tabl1710 lecture wk6 - breach of contract, termination
Post on 19-Dec-2015
20 Views
Preview:
DESCRIPTION
TRANSCRIPT
-
111
TABL 1710Business and the Law
Week 6Contract Law (Contd)
Breach of contract/Termination of contract/Remedies for breach of contract
Lecturer: Paul Tuohy
2015 The University of New South WalesSydney 2052 Australia
The original material prepared for this guide is copyright. Apart from fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission.
Enquiries should be addressed to the Head of School, Taxation and Business Law, UNSW, Sydney22
In-Class Exercise on Lecture Topics 1 and 2
PLEASE SPEAK TO YOUR TUTOR IF YOU MISSED THE IN-CLASS EXERCISE
Worth 10% of your mark You must do this exercise before week 9 After week 9 students who have not done this
exercise will automatically receive 0/10 for this assessment
333
MAJOR ASSIGNMENT On Moodle now DUE WEEK 9: Monday 4 May 2015Contract law, problem questionSee Guidelines to Students (attached to the
Assignment)See suggested readings and research guidance
notesNote: Students should show evidence of research
beyond the suggested readings and beyond the textbook
4
MAJOR ASSIGNMENT
ONLINE SUBMISSION ONLY
Check your plagiarism score and re-submit onTurnitin as many times as you wish UNTIL the deadline of 5pm on 4 May
Word limit is 2000 words please observe the word limit
4
5
Discussion Forum
Now available on Moodle Separate Discussion Forum for EACH TUTORIAL
CLASS Tutors will provide details about how to use the
Discussion Forum for your tutorial class Access problems? Please email Margaret Connor
m.connor@unsw.edu.au
666
Lecture 3: Summary
Essential elements of a contract: Intention to enter into a legally binding contract Agreement Offer Acceptance
Consideration Something of value (price) Exception: Promissory Estoppel
-
777
Lecture 3: Summary
Other elements for a valid contract: Legal capacity Genuine consent Legality of purpose Any formal/procedural requirements must be satisfied(See Latimer at 5-510 to 5-570)
888
Lecture 4: Summary
Intention to create legal relations Social/family/domestic/voluntary Commercial/business Historically the rebuttable presumptions Now change in approach
Terms of a contract Representation:
- Pre-contractual negotiations Terms
- Express/Implied- Condition/Warranty- Uncertain/Meaningless/Ambiguous terms
99
Week 5: Summary
Exclusion Clauses Notice to be given before contract made or at time of making of contract
(Thompson V London, Midland & Scottish Railway Co; eBay case; Olley v Marlborough Court; Balmain Ferry case)
Exclusion clause must be properly incorporated into the contract (Curtis v Chemical Dry Cleaning)
You are bound by what you sign (LEstrange v Graucob) Rules of interpretation:
Ambiguity (or Contra Proferentum) Rule; Negligence Rule; Four Corners Rule (Sydney County Council v West; Thomas National
Transport case)
9 10
Week 5: Summary
Requirements for a valid contract (contd) Capacity Consent Proper formPrivity of contract Agency: the exception to PrivityVitiating elements Mistake Misrepresentation Illegality Inequality between the parties
Duress (threats of violence to person/property etc) Undue influence (improper use of position of authority) Unconscionable conduct (abuse of superior bargaining position when you
know other party in situation of special disadvantage/special disability: Commercial Bank v Amadio)
111111
Week 5: Summary
Unconscionable or Unfair Contracts Contract will be set aside as unconscionable (unfair) where the
defendant has abused their superior bargaining position in their dealings with the plaintiff
Case: Commercial Bank of Australia v Amadio See Latimer at 5-730
121212
Week 5: Summary
Unconscionable or Unfair ContractsThe plaintiff has to establish: They were in a position of special disability or special
disadvantage That substantially affected their ability to protect
themselves The defendant knew, or ought to have known, of the
plaintiffs disability/disadvantage and should not have taken advantage of it
AND The actions of defendant were unconscionable
-
1313
Week 5: Summary
Unconscionable or Unfair Contracts Examples of special disability/special disadvantage
include: age financial needs illness ignorance inexperience inability to understand the language inability to read
See Latimer at 5-730
141414
Todays lecture
Restraint of trade clauses Breach of contract Termination for breach of contract Loss of the right to sue (the limitation period) Time of the essence Remedies available for breach of contract, under the
common law
151515
Overview - Week 6 Breach of Contract/Termination for breach of
contract/Remedies
On completion of this week you should beable to:9 Explain when a contract may be terminated or
discharged9 Identify the remedies for breach of contract9 Explain what is a statutory limitation period 9 Explain what time of the essence means
161616
Restraint of trade clauses
Clauses in restraint of trade are found in:Contracts for employmentContracts for sale of businessContracts between manufacturers and traders
17
Restraint of trade clauses
Restraint of Trade clauses in contracts will generally be unenforceable (ie: void as being contrary to public policy) unless the restraint is reasonable
181818
Restraint of trade clauses
What is reasonable is determined by:The geographic extentThe time period involvedThe nature of the business and the activity being
restrained Whether the restraint is reasonable, both in the
interests of the parties and the public
-
191919
Enforceability
Contracts classified by enforceability:
Valid - a contract which the law will enforce
Voidable - the contract remains valid and binding unless and until it is repudiated (ie cancelled) by the injured party
Void - no legal rights or obligations from the outset (void ab initio)
202020
Enforceability
Contracts classified by enforceability:
Unenforceable - valid on its face but no legal action can be brought on the contract, often because of a procedural defect
Illegal - the purpose of the contract contravenes a statute or the common law, and generally treated as void
212121
Breach of contractRemedies(1) Common Law
Termination of contract Damages
(2) Equity Rescission Restitution Rectification Specific Performance Injunctions
(Also: Remedies under the Australian Consumer Law - to bediscussed in Consumer Law lecture)
222222
At Common Law:Termination of contract
When one party: completely fails to perform their obligations (actual
breach)or indicates that they do not intend to perform their
obligations (anticipatory breach), the other party is entitled to terminate the contract
2323
At Common Law:Termination of contract
Breach of contract may be either:
Total breach: where one of the parties does not perform the contract at all
OR Partial breach: where one of the parties does not
perform the full requirements of the contract
242424
At Common Law:Termination of contract
A contract may be terminated or discharged: by performance by agreement by operation of law (eg bankruptcy) by lapse of time by frustration
See Latimer at 6-280 to 6-350
-
252525
At Common Law:Termination of contract
By performance: contract usually ends when each party has performed its contractual obligations
Obligations under a contract must be performed exactlyNear enough is not good enough
Cases: In re Moore & Co Ltd and Landauer & CoSumpter v Hedges
See Latimer at 6-2902626
At Common Law:Termination of contract
By performance:
Entire or divisible contracts- If a contract does not provide for pro rata recovery expressly or
by implication then this equals an entire/lump sum contract- If the contract is to be delivered by instalments which are to be
separately paid for, then the terms of the contract will show whether the breach is a repudiation of the whole contract OR whether the breach is severable (ie referable to the particular instalment only)
See Latimer at 6-300
2727
At Common Law:Termination of contract
By agreement: contractual obligations can be discharged by agreement between the parties
By operation of law: bankruptcy, death, material alteration of a written document without consent, merger of contract terms into one document
282828
At Common Law:Termination of contract
By lapse of time: when contract stipulates a time period after which it will expire and parties allow this time to lapse or expire
2929
Time of the essence Performance of the contract must take place in the time
specified Or, within a reasonable time if no time is specified
If performance at certain time is essential, contract may contain a time of the essence clause
If time not of the essence, serving a notice to complete will fix the time for performance/completion of the contract Non-compliance will become a breach
See Latimer at 6-290
29 3030
Loss of the right to sue:Statutes of Limitation
Statutes of Limitation protect a person from being forced to defend a case after a certain number of years (when the case becomes statute barred)
Period of limitation begins to run as soon as a cause of action arises (so when the breach of contract first occurs)
Statutory limitation period: 6 years (or 12 years for formal contracts)
See Latimer at 6-500
30
-
313131
At Common Law:Termination of contract
By frustration: After formation of the contract, performance may become impossible if something unexpected happens over which neither party has any control
See Latimer at 6-350
3232
At Common Law:Termination of contract
Cases:
Codelfa Constructions Pty Ltd v State Rail Authority (NSW)Ooh! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd
See Latimer at 6-350
3333
At Common Law:Termination of contract
Frustration can arise if: There is some significant or radical change to
nature of contractual rights and obligations by an unexpected event
Neither party caused the unexpected event Neither party contemplated the unexpected event
when the contract was entered into In the new circumstances, it would be unjust to hold
the parties to the originally agreed contract
See Latimer at 6-350, footnote 51: National Carriers Ltd vPanalpina (Northern) Ltd case
343434
At Common Law: Damages
Every breach of contract gives the innocent party a right to claim damages
Main purpose of damages is to enable the innocent party to receive (monetary) compensation for injury or loss suffered because of the breach
353535
At Common Law: Damages
Damages are calculated on the basis of looking at what the position of the plaintiff would have been if the contract had been properly performed
363636
At Common Law: Damages
Key issues: Causation Remoteness
Case: Hadley v Baxendale
See Latimer at 6-430
-
373737
At Common Law: Damages
Causation and Remoteness: The plaintiff must show that the breach of contract by the
defendant was the cause of the loss
Must be a connection between the breach and the loss suffered
38
At Common Law: Damages
Causation and Remoteness:
ASK:
Is the loss suffered by the injured party a usualand reasonably direct consequence of the breach ofcontract?
