CONTRACT LAW PLAN

FORMATION
1)
2)
3)
4)

Distinguish an agreement from a contract

6 Prerequisites for a valid contract
Types of contracts Simple, Formal (Deed), unilateral/bilateral
Agreements (Intention to create legal relations) Business,
commercial (ads), Family/domestic/social/voluntary
5) Distinguishing an offer from an invitations to treat
6) Acceptance of an offer
7) Importance of consideration required in simple contract, what it
involves, requirements for valid consideration.
8) Promissory estoppel 6 elements and key cases
9) Capacity Minors contracts, mentally ill, intoxicated, corporations
(natural/legal impossibility).
10)
Mistake between parties, mistake of law, mistake regarding
nature of document (non est factum), remedies (common law,
equity, legislation).
11)
Rectification
12)
Misrepresentation (in contract, in tort of deceit, in legislation).
CONTENTS
1) Purpose of contract What it sets out
2) Parol evidence rule Meaning, exceptions
3) Pre-contractual representation Not part of contract, test: IRT,
remedies
4) Terms:
i)
Condition v warranties
ii)
Terms implied by court
iii)
Uncertain terms
iv)
Meaningless terms
v)
Ambiguous terms.
5) Exclusion clauses:
i)
2 Tests: Term? Cover loss or damage? (T, LD)
ii)
Regulation (what it means)
iii)
Signed document
iv)
Unsigned documents
v)
Notice
vi)
Introduction of terms after contract
vii) Notice from previous dealings
viii) Interpretation Ambiguity rule, negligence rule, four corners
(deviation) rule, interpretation according to express
agreement.
ix)
Limited by legislation
6) Unconscionable Conduct 3 requirements, key case
TERMINATION OF CONTRACT

1) How termination may occur:

i)
By Performance
ii)
By Agreement
iii)
By lapse of time
iv)
By operation of law
v)
By Frustration
2) Equitable remedies:
i)
Specific performance
ii)
Injunction
3) Damages for breach of contract:
i)
Remoteness
ii)
General and nominal damages
iii)
Dissapointment and distress
iv)
Liquidated and unliquidated damages and penalties
4) Restitution

TORT OF NEGLIGENCE
1) Is there a duty of care (foreseeability of plaintiff)?

Donoghue v Stevenson
-

The Neighbour test:

a) The risk of injury.
b) Defendants relationship to the risk.
c) Nature of damages suffered by plaintiff.

Other (salient) criteria:

i)
ii)

Foreseeability of harm.
Reliance by the plaintiff upon the defendant.

1) Establishing the standard of care

CLA 2002 (NSW) s5B(2):
a) Probability that the harm would occur if care were not taken
Bolton v Stone
b) Seriousness of the harm Paris v Stepney Borough Council
c) Burden of taking precautions to avoid the risk of harm Cole v
South Tweed Heads Rugby Football Club
d) Social utility (purpose) of the activity that creates risk of harm
Agar v Hyde
2) Is there a breach of duty of care (foreseeability of risk of harm)?
CLA 2002 (NSW) s5B(1): The Person is not negligent in failing to take
precautions against a risk of harm unless:
a) The risk was foreseeable
b) The risk was not insignificant
c) A reasonable person in the defendants position would have
taken precautions to guard against the risk of harm.
3) Causation
- Must be a casual connection between breach of duty of care and
damage suffered, ie. Did the defendants conduct cause the
plaintiffs injury? Lindeman Ltd v Colvin
-

But For Test: A negative test for causation, but essential in helping
to work out causation: But For the defendants breach, the damage
would not have occurred Yates v Jones

- S5D(1) CLA 2002 (NSW)

a) FACTUAL CONSIDERATION: Negligence has to be a necessary
condition of the occurrence of harm.

4) Remoteness (foreseeability of damage)

The defendant is not always liable for all the damage caused by
their breach of duty: Only foreseeable damage that is not too
remote is recoverable.

Connection needed between breach of duty and damage:

i)
ii)

Was the damage the cause of the breach (factual causation)?

Was the damage of such a kind that a reasonable person
would have foreseen?

