Contents of a Contract

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  1. Handbury v Nolan
    • contract; contents; representations and terms
    • Facts: cow, pregnant, but infertile.
    • Issue: Was expressly agreed term - cow fertile and pregnant?
    • Decision: Yes.
    • Reason: not mere opinion, statement of fact, intended to contractually binding, circumstances - breeders' sale, made just before bids were invited.
    • Note-because express term - not covered by clause in contract excusing seller from liability for breach of implied terms.
  2. Associated Newspapers v Bancks
    • contract; contents; terms; conditions and warranties; breach of contract; remedies; termination of performance
    • Facts: cartoonist, front page, page 3, Bancks terminate further performance.
    • Issue: Was promise to public on front page an essential term (condition), which would justify termination?
    • Decision: yes.
    • Reason: Promise is of such importance to promisee that he would not have entered into contract unless he had been insured of strict/substantial performance of promise.
  3. Bettini v Gye
    • contract; contents; terms; conditions and warranties
    • Facts: singer, missed rehearsale, Gye wanted to terminate future performance.
    • Issue: Was term requiring attendance at rehearsals condition?
    • Decision: Warranty, not condition. Not entitled to terminate.
    • Reason: Requirement of attending rehearsals didn't go "to root" of contract. No. of performances over long period of time, initial attendance at rehearsals not vitally affect whole contract.
  4. Oscar Chess Ltd v Williams
    • contract; contents; terms and representations
    • Facts: Williams took mothers car to dealer to trade in, documents wrong date model, dealer sued Williams for breach, claimed statement would age of car in document, promise, intended to be legally binding.
    • Issue: Was statement in documents legally binding?
    • Decision: Mere representation rather than contractually binding promise.
    • Reason: Dealer had special knowledge and expertise in cars, Williams did not. Williams did not intend for legally binding promise.
    • Other remedies for misrepresentations: s18, 29, 30 ACL, tort law
  5. L'Estrange v F Graucob Ltd
    • contract; contents; asset to express terms in signed document
    • Facts: cigarette vending machine, clause expressly excluded implied warranties or conditions, L'Estrange signed without reading. Vending machine broken, alleged breach of implied condition - reasonably fit for purpose it was bought.
    • Issue: Was L'Estrange bound by provision in contract excluding additional implied warranties/conditions?
    • Decision: Yes.
    • Reason: Clearly contractual document, not induced to do so by fraud/misrepresentation, agreed to be bound by terms.
  6. Causer v Browne
    • contract; contents; express terms in non-contractual document; unsuccessful attempt to include terms
    • Facts: dry cleaning docket, no responsibility, not drawn to his attention specifically, ruined dress.
    • Issue: Had docket statement excluded liability become term of contract?
    • Decision: No.
    • Reason: did not appear to be contractual document, or document likely to contain contractual terms. If Causer's attention had been drawn to it, result would be different.
  7. Moorhead v Brennan
    • contract; contents of contract; agreed terms; terms implied ad hoc
    • Facts: publisher exclusive right to produce, sell book, licence other publishers. Moorhead could terminate if Brennan failed to rectify any failures to comply with agreement. Overseas publisher offered to publish but did not want Brennan's intro statement.
    • Issue: Was a term implied ad hoc that Brennan would not obstruct opportunities for Moorhead to receive royalties from persons publishing book under licence?
    • Decision: Yes, implied. Moorhead justified in terminating.
    • Reason: Only way parties could have contemplated Brennan could publish book overseas - overseas publisher, Brennan had sole right to produce book - Moorhead had no other way of exploiting copyright.
    • Ad hoc requirements:
    • 1) term reasonable, equitable
    • 2) necessary to give business efficacy to contract
    • 3) sufficiently obvious to go without saying
    • 4) capable of clear expression
    • 5) did not contradict express terms
  8. Codelfa Construction v State Rail Authority
    • contract; contents; terms implied ad hoc
    • Facts: build tunnels, local residents obtained injunction, cost Codelfa extra money. Codelfa claimed payment from State Rail Authority.
    • Issue: Was term implied into contract, obliging State Rail Authority to pay for extra costs?
    • Decision: No term implied.
    • Reason: At time of contracting, did not intend to include term - hadn't been thought about.
    • Court declared contract frustrated - redraft it!
  9. Van de Esschert v Chappell
    • contract; contents; terms; proving orally agreed terms - partly written, partly oral contracts
    • Facts: immediately before agreeing to buy house, free from white ants, yes, but not in written contract.
    • Issue: Was Chappell entitled to lead evidence of a term, orally agreed, that house  free of ants?
    • Decision: Contract partly written, oral. 
    • Parol evidence rule - when written contract appears to be complete agreement, courts presume parties intended written contract to contain all agreed terms. Forbids orally agreed terms.
    • specific request before contract signed, regarded as term. Chappell entitled to prove existence of oral term in addition to written.
  10. Secured Income Real Estate v St Martins Investments
    • contract; contents; universal terms; duty to cooperate
    • Facts: St Martins purchased property from SI - price determined in part by extent to which space of building could be successfully let to tenants. To max price, SI applied to lease remaining space. Rejected.
    • Issue: Was rejection of SI's offer a breach of contract?
    • Decision: Implied term of contract to cooperate, but not breached.
    • Reason: Implied obligation to do all that was reasonably necessary to secure performance of contract. St Martins properly evaluated SI's merits as tenant, no breach.
  11. Perri v Coolangatta Investments
    • contract; formation; conditional agreement; universal terms; duty to cooperate; reasonable time for fulfilment of condition
    • Facts: Perri first sell property, then buy from CI. CI terminate because not done in reasonable time.
    • Issue: Had CI validly terminated further performance of contract?
    • Decision: Yes. Perri failed to sell within reasonable time. Unduly delayed completion of Cronulla sale.
    • Reason: Implied condition of agreement to do all reasonable to bring about sale of property, in reasonable time.
  12. Alcatel Australia v Scarcella
    • Contract; contents; universal terms; duty of good faith; pursuit of legitimate interests
    • Facts: lease, Alcatel should maintain building, pay for work required from govt. Scarcella asked local authority to inspect building, local authority asked Alcatel to insulate stairwell. 
    • Issue: Was term implied into contract by law, requiring Scarcella to act in good faith and ensure Alcatel not subject to expense of unreasonable fire order?
    • Decision: Seeking fire safety inspection not unreasonable exercise of Scarcella's power. No breach of duty.
    • Reason: Not contrary to good fair for lessor to take steps to ensure fire safety requirements carried out. Legitimate right to ensure building properly protected.
  13. Burger King v Hungry Jacks
    • contract; universal terms; duty of good faith; dishonest use of contractual power
    • Facts: BK force HJ sell out franchising rights. BK made it impossible for HJ to perform franchise obligations. BK gave notice of termination.
    • Issue: Did BJ owe a duty of good faith to HJ, and had they breached it?
    • Decision: implied by law. Breached by refusal to approve sub-franchise outlets.
    • Reason: BK obliged to exercise contractual powers honestly, reasonably, not for purpose outside contract.
  14. Australian Knitting Mills v Grant
    • contract; contents; implied by legislation; sale of goods; implied condition requiring delivery of goods of merchantable quality
    • Facts: itchy rash from underwear, sulphur in wool, merchantable quality implied into contract of sale.
    • Issue: Was underwear sold of merchantable quality?
    • Decision: Yes.
    • Reason: same underwear sold in market in large quantities to people not affected. Despite defect, goods merchantable.
  15. David Jones v Willis
    • contract; contents; terms implied by legislation; sale of goods; implied condition requiring delivery of goods of merchantable quality
    • Facts: comfortable walking shoes, 3rd time wore them, broke her leg.
    • Issue: Term of contract shoes of merchantable quality?
    • Decision: yes.
    • Reason: Buyer has right to expect article not perfect, but saleable in market. 
    • Goods not of merchantable quality if they are of no use for any purpose for which such goods are normally used, hence not saleable under that description.
  16. George Wills v Davids
    • contract; contents; implied by legislation; sale of goods; implied condition requiring delivery of goods of merchantable quality
    • Facts: resell beetroot, bacteria, unfit for consumption.
    • Issue: Did lack of "lasting quality" make canned beetroot unmerchantable?
    • Decision: Merchantable.
    • Reason: Normal beetroot canned has shelf life 1 yr. Tins had normal shelf life, so merchantable quality.
  17. Expo Aluminium v WR Pateman
    • contract; contents; terms implied by legislation; sale of goods; duty to deliver goods suitable for buyer's purpose
    • Facts: supply aluminium windows, informal, indirect way of telling manufacturer house would be fully exposed to strong winds/rain. Leak. 
    • Issue: Had Expo sufficiently indicated purpose for which windows were required, shown they were relying on Pateman to supply something suitable?
    • Decision: Implied term goods would be suitable. Breached.
    • Reason: Buyer sufficiently indicated. Buyer's reliance on seller to supply suitable goods can be established by inference - buyer stating his/her purpose.
  18. Baldry v Marshall
    • contract; contents; terms implied by legislation; sale of goods; implied condition requiring delivery of goods suitable for buyer's purpose; sale by trade name
    • Facts: asked for Bugatti, explained why wanted car. Car defective.
    • Issue: Was implied term of contract that car be suitable for buyer's purpose, even though it had been bought under trade name?
    • Decision: Yes. Buyer relied on seller to supply suitable goods, implied term, regardless of use of trade name.
    • Reason: Test is - did the buyer, in purchasing the goods by name, himself form the judgement that the goods would be suitable for his purpose, without reliance on seller?
  19. LG Thorne v Thomas Borthwick
    • contract; contents; proving orally agreed terms; sale by sample; parol evidence rule
    • Facts: bought oil, given sale to test, document signed but no mention of sample. Oil delivered different to sample.
    • Issue: Was it part of the agreement that sale made reference to sample?
    • Decision: No reference to sample in agreement, not "by sample".
    • Reason: buyer needed to show sale by sample.
    • Written contract no reference.
    • Written contract appeared, on its face, to be complete and workable agreement. Parol evidence rule applied - excludes evidence of additional orally agreed terms.
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Contents of a Contract
2013-06-10 05:29:51
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Chapter 6
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