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C09,+*:,(U*V/G*%W0,$( A contract is a legally enforceable agreement that involves one or more promises, given for something in return. Common Law meaning Common law can be distinguished from legislation or statutory law but that has two main categories: Equity (rules and principles deriving from the old Chancery court) Common law (rules deriving from the other courts) o So the same term can mean all judge made law, and one type of judge made law Contractual Remedies, Pt 1 Types: Self help Enforcement Compensation Restitution Self Help Withholding performance refusing to perform your own side of contract until other party does what they should Termination terminate contract, ongoing relationship, e.g. employment Deposits and advance payments structure payment obligations of contract provide yourself with self help remedies Enforcement Specific performance (order that contract be performed) o Granted at discretion of court, but only rarely (except contracts for sale) o Common reasons for refusal! Damages would be an adequate remedy! Continuing obligations involved would effectively require the court to supervise ongoing obligations over a period of time, not one-off.! Obligation is one of personal service would force people to deal with each other, court doesn t like this Injunction to restrain breach of contract o Used to enforce negative stipulations a promise not to do something e.g. a promise to work for one company and no other, may seek an injunction to stop them working somewhere else o Also a discretionary remedy, but more commonly granted than specific performance courts feel more comfortable telling people not to do something Action for debt or money due (Remember) o Used to recover any sums due under a contract, e.g. price of goods or fee for services o No need to prove loss, merely that the money is owed and has not been paid o So money obligations much easier to enforce than other obligations o Not discretionary like specific performance if you re owed it you automatically get it Difference between Action for Debt and Action for Damages o Action for damages: prove loss and how much o Action for debt: money owed not been paid o However for example you didn t get given money and couldn t invest that money and therefore didn t make a profit it would be! Money action for debt! Profit loss action for damages! Note: remoteness of damage doctrine -
Compensation Any breach of contract entitles the injured party to seek damages, but the damages will be nominal unless the plaintiff can prove they have suffered loss. Where a party sustains loss by reason of a breach of contract, he [sic] is, so far as money can do it, to be placed in the same situation... as if the contract had been performed - Parke B, Robinson v Harman - Endorsed and applied in TabCorp Holdings v Bowen Investments Examples of quantifying loss: For uncompleted work, reasonable cost of having someone else do it For undelivered goods, additional cost (if any) of buying replacement goods o Cost of going somewhere else, look at contract price and market price. E.g. someone offers to sell you a car for $10,000 and to get same car somewhere else its $12,000 your loss is $2,000 o On the other hand if somewhere else the car is $8,000 rather than $10,000, you can sue, you can get damages, but they will be nominal i.e. $1. For defective goods, compare value of goods as promised and as supplied o Sale of Goods Act 1895 (SA) ss 50, 52 Damages must be assessed, no matter how difficult e.g. compensation for lost chance Chaplin v Hicks entered into a competition, sent pic in, shortlist selected, then if picked would get work in theatre. Never got chance to be interviewed and sued for loss of chance and damages were awarded. (will take into account your chance of losing) Note: loss of chance is a form of expectation loss Where expectation loss cannot be ascertained, reliance loss may be awarded. McRae v CDC Ship salvaging oil tanker which didn t exist from a reef that didn t exist awarded his wasted expenditure from relying on the other party (sailing out and back) reliance loss as opposed to expectation loss. Besides loss of promised benefits, plaintiff may claim consequential (additional) loss E.g. physical injury caused by defective goods, or loss of profits caused by not having goods/services supplied on time Causal link must be established ( but for ) test May only be claimed if loss not too remote, ie outside reasonable contemplation of parties o Hadley v Baxendale mill stopped working, crank shaft broken, contract entered to replace it, they were late bringing it back. The loss was caused by the breach but the Court said was not in reasonable contemplation therefore couldn t claim. There are 2 limbs:! Loss isn t too remote if you expect to occur ordinarily or! It is out of ordinary but knew it would cause loss o Victoria Laundry v Newman entered contract to get a new boiler to expand business but it was late, loss was not too remote however due to them entering into special contracts with government they found the loss was not reasonable and therefore recovered ordinary loss H
Damages for mental distress or suffering recoverable if consequent upon physical injury. But not otherwise, unless specific aim of promise breached is to create happiness (e.g. holidays) or avoid distress Baltic Shipping v Dillon holiday cruise ship sank, sued for B.O.C for distress and loss of enjoyment, they were promised an enjoyable time Silverman v Silverman also works when someone promises not to cause you distress or harm Contributory negligence Damages may be reduced under Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) to extent that plaintiff has contributed to own loss Mitigation of loss No recovery for loss actually avoided Or for loss that defendant proves could reasonably have been avoided by taking appropriate steps (onus of D to prove) If you haven t done any mitigating that was reasonable to do, it will be taken into account and may result in nominal damages being awarded Date of assessment of Damages Usually date of breach, but can be varied flexible rule e.g. badly built but not discovered until years later, would probably become date that breach discovered o Johnson v Agnew Interest on judgement sum (note: could take months or years between date that loss assessed and the date the damages must be paid) o Supreme Court Act 1935 (SA) s 30C value of money will usually increase, court orders you to pay interest on that money over the time in waiting Unlike tort actions, exemplary or punitive damages may not be awarded for breach of contract Hospitality Group v ARU Limitation of actions Limitation of Actions Act 1936 (SA) s 35 actions founded upon any simple contract express or implied must be commenced withing 6 years of cause of action accruing Equitable doctrine Statute of limitations doesn t apply here but lackes (delay) does Pre-existing contractual duty A promise to perform an existing duty is legally insufficient Stilk v Myrick sailers on voyage, some jump ship and cant be replaced, captain says if they complete they will get bonus. Not entitled because they didn t give fresh consideration and just did what they were already bound to do. Hence a contractual variation that affects only one party s performance is unenforceable Cf termination of one contract and replacement by another would make it ok <
A variation that is supported by additional consideration is enforceable, subject to the doctrine of economic duress North Ocean Shipping v Hyundai effectively extortion, P wanted new tanker from D, the market value changed a lot and D made P pay 10% more and they would increase money in bank in they failed therefore good consideration. However court found it was duress, but P lost because they took too long and affirmed contract. Is practical benefit consideration? Williams v Roffey Bros provided a practical benefit for them to complete the contract for more money (what they already had to do) instead of defaulting. Area still unclear Promise to perform an existing duty may be good consideration if made to a third party (Pao On v Lao Yiu Long) and comprises made in good faith are also enforceable (Wigan v Edwards gratuitous promise) Part Payment of Debt Another manifestation of the pre-existing duty rule: a promise to accept part payment of a debt is unenforceable Foakes v Beer creditor promises to accept part payment of a debt is unenforceable Re Selectmove argued practical benefit, court said no because it contradicts FvB Note: can be made enforceable by fresh consideration, deed etc Estoppel Estoppel can be pleaded to preclude ( estop ) one party from denying the truth of, or acting inconsistently with, an assumption which the other has been encouraged to adopt. Types: Estoppel by record o Inc res judicata, issue estoppel can t raise that issue because its already been decided Estoppel by conduct o At common law! Inc estoppel by convention deal w/ each other on an agreed basis that same fact is true! estoppel by representation one party makes a statement to another party that is represented as true o In equity! Proprietary estoppel and promissory estoppel Equitable Estoppel Common law estoppel limited to assumptions or representations as to present fact Jorden v Money can t invoke common law estoppel unless assumption/representation of present But in equity, estoppel could be founded on representations as to the future (failing to fulfil a promise) E.g. proprietary estoppel used to enforce gratuitous promises to grant an interest in land o Riches v Hogben came to AUS on reliance, intention to be legally binding and estopped from denying it 3
Development of promissory estoppel: Originally confined to representations that a party would not enforce existing rights o Je Maintiendrai v Quaglia landlord accepted less rent (promised) then sued to recover rent owed, tenant argued they had been led to believe and relied on what led to their detriment successful o Legione v Hateley HCA accepted doctrine existed but case failed. Sale of land, secretary took call I think that ll be okay but I ll have to check hadn t been clear and unequivocal promise Extended to enforce a promise to create rights (estoppel as a sword, not just a shield) o Waltons Stores v Maher signed lease and demolished building then Waltons tried to terminate, estopped from denying they signed contract o This decision departed from the classical idea that a promise creates a legal obligation only when consideration has been given in return for the promise and a contract has been formed. Expanded situations where liability can result from reliance on non-contractual promises. Elements of Estoppel A encourages B to adopt an assumption Legione v Hateley (estoppel argument failed because wasn t clear they were encouraging) B acts on that belief, such that B would be worse off if A departed from that assumption (detrimental reliance) Je Maintiendrai v Quaglia Unconscionable for A to depart from assumption Austotel v Franklins negotiating about development, started work in anticipation, franklins pulled out. Estoppel failed because unlike Waltons, both parties were aware that contract hadn t been signed, austotel took the risk. Franklins hadn t acted unconscionably. Effect of estoppel Flexibility and discretion: the minimum equity whatever is the least that should be done to rectify the effect of the unconscionable conduct, ordinarily linked to actions in reliance. Reversal of detriment. But not necessarily limited to reversal of detriment Waltons Stores v Maher got damages based on if lease went ahead (probably should have been minimum equity though) Estoppel as an alternative to contract Can be used to enforce promises that might otherwise be unenforceable (e.g. for lack of consideration); but note drawbacks: Must prove detrimental reliance In court s discretion, not available as of right Relief may be limited to extent of reliance (as opposed to benefits expected from contract) P