Case Law Summaries Case: Taylor v Johnson (1983) 151 CLR 422 Pg. 265 FPBL Legal Issues: Contract, vitiating circumstances, unilateral mistake, effect of unconscionability Facts: 10 acres of land was offered for $15,000. Taylor accepted this offer knowing the price was most likely a mistake. Johnson had meant $15,000 per acre. Decision: The contract was dismissed. Reason: Unilateral mistake, Taylor knew that the price was probably a mistake but chose not to notify Johnson until it was too late. The court found this action in contrary to good conscience.
Case: Balfour v Balfour [1919] 2 KB 571 Pg. 158 FPBL Legal Issues: Contract, formation, intention to be legally bound, agreement between spouses Facts: While they were married Mr Balfour promised to pay Ms Balfour £30 a month until she re-joined him. They later divorced and Ms Balfour wants to enforce the promised payment. Decision: The agreement was not legally enforceable because in the circumstances it was not intended to be legally binding. Reason: Domestic arrangements between spouses are not legally enforceable because it is assumed by law when agreements are made the parties do not intend to be bound by law.
Case: Cohen v Cohen (1929) 42 CLR 91 Pg. 177 FPBL Legal Issues: Contract, formation, intention to be legally bound, agreement between spouses. Facts: Before marriage Mr Cohen promised his fiancée an allowance, prior to their divorce he discontinued payments. Ms Cohen claims she is owed £278. Decision: There were no intentions that the allowance was legally enforceable. Reason: According to Dixon J, “The parties did no more, in my view, than discuss and concur in a proposal for the regular allowance to the wife of a sum.”
Case: Merritt v Merritt [1970] 2 All ER 760; 1 WLR 1211 Pg. 231 FPBL Legal Issues: Contract, formation, intention to be legally bound, agreement between spouses. Facts: Mr Merritt agreed to sign the house owned by him and Ms Merritt to Ms Merritt once she finished repaying the loan during divorce agreements. When the time came he refused to honour his agreement. He signed a written agreement. Decision: The circumstances show the agreement was intended to be legally enforceable. Reason: As they were in divorce proceedings at the time „the goodwill between married persons has broken down‟ therefore any agreement made at this time are intended to be legally binding.
Case: Carlill v Carbolic Smoke Ball CO [1893] 1 QB 256 Pg. 171 FPBL Legal Issues: Contract, formation, (1) consideration, performance of an act of consideration, (2) offer, offer to members of the general public, (3) acceptance, acceptance by conduct Facts: Carlill responded to an ad to use a smoke ball to prevent catching the flu, if it failed she could claim £100. When she did catch the flu she tried to claim the reward however the company did not pay. Decision (1): The circumstances were sufficient to infer the contract was intended to be legally binding. Reason: The company depositing £1000 in the bank specifically for paying this reward inferring the promise was intended to be legally binding. Decision (2): An offer made to the public can be accepted by anyone who learns of it. Reason: The ad was a general offer so anyone would be able to accept, once a person accepts the offer an enforceable contract is formed. Decision (3): To accept the offer one had to buy and use the smoke. Reason: Carlill did this which means that there was sufficient acceptance to create an enforceable agreement with the company. Decision (4): The consideration required to create an enforceable promise to pay the reward was buying and using the smoke ball as directed, but still catching the flu. Reason: By doing what the ad said in expectation of a known promise may constitute the consideration given in exchange of that promise, even though the act has to be performed before the promise becomes legally binding.
Case: Price v Easton (1833) 4 B & Ad 433 Legal Issues: Contract, formation, privity, parties.
Pg. 249 FPBL
Facts: A builder owed money to Price but didn‟t have any. Easton made an agreement with the builder to pay Price in exchange for work by the builder. However Easton did not pay Price. Price tried to force Easton to pay. Decision: Price was unable to enforce the contract. Reason: The agreement was between Easton and the builder, Price was not a party to the contract and therefore did not have any legal rights to enforce payment due to the doctrine of privity of contract. Case: Coulls v Bagot‟s Executor & Trustee Co LTD (1967) 119 CLR 460 Legal Issues: Contract, formation, privity, right of third parties.
Pg.181 FPBL
Facts: Coull‟s and O‟Neil make an agreement to pay royalties to Coull‟s wife. Coull‟s later dies, the issue of whether Ms Coull‟s can enforce payment arises. Decision: It is decided Ms Coull‟s does not have a legal right to enforce the payment as she is not a party to the contract.
Case: Placer Development LTD v Commonwealth (1969) 121 CLR 353 Legal Issues: Contract, formation, offer, illusion of promise.
Pg. 249 FPBL
Facts: Commonwealth chose to pay subsidies on timber at a rate they choose but stopped paying after some time. Placer wanted to enforce payment. Decision: It was decided the promise was not legally enforceable. Reason: As the commonwealth was the one that decided the level of subsidy, they could at their discretion choose to pay nothing. This is known as an illusory promise and is not enforceable.
Case: Partridge v Crittenden [1968] 2 All ER 421 Legal Issues: Contract, formation, offer, advertisement not an offer
Pg. 243 FPBL
Facts: Partridge put an ad in a magazine for birds. RSPCA prosecuted him for offering wild birds for sale. Decision: The ad was treated as an invitation into negotiations instead of an offer. Reason: According to the judge when an ad is made from sources other than actual business it is only an invitation to treat and not an offer.
Case: Masters v Cameron (1954) 91 CLR 353 Pg. 226 FPBL Legal Issues: Contract, formation, intention to be legally bound, conditional intention. Facts: Cameron agreed to sell a farm to Masters. They made an agreement saying „This agreement is made subject to the preparation of a formed contract of sale which shall be acceptable to my solicitors on the above terms and conditions.‟ Decision: It was decided that the agreement was not intended to be legally binding until the contract was signed. Reason: The condition in this case was „subject to‟ in the form that another act must be completed before the agreement becomes legally binding, specifically a formal contract.
Case: Henthorn v Fraser [1892] 2 Ch 27 Pg. 204 FPBL Legal Issues: Contract, creation of a contract, offer and acceptance, acceptance by post. Facts: Fraser offered houses to Henthorn. Henthorn accepted the offer by post the next day. Before receiving the letter, Fraser received a better offer and tried to withdraw his offer to Henthorn. Decision: Once the letter was sent the contract was created and legally binding. Reason: In the circumstances post is the usual way of accepting an offer and this would have been the expected method he used therefore the acceptance is provided the moment the letter is sent.
Case: Brinkbon Ltd v Stahag Stahl und Stahlwharenhandelsgesellsshaft [1983] 2 AC 34; [1982] 1 All ER 293 Pg. 165 FPBL Legal Issues: Contract, formation, agreement, acceptance by telex Facts: A contract was being negotiated by telexes between London and Vienna. Two of these telexes were an offer and acceptance. Decision: It was decided that acceptance only occurs when the telex is received. Reason: As the receiver may not be the principal of the contract, it may not be received immediately, there may be technical difficulties, etc.
Case: Esso Petrol Co Ltd v Commission of Customs & Excise [1976] 1 All ER 117 Pg. 190 Legal Issues: Contract, formation, intention to be legally bound, commercial agreement Facts: Esso produced commemorative coins that they gave away free with purchases of 4 gallons. The commissioner of customs & excise argues the coins should be taxed. Decision: They were required to pay the tax. Reason: The promotion was intended to be legally binding. As Esso would gain from the promotion it was a promise with intention to be bound.
Case: Ermogenous v Greek Orthodox Community of SA Inc [2002] 209 CLR 95 Legal Issues: Contract, formation, intention to be legally bound, relevant factors.
