Contract Law Cases And Principles

Part 1

Part 1

1. Specific performance is an order which is made by the court to make a party do a specific act.

• Specific performance order can be made in relation to a sale of land
• It cannot be made n relation to sale of care

1. Court will not awards specific performance when compensation and other damages can compensate the loss
2. The purpose of an injunction is to prohibit a person form doing an act
3. The purpose for damages in the breach of contract is to ensure that the aggrieved party’s initial position when the contract has not been entered into has been restored.
4. Punitive damages are provided in case of extreme breaches and negligence whereas compensatory damages are awarded for personal injury claims not very serious.
5. The damages which are awarded for the breach of contract are Repudiation Compensation Injunction Specific performance

Part 2

1. Hadley v Baxendale case provides through its two limbes that Damages of contract must be fair and reasonable arsing from ordinary course of dealing and the other party must have special knowledge in relation to special circumstances for damages to be allowed.
2. In Hadley v Baxendale-  the defendant caused injury to the plaintiff. Special instructions have been provided by the plaintiff to the defendant. Court held that damages can be provided where such communication was made.

In Laundry (Windsor) Ltd v Newman Industries Ltd plaintiff made a claim for extraordinary damages. it was held by the court that only ordinary damages could be provided.

1. an injured plaintiff cannot claim interest as damages for breach of contract as per Hungerfords v Walker as it is not consistent with the two limbs of Hadley v Baxendale.
2. The Liquidated damages clause cannot be always enforced by a contract. They are only applicable when the damages are equal to the best estimates of the parties.
3. Duty of mitigation is the duty imposed on contractual parties to reasonably mitigate the harm which can be caused to each other.
4. No damages for emotional distress is contract law cannot be claimed as provided by the case of Michigan Supreme Court, in Kewin v Massachusetts Mutual Life Ins Co.
5. quantum meruit’ is a reasonable money paid in relation to a contract.
6. issue can Jane claim damages from Tom rule Hadley v Baxendale Application All losses are reasonable

Part 1

The first idea is correct as complicated contracts have to be in writing. This is to avoid any uncertainty in the future in relation to the terms of the contract. The second idea is not correct as it is a simple contract and would cause inconvenience for both the parties and such dealings are usually conducted by trade customs.

Part 2

Question 1

There is a contract as per Balfour v Balfour in case of the bank because there was an intention to create a legal obligation. There is no contract as per Merritt v Merritt in relation to mum as the intention of creating a legal obligation was not present in the case.

Question 2

Domestic arrangement – there was contract- no, the agreement was serious to be enforceable

Domestic arrangement- there was a contract-no, the plaintiff was party despite family relationship

Commercial arrangement- intention of being legally bound- yes, the honorable clause rebutted the presumption

Question 1

Invitation to offer Offer offer counter offer offer supply of information offer inquiry acceptance rejection of offer

Question 2

issue Whether there is a contract between Jane and Tarzan Rule

In the case of Pharmaceutical Society of Great Britain V Boots Cash Chemists ( Southern)Ltd (1953) 1 QB 401 distinction between offer and invitation to a treat had been provided.

Application

The advertisement made by Tarzen was invitation to treat as it has the same facts as was present in the case discussed in the rules. The case provided that where the offer is not complete it is an invitation to treat.

Question 3

• case of offer and acceptance
• argument that there was no intension
• induced a person to get into contract
• No, unless complete
• Yes
• To the world at large
• Induce by the offer and complete it terms
• to use the product and get the disease- communication
• yes
• objective test
• it means contract occurring by one party

Question 4

Carlill v Carbolic Smoke Ball Co  is related to offer, acceptance and unilateral contract. the case ruled that the offer can be made to the world at large. A valid offer has been made or not is determined by applying the objective test. Acceptance does not have to be communicated traditionally where there is an unilateral contract.

