LAWS1204 Final: Contracts – answering problems guide
HEADINGS / ISSUES / RULE / APPLICATION / CONCLUSION
A new analytical/IRAC method
Once you have identified the relevant issue and applicable rule then you should address:
(i) the purpose of the doctrine or rule;
(ii) the content of the relevant rules;
(iii) the method for addressing those rules and
(iv) the analysis that flows from their application.
(i) Having ascertained that a particular doctrine or subset of rules is relevant you might want to begin your answer
with a statement encapsulating the policy rationale behind that area of law.
For example, where illegality is concerned it would make sense to begin with a statement of the underlying purpose
behind that set of rules.
That is, why has the common law established rules from which we can manage the illegality of a contract?
What are the competing principles that are at play?
(ii) You should then set out the relevant rules that apply to illegality (or whichever other area of law is relevant).
This is pretty much going to point you in the right direction with your analysis because setting out the rules more or
less groups together all of the sub-issues that you then need to explore.
It also identifies any latent rule v rule conflicts.
(iii) It might be helpful, but not always, to consider how other courts have addressed the relevant rules.
In particular, have the other courts worked out a test or formula?
Have they identified a set of considerations?
FACTUAL HOOKS
Sidhu v Van Dyke reliance loss, estopped, partner, reliance, promise, property, mistress/affair
Cth v Amadio limited English and literacy, misrepresentations, son and parents, unconscionable, constitutional
disadvantage
Louth v Diprose emotional dependency, relationship, manufactured an ‘atmosphere of crisis’, male solicitor manipulated
by woman with whom he was utterly infatuated. She made up false personal crisis and threatened suicide. His gift of a
property to her was set aside by the court. Emotional dependence can create disability.
Blomley v Ryan special disadvantage, capacity, intoxication, incapable of making business decision, coerced to drink, sold
grazing property at gross undervalue, was habitual drinker and occasion of sale was completely incapable of forming a
rational judgement about terms of any business transaction.
Kakavas gambling, did not accept that the appellant's pathological interest in gambling was a special disadvantage which
made him susceptible to exploitation by Crown. He was able to make rational decisions in his own interests, including
deciding from time to time to refrain from gambling altogether. Crown did not knowingly victimise the appellant by
allowing him to gamble at its casino, Where stronger party conducts itself reasonably and with no perceptible dishonesty it
is difficult to argue that weaker party has been treated unconscionably
Cth v Amann Aviation when the time for performance came, the plaintiff was not really ready to fulfil its contractual
obligations, coastal aerial surveillance, invalid notice served, reliance damages, loss-making contracts
Johnson v Buttress presumed undue influence, without receiving independent legal advice, man gave land and cottage to
D 3 yrs before death because D had been good to his wife etc. Admin of will challenged transfer. HC: voidable. Although
no proof of improper influence – man was illiterate, ignorant of affairs and person of strange disposition who did not
understand he had disposed of the property irrevocably. D could not rebut presumption of undue influence.
Edith White Undue influence is a doctrine of equity that allows a court to set aside a transaction that has been
unconscionably procured as a consequence of the relationship of the parties. The existence of some ‘ascendancy by the
stronger party over the weaker party such that the relevant transaction is not the free, voluntary and independent act of the
weaker party’. Requires an examination of the relationship between the parties
Associated Newspapers A term in the contract specified that the drawings of the Defendant would be displayed on a full
page, each week, on the front page, Plaintiff didn't do so on three days, “would not have employed the defendant unless it
had been assured that the defendant would perform his promise”
Tramways “at least eight hours per day”, breach of condition, display of ___**
Bridgewater v Leahy Unconscionable conduct, uncle/nephew, relevance of independent advice, will to daughters and
wife, HC: deed of forgiveness should be set aside because of Louth v Diprose. Unconscionable because of lack of
independent advice and Neil initiated suggestion of benefit.
Nelson illegality, a woman bought a house as an investment property which she registered in the names of her son and
daughter so that she could continue to receive a subsidy, daughter sued for share of money
Parking Eye penalty, parking, notices, recovery of loss
Fitzgerald illegality, F contract with licensed driller to drill holes. Sued F for money, F raised defence of illegality – no
permit issued under Water Act (NT), which imposed fine. HC: disallowed defence
Laurinda repudiation, reasonable time, notice, Capalaba was to construct the premises and register the lease. Capalaba
failed to register the lease and Laurinda eventually stopped paying rent, in the basis that the former
had repudiated the lease – Not repudiation
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Legione Instalment contract, time of essence, breach, estoppel, contract for land. Purchasers failed to pay by due date 10th
Aug. P told Miss Williams (secretary) that they could pay by 17th Aug. W said she thought it would be alright but would
have to get instructions. P attempted to pay on 15th Aug, but rejected.