Pg. 189
Facts: Ermogenous came to work in Australia for the Greek Orthodox Community who paid him a salary for 23 years, when he finished the community refused to pay out his accumulated leave. Decision: The agreement was intended to be legally binding. Reason: The organization was an incorporated body and they paid the ministers. This decision is dependent on the facts.
Case: Thomas v Thomas (1842) QB 851 Legal Issues: Contract, formation, taken consideration sufficient.
Pg. 265 FPBL
Facts: When Mr Thomas died, his executors made a deal with Ms Thomas to live in his house. They agreed she could live there for rent of £1 a year and keeping the house in good condition. Decision: She had a legal right to enforce the agreement. Reason: She had provided enough sufficient consideration even though it was not equivalent to what she was receiving.
Case: Stilk v Meyrick (1809) 2 Csmp 317; 170 ER 1168 Legal Issues: Contract, formation, insufficiency of past consideration
Pg. 261 FPBL
Facts: Two sailors abandoned ship, the captain promised the remaining crew extra pay if they returned the ship safely. When they returned the ship‟s owner refused to pay extra wages. Decision: The crew were not entitled to the extra pay. Reason: Their original contract stated that in case of emergency they would return the ship to port, the desertion of two sailors falls within its meaning. Therefore when the agreement with the captain was made no additional consideration was given by the sailors so the contract was null and void.
Case: Van der Esschert v Chappell [1960] WAR 114 Pg. 269 FPBL Legal Issues: Contract, contents, terms, proving orally agreed terms of partially written and partly oral contracts. Facts: Van der Esschert sold a house to Chappell with an oral agreement that there was not an ant infestation. Chappell later found out the house was infested. Decision: The oral part of the contract was able to be enforced. Reason: It was agreed on before the contract signed and in the circumstances the issue of infestation was very important.
Case: LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (Australasia) Ltd (1956) 56 SR (NSW) 81 Pg. 220 FPBL Legal Issues: Contract, contents, proving orally agreed terms, sold by sample, parol evidence Facts: Thorne bought oil from Thomas, before the sale Thorne tested a sample and then a contract was made but it did not mention the sample. When Thorne used the oil that was delivered he found it was different from the sample. Thorne believes it was a term of the contract the oil would be the same. Decision: The oil matching the sample was not a term. Reason: There was no mention of the sample in the agreement and the sale was not „by sample‟. The rest of the written agreement was a complete and workable agreement. The parol evidence rule was applied, which exclude evidence of additionally orally agreed terms.
Case: Oscar Chess Ltd v Williams [1957] 1 All ER 325 Legal Issues: Contract, contents, terms, conditions and warranties
Pg. 239 FPBL
Facts: Williams sold his mother‟s car to a used dealer. The documents that were showed to the dealer stated the vehicle was a 1948 model. This was also the believed year by Williams‟s mother. The dealer later discovered the car was actually a 1939 model. He sued Williams for breach of contract, claiming the statement of age was a promise and intended to be legally binding. Decision: The statement about the car was not a promise and was not intended to be legally binding. Reason: The dealer has expertise in cars so the parties were not intending the statement to be legally binding. If the dealer had any doubt about the age of the car he could have verified it himself. Note: One of the judges ruled in the dealer‟s favour saying the age of the car was important and therefore it should have been a term of the contract.
Case: Handbury v Nolan (1977) 13 ALR 339 Legal Issues: Contract, contents, representation and terms Facts: A cow was auctioned, before the auction it was stated the cow was pregnant and this was confirmed by a pregnancy test. After the cow was sold it was discovered the cow was actually infertile and therefore not pregnant. Decision: The auctioneer‟s statement was an express term of the contract. Reason: It was stated as a fact that the cow was pregnant. It was taken into account that it was a breeder‟s auction, so a pregnant cow would sell for more. Therefore the promise was intended to be contractual and legally binding. Note: Because it was an express term, the seller was not excused for liability as he would have been if it were an implied term.
Case: Associated Newspaper Ltd v Bancks (1951) 83 CLR 322 Pg. 153 FPBL Legal Issues: Contract, contents, terms, conditions and warranties, breach of contract, termination of performance. Facts: A cartoonist agreed to draw a comic for a newspaper and the newspaper agreed to pay a salary and publish the comic on the front page. For 3 weeks the comic was on the third page, when Bancks complained he was ignored so he terminated the contract. Decision: He had the right to terminate the contract. Reason: The term was an essential one. It was stated that Banks would not have entered into a contract without the front page condition, so performance of this was vital. As it wasn‟t performed the newspaper had breached the contract giving Bancks the ability to make it void.
Case: Bettini v Gye (1876) 1 QBD 183 Pg. 161 FPBL Legal Issues: Contracts, contents, terms and warranties, breach of contract, remedies, damages. Facts: Bettini made an agreement with Gye to perform over a 15-week period. A term of the contract was that Bettini would go to rehearsals 6 days before the first performance. Bettini was sick so she missed 4 days of rehearsal. Gye tried to terminate the contract because of this. Decision: Gye could not terminate the contract. Reason: The term was a warranty not a condition. As the contract was for an extended period of time the absence of Bettini in the 4 days would not cause a major effect to the contract.
Case: Cehave NV v Bremem Handelsgesdlschaft [1976] QB 44; [1975] 3 All ER 739 Legal Issues: Contract, breach of contract, innominate terms, breach, remedies, termination of performance. Pg. 174 FPBL Facts: Cehave bought pellets from Bremer on the condition that they are shipped in „good condition‟. The pellets that were shipped were not in good condition but they were good enough for Cehave‟s purposes. Cehave tried to sue on breach of contract. Decision: Cehave did not have the right to reject the good. Reason: They were good enough for his purposes. The condition was an innominate term, so only a serious breach would warrant a rejection of the goods. Cehave would only be able to claim damages worth the difference in value and what he paid for the goods.
Case: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 Legal Issues: Contract, breach of contract, remedies for breach, the right to terminate performance Pg. 216 FPBL Facts: Koompahtoo Council and Sanpine agreed to develop land owned by the council. Sanpine was in charge of development. Clause 16.5 required Sanpine to keep records so that Koompahtoo could assess progress. Sanpine failed to do so, relying on this the Council seeks to terminate the contract. Decision: The Council were able to terminate the contract. Reason: Clause 16.5 was an intermediate term of the contract, so only a significant breach would have resulted in the termination of the contract. Which in this case had occurred. The court said, “The focus of attention should be the contract, and the nature and seriousness of the breaches… the intention that is relevant is the common intention of the parties, at the time of the contract, as to the importance of the relevant terms and as to the consequences of failure to comply with those terms. This is a question of construction of the contract to be decided in the light of its commercial purpose and the business relationship it established.”
Case: L'Estrange v F Graucob Ltd [1934] 2 KB 394 Legal Issues: Contract, assent to express terms in signed document.
Pg. 219 FPBL
Facts: Graucob Ltd sold a cigarette vending machine to L‟Estrange. L‟Estrange signed a „Sales Agreement‟ which excluded implied conditions and warranties, which she didn‟t read. Once delivered the machine was unsatisfactory. L‟Estrange tried to sue for breach, which in normal cases the condition of satisfactory performance would be part of the contract. Graucob argued the clause in the „Sales Agreement‟ excluded this condition from becoming part of the contract. Decision: L‟Estrange was unable to sue for breach. Reason: As L‟Estrange signed the contract, she was bound by the terms of the contract. She cannot later say she did not intend to be bound by them because she did not read it.
Case: Causer v Browne [1952] VLR 1 Pg. 173 FPBL Legal Issues: Contract, contents, express terms in a non-contractual document, unsuccessful attempt to include terms. Facts: Causer took dress to Browne to be dry cleaned. Browne gave Causer docket that said, „No responsibility is accepted for loss or injury to articles through any cause whatsoever‟. This term was not made obvious to Causer. The dress was returned stained and Causer claimed damages. Browne argued the statement on the docket was a term. Decision: In these circumstances, the docket had not become a term of the contract. Reason: The docket did not appear to be a document containing legally binding terms. It was reasonable to assume the docket was only for identification. Therefore it cannot be assumed Causer was agreeing to the term. If Causer had been made aware of the condition then the result would have been different.
Case: Moorhead v Brennan (t/as Primavera Press) [1991] 20 IPR 161 Pg. 232 FPBL Legal Issues: Contract, contents of a contract, agreed terms, terms implied into a contract ad hoc. Facts: Moorhead entered into a contract with Brennan to publish and sell her book and to licence other publishers to do so. Moorhead was entitled to 50% of revenue from publishers licenced to publish her book. Moorhead also had the ability to terminate the contract if Brennan failed to fix any breach of the contract within 90 days. Brennan wrote an introduction which Moorhead agreed could be included in the Australian edition. An English publisher wished to licence the book but only if they could omit the introduction as they had a policy of only publishing works by women. Brennan refused this condition and the publisher withdrew their offer causing Moorhead to lose the opportunity to earn royalties. Decision: Moorhead was allowed to terminate the contract. Reason: Brennan was contracted as the only publisher with original rights to publish the book and therefore any publishing of the book outside Australia would be through licencing, which would be handled by Brennan. The circumstances apply a condition ad hoc. Therefore it is implied that Brennan will not affect Moorhead‟s opportunities to collect royalties, which he did by refusing to remove his introduction.
Case: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Legal Issues: Contract, (1) contents, terms implied ad hoc, (2) performance, frustration, discharge by frustration. Pg. 176 FPBL Facts: Codelfa was contracted by SRA to build tunnels in Sydney for an agreed price. They both believed that construction could continue 24 hours a day and that they would be protected from an injunction. However residents obtained an injunction after being disturbed by the noise. This cost Codelfa more as they had to work at a slower pace. Codelfa claimed extra payment from the SRA. Decision (1): Using the precedent of BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, there was no term implied. Reason: Both parties had believed that work would continue 24 hours a day, so it is assumed they did not intend a term to be included that would provide extra payment if hours were limited. It was also unclear what agreement they would come to in this situation. Also it is necessary for implied terms to be inferred from expressly agreed terms and not from extrinsic evidence. Brennan J said, “…where the term propounded is said to be implied in a contract, that term must inhere in its express terms, and reference to extrinsic circumstances is permissible only to construe the contract and to understand it‟s operation…The meaning and operation of the express terms, thus established, are the sole foundation for implying a term which the parties have not expressed…BP Refinery should not be regarded as authorizing an extension of the role of extrinsic evidence…” Decision (2): The contract was frustrated. Reason: Both parties believed construction would be continuous, the injunction made performance of the contract possible only in a way that was considerably different and more expensive. The court decided it would be unfair to enforce the original agreement in these circumstances therefore the contract was discharged by frustration.
Case: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Pg. 246 FPBL Legal Issues: Contract, formation, agreement, conditional agreement, universal terms, duty to co-operate, reasonable time for fulfilment of condition. Facts: Perri agreed to buy a property from Coolangatta Investments (CI) in April 1978, this was made subject to the condition that he would first sell another property. Perri was unable to find a buyer for his property. In July 1978, CI asked Perri to complete his purchase by August 8. CI terminated the contract when he failed to finalise the purchase. Decision: CI was able to terminate the contract. Reason: Perri had not given a specific deadline for the sale of his property, however it was an implied term that it would occur within a reasonable time frame. The reasonable amount of time is subject to the circumstances. As CI could not deal with the property until Perri‟s property was sold, the court found that a reasonable amount of time had passed and CI was able to terminate the contract.
Case: Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Pg. 257 FPBL Legal Issues: Contract, contents, universal terms, duty to co-operate. Facts: St Martins bought property from Secured Income (SI). The price was partly determined by the amount of space lent out at the end of a certain period. Towards the end of the period SI applied to lease the remaining space. St Martins rejected their application. SI sued for breach of an implied term that St Martins should cooperate. Decision: There was an implied term to cooperate but St Martins had not breached it. Reason: St Martins had rejected SI because they were not satisfied after evaluating SI‟s merits as a tenant, they did not act arbitrarily to reduce the price they would have to pay when the sale was completed. Mason J said. “The contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract… As Griffith CJ said in Butt v M’Donald: „It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have benefit of the contract.‟”
Case: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Pg. 152 FPBL Legal Issues: Contract, contents, universal terms, duty of good faith, pursuit of legitimate interests. Facts: Alcatel leased building from Scarcella, under the lease Alcatel was required to maintain the building and pay for any work ordered by the local authority. Scarcella requested a fire safety inspection from the local authority, who ordered the stairwell to be insulated. Alcatel refused to pay as they believed Scarcella caused the local authority to impose unreasonable safety requirements. Decision: There was no breach of the duty of good faith so Alcatel was required to pay. Reason: The duty of good faith prevents a contractual power being exercised in a „capricious or arbitrary manner or for an extraneous purpose‟. In the circumstances Scarcella had the right to ensure his building was properly protected against fire.
Case: Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 Pg. 167 FPBL Legal Issues: Contract, contents, universal terms, duty of good faith, dishonest use of contractual power. Facts: Hungry Jacks (HJ) was a franchise of the Burger King Corp (BKC). To force HJ out of its franchising rights BKC refused the approval of new sub-franchise outlets, which was a term of their agreement. BKC gave notice they were terminating HJ‟s franchising rights. Decision: BKC had breached the contract. Reason: By refusing the approval of sub-franchise outlets, BKC had breached the implied term to provide a duty of good faith. They had used their contractual powers for a purpose outside of the contract, namely to thwart HJ‟s franchise rights.
Case: Breen v Williams [1995] HCA 63; (1996) 186 CLR 71 Pg. 165 FPBL Legal Issues: Contract, contents, generic terms, a doctor‟s duty to act with reasonable care and skill. Facts: Breen got breast implants but became ill afterwards. She was treated by Williams however the implants had to be removed. Breen wanted to sue the manufacturer but needed medical records from Williams. He refused to provide the records without being indemnified first, Breen refused and claimed that he was required to supply the records as it was in her best interest. Decision: Williams was not required to provide the records. Reason: A doctor is only required by law to provide reasonable care and skill. Gaudron and McHugh JJ said, “If a doctor owed such a duty [to act in a patient‟s best interests], he or she would be liable for any act that objectively was not in the best interests of the patient. The doctor would be liable for the treatment that went wrong although he or she had acted without negligence. That is not the law of Australia.”
Case: Expo Aluminium (NSW) v WR Pateman [1990] ASC 55-978 Pg. 191 FPBL Legal Issues: Contract, contents, terms implied by legislation, sale of goods, duty to deliver goods suitable for buyer‟s purpose. Facts: Expo Aluminium ordered aluminium windows from WR Pateman for a client, stating that, “There is nothing between this job and the South Pole.” This meant they would be exposed to strong wind and rain. When the windows were installed they were found to leak. Expo claims that it was a term that the windows would be weatherproof. Decision: It was an implied term that the windows would be suitable for the buyer‟s purpose, i.e. weatherproof. Reason: Expo‟s statement indicated the purpose for which the goods were required, therefore he was relying on Pateman to provide suitable goods for his purpose. This is an implied term by s 19 (1) of the Sale of Goods Act 1923 (NSW).