Application

The boys were induced by the offer according to the principles provided by the objective test

Acceptance made by principles of unilateral offer

Conclusion

Offer is valid and the contract is binding in the parties

Question 5

Issue

Was there a valid contract

Rule

Adams v Lindsell – postal rule- as soon as letter posted acceptance is made and not when the letter actually reaches the offeror

Part 2

Application

The acceptance was made on 9^th July because the letter had been posted in that day itself.

Conclusion

Valid contract as proper acceptance had been made.

Question 6

Issue

Was there a binding contract

Rule

Masters v Cameron contract is binding on the parties where there is a special condition

Application

In first case no special condition

In second case special condition

Conclusion

Contract in second case and no contract is first case.

Question 7

Yes I agree because it is normal to have such correspondences before a contract is formed and without correspondences the meeting of minds cannot take place.

Question 1 A

1. No,
2. Yes
3. Yes
4. Yes, in most cases
5. Yes
6. yes
7. yes
8. yes

Question 1 B

No, there is a valid contract

Question 2

Issue

Can Jim Sue Huyen for breach of contract

Rule

Condition is the most important terms of the contract and if such term is not complied with the parties whose right have been violated can rescind the contract.

Application

The term of the car being serviced was a condition

Conclusion

Jim can sue Huyen

Question 3

Issue

Can terry sue Dave

Rule

Promissory estoppels – Williams v Roffey Bros & Nicholls according to this case equity would intervene to provide compensation to a party who acted upon the promise made by another person

Pinnel’s case – consideration – in this case a universal principle has been provided by the court according to which part consideration was not considered as good consideration

Application

In first case Sam can claim the outstanding as per rules of part consideration

In second case Sam cannot claim the outstanding amount as per rules of of pinnel case as the box of chocolate may be considered as a consideration against the remaining amount.

Question 5

Issue

Whether Lulu has to pay the different rent

Rule

Promissory estoppels and consideration

Application

The doctrine of promissory estoppels would intervene

She does not have to pay different rent

Question 6

A valid contact exits even when the consideration has been paid in part 

1. Express terms in a contract are those terms which have been agreed by the parties to the contract in an expressed way either written or oral. The terms have been incorporated by thee consent of both parties.
2. The three classes of terms which can be found in a contract are

• Condition – the most important term of the contract
• Warranty- the less important term of the contract
• Innominate terms – different then the above two approaches

1. In the case of Poussard v Spiers and Pondthe tem found by the court was condition because it was the fundamental term of the contract. in the case of v Guy the terms found by the court were warranties as they were less important terms of the contract.
2.  Yes, the contract has a condition precedent  

• Yes, the contract is subjected to the parole evidence rule
• No, the price is a condition and not warranty

1. As per the parole evidence rule when a verbal contract is documented any term which is excluded from the documentation is not binding on the parties to it. Exception where the contract was both oral and written
2.  the verbal assurance provided was that there was no termites in the house

• the contract was both written and oral
• that whether the written contract is complete or not
• That a verbal promise had been made
• The written contract is not complete, verbal promise constitutes contract

1.  Yes, the contract entered upon by the parties had an effect of a collateral contract in relation to the drains

• It was promised by the landlord that of the tenent entered into a contract the condition of the drain would be fixed.
• The parole evidence rule as there was a written contract in the given situation
• collateral contract is a contract which is formed along with the primary contract with respect to an additional promise
• There was an additional promise. The party relied on the promise to get into the main contract

1.  Issue Can Marcel make a claim against Yvonne for contract breach

Rule Third exception of parole evidence and collateral contract- Van de Esschert v Chappell- according to this rule a collateral contract can be breaded as a consideration for the original contract as is binding in the parties. 

(a) according to the test provided in the case of —- if a document is signed it becomes binding legally even where they are not aware of the terms if there was no fraud or misrepresentation by the other party.

Question 1

(b) In the case there was an exclusion clause present in the contract between the parties. In the given situation the exclusion clause was triggered as the dress was not taken care of. The court in this case ruled that the clause was not valid as the incorporator has misrepresented the effect of the clause on the other party to the contract.

