an existing contract o Williams v Roffey Held: Promise to perform existing contractual duty could amount to consideration if it conveyed a practical benefit to the promisor and there was no element of duress. The court decided that there was a practical benefit to Roffey in that Williams kept working thus saving Roffey, the time and trouble of finding another carpenter and the contractor losses that would have been incurred if Roffey did not complete the renovation on time. Therefore, Roffey was ordered to pay Williams the agreed extras.

Express Terms
Terms can be o Express (actively agreed to by the parties) o Implied incorporated into the contract by the courts or statue Term promise to do or not do something, legally binding. Is it a term? o As proven by the innocent bystander o What would a reasonable person, in view of the circumstances consider/believe, to be the parties intentions? o Oscar Chess v Williams Denning LJ was influenced by the fact that it was clear to both parties that Williams had no personal knowledge of the year of manufacture Relief on the registration book, which had been tampered with by some other person without the knowledge of Williams. He held that the statement was a mere representation. Hodson LJ also held it was mere representation was definite and unqualified. He also stressed the importance of the statement to the overall deal. Written Document o Courts Approach In such a case [When there is doubt whether partly oral/part;y written/completely written etc.] The court is entitled to look at and should look at and should look at all the evidence from start to finish in order to see what the bargain (contract) was that struck between the parties. J Evans & Son (Portsmouth) Ltd v Andrea Merzario Parol Evidence o If at first glance the contract appears to be completely in writing, the court presumes that both parties intended all terms to be included in written format. o No evidence of oral terms will be allowed. o Factors affecting test Written? Signed? Past Dealings? Reasonable notice? Time (when during negotiations) Importance in minds of parties Experts (opinions?) o Presumption The point is that such (oral) statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded and merged in the contract itself. o Written & signed. Prima Facie written contract binding through signature. LEstrange v Graucob

Mrs LEstrange bought an automatic cigarette machine from the defendant. o Signed a document Sales agreement without reading. Agreement contained exemption clause This agreement contains all terms and conditions under whicih I agree to purchase the machine specified above and any express or implied condition, statement or warranty, statutory or otherwise, not stated herein is hereby excluded. o Court held that Mrs LEstrange had signed the agreement and therefore was bound by it. The exemption clause excluded implied terms and therefore Mrs. LEstrange could not rely on one. Misrepresentation (misleading or deceptive conduct) Curtis v Chemical Cleaning & Dyeing Co o Mrs Curtis took wedding dress to defendant to dry-clean. o Needed to sign receipt that she was to accept responsibility for damage to beads and sequins. o Dress damaged, Curtis sued for damages. o Defendant relied on clause on receipt This or these articles is accepted on condition that the company is not liable for any damage howsoever arising or delay. o Held: Court of Appeal agreed with Mrs. Curtis. Although the assistant had acted innocently, a false impression had been created which prevented the cleaners from relying on the exclusion clause except in so far as damage to the beads and sequins was involved. Past Dealings D J Hill & Co Pty Ltd v Walter H Wright Pty Ltd DJ Hill & Co hired a cartage contractor (Walter) to carry valuable machinery, which was damaged in transit due to negligence When items were delivered , Hills employees signed form which contained exemption clause which excluded liability for damage caused by any acts, defaults or negligence of the carrier or otherwise, howsoever Both parties had 10 similar dealings within 8 months. Hill sued, Walter relied on exemption clause Held: Contract was made before the form containing the clause was presented. No reason why Hill or its employees would regard form as delivery docket that when they signed it, they just acknowledged the delivery. Written evidence of contract Not necessarily a written contract A receipt, voucher, docket Docket in DJ hill