Test for remoteness: Reasonable foreseeability Wagon Mound

Cases

- S5D(1) CLA 2002 (NSW):

b) A determination that negligence caused particular harm comprises
the following 2 events:
i)
Factual causation (s5D(1)).
ii)
Scope of liability That it is appropriate for the scope of the
negligent persons liability to extend to the harm so caused.
5) Defences:
i)
Contributory Negligence
- The Plaintiffs failure to take care of their own safety.
- Plaintiffs negligence must help cause the damage
- Liftronic v Unver
- s5R(1): The same principles apply to determining contributory
negligence as determining negligence.
- s5R(2): Standard of care is that required of a reasonable person in
the position of the plaintiff.
- s5S: Liability can be reduced by 100%, thus defeating the claim for
damages.
ii)
Voluntary assumption of risk
- Commonly used in sport, defendant must prove the plaintiff had:
i)
A precise knowledge of the risk
ii)
A full understanding of the risk
iii)
Voluntarily accepted the risk
- No liability for:
a) Inherent risk (s5I: cannot be avoided by reasonable care).
b) Harm suffered from obvious risks of dangerous recreational
activities (s5L).
c) Harm suffered during recreational activity where warning was
given by defendant (s5M).

iii)
Vicarious liability
Also referred to as secondary liability: One person responsible for
the wrongful act of another because of their legal relationship, even
if the first person is not at fault:

a) Employer/employee
b) Principal/agent
c) Partnerships

TORT OF NEGLIGENT MISTATEMENT

1) Is there a duty of care (foreseeability of plaintiff)?
- Hedley Byrne & Co Ltd v Heller and partners Ltd:
i)
If advice is given to be relied upon, a duty of care goes with it.

ii)
a)
b)
c)

d)
e)

Any person with a special skill is under a duty to take care with
the accuracy of advice/information.
The Barwick test (Is there a special relationship?): Mutual Life &
Citizens Assurance Ltd v Evatt
Duty of care owed if:
Defendants advice was on a serious business matter.
Defendant intended to induce the plaintiff to act on the advice.
Defendant realised, or ought to have realised, that the Plaintiff was
trusting in the Defendants especial competance to give the
advice.
Plaintiffs acceptance and reliance on Defendants advice was
reasonable.
Reasonably foreseeable that the Plaintiff would suffer loss if the
advice turned out to be incorrect or unsound.
Includes advice given for free: L Shaddock & Assoc Pty Ltd v
Parramatta City Council
Esanda Test: Esanda v Peat Marwick

(Information acquired by unknown third party) A special

liability of auditors and accountants to investors and lenders.
If there is a mere foreseeability that advice might be
communicated to someone other than the client; and that
person might enter into a transaction and suffer loss.
NOT sufficient to establish duty of care between auditor and
third party.

Duty of care Owed if:

a) The adviser knew or ought to have known that the
information/advice given to its client would be communicated to a
third party.
b) The information/advice would be communicated for a purpose that
would very likely lead the third party to enter into some transaction.
c) It would be very likely the third party entered into such a
transaction in reliance on the information or advice from the adviser
and risk incurring economic loss if the advice is untrue/unsound.

2) Establishing the standard of care

CLA 2002 (NSW) s5B(2):

e) Probability that the harm would occur if care were not taken
Bolton v Stone
f) Seriousness of the harm Paris v Stepney Borough Council
g) Burden of taking precautions to avoid the risk of harm Cole v
South Tweed Heads Rugby Football Club
h) Social utility (purpose) of the activity that creates risk of harm
Agar v Hyde
3) Is there a breach of duty of care (foreseeability of risk of
harm)?
CLA 2002 (NSW) s5B(1): The Person is not negligent in failing to take
precautions against a risk of harm unless:
d) The risk was foreseeable
e) The risk was not insignificant
f) A reasonable person in the defendants position would have
taken precautions to guard against the risk of harm.
-

4) Causation
Must be a casual connection between breach of duty of care and
damage suffered, ie. Did the defendants conduct cause the
plaintiffs injury? Lindeman Ltd v Colvin

But For Test: A negative test for causation, but essential in helping
to work out causation: But For the defendants breach, the damage
would not have occurred Yates v Jones

S5D(1) CLA 2002 (NSW)

a) FACTUAL CONSIDERATION: Negligence has to be a necessary
condition of the occurrence of harm.

5) Remoteness (foreseeability of damage)

The defendant is not always liable for all the damage caused by
their breach of duty: Only foreseeable damage that is not too
remote is recoverable.

Connection needed between breach of duty and damage:

iii)
iv)

Was the damage the cause of the breach (factual causation)?

Was the damage of such a kind that a reasonable person
would have foreseen?

Test for remoteness: Reasonable foreseeability Wagon Mound

Cases

- S5D(1) CLA 2002 (NSW):

b) A determination that negligence caused particular harm comprises
the following 2 events:
iii)
Factual causation (s5D(1)).
iv)
Scope of liability That it is appropriate for the scope of the
negligent persons liability to extend to the harm so caused.
6) Defences:
-

Standard of care for professionals (does not impose) s5O(1):

(1)A professional does not incur a liability
in negligence arising from the provision of a
professional service if it is established that the professional
acted in a manner that was widely accepted as competent
professional practice.