Hadley v Baxendale damages, remoteness, delay prevented the plaintiffs working their steam-mills for the five days
comprising the delay, which in turn prevented them meeting supply of customers from their own mills, depriving them of
the profits
Koompahtoo serious breach, intermediate terms, joint venture agreement was signed to facilitate commercial property. K
provided land but S did not keep adequate financial records
Yerkey v Jones undue influence, husband and wife, secured his wife’s signature for security of a loan, protection of wives
who guarantee their husbands’ debts.
Yango statutory illegality, First Chicago provided a loan of $132,600 to Yango Pastoral. When Yango defaulted, First
Chicago sued to recover on the basis of a mortgage and guarantees that the former had provided. Yango argued that First
Chicago lacked authority to carry on a banking business in Australia under statute and that the contract was implicitly
illegal and unenforceable
Carr v JA Berriman builder entered into a contract with a landowner to build a factory on a property owned by the
former. Builder was required to complete excavation by a certain date. Landowner left building equipment on site and failed
to excavate on time – repudiation for builder
Clark v Macourt purchase of assets that were unusable, alternative supplier,
Kiriri v Dewani offence for leasor to receive any money other than rent. D paid unlawful amount to K for grant of lease.
Held: recoverable – purpose to protect tenants.
Farmer’s Co-op wife transferred interest as tenant in common in farming property (jointly owned by her and husband) to
husband. Evidence of long history of brutal violence by husband against wife, which end in murdering her. Court: Voidable.
Relationship of influence existed and presumption was not rebutted. Furthermore: evidence of actual undue influence.
Arcos breach of contract and whether or not a buyer of timber was entitled to reject timber on the basis that it did not
comply with the specified thickness in the contract
Hong Kong Fir ship had to be seaworthy – broken by the presence of trivial defects easily and rapidly remediable which
result in a total loss of the vessel
Tropical Traders time was of the essence. It was a condition of the contract that the deposit and instalments of the
purchase price be paid at times stipulated by a clause of the contract. Vendors accepted first three instalments late and fourth
instalment early. Asked for extension for final instalment. Wrote a letter about extension being “an act of grace…without
prejudice to an in no way varying the company’s right to strict enforcement of the contract”. Purchasers failed to pay final
instalment on time and next day vender notified purchasers of election to terminate the contract
Waterman v Gerling prompt and timely payment of instalments of an insurance contract was a condition of maintaining
cover under the policy. Insurance company accepted late payments and sent out notices to the insured, creating an estoppel
which restrained operation of the condition. Termination is not possible where estoppel has arisen
Bowmaker’s Barnet sued Bowmakers for tortious damages for conversion. The plaintiff had transferred machinery tools
to the defendant under an illegal hire purchase agreement. The defendant had kept some and sold some and refused to return
the tools. It argued that the tools did not have to be returned as the contract was illegal under statute. The court held the
plaintiff could sue in tort and not mention the illegal contract.
ESTOPPEL (proprietary)
HEADING: Can the contract be estopped?
Proprietary estoppel occurs where the relying party acts to his detriment on the faith of an assumption that the relying party
will be granted an interest in land.
2 types
1. Common law estoppel (estoppel by representation)
2. Equitable estoppel (future conduct / assumptions)
a. Promissory
b. Proprietary
b.i. Arises where there is a representation as to the future acquisition of ownership of property that
induces an assumption in another person, who relies on that assumption to their detriment (Sidhu
v Van Dyke)
Equitable estoppel – 6-part test for promissory estoppel (Walton v Maher: Brennan J)
1. Representation: The representation may be express or implied but must not be ambiguous or unclear.
a. Legione v Hateley, Mason and Deane JJ: “The requirement that a representation as to existing fact or
future conduct must be clear if it is to found an estoppel in pais or a promissory estoppel does not mean
that the representation must be express. …... Nor is it necessary that a representation be clear in its
entirety.”
a.i. Representation must be clear and unambiguous.
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b. How specific is the statement? Is it unequivocal (Cosmopolitan v Crown)?
c. CA: There’s ambiguity in the statement; where there is a high level of ambiguity in the representation, this
will not be sufficient to give rise to an estoppel (Australian Crime Commission v Gray).
c.i. CCA: Giumelli – analogise, not everything has to be perfectly clear (Legione)
2. Assumption: the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the
defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the
defendant would not be free to withdraw from the expected legal relationship;
a. Must relate to an esiting or expected legal relationship – Walton Stores per Brennan J; Mobil v Wellcome
b. Consider whether the relying party has adopted an assumption
c. Consider whether the assumption relates to mere facts or the parties relationship (Walton Stores)
3. Inducement: the defendant has induced the plaintiff to adopt that assumption or expectation
a. Normally the assumption will be induced by an express representation.
b. But an express promise is not required. It can be implied – Walton Stores
c. Inducement satisfies the causation requirement.
d. Was there coercive behavior?
e. Consider the role the person played in the representation
4. Knowledge: the defendant knew or intended him to do so;
a. Walton Stores v Maher, Brennan J held that the representor must know that the relying party has or will
act to their detriment. