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1 MLL111NOTES MICHAEL KRIEWALDT 1

2 Index Formation Agreement...3 Certainty and conditional contracts...6 Consideration...9 Intention to create legal relations...17 Capacity...20 Formalities...23 Scope and content Privity of contract...27 Terms of a contract...32 Exclusion Clauses...39 Avoidance Misleading or deceptive conduct...42 Mistake...50 Duress...57 Undue Influence...60 Unconscionable conduct...63 Illegality and public policy...66 Performance and termination Performance...76 Discharge by agreement...81 Discharge for breach...83 Discharge for frustration...93 Remedies Damages and liquidated claims...97 Equitable remedies

3 OVERVIEW: Agreement6 Meetingofminds/consensusreachedb/w2ormorepartiesonaparticularsubject.SmithVHughes[1871] LR6QB597exampleofnomeetingoftheminds Determinedobjectively(reasonableperson) Needavalidofferandacceptance. Offer: Whatisit:It s a communication amounting to a promise to do (or not to do) something if the person to whomitisaddressedrespondsinacertainway;egbymakingapromiseinreturn,orperformingaspecified task. ToWhomcanitbemade?CanbemadetotheworldandcanbecomeaCTwithanyoneperforming conditionsstipulated:carlill&v&carbolic&smoke&ball&co&(facts:csboffered1000topersonwhocaughtfluifit usedoneoftheirsmokeballs.mrscboughtandusedasmokeballandcaughtfluandclaimedreward.held: Offertoworldmadeherethatcouldbecomeacontractwithanyoneperfomingconditionsstipulated) OffervsIntentiontoDeal/TreatPForoffer:Mustintendthatanaffirmativeresponsewillgiverisetoafinal agreement.invitationtodealpwhereresponsegivesrisetoafurthernegotiation(andaffirmativeresponse willamounttoofferwhichcanbeacceptedorrejected)partidgevcrittenden.egitemsonshopshelf, advertisements.testinpharmaceutical&society&of&great&britain&v&boots&cash&chemists&(southern)&ltd (Pharmcueticalgoodsonshelfofselfservicestore.Held:Inshop,CTnotcompletedtilshopkeeperaccepts customer soffer)):"lefkowitz&v&great&minneapolis&surplus&store&(facts:3coatsadvertisedtobesoldfor1 eachtofirstserved.held:courtsaidwhere theofferisclear,definiteandexplicit,andleavesnothingopen tonegotiation,itconstitutesanoffer,acceptanceofwhichwillcompletethecontract. Eachcasewilldepend onthe legalintentionofthepartiesandthesurroundingcircumstance ). Auctions:Auctioneermakesinvitationtodeal/treat(invitesoffers).Maybeissueifauctionis without reserve "AGC&(Advances)&Ltd&v&McWhirter& Tenders6StandingofferPTenderinvitedforgoodsandservicesPCTformedonlywhenordermade.Fixed Tender:amountstoanoffer. RequestsforInformation:eg:lowestpriceyouwillsellhouseisnotanofferbutrequestforinformation (Harvey&v&Facey).Toclassifyacommunicationlookat:Thelikelihoodofthecommunicationbeinganoffer; Thetermsofthecommunicationinvolved; Whetherpartiescontemplatedinvolvementoflawyers; Subsequentevent TerminationofOffer:Onceterminated,offercan tbeaccepted.terminationoccursvia:revocation; rejection; failuretoacceptontime; deathofofferor/offeree; failureofacondition. Revocation:WithdrawalofOfferbyofferorPcanoccuranytimebeforeacceptance,canusewords/conduct andmustbecommunicated.canhaverevocationvia3rdparty(ifitisauthorisedorresultsfromofferor). Promisenottorevokemustbesupportedbyconsideration:Dickinson&v&Dodds&(Facts:D(Dodds)offeredto sellp(dickinson)house,offeropentil12june.pdecidedtoacceptofferon11junebutdidnottelldand3rd partytoldpon11thhousesoldtoanother.ptriedtoacceptbutdsaidtoolate.held:revocationofoffer