Case: Baldry v Marshall [1926] 1KB 260 Pg. 156 FPBL Legal Issues: Contract, contents, terms implied by legislation. Sale of goods, implied conditions requiring delivery of goods suitable for buyer‟s purpose, sale by trade name. Facts: Marshall bought an „eight cylinder Bugatti‟ from Baldry but stated his purposes for needing it. The car turned out to be defective and was therefore unsuitable for Marshall‟s purposes. Baldry argued as it was bought under the trade name he was not required to provide a car suitable for his purposes. Decision: Baldry was required to provide a car suitable to Marshall‟s needs. Reason: As Marshall had stated his purpose for the car he was relying on the seller to provide suitable goods. The fact that the goods are described by trade name does not necessarily mean that the implied term of suitability for purpose is excluded. It only applies if the buyer does not rely on seller to determine whether the goods are suitable for his purpose.
Case: Australian Knitting Mills Ltd v Grant (1933) 50 CLR 387 Pg. 155 FPBL Legal Issues: Contracts, contents, terms implied by legislation. Sale of goods, implied condition requiring delivery of goods of merchantable quality. Facts: Grant bought woollen underwear made by the Australian Knitting Mill. Grant developed acute general dermatitis which was caused by small particles of sulphur in the underwear. Grant sued for breach of the term implied by s 14 (2) of the Sale of Goods Act SA which required goods to be of merchantable quality. Decision: There was no breach as the goods were of merchantable quality. Reason: All woollen underwear contained sulphur particles, which was being sold as underwear in large quantities and other people were not affected by the sulphur particles, therefore the underwear is merchantable. Dixon J said, “The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonable sound order and condition and without special terms.”
Case: David Jones Ltd v Willis (1934) 52 CLR 110 Pg. 184 FPBL Legal Issues: Contract, contents, terms implied by legislation. Sale of goods, implied condition requiring delivery of goods of merchantable quality. Facts: Willis bought shoes from David Jones. The third time she wore them the heel broke and she fell down stairs breaking her leg. Willis sued David Jones for damages on breach of contractual warranty. Decision: It was a term that the shoes should be of merchantable quality in these circumstances. Whether or not they were was to be decided by the jury. Reason: Starke J said, “The buyer has „a right to expect, not a perfect article, but an article which would be saleable in the market‟ under that description. Goods are not of „merchantable quality‟ if, in the form in which they are tendered, they are of no use for any purpose for which such goods are normally used, and hence not saleable under that description.
Case: George Wills & Co Ltd v Davids Pty Ltd (1957) 98 CLR 77 Pg. 197 FPBL Legal Issues: Contract, contents, terms implied by legislation. Sale of goods, implied condition requiring delivery of goods of merchantable quality. Facts: Davids Pty Ltd bought beetroots canned in vinegar from George Wills. Davids resold the beetroots at retail price, however after a year only a third had been sold. The remaining cans then went bad and had to be destroyed. Davids sued claiming they should have had a longer shelf life and were not of merchantable quality. Decision: The canned beetroot was of merchantable quality. Reason: Beetroot canned in vinegar has a normal shelf life of 12 months, Davids canned beetroot lived up to this standard therefore the beetroots were of merchantable quality.
Case: Sydney City Council v West (1965) 114 CLR 481 Pg. 263 FPBL Legal Issues: Contract, contents, (1) assent to express terms printed on ticket, (2) interpretation of exclusion clauses contra proferentem, „four corners‟ rule Facts: West parked his car in Sydney City Council‟s car park, while he was gone a thief stole his car. The thief claimed he had lost his ticket and the attendant gave him a duplicate. No checks were made to verify that it was West. West sued Sydney City Council for damages. The council denied liability as the ticket contained an express term that exclude the council of liability in the event of loss or damage to the vehicle. Decision: The exclusion term was a term of the contract but in these circumstances did not exclude liability for what happened. Reason: According to the contract, the car could only be removed by West presenting his ticket, any other way would be unauthorised. Giving the thief a duplicate ticket and allowing him to leave was unauthorised in terms of the contract, the exclusion clause only covers the acts permitted by the contract. Therefore the exclusion clause does not apply to these circumstances.
Case: Maritime National Fish Ltd v Ocean Trawlers [1935] AC 524 Legal Issues: Contract, performance, frustration, fault.
Pg. 225 FPBL
Facts: Maritime chartered a boat from Ocean Trawlers. Maritime had 5 boats included the Ocean Trawler boat but only received fishing licences for 3. They allocated the licences to their own boat and returned the boat to Ocean Trawlers claiming the contract had been frustrated by lack of a licence. Decision: The contract had been frustrated. Reason: It was Maritime‟s choice to not allocate a licence to the chartered boat. A contract cannot be frustrated by a deliberate act of either party which was the case for Maritime.
Case: Varley v Whipp [1900] 1 QB 513 Pg. 270 FPBL Legal Issues: Contract, contents, terms implied by legislation, sale of goods, duty to deliver goods as identified. Facts: Whipp bought a reaping machine from Varley that was described as only a year old and had only been used to cut a small number of crops. The machine that was delivered was considerably older and had been repaired. Decision: The seller had not delivered what was promised. Reason: The specific machine was sold by a description, however the machine delivered did not match the description. It is an implied term that goods sold by description must match that description when they are delivered. Therefore Whipp did not receive the goods he bought.
Case: Hoenig v Isaacs [1952] 2 A11 ER 176 Pg. 206 FPBL Legal Issues: Contract, breach, substantial performance, remedies for breach. Facts: Isaacs hired Hoenig to paint his apartment for £750. Isaacs was unsatisfied with the work and hired someone else to repair the work for £55. Isaacs then paid Hoenig only £400, Hoenig sued for the full amount. Decision: Isaacs was required to pay the full price any costs to repair Hoenig‟s work. Reason: Hoenig performed substantial performance since the faults were repaired at a modest cost. Therefore as substantial performance is only considered a breach of warranty, Isaacs was only entitled to damages which would equal the cost of repairs.
Case: Connor v Stainton [1924] 27 WALR 72 Pg. 180 FPBL Legal Issues: Contract, performance of a contract, substantial performance, breach of contract Facts: Stainton was hired by Connor to build a fence with posts 12 feet apart. The finished fence had many posts more than 12 feet apart. Connor refused to pay as performance was not substantial. Stainton claimed droppers placed in between the posts would make it as effective. Decision: There was not substantial performance. Reason: The contract specified the distance between posts. The fence that was erected was substantially different, even though with the droppers it would be just as effective it was not the fence that was promised, therefore the performance was not substantial and Stainton was not entitled to claim payment.
Case: Steele v Tardiani (1946) 72 CLR 386 Pg. 260 FPBL Legal Issues: Contract, breach, partial performance, acceptance of partial performance, duty to pay pro rata for accepted performance. Facts: Tardiani was hired to split wood into 6 inch widths. However the wood was split into pieces between 6 and 15 inches. Decision: Steele was required to pay for the work done. Reason: Even though Tardiani had only partially performed the contract, Steele had not rejected the larger pieces of wood or made Tardiani correct the width. Therefore Steele had accepted partial performance, relinquishing his right to insist on complete performance.