Brochure is not document Oceanic Sun Line Special Shipping Co Inc v Fay o Reasonable Notice If reasonable notice given, does not matter whether the other party read clause or not Parker v South Eastern Railway Co. What constitutes reasonable notice? Whether document containing term was contractual in manner o Post contractual statements not a term Olley v Marlborough Courty o All terms must be incorporated at the time of the formation of the contract Whether term sought to be incorporated was unusual for that kind of contract o If terms are unusual, extra notice has to be given. o By refence to what others in same industry do (standard penalty/fine/clause) o Inferfoto Picture Library Ltd v Stiletto Visual Programmes Ltd Held contract was not formed until transpencies and delivery note had been delivered. Nothing was done to draw defendants attention to overholding (late fee) condition, and condition was so new to normal industry practice, was not regarded as condition to contract. Whether parties discussed the matter. o Couchman v Hill Intetion of parties was to contract on the basis of the oral representation and on the basis of conditions set out in the catalogue. Therefore oral representation intended to be a warranty prevailed over written terms o Experts/Those with specialist knowledge Dick Bentley Productions Ltd v Harold Smith Motors Ltd The statement made by the dealer HSM was promissory in nature. I promise that the car has only driven 20k miles: Esso Petroleum v Marden o Marden relied on the information from Esso (200k gallons in 3 years as opposed to the real 70k gallons) therefore could sue for damages. o Importance of the statement Bannerman v White If the hops had been treated with sulphur then the purchaser would not have even, asked the price See Esso Petroleum v Marden Test if statement/term is promissory

Time = when it is said? Type of document is important What do both parties intend Importance of subject Test of contractual intention An objective test of subjective intentions Proven by the innocent bystander/reasonable person test o Sign contract, bound unless misrep. Terms have 3 categories o Condition Represents the purpose of a contract, breach of a condition renders performance of the contract to be completely different from what the parties originally intended. Associated Newspapers Ltd v Bancks Condition is the heart/essence of a contract. Defendants obligation was clearly a contract. Bettini v Gye Gye could only terminate if time stipulation was a condition. However, because contract was for an extensive period, involving many performances, time stipulation is seen to be unimportant to amount to a condition. o Innominate/Intermediate term Major breach as per condition Minor breach as per warranty Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd Contract required a ship to be delivered in every way fitted for ordinary cargo service Implied term = seaworthiness o Warranty/Damages Exemption Clauses o Two steps: Is it a term of the contract/has it been incorporated into the contract? Only if there has been reasonable notice What type of document is it? o Signs Thornton v Shoe Lane Parking o Court held that Shoe Lane Parking not protected by exemption clause because contract made prior to ticket being issued in vending machine. Offer made by proprietor and accepted by Thornton when put money into machine. What type of notice given? Reasonable notice? o Affected by: Signature (LEstrange v Graucob Ltd & DJ Hill v Walter H Wright) Prior dealings (Balmain New Ferry Co v Robertson)

o o o o o

Misrepresentation (Curtis v Chemical Cleaning & Dyeing Co)

Ticket Cases o Conditions on reverse of ticket Parker v South-Eastern Railway Co. Taken reasonable steps to bring into existence the exemption clauses used. See back o Anything that covers the notice, such as date stamp or any matter that hides the notice or obscures it, will prevent reasonable notice occurring. Sugar v London, Midland & Scottish Railway Co. Past dealings Signature Circumstances Does it cover the breach complained of? Ambiguity o Photo Production Ltd v Securicor Transport Ltd Securicor protected by clause because could not anticipate arson by employee. Four Corners Rule o Sydney Corporation v West Each exemption clause must be construed/interpreted in the light of the contract as a whole Four corners = boundary of limits of what was agreed to at the time of formation, or what the Court believes would have been agreed to. Negligence o Tech Pacific Australia Pty Ltd v Air Pacific Ltd Successfully argued that clause was sufficient to protect it against liability for negligence for losing clients goods. o White v John Warwick & Co Ltd Exemption clause will not cover negligence claim unless there is clear intention of the parties. Court held that the exemption clause did not relieve Warwick from liability under negligence tort. Fundamental Breach o Breach of a central crucial obligation, which is the basis of the contact o Covered by exemption clause if properly worded. Deviation Rule

Implied Terms
Implied by Courts as Law o As a matter of law = nature of contract or obligations it creates Work & materials Professional contracts Employment Good faith o Terms implied to ALL contracts Burger King v Hungry Jacks Burger King breached implied obligation of good faith just to take Aussie market o Professional services Reasonable care & skill o Trade Service contracts Reasonable care and skill Service reasonably fit for purpose Materials of good quality and fit for purpose Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd o Rivers breached contract because burglar proof implied that doors would be reasonably fit to keep breakers out of the shop. Implied by courts as matter of fact o Court may add a term to reflect the TRUE intentions of the parties as if the term has been forgotten o Cannot contradict express term o Implication merely the court introducing a term that was intended but was not Trade usage/custom Must be well known and widespread throughout particular industry. Past dealings Must be reasonable and clearly identifiable o Henry Kendall & Sons v William Lillico & Sons Terms in sold note part of past dealings. Not contradictory to express terms Biz efficiency A court will imply a term if the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case Must be reasonable and equitable Necessary to give biz efficacy So obvious Must not contradict express term The Moarcock All ER Rep. 500