neednotbeexpresspcanbeeffectiveifofferorletsoffereeknowhehaschangedhismind(via3rdparty); ByrnevVanTienhoven.NorevocationtilcommunicatedandPostalRuledoesnotapplytorevocation: ByrnevVanTienhoven(Facts:Letterusedtorevokeofferofgoods) Rejection6CounterOfferPAmountstorejection:terminatesoffer.Mustbecommunicatedandpostalrule doesnotapply.counterofferpnewoffermadeinresponsetooffer(ieacceptingondifferentterms).rejects originaloffersocan tbesubsequentlyagreedtobyofferee:hyde&v&wrench(dofferstoselllandtopfor 1200.Drejects.Poffersat1000andPofferstobuy950.DrefusestosellandPsayswillbuyfor1.000.D refusestosell.contract?held:noctasp sofferfor950wasarejectionofd soffertosellat1,000).note differenceb/wcounterofferandrequestforfurtherinformation(latterdoesnotrejectoriginaloffer: Stevenson,&Jaques&and&Co&v&McLean&(Facts:SaskediftimeofdeliverywasnegotiableandMtreated 3

4 communicationasrejectionandsolditemsto3rdparty.held:merelyrequestforfurtherinfosos s subsequentacceptanceofm soffercreatedact) LapseofTime:Ifdurationoftimenotstipulated,offercomestoanendafterareasonabletime(thisdepends oncircumstances). InternationalPerspective:UNConventiononCTsforSaleofGoods(Art20/21);periodoftimefor acceptancefixedbyofferorintelegram/letterrunsfromtimetelegramhandedintobesentorfromdateon letter.timeforacceptancerunsfrommomentofferreachesofferee. India:IndianCTAct1872(ss3P5);China:CTLawofPeople srepublicofchina1999arts15p20) Acceptance: Isanunequivocalstatement(oral,writtenorbyconduct)bytheoffereeagreeingtotheoffer. Mustoccurinresponsetooffer(can toccurinignoranceofoffer)crown&v&clarke.& Canbeacceptedbypersontowhomitisdirectedorifit smadetoworldatlarge,byanyoneintheworld. MayacceptbywordsorconductPTestis whetherareasonablebystanderwouldregardtheconductofthe offeree,includinghissilence,assignallingtotheofferorthathisofferhasbeenaccepted. Empirinall& Holdings& Wordsorconductmustbeconsistentwithoffer:Maxitherm&Boilers&Pty&Ltd&v&Pacific&Dunlop&Ltd& MUSTBECOMMUNICATED When?AgreementconcludedattimeacceptanceisreceivedbyofferorPnotwhensent(ifinstantaneousP whenmessageisgiventoofferor). Where?Deemedtooccurwhereitisreceivedratherthanwhereitissent. Imposingsilence:willnotconstituteconsent.EgifIdon thearfromyou,youaredeemedtoaccept: Felthouse&V&Bindley& Exceptions:Waiver(Carlill);SilencePifcombinedwithothercircumstances(otherconduct),maybeavalid acceptance:empirnall&holdings&pty&ltd&v&machon&paull&& Partners&Pty&Ltd:&Estoppel;&Postal&Rule" PostalRule:"exception"to"the"general"rule"that"acceptance"occurs"when"and"where"it"REACHES&the"offeror. Whenthepostalruleapplies,acceptanceoccurswhen&and&where&letter&was&sent.& POSTALRULE Whentheruleapplies:BressanVSquires[1974]2NSWLR460 appliestoletters/telegramsandthelike theofferormusthavecontemplatedacceptancecouldbecommunicatedinthisway (whetherexpresslyorbyimplicationfromconductorcircumstances). Whentheruledoesnotapply Toinstantaneousformsofcommunicationsuchasfaxorphoneor .SeeBrinkibonLtdvStahagStahl undstahl6warendhandelsgesellschaftmbh(telex);schibpackagingsrlvemrichindustriesp/l IfpostisnotcontemplatedPseewordingofcommunications:Bressan&V&Squires&(Wordsusedwere bynotice inwriting =courtsaidthismeanswhenactuallycommunicatedtoofferor).alsonuninholdingsptyltdvv TullamarineEstatesPtyLtd6postalrulewillnotapplyifacontrarystipulationappearsinoffer. Ifpostiscontemplatedbytheofferormakesclearthatacceptancewillnotbeeffectiveuntilaletteris received"(seenunin&holdings&pty&ltd&vv&tullamarine&estates&pty&ltd) Ifaletterislostordelayedbecauseitwaswronglyaddressedorstamped Ifitisunreasonabletousepostinthecircumstances(eg,duringapostalstrike) FormofacceptancePifstipulatedandisobligatory,methodmustbeadoptedforvalidacceptance: Manchester&Diocesan&Council&for&Education&v&Commercial&&&General&Investments&Ltd& Electronic&Transactions&(Victoria)&Act&2000W&eg& sW&dispatchofanelectroniccommunicationoccurswhen youhitsendonyour anditdisappearsintothevoid. Theresultofthislegislationisthatwhere iscontemplatedasameansofacceptancethatacceptance occurswhen&the issent(if notcontemplated,thenwhenitcomestotherecipient sattention).it willbedeemedtohavebeenreceivedattheaddressee splaceofbusiness.thus,iftheaddressee splaceof 4

5 businessismelbourne,butshehappenstocheckher whileonabusinesstriptohongkong,the willbetakentohavebeenreceivedinmelbourne. ElectronicTransactionsAct1999(Cth),ss5,14,14A,14B Keypointstonote!Section14 thetimeofdispatchofanelectroniccommunication( EC )(definedins5) isthetimeitleavestheinformationsystemundercontroloftheoriginatorunlessit doesn tleavetheoriginator sinformationsystem. Thenthetimeofdispatchiswhenitisreceivedbytheaddressee!Section14A thetimeofreceiptofanecis ss(a) thetimeoftheecbecomescapableofbeingretrievedbytheaddresseeat thedesignatedaddressor ss(b) atanotherelectronicaddressoftheaddress,itisthetimewhenboththe EChasbecomecapableofbeingretrievedandtheaddresseehasbecome awarethattheechasbeensent.!section14b theecisdispatchedattheoriginator splaceofbusiness(definedins5) andreceivedattheadressee splaceofbusiness. UnilateralAgreement:onlyonepartymakesapromise(cfbilateralagreementwherebothpartiesmakea promise).&test&for&deciding&if&a&contract&is&bilateral&or&unilateral:looktointentionoftheparties rather thanthewordsortheformused.ask:didthetermsoftheofferseekapromisefromtheoffereepwhatwas theofferoraskingfor? Example:Iwillpayyou1000ifyoupaintmyhouse.Unilateral(noreciprocalpromisesought). Thesetypesofcontractsaremostlikelytobeusedincaseswheretheofferorwantstheofferee(s)todo something,butknowsthattheyareunlikelytopromisetodoit.forexample,peoplearenotlikelytopromise" tofindyourlostdog,butyouwouldlikethemtotryto,soyoumightofferareward. RevocationofUnilateralContractPInDaulia&v&Four&Millbank&itwassuggestedthatinthecaseofoffersof unilateralcontracts,theofferisacceptedandacontractismadewhenanunequivocalcommencementof theacthasoccurred.butinmobil&oil&v&wellcomew&thereisnogeneralpropositionthatoffersforunilateral contractscouldnotberevokedafteroffereecommencedperformance. InternationalPerspective:India:S4IndianCTAct1872Postalruleisentrenchedasnormforcommunications usingpostorsimilarservices.revocation.offereecanrevokepostedacceptancesolongasrevocationarrives beforeacceptancedoes.chinactlawofpeople srepublicofchina1999:acceptancerequires communicationandcanbewithdrawnpriortocommunication.noequivalenttopostalrule. CertaintyandConditionalContracts: Certainty6 AgreementmustbecertaininallmaterialrespectsbeforeitisbindingPAgreementthatisuncertainin materialrespectcan tconstituteabindingct.counciloftheupperhuntercountydistrictvaustralian ChillingandFreezingcoLtd 3waysagreementmaybeconsidereduncertain: 1. Vaguenessorambiguity 2. Incompleteness 5