(a) some examples of unsigned documents that may contain exclusion clauses are train tickets or notice visible in a shop.

(b) yes, if such clause has been duly communicated to the other person before the contract had been made.

(c)  firstly the clause has to be consistent with law. It has to be brought to the notice of the party clearly before the contract is formed.

(d) in the case of Olley v Marlborough it had been ruled by the court that the notice is relation to an exclusion clause has to be provided before the contract is entered upon by the other party

(e) in the case of Balmain New Ferry Co v Robertson it had been ruled by the court that exclusion clause can be incorporated through regular method of dealings however the use of signs is not valid if its complex.

(f) an exclusion clause can be incorporated through regular method of dealings if the parties are using the services often and are aware about the dealings of the company.

(g) in the case of Hollier v Rambler Motors (AMC) it had been ruled by the court that Actual notice is different from constructive notice. However constructive notice cannot account out of 1-2 transactions in 4-5 years.

(a) According to the rule where a term which has been incorporated by a party to the contract is ambigious, the court interprets the term against the party who has incorporated such terms into the contract.

(b) The rule has been employed in the case of White v John Warwick & Co Ltd because the term which had been incorporated by the defendant was ambigious and to the detriment of the plaintiff.

(c) yes consumer warranties cannot be excluded through the use of an exclusion clause

The clause has to be brought to the notice of the party before the contract is valid. Any clause which is not duly communicated to the party or communicated after the contract is formed is void.

• Implication in law
• Implication by fact
• Implication by custom
• Right to claim repair, replace, refund or compensation
• Breach of section 56 of the ACL related to sale by description of Goods
• Consumer right
• Provisions related to unconscionable conduct

1. The goods are of a value of less than $40000 or else the goods are used for household and domestic purpose
2. Covered by ACL

• Covered by ACL
• Covered by ACL
• Not covered by ACL
• Covered by ACL
• Covered by ACL

1. The goods are of a value of less than $40000 or else the goods are used for household and domestic purpose
2. No, exclusion clauses are not valid in consumer contract

1. Innocent misrepresentation is a kind of misrepresentation which is not made intentionally. The element of intention is required to determine whether the representation is innocent or fraudulent. Thus if the representation is innocent the party must prove that they had no intention of doing so.
2. Voidable means that aggrieved party of the contract can rescind the contract on its wish.
3. The case of case Bissett v Wilkinsonestablished that providing opinion in a fair manner cannot be considered as misrepresentation.
4. In case of Fraudulent misrepresentation the aggrieved party would be able to make rescind a contract as well as claim compensation. In case of innocent misrepresentation the aggrieved party can only rescind the contract
5. The right to rescind may be lost when the other person was aware of the fact that the misrepresentation is being made by the other person.
6. Yes a failure to provide a material fact about a contract can also lead to misrepresentation  

• No misrepresentation as statement of opinion cannot be considered as a misrepresentation
• Yes, the act of the seller would result in fraudulent misrepresentation
• No, the situation would not account to misrepresentation as per the rules of exceptions to misrepresentation

The claim from breach of contract as well as misrepresentation can be made

1. c) yes the act would be applicable in this case under section 18 of the ACL related to misleading and deceptive conduct
2.  yes the act would account to deceptive and misleading conduct under section 18 of the ACL as well as misrepresentation under the provisions of common law.

1. Minors, person who are not mentally ill but are not in a sound mind when the contract is entered upon, those who are restricted by Law
2. The court generally hold the contract which have been entered upon by a minor as void ab initio. This means that no contract with a minor can be formed. However there are certain exception to the rules which include contract for necessities and beneficial contract for employment

• No, in the given situation the contract which is entered upon with John is not enforceable because John is a minor irrespective of how he looks.
• Yes, in such situation the contract would be binding as john needs such goods for basics consumption and would result in a contract for necessities.

1. No, as a 16 year old the contract would not be enforceable as such a contract does not fall within the exception and minors do not have the capacity to get into a contract.
2. No a contract can be void for various reasons such as capacity and inappropriate consideration however all contract which have a illegal objective are considered as void contract and cannot be enforced by law.
3. The contract to hire a criminal for the purpose of Assaulting someone would be illegal as assault is a criminal act as per the penal code and therefore a contract to do so would also be deemed an illegal contract.
4. Yes, all illegal contract are unenforceable by law.
5. Yes a tem of the contract can be declared void by a legislation or if it is not consistent with a legislation. Such as the inclusion of exclusion clause is illegal in consumer warranties contract by the Australian Consumer Law.

1. The contract which is entered upon by parties is void (Res Extincta) as there is no consent between the parties in case of common mistake under common law as per Couturier v Hastie (1856) 5 HL Cas 673. RES SUA- contract to purchase thing belonging to self is void. In case if mistake of quality the contract is void as per Cooper v Phibbs. In case of unilateral mistake the contract is not void if there is only error of judgment as stated in Webster v Cecil
2. Common mistake- The mistake made by both parties where subject matter of the contract did not exists at all.

Unilateral Mistake – Where the parties are not present when the contract was negotiated. The mistake was in relation to one party of the contract.

Mutual Mistake- This is a kind of mistake when there is a failure on the part of both the parties to the contact to understand each other.

1. The three types of duress are Physical duress, Duress by Improper threat and Economic duress
2. The contract is voidable on the operation of the party who has entered into the contract due to duress.
3. In this case it had been ruled by the court that the person who has been forced to enter into a contract due duress can rescind the contract even in case the duress was not the motivating factor in relation to the contract.
4. The use of economic pressure in an unlawful manner to force a party to get into a contract which they would have not entered into otherwise is regarded as an economic duress.

Undue influence

1. Undue influence is the process through which a person uses his position to take advantage over another person and makes him get into a contract.
2. Undue influence is presumed to have taken place in relation to contract which those who are in a position of influencing the party to get into a contract which may be detrimental for such party.

1. There was a contract between a farmer and his son who was having financial problem. The contract was declared to be under Unconscionable conduct.

• The father had made guarantees against the son’s loan from the commercial bank. Held that Unconscionable conduct took place because of a special disadvantage.
• The factor used by court was special disadvantage
• The bank should have considered the special disadvantage

• unconscionable conduct under the ACL is stated under section 20, 21 and 22
• The three elements analyzed by the court include bargaining power of the parties, understanding capacity of the weaker party and the degree of good faith involved in dealing.
• Remedies for unconscionable conduct include financial penalties, compensation of damages, contractual rearrangements, refund and recession of contract.

1. A discharge of contract is the process through which the contract is brought to an end by the parties to it and no longer has any effect.
2. A contract can be discharged by performance, Repudiation and frustration
3. Yes the contract in this case would be discharged by frustration. This is because the event which took place was beyond the control of both the parties to the contract. Yes a refund can be obtained under such situations.

Adams v Lindsell (1818)106 ER 250

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Balfour v Balfour [1919] 2 KB 571

Bissett v Wilkinson [1927] AC 177

Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256

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Cooper v Phibbs (1867) LR 2 HL 149

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Hadley v Baxendale EWHC J70, (1854) 156 ER 145

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Masters v Cameron (1954) 91 CLR 353

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Merritt v Merritt [1970] EWCA Civ 6

Pharmaceutical Society of Great Britain V Boots Cash Chemists ( Southern)Ltd (1953) 1 QB 401

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Poussard v Spiers and Pond (1876) 1 QBD 410

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Webster v Cecil (1861) 30 Beav 62.

White v John Warwick & Co Ltd [1953] 1 WLR 1285

Williams v Roffey Bros & Nicholls (1991) 1 QB 1