By allowing to moor at jetty, implied that defendant was saying it was safe. BP Refinery (Westernport) Pty Ltd v Shire of Hastings o Imlied a term that the rate agreement was only to apply to company in occupation of property. o Privy Council implied a term that the agreement would apply to any assignee of the occupying company. Codelfa Constructions Pty Ltd v State Rail Authority of NSW o Confirmed BP Refinerys test o It is not enough that it is reasonable to imply a term, must also be necessary to give biz efficacy o Held: Unjust to imply term that nuisance claim would add to costs. It is a mere mistaken assumption Implied by relevant statute (Statutory Guarantees) o Contracts for services o Contracts of sales of goods o In trade or commerce Goods must be ss-ed in trade or commerce for any guarantees in ss 54 59 of the ACL to apply. Atkinson v Hastings Deering (Qld) Pty Ltd Tractor purchased was reasonably fit although being 2nd hand. o Consumer contract s.3 ACL defines consumer contract as price does not exceed $40k or of the kind ordinarily used Not acquired for resale Not for transformation through manufacturing processes Not for commercial repairing or treating goods or fixtures on land Crago v Multicorp Pty Ltd Ostrich not ordinarily acquired for domestic and personal use. o Summary: Acceptable quality s.54 of ACL Merchantable quality Disclosed purpose S.55 ACL Consumer must make known to the supplier the purposes for which the goods will be used through o Directly o Implied o Pre-contractual negotiations Does not apply if no reliance by the customer on the advice of the salesperson o Carpet Call Pty Ltd v Chan

Insufficient evidence to establish buyer relied on sellers skill to ss carpet that could camouflage staining. Correspond with description S.56 of ACL Only applies where goods were sold by description. Beale v Taylor o Breach of contract because car did not fit description Correspond with sample s.57 of ACL Where goods are sold by reference in a sample or demonstration model, the consumer has an action against the supplier if the goods do not correspond with the sample or demonstration model in quality, state or condition. Remedies for breach Depend whether failure to comply was major failure s260 of ACL There are time limits on right to reject goods Rejection period starts when goods are supplied and ends when defect should have been apparent s262(2) ACL Lost, destroyed, disposed of by consumer Damaged after being delivered to consumer for reasons not related to state or condition at time of supply Attached to, incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. If breach is MINOR, may ss remedy by: Repairing goods Replacing goods with identical type Providing consumer with refund (s261 ACL) Person receiving goods as gift has same rights as consumer S266 ACL Guarantees & Exemption Clauses Limitation where goods are not normally bought for personal use S64A(1) ACL Seller can limit liability to o Replacement of goods o Repair goods o Paying cost of replacing goods o Paying cost of repairing foods. Rights of suppliers against manufacturers. Suppliers are entitled to be indemnified by manufacturer For damages and costs (s274 ACL) Where goods are not ordinarily acquired for personal, domestic or household use: Manufacturer may limit liability to replace/repair goods. (s276A ACL) Consumers rights against suppliers of services

S3(3) of ACL provdes A person is taken to have acquired a particular service as a consumer if and only if: o The mount payable for the services under subsections (4) to (9) did not exceed $40k or if greater amount prescribed, the services were of a kind ordinarily acquired for personal, domestic or household use of consumption Services broadly defined as: Financial Services covered by the Australian Securities and Investments Commission Act 2001 Employment contracts Insurance contracts Contracts in relation to transportation or storage of goods Supply of telco services Supply of gas/electricity services Can include ss of goods that are provided as incidental to the provision of the service E v Australian Red Cross Society o Blood supplied from hospital contaminated with HIV o Held Contract was for provision of services. Guarantees: Service Guarantee of care & skill (s60 ACL) o Read v Narey Nominees Pty Ltd Nerey was held to be under contractual obligation to exercise reasonable care and skill. Guarantee for fitness of particular purpose o Crawford v Mayne Nickless Ltd Breach when alarm failed to work Where no time of ss of service is dixed, guarantee that they will be supplied in a reasonable time. (s62 ACL) Guarantees may not be exluded s64 Service providers may limit liability s64A(2) o Resupply o Paying for resupply Remedies S268 Termination for a contract take effect from the time supplier is notified.

Vitiating Factors & Remedies


Misrepresentation o Has one partys statement induced the other into entering a contract. o If innocent party had known the truth, would not have entered contract. o May be fraudulent/negligent/innocent misrep Inducement Inducement = reliance There must be an intention to induce by the representor o Holmes v Jones Court rejected action brought on basis of misrep, because purchases did not rely on the misrep but the report of their agent. o Redgrave v Hurd No duty of plaintiff to investigate truth of a representation. Mere puff Dimmock v Hallet o mere flourishing description by an auctioneer o Obvious to all that it is not fact Opinion Smith v Land and House Property Corporation o Smith statement about tenant was false. Bisset v Wilkinson o Statement that farm can support 2k sheep in winter o Vender never run sheep before, was honest statement o Statement was only opinion. Silence Generally not actionable Exceptions: o Distortions of truth. R v Klysant Prospectus of coy. Stated dividends have been paid for 6 years, but didnt say that paid out of reserves, not profits. Loss was made. Held: Misrep. o Half Truths Re Hoffman: Ex parte Worrell v Schilling In financial difficulty vs bankrupt. Misrep o Change in circumstances Lockhart v Osman Failure to speak amounted to misrep

Other vitiating factors Undue influence O Sullivan v Management Agency and Music Ltd o Agreement was set aside, because of Mgmts fiduciary nature to O Sullivan. Duress Physical o Barton v Armstrong Will of contracting party overborne by threats Economic o North Ocean Shipping v Hyundai Construction Co Ltd North Ocean paid under compulsion therefore contract was void under economic duress. Unconscionability Taking advantage of a persons vulnerability o Blomley v Ryan Contract set aside due to Blomley taking advantage of Ryan. Biz Unconscionability s.22 ACL Unconscionable Biz Transactions o Not applicable to public listed companies o Used by small biz dealing with financiers o Potential use in guarantee cases s.22(2) sets out factors o Industry Codes

Remedies
Different type of remedies o Rescission Treated as if contract never had existed vs parties restored to original position Equitable remedy Contract is voidable & parties are restored to their original precontractual positions o Must be communicated o Car & Universal Finance Co Ltd v Caldwell Notified police, meaning provided reasonable notice. Recission valid because not interfering with third part rights by dding the return of car. Restrictions Restoration to pre-contract position must be substantial. o Academy of Health & Fitness Pty Ltd v Power Power validly rescinded contract because never visited gym or paid fees. Protection of Thirds Parties o Bona fide purchaser for value without notice o Car & Universal Finance Co Ltd v Caldwell Notified police, meaning provided reasonable notice. Recission valid because not interfering with third part rights by dding the return of car. Different Reasons for Rescissions: Contract is rescinded. Misrep Unconscionability Undue influence Duress o Termination From specific point of time What about deposits What about performance of terms prior to termination Watch out of affirmation Common law remedy o Damages Money compensation Punishment versus competition? Common law ready To put injured part into position they have been, if contract have been performed. Addis v Gramophone

Court overturned decision on the amount of damages. Purpose of damages to compensate innocent party, not to punish wrongdoer.

Must cause loss Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd. Goods have not been stolen if the correct security door installed. Victim must mitigate loss. Loss not too remote Hadley v Baxendale Part in breach will be liable for losses which flow according to usual course of things from the breach. Party in the breach is only liable for losses that were within reasonable contemplation of the parties at the time the contract was made. Include agreed amounts? Genuine pre-estimate, penalty not allowed. Expectation Costs Commonwealth of Australia v Amann Aviation Pty Ltd o Normal claim includes the establishment costs and the expected profits. o If cannot predict accuracy with profits then at least expect to recover costs (Robinson v Herman)

Other Orders of the Court Specific performance Where damages are not going to suffice o Dougan v Ley Damages not sufficient, granted specific performance. D ordered to submit necessary documents of transfer to Commissioner for Road Transport and Trainways to transfer registration and license. Injunction Prohbition o To not do something they promised not to do. Termination o Terminated by Performance Old rule: o Performance must be exact New Rule: o Substantial performance Hoenig v Issacs

$750 to be paid, only paid $400. Remainder not paid due to defective work Held: Court of Appeal held that Issacs entitled to contract price.

Agreement Mutual discharge o Where both parties abandon their original agreement by mutual consent while the contract is still executor Waiver v Variation o Wavier = Where one party leads the other party to reasonably believe that strick performance will not be insisted upon o Variation/Substitution = Where parties wish to continue with a contractual relationship but on terms differing from those in the original agreement, a new agreement can be substituted. Frustration Taylor v Caldwell o T contract to perform in a building that was burnt by fire, T was not arsonist. o Supervening event not due to parties o Significant change o No default/Negligence o No contemplation to event o Unjust to hold contractual obligation o Money paid before supervening event Common law, no recovery Unless total failure of consideration Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd Under statute, recovery of sums paid. S.3(2) Frustrated Contracts Act Breach Remedied by Termination/Damages/Order from court. For breach of a condition or serious breach of an intermediate term Parties relieved from future obligations Unequivocal No affirmation Repudiation Where one party indicates they are unable/unwilling to perform their obligations o Penola Trading Co Pty Ltd v Sunny Springs Pty LTd Implied term that P had to take reasonable steps to satisfy terms of contracts.

Failed to satisfy, hence breached contract. Conduct demonstrated intention not to be bound by contract, therefore a repudiation, where reasonable person will interpret as refusal to proceed with contract.

Anticipatory breach Innocent party has a choice: o Terminate & sue for damages o Affirm /Elect to maintain contract National Engineering Pty Ltd v Chilco Enterprises Pty Ltd For Nat.Eng to sue anticipatory breach, must prove that matter of fact that Chilco not able to perform contractual obligation. Failed to satisfy test Termination wrongful, amounted to repudiation. Chilco entitled to damages. Loss of enjoyment Baltic Shipping Co (Mikhail Lermontov) v Dillion o Mrs D awarded damages including disappointment and distress and the loss of entertainment and enjoyment Biz Unconscionability o s.21 ACL = Unconscionable consumer transactions. o List of factors to determine if contract was unconscionable: Relative strength of bargaining powers of the two parties Condition imposed on consumer Undue influence Unfair tactics used against consumer Amount paid higher than other suppliers Other Equitable Remedies o Restitution Unjust enrichment Not contractual remedy Not tort remedy Gained benefit at the expense of plaintiff in circumstances where it would be unjust. Pavey &Matthews Pty Ltd v Paul Pavey granted quantum meruit payment for amount of work completed.

Agency
Agency involves 3 parties o Principal (P) who posses authority to o Agent (A) to effect the legal relations between the principal, and o A Third Party (TP). o Principal acts though agent with third party in one contract. o Compare Employer Employee An employee is subject to the control and direction of the employer and an agency relationship will only arise where the employee is acting within the scope of their employment Employer-Independent Contractor Independent contractor controls the manner, method and materials for the task and in dealing with third parties, the contractor is generally the principal. How agency created? o Expressly o Implied by conduct o By operation of law Necessity or emergency Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd o Implied by necessity: There must be a genuine emergency where A is entrusted with Principals property and acting in their best interests cannot get in touch with them. Cohabitation Sachs v Miklos o Presumption that spouse or de facto has authority to pledge credit for necessaries suitable for lifestyle. o Estoppel Pole v Leask A acted as agent for P in transactions with Leask for a number of years. P terminated agenvy but A continued to act as if he were an agent and collected money and then kept it. Held: Prevented from denying an agency existed if have not communicated terminated of agency to 3rd party. What authority does the agent have to bind the principal? o Implied authority Biz efficacy = make the contract work ANZ Bank Ltd v Ateliers de Constructions Electriques de Charleroi o Privy Council held that agent must have implied authority because it is necessary to give biz efficacy. Trade Custom

Refers to additional authority that is so obvious it goes without saying in a particular industry/trade/profession E.g.: A company secretarys job requires them to be able to plan biz trips for the MD, to hire cars for the companys purpose. Past Dealings = as per previous conduct o Ostensible/Apparent authority Principal represents through conduct to the TP that the A has authority to perform a particular task, when in reality A does not Thus it appears that the agent has a particular level of authority. Ostensible authority may be greater than express authority. Apparent or ostensible authority overlaps with express and implied authority. Trade custom of a company secretary may be to hire cars. Freeman & Lockyer v Buckhurst Park Properties A not appointed MD of company, but acted as he was There was power to appoint A as MD, BPP does not object. A hires F&L to draw plans Although A not MD, actions typically within MDs express authority F&L sends account to BPP BPP x pay. BPP liable for damages because A had ostensible authority. Proven by: 3 ELEMENTS TO PROVE OSTENSIBLE AUTHORITY: P made a representation to a TP that the A had authority to enter into a contract. Representation made by a person who had actual authority to manage the biz of the company. TP was induced/relied on the representation Ratification When principal will not be liable unless the principal subsequently ratifies the agents action. (principal's approval of an act of its agent where the agent lacked authority to
legally bind the principal)

Where A acted without Ps authority, P may subsequently ratify transaction Ratification is retrospective, and dates back to the time contract was made Basically where authority is given after transaction has been made: i.e. without antecedent authority. o Agent must purport to act as an agent o Must have a definite principal in mind, o Principal must be in existence at the time of contracts formation o Principal must have contractual capacity o Pricipal must have full knowledge of all facts at time of ratification. o Where no time is specified, must take place within reasonable time. o Ratification may be expressed or implied. o Must be in full. Duties of agents o Ficuciary Obligations Must be in good faith

o o o

Must follow Ps instruction Bertram, Armstrong and Co v Godfrey o A must act in Ps best interests A must disclose personal interests Dargusch v Sherley Investments Pty Ltd A not to make secret profit Lunghi v Sinclair Secret Commissions Act 1905 o Offence for agent to accept or obtain for him/herself or any person other than the principal any gift or consideration as an inducement or reward unless it is down with knowledge and agreement of the principle. o A must use reasonable skill Mitor Investments Pty Ltd v General Accident Fire & Life Assurance Corp. o A must divulge confidential information o A must not delegate must act in person in person Rights of Agents o Right to remuneration or to commission o Right indemnity = recover their costs of exercising their authority and acting on behalf of the principal. o Right to lien = when the principal doesnt pay the agents fees, the agent can keep the property in their possession until principal pays the agents fees. Liability A and P tp TP o General rule = A cannot sue or be sued on a contract between P and TP: A discloses the agency relationship and names P or A discloses the agency relationship but does not name P o Why? A as in intermediary P is the party to the contract to TP. o Exceptions: Breach of a Warranty of Authority Collen v Wright o TP entered into a lease agreement because they believed the agent had authority to sign and discuss and therefore enter into the lease on behalf of P. o Agent did not have ANY authority to do so, so P refused to proceed with lease. o HELD: If Agent expressively or impliedly represents they have the sufficient level of authority. It is actually like entering into a contract with the TP in which Agent promises they have personal authority. Undisclosed Principal o TP &P can only enforce the contract if the following is satisfied: Agent did have the actual authority to enter into the contract at the time they did.

Terms of the contract are not inconsistent with there being an agency If the identity of the principal/agent is not crucial to the performance of the contract. Said v Butt o X theatre critic banned watching a show, asking a friend to buy ticket for him so he could sneak into the show. o Held: Couldnt enter as critics identity was crucial. If 3 conditions fulfilled and the P refuses to comply with contract: TP can choose to sue either A to P o Minter v Mendies Minter hired Mendies to repair roof. Mendies ran biz as a company but didnt tell Minter this = company was undisclosed principal. Minter wanted to sue for breach of conduct. Held: Minter could choose either to sue Mendies as an individual or his company. (Choice decided by determining who had the most assets & therefore could pay most damages) Agency Termination: By operation of law By action/agreement of parties Mental incapacity of A/P Bankruptcy of A/P Frustration of contract Illegal contract Dissolution of company.

Partnership
Definition: Carrying a business between persons in common with view to a profit. Partnership is not a separate legal entity from partners. Distinct from other trading entities o ID of the partners with the firm o Unlimited liability to each partner. o Non-transferability of each partner o Right of mgmt of each partner Does not require registration o If name different from partners names, must be registered under s.5 the Business Names Act. Based on obligations of mutual trust and confidence. Elements o Business Any trade, occupation or profession s3 Partnership Act o Does not include hobbies & not for profit clubs. o Single activity? Repetition and regularity Smith v Anderson Yes, single events can be considered to be carrying on. Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd o Went into agreement with view of profit o Agreed to share profits o Agreed to make joint decisions and clearly intended to become joint proprietors of the benefits o Sufficient to create partnership o Thus court held both as partners. Continuing: Partnership will end by expiry of time limit as per partnership agreement s.36(a) Or by notice s.36 Carrying on a biz in common Agents for one another (mutuality of rights and responsibilities) and in the same biz. o Re Ruddock Mrs Bear was partner because treated each other as partners and relationship determined by mutuality of rights and not by words used by partners. Partnership formation: o Significance of s.6PA S.6(1) = Joint tenancy or tenancy in common (real property) = no partnership

S.6(2) = Sharing gross returns (b4 expenses deducted) = Generally no partnership S.6(3) = share of profits prima facie evidence of partnership Receipt of debt out of accrued profits no o S.6(3)(a) Cox v Hickman Not partners even though they had a right to share in the profits. (Creditors not partners) Contract for renumeration for service no o S.6(3)(b) Plummer v Thomas Despite agreement to share profits, rest of evidence x support the existence of a partnership. No suggestion that Plummer agreed to share losses. Widow/Child receiving annuity no o S.6(3) - Advance from profits no To protect creditor who finances project o S.6(3)(d) (However, if creditor seeks greater power/rewards, may become partner) Re Megavand; Ex Parte Delhasse Delhasse was a partner. Terms of agreement was beyond requirements of a standard loan. Loan was not to be repaid until partnership was dissolved more consistent with partners capital contribution than loan. Goodwill no o S.6(3)(e) Where vendor of a business waits to receive the balance of the purchase price, the goodwill or its entire amount from the future profits of the business.

Key element o Montefiore v Smith Partnership may be created in many ways either by express words or by the acts of the parties, and whether a partnership exists does not depend on the private intentions of the parties; what their intentions were is to be judged of by their acts. o Cox v Hickman The law of partnership is undoubtedly a branch of the law of principal and agent So if two or more persons agree that they should carry on a trade, and share the profits of it, each is a principal, and each is an agent for the

other, and each is bound by the others contract in carrying on the trade, as much as a single principal would be by the act of an agent. Partnership by holding out o Employees who say or allow themselves to be held out as partners o Names on letterhead/vehicles that indicate partnership o If a partner holds out to third parties that a non partner is a partner then due to the rules of ostensible authority, the firm will be held liable as if that person was a partner s. 10 o Also, the non-partner will held liable as if he/she was a partner. s. 18(1) D&H Bunny Ltd v Atkins and Naughton Partners Rights/Responsibilities Inter Se o Duties to each other governed by: Terms of partnership agreement/contract/deed Partnership Act S23 Variation of rights of partners (Unanimous) S28 default rules (where not contained in partnership agreement) o S.28(5) Every partner has right to mgmt partnership o S.28(7) Partners cannot be added or changed without consent of other partners o S.28(8) Changes to the type of biz engaged in by partnership must receive consent of all partners o S.28(3) Any additional advance to the partnership, by a partner entitled to 7% interest. o S.28(9) Partnership books are to kept at the place of biz and available to all partners S29 Expelling a partner o Expulsion must be a unanimous decision o Subject to partnership deed/agreement o If no expulsion power , dissolve partnership, encourage partner to retire S32-34 Fiduciary Duties o S. 32 Each partner must make full disclosure of all things/matters affecting partnership to other partners or their legal representatives. o S. 33(1) Each partner must account for the benefits derived without consent. o S. 34 If a partner carries the same type of biz without consent, they must account to the firm all the profits. Birtchnell v Equity Trustees, Executors and Agency Co. Ltd Partner in real estate firm Client dev-ed land, split profits with a partner No disclosure

Partner died. Court ordered executor of partners estate to give money to the firm to be provided according to Partnership Agreement

Partnership Property o Harvey v Harvey Arrangement was clearly intended to be partnership Land did not become asset of partnership. Evidence Land was intended to be preserved for HHs son. No principle that in absence of agreement, partner whose property has been increased in value by expenditure of partnership money is bound to other partners to share in the increased value. HH Harvey kept land, but was under no obligation to pay other partners for improvements made. o S. 24- Whether particular items brought into partnership has become partnership property or not depend on the intention of the parties as evidenced by their actions, not the operation. o S. 24(1) defines as = Items brought into the partnership as partnership property. Items acquired on behalf of partnership Items acquired on course of partnership biz. Must be for exclusive use of partnership. Agency s9 o Every partner is an agent of the firm for: Purpose of biz of the tirm Carrying on in the usual way Or in biz of the kind Unless partner has no specific authority and the person dealing knows they do not have that authority or the stranger does not know person is a partner. Partnership will be bound by the acts of one of its partners where that partner is acting within their actual or ostensible authority o (Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd T did not have authority to make contracts on behalf of partnership. No ostensible authority because Construction Engineering unaware of Hexleys existence. Construction engineering not bound. o Liabilities to outsiders Actual & Ostensible authority(usual way) Young v Lamb & Ors o Partnership bound Depends on nature of specific biz Normal practice of other similar biz Duration of partnership Goldberg v Jenkins