6 3. Agreementstoagree Vagueness/ambiguity: Ifagreementsovague/uncertainthatcourtcan tworkoutwhatisintendedptoouncertaintobeenforceable:& Scammell&v&Ousten&(hire"purchase"terms8"obscure);"Raffles&v&Wichelhaus"(mixupre2shipsnamedPeerless);" Council&of&the&Upper&Hunter&County&District&v&Australian&Chilling&&&Freezing&Co&Ltd&( supplier scost sfor electricityptermnotuncertain)" Courtswilltrytoresolveuncertainty/ambiguitybylookingat: 1. Extrinsicevidenceexplainingwords/phrases 2. Customortradeusage 3. Determiningwhatisa reasonable construction IllusoryAgreements: Makingperformanceofacontractualpromiseamatterforparty sdiscretion:eg Ipromisetosupplyyouwith applesifyoupromisetopaymeatapricetobedeterminedbyyou.promiseisillusoryasnopromisetopay anythingasoffereecanpay0sonotpromisingtodoanything. NoteKirbyPinBiotechnology&Australia&Pty&Ltd&v&Pace&(PenteredCTofemploymentwithBwhichsaidhe s haveoptiontoparticipateinco sstaffequitysharingschemepnosuchschemeexistedattimeofctorwhen Presigned.PsuedforbreachofCT,succeededandBappealed.Held:VaguetermofCTanduncertainsonot enforceable.wasjustaprovisionforfuturearrangements): Thecourtwillnotcreateanagreementwherepartieshavefailedtoarticulatetheiragreement. Norwillthe courtclarifythatwhichisirremediablyobscure or acceptforitselfadiscretionwhichthepartieshave reservedtooneorotherofthem.doingsowouldchangethecontract.relevantmattersincl: a. Atermwillbeenforceablewhereitclearlyidentifiesathirdpersonwhoisgivenpower(by theparties)to(anddoes) settleambiguitiesanduncertainties. b. But, ifthetermissovitalthatleavingittooneonlyofthepartiesunacceptablyremoves certaintyinthearrangement,thecourtmayormaynotrefusetoenforceitasillusoryor unacceptablyuncertain. c. Wherethereisareadilyascertainableexternalstandard thecourtwillconsideritwhen determiningwhethertheycangiveeffecttoaprovisionwhichotherwiseappearsvagueand uncertainorillusory. d. Whereatermcontainsa rangeofpossibilities thecourtwillholdthepartytoprovidingat leasttheminimumprovisionwithintherangeratherthanavoidingthecontractentirely(eg, providingforpaymentbetween100p500,thecourtwouldrequirepaymentofatleast theminimum,100,ratherthanholdingittobeuncertain) AlsoPlacerdevelopmentsLtdVCth1969 Incompleteness: General&ruleW&it snecessaryforthepartiestodealwiththeessentialtermsoftheagreementinorderforitto beenforceable. Whatisessentialwilldependonthenatureofthesubjectmatter. Forexample,pricesarerequiredforcontractsforthesaleoflandbeforetheywillbeenforceable(Hall&v& Busst&(1960)CLR);however,thereisnosuchrequirementinthecaseofagreementsforthesaleofgoods becausethegoods&act"ineachjurisdiction(invictoriaitiss13(2))providesthat,ifthepriceisnotfixedinthe agreement,thebuyermustpayareasonableprice. Noneedforagreementtobeworkedoutingreatdetail6partiescanpostponesomematterstothefuture (egrenttobefixedbyarbitrator)ortobedeterminedbyoneoftheparties(godecke&v&kirwanw&saleofland CTprovidingthatifKrequiredit,Gwouldexecutefurtheragreementcontainingthosetermsreas determinedbyk ssolicitors.&krefusedtoproceedwithsale."wasthereanagreement?trialpagreementnot bindingsogappealed.&held:inmostcasesbindingagreementcanleaveanimportanttermtobesettledbya thirdparty;ortobesettledbyoneoftheparties.herenofurtheragreementwasneededbetween"the" parties."walshjimpliedtermthatsolicitorscouldonlyincludeadditionaltermsthatwerenotinconsistent withoriginallyagreedtermsandthattheyhadtobereasonable.ctvalid.appealallowed) Partiescanleaveessentialmatterstobedeterminedinfuturesolongasthisdoesnotrequirethemtoreach afurtheragreementb/wthemselves. 6

7 Thiscanbedonebyincludinginagreementaformulaormechanismprovisionstofinalisematter.Godeckev Kirwan AgreementstoAgreeandAgreementtoNegotiate: Courtshavegenerallyheldthatagreementstoenterintoanagreementinthefuturearenotbinding.Thus, anagreement,whichprovidesthatadditionaltermsaretobeagreeduponbythepartiesinthefuture(like rentinfiveyearstime),willnotbeenforced. However,ifsuchanagreementhasbeenpartlycompletedanditisclearthattheprovisioninvolvedwas intendedtobeeffective,acourtmayfindawayofgivingeffecttoit. SimilarlytheHouseofLordsdecidedthatanagreementtonegotiateisnotenforceable. ThepositioninAustraliaislessclear:CoalCliffCollieriesPtyLtdvSijehamaPtyLtd(Headsofagreementfor miningrightspagreementtonegotiateingoodfaithcanbeenforceablepkirbyppneedtolookateach particularct(espif3rdpartyhaspowertosettleuncertaintiespherepromisetoovaguetobeenforcedand noexternalarbitratorappointed) Distinctiondrawnb/wagreementtonegotiateingoodfaithsoastofinaliseanagreement(Coal&CliffW&may& not&be&biding)andagreementinconcludedcttonegotiateingoodfaithshouldadisputeariseb/wparties aboutitsperformance.inlattercase:pnotvagueillusoryoruncertainpcourtwillgiveeffecttothese contractualprovisions(united&group&rail&services&ltd&v&rail&corporation&nsw) LockoutAgreements:PartiescanagreenottonegotiatewithathirdpersonPthiscouldbeabindingCT (Walford&v&MilesPphotographicbusiness) InternationalPerspective: India:IndianCTAct1872s.2IllusoryAgreementsPvoidable.S29Uncertainagreementsarevoid. China:Art61Ppartiescanenterintosupplementaryagreementstodealwithmaterialtermsnotincludedinhtheir agreement.ifmaterialtermsmissingplookatmarketstandards(art62). Severance:TheresultofUncertainty Ifuncertainpartisnotimportantandcanbe severed fromtheremainingtermsofthecontract,those remainingpartswillbeenforceable.ifnot,thewholeagreementwillbeunenforceable." Determiningwhethertermsmaybeseveredrequiresanassessmentoftheintentionoftheparties(Life& Insurance&Co&of&Australia&Ltd&v&Phillips).& ConditionalCTs PartiestoaCTcanavoidbeingimmediatelyboundbyagreementbymakingthecontractconditionalinsome waywhichwillsuspendorqualifytheirobligationsuntiltheconditionissatisfied. Conditionsprecedentorsubsequent (1) Conditionprecedent:aconditionwhichmustbefulfilledbeforeobligationsofpartiesbecomebinding(eg subjecttosolicitorapproval) (2) Conditionsubsequent:conditionwhichwillendthecontractualrightsandobligationsofthepartiesifitisnot fulfilled.(subjecttofinance) Partiesarestillcontractuallyboundwhentheyincludesuchconditionsunlessanduntilconditionfails. SubjecttoContract Clauses Masters&v.&Cameron&(SaleoffarmingpropertyPResp(vendor)andappellantsigneddocumentwhichwassubjto preparationofformalctofsalewhichshallbeacceptabletorespondent ssolicitorsonabovetermsandconditions. Apppaiddepositbutrefusedtoproceedwithpurchase.Bothclaimeddeposit.IfCTexisted,respwouldbeentitledto deposit.)courtsaidthatthereare3differentinterpretationsthatcanbeplacedonthesubjecttocontractclauses: 1. Partiesmayintendtobeimmediatelyboundbutproposetorestatetermsinmorepreciselanguage but withsameeffect.bindingctregardlessifformalctconcluded 2. Partiesmayhaveagreedonalltermsanddonotintendtodepartfromthembutmayhavemade performanceconditionaluponexecutionoffinaldocument.bindingbutperformanceisconditional.parties dowhatisnectobringformalctintoexistence. 3. Partiesmaynothaveintendedtomakeaconcludedbargainunlessanduntiltheyexecuteformal document.notbinding.noenforceablecttilfinalctconcluded.eg subjecttoct/subjecttoformalct. 7

8 Held: Inthiscasetheformalcontract,whiletobeonthesameconditionsasthoseagreed,weretobe satisfactoryto thesolicitors (subjecttoctpwhichwasacondition).nobindingcontractwasmadepriortotheformalisingofthe agreement.depositcouldberecovered.)type2. SubjecttoFinance clauses MeehanvJones Aclauseprovidingthatacontractisdependentononepartyobtainingthefinancenecessarytoperform his/herobligationsunderthecontract Theseclausesarecommoninconsumerrealestatetransactionsforcontractorsale. DesignedtomakethecontractsubjecttothepurchaserobtainingsatisfactoryfinancePfinanceon satisfactorytermsandconditions.thesetermsneedtobespecified(eg.astoamount,natureoflender, interestrateandterms).asmanyofthesetermsaspossibleshouldbeincludedsothatthecontractis sufficiently certain. Issue:ispurchaserboundtolookforfinance?Needtoseeiftermissubjective/objective.Thesetermswon t necessarilyrenderagreementuncertainandthere slikelytobeageneralobligationonpurchasertoacthonestlyin determiningiffinanceissatisfactory(meehanvjonespdagreestoselllandtoponwhichoilrefineryisbuiltpsubjto financecl.jarguedctvoidforuncertaintyandmgavenoticetojthatithadobtainedfinance.effectofsubjto financecl?held:hereterminologyusedimportedasubjectivetestppurchasertoacthonestly.notejudgementsof GibbsCJandMasonJ)) Wasthereabindingcontract? GibbsCJPWasitjustanagreementtoagree? No financeonlyneededtobetotopurchaser ssatisfaction,notbothparties. Waslanguageso impreciseandindefinite itcouldnotbegivenmeaning? Dependsonthewordsusedineachcase. Objectiveorsubjectivetest(lookatintention)? SolongascourtcandeterminewhichtestappliesPthereisnouncertaintyNouncertaintyhere subjectivetest applied Thepromisewasnotillusory MasonJ Satisfactory=satisfactorytopurchaser.Thisiscapableofprecisemeaning. Primaryobjecttoprotectpurchaser. Conditionmetif,subjectively,financeissatisfactorytopurchaser Isasubjecttofinanceclauseaconditionprecedentorsubsequent? GibbsCJ conditionsubsequentinthiscase.certainobligationsattachedimmediatelyuponsigning MasonJ conditionsubsequent Dopartieshaveobligationtoacthonestlyindeterminingiffinanceissatisfactory?(obiterinthiscase) Yes(maybe)(GibbsCJ) Yes(MasonandWilsonJJ) Dopartieshaveanobligationtoacthonestlyandreasonablyinseekingfinance?(obiterinthiscase) No(GibbsCJ) Yes(MasonandWilsonJJ) Canapurchaserwaivetheneedforasubjecttofinanceclausetobemet?(obiterinthiscase) Yes(MurphyJ) InternationalPerspective:India6doesn tprovideforconditionalcts.china:art45partiesmaystipulatectissubject tocertainconditions. CHAPTER4CONSIDERATION 8

9 OVERVIEW: MeaningofConsidn: 2ndkeyelementforformationofCTPCLrequiredthatforagreementtobebinding,promiseemustprovide consideration ConsiderationisthepricestipulatedbythepromisorinexchangeforthepromiseDunlopTyreCoLtdV SelfridgeandcoLtd[1915]AC847made.Maytaketheformofmoneybutneednottakethatform. Considerationisoftenreferredtointermsofbenefitanddetriment;considerationisgenerallyofbenefitto thepromisor(eitherdirectlyorbybenefitingathirdpartyatthepromisor srequest)or"adetrimenttothe promiseepsufficientifadetrimentissufferedbythepromiseeeventhoughthepromisorreceivesnobenefit. CarlillWCourtsaidinthatcaseitwouldbesufficientthatMrsCarlillsufferedthedetrimentassociatedwith usingthesmokeballasdirectedevenifthecarbolicsmokeballcoreceivednobenefit Paymentofconsiderationcantakeformof:BeatonVMcdivitt 1.Performinganact; 2.Forebearingfromperforminganact; 