Case: Holland v Wiltshire (1954) 90 CLR 409 Pg. 206 FPBL Legal Issues: Contract, breach, late performance, remedies, termination of performance. Facts: Wiltshire sold land to Holland. Holland failed to pay by the deadline. Wiltshire informed him that if he did not pay by a new deadline that he would sue for breach. Decision (1): Wiltshire was entitled to damages. Reason (1): The contract was breached twice, when Holland failed to meet both deadlines. In the circumstances timely payment was considered a condition of the contract. There was a breach of condition by Holland which entitled Wiltshire to termination of the contract and damages. After the failed sale with Holland, Wiltshire resold the property at a lower price. He was entitled to the difference between the sale price and the price agreed with Holland in damages. Decision (2): Wiltshire had effectively terminated the contract. Reason (2): Wiltshire notified Holland that failure to pay after the second deadline would result in termination of the contract. Re-advertising and reselling the land was sufficient to communicate to Holland that the contract had been terminated.
Case: Hochester v De la Tour (1853) 1 CLR 846; 118 ER 922 Legal Issues: Contract, anticipatory breach, immediate right to sue.
Pg. 205 FPBL
Facts: De la Tour hired Hochester as courier. De la Tour informed him three weeks before the start date that he was no longer required. A week before Hochester was supposed to start he sued for breach. Decision: Hochester was entitled to sue. Reason: As De la Tour had made it clear he would not pay Hochester he had anticipatorily breached the contract, which gave Hochester the right to sue immediately for damages after he had been notified of the anticipated breach.
Case: Mahoney v Lindsey (1980) 33 ALR 601 Legal Issues: Contract, anticipatory breach, the choice to terminate.
Pg. 223 FPBL
Facts: Mahoney was selling land to Lindsay. Before the payment date Mahoney told Lindsay that he longer wanted to sell. Lindsay made it clear he would continue with the contract, however he did not attend a meeting to pay for property which is normally required. Mahoney claimed Lindsay‟s failure to attend the meeting and pay had breached the contract, therefore losing the right to enforce the contract. Decision: Lindsay had the right to enforce the contract. Reason: Mahoney had made it clear that Lindsay attending the meeting would be useless as he would not transfer the properties. In the circumstances Lindsay was excused from his obligations under the contract but was still able to enforce payment.
Case: Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 Legal Issues: Contract, performance, divisible contracts.
Pg. 247 FPBL
Facts: Phillips was hired to work 160 hours a month for two years. After some time he made an informal agreement with Ellinson Brothers to only work 60 hours a month. At the end of the two years he claimed full payment. Decision: Phillips was not entitled to claim payment. Reason: The contract was considered indivisible, therefore the original terms of the contract were required to be fulfilled for complete performance. The switch to 60 hour months meant that performance was only partially performed. Starke J said, “It is a principle of English law that the parties having contracted to do an entire work for a specific sum can recover nothing unless the work to be done or it can be shown that it was the other party‟s fault that work was incomplete or that there is something to justify the conclusion that the parties have entered into a fresh contract… If the contract be indivisible and not severable, then nothing can be recovered under the contract unless it is completed according to its terms or a new contract is made or is to be implied from the acts of the parties, giving rise to new rights.”
Case: Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 Legal Issues: Contract, performance, discharge, divisible contracts Pg. 198 FPBL Facts: Newfoundland Railway Co was contracted to build a new railway. One of the terms was that the government would grant 25,000 acres of land to the railway company for each five-mile stretch of railway. The project was ended after only seven five-mile sections were completed. Decision: The government were required to provide the land to the railway company. Reason: The terms of the contract made it clear that each grant of land was determined by the number of five-mile sections that were completed, not by completion of the entire railway line. Each completed section of railway created a new contract. Note: The decision appears to be based on the concept of divisible contracts.
Case: Radford v de Froberville [1978] 1 All ER 33 Legal Issues: Contract, remedies for breach, objectives of damages.
Pg. 250 FPBL
Facts: De Froberville bought land from Radford, a condition was to build a brick wall on the boundary. She then resold the land without building the wall. Redford claimed damages for the cost of the wall. Decision: Redford was entitled to damages worth the cost to build the wall. Reason: The point of damages is to put the non-defaulting party in the same position as if there had been no breach. For this case that meant the cost of the wall because the cost for the wall would have been the same if de Froberville hadn‟t defaulted.
Case: McDonald v Denny Lascelles (1933) 48 CLR 457 Pg. 227 FPBL Legal Issues: Contract, remedies for breach, the effect on the contract for terminating performance. Facts: McDonald bought land from Denny. Then failed to pay on time, so Denny terminated the contract. Decision: Terminating a contract on grounds of breach does not rescind the contract. Reason: Dixon J said, “When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected… when a contract… is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executor only and the party in default is liable for damages for its breach.”
Case: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8 Pg. 264 FPBL Legal Issues: Contract, breach of contract, claim for remedies, objective of damages for breach of contract. Facts: Bowen leased a building to Tabcorp. A condition was that there would be no renovations without consent from landlord. The foyer was remodelled without consent. Bowen sued for the cost of restoration of $1.3 million but was awarded $34,820, the difference of the buildings value with the new foyer. Bowen appealed for the full amount. Decision: Bowen was entitled to the full amount. Reason: When a contract is breached the party that suffers a loss is entitled to claim damages to the point where they would be if they breach hadn‟t occurred. In this case that meant the cost of returning the foyer to its original condition as this is the position Bowen would have been in if Tabcorp had not breached the contract.
Case: Koufos v Czarnikow Ltd (The Heron II) [1969] 1 AC 350; [1967] 3 All ER 686 Legal Issues: Contract, remedies for breach, damages, immediate loss Pg. 216 FPBL Facts: Koufos shipped sugar for Czarnikow to Basrah. The trip normally takes 20 days but because of unauthorised detours took 10 days longer. In the 10 days the price of sugar in Basrah dropped significantly. Czarnikow sued for damages to compensate for price drop. Decision: Czarnikow was entitled to claim damages for the price difference. Reason: Koufos taking 10 days longer to arrive at Basrah breached the contract and it was foreseeable that Czarnikow could suffer a loss as a result of fluctuating sugar prices. Therefore Czarnikow is entitled to claim damages for direct losses, which are losses that are fairly and reasonably considered to arise naturally.
Case: Hadley v Baxendale (1854) 2 CLR 517; 9 Exch 341 Pg. 200 FPBL Legal Issues: Contract, remedies for breach, damages, consequential loss. Facts: A part in Hadley‟s mill broke, stopping production. He hired Baxendale to take the part to manufacturer so they could copy it to make a new one. Baxendale promised to deliver the part the next day but didn‟t do so for several days. The mill was not operational during this time. Hadley sued for the lost profits. Decision: Hadley was not entitled to damages. Reason: It is expected that a mill would be able to replace a broken part quickly so stopped production was not foreseeable. This means Hadley would not be able to claim for direct loss. Also Hadley was not entitled to damages for consequential loss because he did not inform Baxendale that the mill would be out of operation until the part was delivered, therefore Baxendale did not consider that there would be a loss of profits caused by his failure to perform delivery the next day.
Case: McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 Legal Issues: Contract, remedies for breach, damages for wasted expenses.
Pg. 229
Facts: The Commonwealth Disposal Commission sold a wrecked tanker lying in the Jourmand Reef to McRae for £285. McRae spent more money searching for the tanker and reef however neither existed. McRae sued for damages including the price of the tanker and the cost of searching for it. Decision: McRae was entitled to claim damages for their wasted expenses. Reason: Both parties were aware that there would be costs to locate the tanker but McRae was entitled to damages as the commission could not prove the expenses would have occurred even if the tanker did exist. Note: This case involves the sale of a non-existent thing, and such agreements are not normally enforceable. However in this case, the commission had in effect guaranteed the existence of the tanker they sold to McRae.
Case: Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 Pg. 159 FPBL Legal Issues: Contract, remedies for breach, distress and disappointment. Facts: Dillon went on a 14-day cruise, the ship sank after 8 days. Dillon suffered from disappointment and distress as a result. She sued Baltic Shipping for damages for this. Decision: Dillon was entitled to damages for distress and disappointment. Reason: Normally one cannot sue for distress, disappointment or injured feelings. However in this case Baltic Shipping had implied Dillon would have an enjoyable time on the cruise. The sinking of the ship breached this term allowing her to sue.
Case: Lumley v Wagner (1852) 42 ER 687 Pg. 222 FPBL Legal Issues: Contract, remedies for breach, prevention of threatened breach of contract. Facts: Wagner contracted to sing in Lumley‟s theatre and promised to sing nowhere else during the contracted period. Lumley wished to enforce these promises. Decision (1): The court cannot force Wagner to sing. Reason (1): It is difficult to ensure Wagner will provide a good performance. Decision (2): An injunction was issued to prevent Wagner from performing elsewhere. Reason (2): To prevent a likely breach, an injunction will be issued. However if the injunction indirectly forces the act of a contractual promise that the court would not normally enforce the injunction will not be issued. The court found the injunction did not force Wagner to perform at Lumley‟s theatre.
Case: JC Williamson Ltd v Lukey (1931) 45 CLR 282 Pg. 212 FPBL Legal Issues: Contract, remedies for breach, specific performance, discretionary nature of remedy, adequacy of damages. Facts: Williamson leased a candy shop to Lukey for 5 years. Part of deal included exclusive rights to sell candy at Williamson‟s theatre. After 3 years Williamson allowed others to sell candy in the theatre. Lukey sued for breach of contract, asking for enforcement of his exclusive right to sell candy in the theatre. Decision: The court could not enforce Williamson to allow Lukey exclusive rights. Reason: To enforce this agreement would require the court to constantly monitor Williamson and Lukey to ensure the breach didn‟t occur again, which it cannot efficiently provide. Lukey was entitled to damages for breach of contract.
Case: Dougan v Ley (1946) 71 CLR 142 Pg. 187 FPBL Legal Issues: Contract, remedies for breach, orders of specific performance, damages not an adequate remedy. Facts: Dougan sold his taxi and licence to Ley, however changed his mind. Ley sued for specific performance, whereas Dougan claimed he was only liable for damages. Decision: Ley could enforce specific performance. Reason: Generally specific performance is not enforced if damages are adequate for remedy. However if the goods are unique or difficult to obtain elsewhere, specific performance can be enforced. In this case, taxi licences are restricted, so Ley would not be able to obtain one elsewhere easily.
Case: Buckenara v Hawthorn Football Club Ltd [1988] VR 39 Pg. 166 FPBL Legal Issues: Contract, remedies for breach, injunction to prevent threatened breach. Facts: Buckenara was contracted to play exclusively for Hawthorn. Hawthorn requested an injunction when it seemed likely Buckenara would play for a competing club. Decision: The injunction was granted. Reason: It was likely that Buckenara would play for another club, which would breach his contract. Also the injunction did not force Buckenara to play for Hawthorn. If it had the injunction wouldn‟t have been granted, however Buckenara could earn a living in other ways.
Case: Barton v Armstrong [1973] 2 NSWLR 598; [1975] 2 All ER 465 Pg. 160 FPBL Legal Issues: Contract, vitiating circumstances, duress, threats of physical harm. Facts: Barton purchased shares from Armstrong. He later claimed his life had been threatened by Armstrong. It was later proved that the threats had been made, but the court found Barton also had business reasons for buying the shares. Decision: The contract was able to be voided on grounds of duress. Reason: Once the threats were proven, Armstrong had to show that the threats had not contributed to Barton purchasing the shares. He was unable to do so, therefore Barton was able to terminate the contract if he wished.
Case: North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705; [1978] 3 All ER 1170 Pg. 237 FPBL Legal Issues: Contract, vitiating circumstances, duress, threats of economic harm. Facts: Hyundai was contracted to build a ship, with the price in US dollars. The value of the dollar then went down meaning that building the ship would not be profitable for Hyundai. They demanded that North Ocean Shipping (NOS) pay the difference the devalued dollar caused. NOS agreed to the new price only because delays in the building of the ship would cause financial loss on another contract. Consideration was provided by Hyundai for the increased price. Decision: NOS was unable to recover the additional money paid. Reason: Hyundai‟s threats forced NOS to agree to their new terms, as rejection would cause financial loss in the future. Therefore consent was obtained by duress. This allows the contract to be voided by the weaker party within a reasonable time. NOS had not tried to void the contract within a reasonable time and were therefore no longer entitled to void it.
Case: Allcard v Skinner (1887) 36 Ch D 145 Pg. 152 FPBL Legal Issues: Contract, vitiating circumstances, undue influence, presumption of undue influence, effect of delay in seeking relief. Facts: Allcard joined a religious order. She was required to give away all her property and chose to give it to the order she had joined. She later left the order, and 5 years after leaving decided she wanted her property back. She claimed that she had given it away because of undue influence by the order and therefore the contract should be set aside. Decision: Allcard was unable to void the contract. Reason: Even though the relationship between Allcard and the order was one that gives rise to the presumption of undue influence. The fact that Allcard had waited 5 years to reclaim her property meant that she had in effect affirmed the agreement without undue influence. If she had reclaimed the property within a reasonable time then the contract could have been voided on grounds of undue influence.
Case: Johnson v Buttress (1936) 56 CLR 113 Pg. 213 FPBL Legal Issues: Contract, vitiating circumstances, undue influence, proof of general undue influence. Facts: Buttress was an elderly man, who became dependent on the help of Johnson after his wife‟s death. He eventually moved in with Johnson. Johnson then took him to her solicitor where he changed his will to include her and transferred ownership of his house to her. After Buttress died, his son wanted transfer of the house voided. Decision: The transfer was voided on grounds of undue influence. Reason: The relationship between Buttress and Johnson was presumed to be one of undue influence because Buttress relied on Johnson and she supervised his affairs. To prevent the contract being voided Johnson had to prove his decision to transfer the house was of his free will, she was unable to do so. Therefore the transfer was void.
Case: Raffles v Wichelhaus (1864) 2 H&C 906 Pg. 251 FPBL Legal Issues: Contract, vitiating circumstance, mistake, errors that affect consensus. Facts: Wichelhaus bought cotton from Raffles. The cotton was to be shipped from India on the ship Peerless by the seller. There were two different ships due in Bombay at different time named Peerless. It was shown that each party was referencing different ships at the time of contracting. Decision: No binding contract existed. Reason: The fact that two ships had the name Peerless meant that reference to just Peerless was ambiguous. Therefore the contract does not show complete agreement on the ship to be used. The mutual mistake meant that unconditional agreement did not occur, so the contract will be made void.
Case: Leaf v International Galleries [1950] 2 KB 86 Pg. 218 FPBL Legal Issues: Contract, vitiating circumstances, mistake, objective unconditional agreement. Facts: Leaf bought a painting from International galleries of Salisbury Cathedral that they both believed was by John Constable. Leaf later discovered that is was not by Constable and wanted the sale voided on grounds of mutual mistake. Decision: The mistake that was made did not justify voiding the sale. Reason: The sale that was agreed upon was for „this painting of Salisbury Cathedral‟, there was no evidence in the contract that it had been for „a painting by John Constable‟. So the mistake is irrelevant as the sale was not on the condition the painting be by Constable.
Case: Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679; [2002] 4 All ER 689 Pg. 199 FPBL Legal Issues: Contract, vitiating circumstances, mistake, conditionality of agreement, mistakes regarding quality, special rules. Facts: Tsavliris was sending a tugboat to rescue a ship in danger of sinking, however it would take almost a week to reach the ship. Tsavliris contracted with Great Peace to stand by and rescue the crew if necessary. He later discovered there was a closer ship and tried to cancel the contract. Great Peace refused termination. Tsavliris claimed the contract was voidable because of their mutual mistake that Great Peace was the closest ship. Decision: The contract was not able to be voided. Reason: Even though Great Peace was further away they were still able to provide the service they were contracted for. The contract would only have been voidable if the mistake had meant that what they received was essentially different than they believed it to be.
Case: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Legal Issues: Contract, vitiating circumstances, unconscionable dealing
Pg. 178 FPBL
Facts: Vincenzo Amadio‟s parents agreed to mortgage their property to cover their son‟s debts. At the time they were not aware the business was failing, as Vincenzo and the bank were, also Vincenzo told them their liability was much less than in reality. The bank manager did not make sure they understood what they were liable for or explain the documents he brought for them to sign. When Vincenzo‟s company went bankrupt the bank tried to enforce the mortgage on the Amadio‟s property. Decision: The mortgage should be voided. Reason: As the arrangement is with their son, the relationship is expected to be one of trust and confidence so they would have trusted he had told them the full extent of his debts. Also the bank knew about the circumstances but did not do anything to make sure the Amadio‟s were fully aware of the level of liability they faced.
Case: Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395 Pg. 196 FPBL Legal Issues: Contract, vitiating circumstances, unconscionable dealing. Facts: Garcia borrowed money from NAB to fund his business but required security on the loan. He asked his wife to provide a property she owned as security. He assured her the business would not fail. When she went to sign the documents, the bank made no effort to ensure she understood the extent of the transaction and her liability. The business then failed and the bank wished to enforce the mortgage. Decision: The mortgage should be voided. Reason: The relationship between spouses is one of trust and confidence. Therefore it is not likely that a full explanation of the transaction would have been provided by Mr Garcia. As the bank failed to ensure that she was fully aware of the risks and her liability the mortgage will be voided because to enforce it would be unconscionable.
Case: Blomley v Ryan (1956) 99 CLR 362 Legal Issues: Contract, vitiating circumstances, unconscionable dealing.
Pg. 163 FPBL
Facts: Ryan owned a farm which he did not wish to sell. While he was drunk Blomley convinced him to sell the farm to him. Decision: The sale should be voided. Reason: Ryan was drunk impairing his ability to rationally enter into a contract, Blomley was aware of this. Taking advantage of Ryan to obtain his consent was unconscionable dealing on Blomley;s part,
Case: Lindner v Murdock's Garage (1950) 83 CLR 628 Pg. 221 FPBL Legal Issues: Contract, vitiating circumstances, illegal contracts, restraint of trade. Facts: Lindner worked as a mechanic for Murdock‟s garage at his Crystal Brook location. His employment contract contained a clause preventing him from working as a mechanic for a year in either of the towns that Murdock‟s garage operated in. Murdock‟s wished to enforce the clause when Lindner left their employment. Decision: The restraint clause was unenforceable. Reason: The fact that the clause referred to two separate towns made it unreasonable. Although Lindner might acquire knowledge about Murdock‟s customers in Crystal Brook, it would not apply to customers in the other town.
Case: Fitzgerald v F J Leonhardt [1997] HCA 17; 189 CLR 215 Pg. 193 FPBL Legal Issues: Contract, vitiating circumstances, illegal contracts, effect of penalties and prohibition. Facts: Leonhardt was employed to drill boreholes. A permit was required by the Water Act 1992 (NT), before the drilling began. Fitzgerald did not obtain the permit. When Leonhardt finished drilling, Fitzgerald refused to pay claimed the contract had been performed illegally. Decision: The contract was enforceable Reason: The Water Act only penalises drilling without a permit, it does not prohibit it. So boreholes can be drilled legally they just carry the extra cost of penalties.
Case: Rogers v Whitaker (1992) 175 CLR 479; (1992) Aust Torts Reports ¶81-189 Legal Issues: Tort, negligence, duty of care, breach of duty of care, relevance of defendant‟s special skills. Pg. 252 FPBL Facts: Whitaker was blind in one eye and consulted Rogers, an eye surgeon. Rogers advised a surgery that could probably restore sight. He did not warn her of any risks. The operation did not improve her sight and caused a rare condition in her other eye that eventually led to blindness. Decision: Rogers failed to warn Whitaker of the risks as was his duty of care as a specialist ophthalmic surgeon. Reason: Mason CJ, Brennan, Dawson, Toohey and McHugh JJ said, “The standard of reasonable care and skill required is that of the ordinary skilled person exercising and professing to have that special skill… in this case the skill of an ophthalmic surgeon specializing in corneal and anterior segment surgery…” “That standard is not determined solely or even primarily by reference to the practice followed or supported by a responsible body of opinion in the relevant profession to trade… The courts have adopted… the principal that, while evidence of acceptable medical practice is a useful guide for the courts, it is for the courts to adjudicate on what is the appropriate standard of care.”
Case: Hawkins v Clayton (1988) 164 CLR 539 Legal Issues: Tort, negligence, duty of care, liability of professionals
Pg. 203 FPBL
Facts: Clayton prepared Mrs Brasier‟s will, in which she named Hawkins as principal beneficiary. Clayton didn‟t contact Hawkins until six years after her death. By the time Hawkins was contacted, the main asset, her house, had fallen into disrepair and had lost a lot of value. Hawkins sued Clayton in negligence for damages. Decision: Clayton was liable in negligence. Reason: It was Clayton‟s duty to find Hawkins as soon as possible after Brasier‟s death. Clayton failed in this duty; therefore Hawkins was able to sue for any economic loss.
Case: Hole v Hocking [1962] SASR 128 Pg. 206 FPBL Legal Issues: Tort, negligence, liability for physical harm caused, acceleration of harm. Facts: The plaintiff suffered head injuries in a car accident caused by the defendant. The plaintiff then suffered a brain haemorrhage and brain damage. The evidence showed that the accident probably contributed to the haemorrhaging happening when it did but could not have if a haemorrhage wasn‟t going to occur at some point anyway. Decision: The plaintiff was not entitled to damages for harm that he would have suffered regardless of the driver‟s negligence. Reason: The defendant was not liable for something that would have happened anyway but he was liable for time which the haemorrhage was accelerated and for the amount the accident made it more severe.
Case: Waverly Council v Ferreira [2005] NSWCA 418 Pg. 272 FPBL Legal Issues: Tort law, negligence, breach of duty of care, the standard of care, statutory criteria. Facts: Martin Ferreira, aged 12, died after falling through a skylight of the community centre, which he gained access to from a fence adjacent to the building. Afterwards Martin‟s father suffered depression and chronic stress disorder. Mr Ferreira sued Waverly Council for damages for mental harm. Decision: The council had not done what a reasonable person would do to prevent foreseeable harm. Reason: In these circumstances, the council should have foreseen that a child might climb onto the roof and suffer serious harm if they fell from the roof. The court reasoned that a reasonable person would have removed the fence and installed a grill under the skylight to prevent the risk of foreseeable harm, which the council did not do.
Case: Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; 216 CLR 515 Legal issues: Tort law, negligence, duty of care, establishing a duty of care in cases of purely economic harm, „vulnerability‟. Pg. 274 FPBL Facts: CDG was hired to design foundations for a building; the owner chose not to do soil tests before it was built. Years after the building was built the owner sold it to Woolcock. A year after the sale, there were signs of stress in the structure, this was due to the settling of the soil or foundations. Woolcock sued CDG, claiming a duty of care and demanding damages. Decision: CDG did not owe a duty of care to Woolcock. Reason: Gleeson CJ, Gummow, Hayne and Haydon JJ said, “The vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. „Vulnerability‟, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, „vulnerability‟ is to be understood as a reference to the plaintiff‟s inability to protect itself from the consequences of a defendant‟s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.” In this case, Woolcock could have had the building inspected to avoid the risk of harm.