Held: Borrowing money in name of partnership is normal scope of biz in partnership. But borrowing in exorbitant rates is not. Partners not bound to debt.

Biz of the kind Mercantile Credit Co Ltd V Garrod o G&P operated garage/repair shop o G silent partner o P sold car through firm to M o Done fraudulently as no authority due to agreement o M sued to recover purchase price from partnership o Held: - Selling cars within practice of repair shops generally. G pays as well. Ratification Re Oppenheimer o Partner bought goods in Melb contrary to agreement o French partner paid debts o Held: Partnership not liable because not in usual way of doing biz. But by paying debts, partner ratified purchases of stock. Provisio Unless TP does not believe to be partner Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd o T did not have authority to make contracts on behalf of partnership. o No ostensible authority because Construction Engineering unaware of Hexleys existence. o Construction engineering not bound. Contractual Debts and obligations S9 S 13 Every partner jointly liable for whole debt while partner/all partners can be sued, but one partner may end up paying whole debt if others bankrupt Unlimited personal liability

Wrongful acts o S14 If partner commits wrongful act (tort) While acting in the ordinary course of firms biz or will acting with partners authority And causes injury/loss to 3rd party. Partnership will just as liable as partner o S16 Joint & Several liability Can sue each partner separately until damages satisfied or sue firm jointly

Liability in tort o Ordinary course of biz. Walker v European Electrics Pty Ltd 3 partners in acc firm. Each had speciality 1 partner misappropriated funds from trust account Held: Firm liable as setting up trust account was within normal procedure of work. National Commerical Banking Corp. of Australia v Batty B&D operated acc partnership D director of Robert Bushby Pty Ltd Banked cheques payable to company in partnerships trust account and misappropriated $30k. Co sued bank for converting cheques. Bank sued partnership Held: B not liable. Depositing cheques in that manner, enough trust account was not normal was not in the ordinary course of biz of the firm, and not something B authorized. Partners Resignation o Not liable for debts/obligations incurred b4 becoming partner. S21(1) o Debts incurred whilst a partner, yes. S21(2) unless others release S21(3) o Liabilities follow when leaving partnership o Holding out S18. Liable if he/she was partner. Resigning safely o Actual Notice to existing clients s 40(1) o Implied or reasonable notice to future clients (those after you leave) Notice in local newspaper (Govt Gazette) s40(2 o Die/bankrupt/retire s 40(3) o Tower Cabinet Co Ltd v Ingram C&I in partnership. Letterhead named 2 partners C bought out I, letterhead changed. C purchased furniture from TCC using old letterhead TCC claim I as partner Held: I not liable. TCC discovered Is involvement and former status as partner after I retired. Dissolution o Break up of partnership Old partnership dissolves, new partnership reborn Transfer of a share to non-partner inevitably breaks continuity of firm, thus constituting a new firm or partnership of those members of the former partnership who remain with the new comer (SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd) Hudgell Yeates & Co v Watson

H a firm of solicitors sued W for outstanding fees, who refused on grounds that one partner was practicing without valid practicing certificate. Illegal to do so. Held: Day certificate lapsed was the day partnership lapsed. New partnership immediately began from remaining partners. Fees payable

By Parties Completion of object of partnership s36 (b) o Deed/partnership contract Expiry of time limit as per deed s36 (a) No time limit, then any time a partner by notice can dissolve s36 o By Court as upon application of partner S 39 Re Yendide Tobacco Co o By Bankruptcy/death of partner Subject to partnership agreement upon death/partner of a partner the partnership dissolves s37. Winding Up o Realization & distribution of assets of partnership o S 48 Debts/Obligations to non-partners Advances made by partners Capital by partners Residue in accordance with how profits divided.