38
393939
At Common Law: Damages
Causation and Remoteness
Compensation will NOT be awarded for damages that are too remote
The plaintiff may not be able to recover if an additional factor unconnected with the defendants breach breaks the causal chain between the defendants action and the plaintiffs loss or damage
This is a question of fact
See Latimer at 6-420
4040
At Common Law: Damages
Losses which can be claimed are those that: flow naturally from the breach of contract are special losses made known to the defendant when
the contract was made
Case: Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
See Latimer at 6-430
4141
At Common Law: Damages Damages for special losses cannot be awarded unless: the plaintiff made known the special circumstances to the
defendant at the time the contract was made if so, the defendant will be taken to have accepted the risk
by default
Case: Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
See Latimer at 6-430
424242
Amount of damages
The aim of damages is to put the injured party back as
close to the position they would have been in had the
breach never occurred
-
434343
Amount of damages
Damages are recoverable for economic loss as well as for:Distress and disappointmentUpset/anxietyDiscomfortMental distress
See Latimer at 6-460
444444
Mitigation of damages The innocent party has a duty to take reasonable steps to
minimise or mitigate their loss. Failure to do so can result in a reduction of damages
Mitigation is a question of fact
Onus of proof is on the defendant to show that the innocent party (plaintiff) did nothing to mitigate the loss
Case: Payzu v Saunders
See Latimer at 6-480
454545
Types of damages
The type of damages that will be awarded will bedetermined by the seriousness of the breach andwhether the contract has specified the amount ofdamages to be paid in the event of breach
4646
Types of damages
General damages: compensation for loss suffered by the plaintiff as a result of the breach
Nominal damages: defendant breached contract but plaintiff has not suffered any actual loss
Exemplary damages: punitive and may be awarded for non-economic loss
See Latimer at 6-450
474747
Types of damages
Liquidated damages: awarded where a plaintiff is able to sue for a specified sum, which must be a genuine or bona fide pre-estimate of the actual loss that will flow from the breach
Unliquidated damages: awarded where an injured party has no fixed sum in mind and leaves the court to decide the amount
See Latimer at 6-471
4848
Types of damages PenaltiesOnly enforceable if amount is a genuine pre-
estimate of the loss from the breach of contractMust not be extravagant or unconscionableMust not be designed to apply pressure or
intimidate the other partyMust be transparent: based on reasonable criteria
and clear evidence/information as to how the amount is calculated
See Latimer at 6-471
-
494949
Equitable remedies
Restitution Rescission Rectification Specific Performance Injunction
These are discretionary remedies at equity andonly granted where damages are not an adequateremedy
505050
Equitable remedies
Restitution: The court orders the return of property or the payment of money
Rescission: Setting aside an agreement and restoring parties to their pre-contractual positions
Rectification: The court corrects a written document
515151
Restitution
Based on the concept of some UNJUST ENRICHMENT
Can be used where there has been: a mistake of fact or of law duress some element of compulsion
See Latimer at 6-510
525252
Restitution The plaintiff must establish:Defendant obtained a benefit or enrichment;Benefit was at plaintiffs expense It would be unjust to allow defendant
to keep benefit or enrichmentandDefendant has no defences (such as estoppel,
incapacity, illegality) to rely on
535353
Rescission
Termination by right Court order setting aside contract, to restore parties
to pre-contractual position May be granted because of:mistake misrepresentationundue influenceduress unconscionability
See Latimer at 6-2805454
Rectification
Court order requiring correction of mistake/error, to bring document in line with correct agreement between parties
See Latimer at 5-695
-
555555
Specific Performance
Court order requiring a party to specifically perform their contractual obligations
See Latimer at 6-400
565656
Injunctions
Court order prohibiting a party from doing something Court order requiring or compelling a party to do
something
See Latimer at 6-410
5757
Injunctions
Cases:
Lumley v WagnerCurro v Beyond Productions Pty LtdNetwork Ten Pty Ltd v Rowe
See Latimer at 6-410
57 58
Contract Law LECTURE queries
Your tutor is your primary point of contact but. if you have any contract law LECTURE queries, you may contact Paul Tuohy at: p.tuohy@unsw.edu.au
All contract law TUTORIAL and ASSIGNMENT queries should be directed to your individual tutor
595959
Next week
Introduction to Tort LawTopic for weeks 7 & 8 (Lecturer: Dr Leela Cejnar)Read Latimer Chapter 4: 4-010-4-120
IMPORTANT TOPICProblem question in the exam
top related