3.Promisingtodosomethinginreturn(mostcommon). Whenisconsidnreqd?Promisesnotbindingunlesspromiseepaysforthembyvaluableconsidn. Gratuitouspromisesarenotbinding.EgIpromisetogiveyou100.Promiseenotprovidedanything, Unilateral CT P binding. Ex:P promises Q 100 if Q stops smoking for 1 weekp P is promisor, Q promisee (considnforp spromiseisactofqquittingsmokingfor1week.qisnotpromisorb/cnotmakingreciprocal promisetostopsmoking. BilateralCT6binding.ExXpromisestosellcartoYinreturnforYpromisingtopayhim10,000.Forpromise tosellcar,xispromisorandypromisee.inrelationtopromisetopay10,000yispromisorandxpromisee. HereXisreceivingareciprocalpromisefromYtopay10,000andYisreceivingpromisetosellcar. Exception to requirement to provide considn: 2 exceptns: 1. Promises under sealp deed; 2. Promissory estoppels. Executed&consideration"takestheformofperforminganactratherthanapromiseofperformance.ExPactof Qquittingsmokingwouldbeexecutedconsideration.InCarlill,theactofusingthesmokeballwouldbe executedconsideration. Executoryconsideration"consistsofapromisetodosomething.Thus,inthecarsaleexample,thepromise tosellthecarandthereciprocalpromisetopay10,000wouldbothbeformsofexecutoryconsideration.as itisthepromise"itself"thatconstitutestheconsiderationinthesecases,considerationwillhavebeen provided(andacontractformed)eveniftheactpromisedisnotperformed. 3essentialelementsofconsideration: 1.Mustbes thingofvalueineyesoflaw; 2.Mustbenominatedbypromisor; 3.Mustbegiveninexchange(quidproquo)forthepromise(ieconsidnmustbebargainedforPcan tbe thrustonpromisorandfurther,detrimentsufferedbypromiseeorbenefitconferredonpromisorwillonly amounttoconsiderationifexpressly/byimplication,itwasrequestedbypromisor:austwoolenmillsp/lv TheCommonwealth). QuidProQuoPSeeAust&Woolen&Mills&Pty&Ltd&v&The&CommonwealthWGovtofferedsubsidytowool manufacturersforlocalmanufacture.ppurchasedandusedwoolandgotsomepaymentsandgovtstopped subsidysoasuedgovtforsubsidiesitclaimedwasduearguingunilateralct.held:nocthere.govt statementnotconsidnforabuyingwool(iestatementherewasnotpinconsidnofyoubuyingwooliwillpay yousubsidy).courtsaidincasessuchasthis itisnecessary, thatitshouldbemadetoappearthatthe statementoralannouncementwhichisreliedonasapromise[herethesubsidystatement]wasreally offeredasconsiderationforthedoingoftheact,andthattheact[buyingandusingthewoolasdirected]was reallydoneinconsiderationofapotentialpromiseinherentinthestatementorannouncement. Theremustbearelationshipofquid"pro"quo"betweenthestatementandtheAct. 9

10 Heretherewasnopromiseofferedinconsiderationofdoinganact.Buyingwoolwasmerelyacondition precedenttoentitlementtosubsidypitwasintendedasconsiderationforpromisetopaysubsidy(nothing heretosaypaymentofsubsidyandpurchaseofwoolwererelatedinsuchawaythatonewasconsidnfor theother.buyingwoolnotregardedaspricetobepaidforcthspromisepsonorelationofquidproquo.just agovtschemehere. Beaton&v&McDivittPM)promisedtotransferaportionofhislandtotheappellant(Beaton)whenaproposed rezoningoccurredif,inthemeantime,bworkedthelandinaspecifiedway.bworkeditasrequired (includingbuildingahouse).sevenyearslater,followingadispute,bwasorderedofftheland.issuearoseas towhetherbeatonhadprovidedvaluableconsideration.held:"beatonhadprovidedconsiderationforthe respondent spromisetotransferthepropertybyworkingonthelandinthemannerstipulated.mchugh:re: quidproquo betweenthepartiespinthiscasetherewassuchconsideration considerationforthepromise