Case: Donoghue v Stevenson [1932] AC 562 Pg. 186 FPBL Legal Issues: Tort, negligence, duty of care, manufacturer‟s duty to consumer, product liability. Facts: Donoghue bought a bottle of ginger beer. After consuming some she discovered that there was a snail inside the bottle. She then claimed that she became sick with gastroenteritis because of the snail. She sued Stevenson, the manufacturer, for damages in negligence. Decision: Stevenson did owe Donoghue a duty of care. Reason: Lord Atkin said, “…a manufacturer of product, which he sells in such a form that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and in the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer‟s life or property, owes a duty to the consumer to take reasonable care.”
Case: Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 Legal Issues: Tort, negligence, duty of care, liability for misstatement causing purely economic harm. Pg. 257 FPBL Facts: Shaddock was interested in purchasing land. Their solicitor telephoned the council to find out if there were any projects that would affect the land. He was told there was not and requested a certificate saying this was so. After the land was bought by Shaddock it was discovered a proposal existed to acquire a third of the land. Shaddock sued the council in negligence. Decision: There was no duty of care from the advice given over telephone but there was from the certificate. Reason: Mason J said, “Whenever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to act on the information or advice, the speaker comes under a duty to exercise reasonable care in the provision of the information or advice he chooses to give.”
Case: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 Pg. 245 FPBL Legal Issues: Tort, negligence, the duty of care, relevant factors to be taken into account. Facts: Perre, a potato farmer, exports most of his crop to WA. The WA government prevents the import of potatoes grown within 20 km of an outbreak of potato disease. A farm near Perre grew diseased potatoes, the seeds of which were obtained from Apand. Apand had grown the seeds in an area that he knew was prone to disease. Perre was therefore unable to export to WA. He sued Apand in negligence for damages. Decision: Apand was held to owe a duty of care to Perre. Reason: In these circumstances a duty of care was owed by Apand because Perre was part of a specific group of persons and was dependent upon the responsible action of Apand. There was a foreseeable risk of disease because Apand knew the area was prone and could therefore have seen the potential harm.
Case: Imbree v McNeilly [2008] HCA 40 Pg. 210 FPBL Legal Issues: Tort, negligence, breach of the duty of care, determining the standard of care, contributory negligence. Facts: Imbree let McNeilly, a 16 year old unlicensed driver, to drive his car on a gravel road. While driving McNeilly swerved to avoid debris on the road. The car overturned and Imbree was injured and was left paralysed. He sued McNeilly in negligence. Decision (1): The standard of care required is determined by reference to a standard licenced driver. Therefore McNeilly owed a duty of care to Imbree. Reason (1): The court found that regardless of the fact that McNeilly was inexperienced he was still subject to the same standard of care as any other driver. Also the standard of care required of children is lower than the standard of care required of adults and drivers that profess particulars skill are subject to a higher standard of care. Decision (2): Imbree contributed to his injuries by his own negligence. Therefore responsibility for the harm was split between both parties. Reason (2): Imbree should have instructed McNeilly how to react to the debris on the road. His failure to do so was negligent. It was decided he contributed to 30% of any consequent harm.
Case: Adeel Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] HCA 48. Legal Issues: Tort, negligence, elements of liability, causation of harm, the „but for‟ test Pg. 151 FPBL Facts: Adeels operated a restaurant in Sydney. A fight broke out on the dance floor. One of the people involved in the fight left the restaurant and returned later with a gun. Then shot Mr Bou Najem and Mr Moubarak. Both men sued the restaurant in negligence, claiming that not having security guards they had failed in their duty of care to patrons. Decision: The lack of security guards had not caused the harm therefore Adeels was not liable. Reason: The court said, “In the present case… the „but for‟ test of factual causation was not established. It was not shown to be more probable than not that, but for the absence of security personnel (whether at the door or even on the floor of the restaurant), the shootings would not have taken place. That is, the absence of security personnel at Adeels Palace on the night the plaintiffs were shot was not a necessary condition of their being shot.
Case: McWilliams Wines v McDonalds System of Australia (1980) 33 ALR 394 Pg. 230 FPBL Legal Issues: Contract, vitiating circumstances, s 52, Trade Practices Act, misleading conduct. Facts: McWilliams advertised a certain wine as a „Big Mac‟. McDonald‟s who sells the „Big Mac‟ burger claimed that McWilliams using „Big Mac‟ was misleading conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) because people might confuse the wine for a McDonald‟s product. Decision: McWilliams was not in breach of the act. Reason: McWilliams advertising did not suggest a connection to McDonald‟s in any way. If consumers that did make that mistake, it would not be because of McWilliams. Therefore there was no misleading conduct by McWilliams.
Case: Concrete Constructions (NSW) Pty Ltd v Nelson 1990 HCA 17; (1990) 169 CLR 594 Legal Issues: Trade Practices Act, s 52, misleading conduct, meaning of „in trade or commerce‟ Pg. 179 FPBL Facts: Nelson was a worker on a Concrete Constructions building site. The foreman gave misleading information to Nelson about a grate at the entrance to a shaft. He fell down the shaft as a result. Nelson sued for a breach of s 52 of the Trade Practices Act 1974 (Cth), claiming the foreman had engaged in misleading conduct in trade and commerce. Decision: Concrete Constructions had not breached the Trade Practices Act. Reason: The term „in trade or commerce‟ is interpreted narrowly by the courts. It only applies to conduct that relates to the operation of the business. In this circumstance this definition did not apply, therefore there was no breach by Concrete Constructions.
Case: Garry Rogers Motors v Subaru (Australia) [1999] FCA 903; (1999) ATPR 41-703 Legal Issues: Contract, vitiating circumstances, s 51AC, Trade Practices Act, unconscionable conduct. Pg. 196 FPBL Facts: Garry Rogers Motors (GRM) was a franchised dealer for Subaru. When the franchise was renewed GRM was unwillingly to comply with certain new requirements. Subaru then decided to end the franchise deal with GRM. To which, GRM replied they would comply with all demands. However Subaru refused to reinstate the franchise. Decision: Subaru was not in breach of s 51AC of the Trade Practices Act. Reason: Section 51AC in this case refers to providing reasonable notice of termination in writing, including the reasons for termination. Subaru had provided 13 months‟ notice, and even though the reasons were not in writing they were well known to both parties. Even though one part was not fully satisfied it was not enough to equal unconscionable conduct.
Case: Yorke v Treasureway Stores 1983 ATPR 40-336 Pg. 274 FPBL Legal Issues: Contract, vitiating circumstances, s 52, Trade Practices Act, misleading conduct, liability of principal. Facts: Yorke bought a shop from Treasureway. Treasureway used Ross Lucas as an agent for the negotiations. Ross passed on information from Treasureway saying that the shop had a weekly turnover of $3500, which was actually wrong. Yorke relied on this information when he bought the shop. He sued Treasureway and Ross for conduct in breach of s 52 of the TPA. Decision: Treasureway and Ross were both liable for a breach of s 52. Reason: A corporation which has acted honestly and reasonably may therefore nevertheless be rendered liable to be restrained by injunction, and to pay damages, if its conduct has in fact misled or deceived or is likely to mislead or deceive. The liability imposed by s 52, in conjunction with s 80 and 82, is thus quite unrelated to fault. Note: Ross would not have been liable, if he had disclaimed responsibility for the accuracy of the information.