totransferwastheactofbincomingandworkingontheblockasrequested.thisconstituteda detriment sufferedbybandthatissufficientforconsideration. ConsiderationvsCondition: Theactrequestedbythepromisorwillonlybeconsiderationifitwasregardedasthepricetobepaidforthe promise.thetestistheattitudeofthereasonableperson. Iftheactisregardedasaconditionthenitissomethingthatmustbeperformedbeforeentitlementtothe promisearises,butperformance(absentseparateconsideration)doesnotallowthepromiseetoenforcethe promise.egcarliilp(catchingcoldwascondnprecedent,notconsidn).austwoollenmillspnoct.buying wooliscondnprecedenttoentitlementtosubsidypnotintendedasconsidnforapromisetopaythesubsidy. Nothingtosuggestpaymentofsubsidyandpurchaseofwoolwereregardedasrelatedinsuchawaythat onewasconsidnfortheother. ConsidncanbeanythingstipulatedbyPromisorCanbeanythingstipulatedbypromisor(notpromisee)so longasnotillegal/illusory6realvaluetopromisor. CarlillPanyactofMrsCwherebyCSBderivedbenefit/advantageoranydetriment/inconveniencesuffered bymrscpprovidedperformedatrequestofcsbpcouldconstituteconsideration.usingsmokeballinway directedwasinconveniencesufferedbymrscatrequestofcsbtobesufficientforconsideration; Chappell&&&Co&Ltd&v&Nestle&Co&Ltd:TopromotechocsalesNadvertisedtosupplyarecordtoanyonewhosent itmoneyand3chocwrappers.werewrappersconsidnforprice?held6wrappersnotacondnprecedentp partofconsideration. Acontractingpartycanstipulateforwhatconsiderationhechooses.Apeppercorn doesnotceasetobegoodconsiderationifitisestablishedthatthepromiseedoesnotlikepepperandwill throwawaythecorn. Dunton&v&Dunton:partiesenterwrittenagreementwhereMrDagreestopayformerwifeallowancesolong asshebehaveswithsobrietyandinrespectable/orderly/virtuousmanner.ddidnotpaymaintenance. Considnforpromise?Pargpromisetobehaverespectablyisgoodconsidn.Dargpromisetobehave respectablywasmerelyapromisetodowhatshewasalreadyboundtodo(tobehaverespectably)sonot goodconsidn.held:validconsidn.thoughpromisingnottodosomethingwhichcannotlawfullybedoneis& not"goodconsideration,apromisenottodosomethingwhichcanbelawfullydoneis&goodconsideration. MrsDpromisedtogiveupalibertyshehad(tobehaveunrespectably)soherpromisetosurrenderher libertyandtoconductherselfinmannerdesiredbydconstitutedgoodconsidn. Givingupliberty(forebearance)todosomethinglawful6isgoodconsidn.(HamervSidwayPUnclepromised thatifnephewrefrainedfromdrinking,smokingswearingandplayingcardsorbilliardstilhewas21,he wouldpayhim5000.)nephewdidthisandclaimed5k.dargued"(1)therewasnoconsiderationgivenby theplaintiffand(2)refrainingfromdrinkingetcwerenotaharmsufferedbutabenefit.held:phad surrenderedalegalrighthehadtodrinketcandthiswasgoodconsideration eventhoughitwasbeneficial totheplaintiff.q:"couldtheunclehavesuedifnephewhad,afterawhile,resumeddrinkingetcbeforehe became21?probablyno;contractprobablyunilateral;courtsaidthattheconsiderationwasgivinguplegal rightsandnotapromisetodosoasindunton scase.iftherewasnopromise(bynephew)contractwas unilateralpunclemadepromisehereonlyandnotnephew.)duntonvdunton Questions: CouldbehavingrespectablyberegardedasaconditionratherthanasconsiderationlikeinAustralian& Woollen&Mills&v&Commonwealth?No.InAustralianWoollenMills,hadtherebeenacontractitwouldhave beenunilateral.hereitwouldhavebeenbilateralastherewerepromisesonbothsides. IfthePlaintiffhadnotbehavedrespectably,couldMrDuntonhavesuedherforbreachofcontract?Why not!?unilateralctpshemadenopromise. 10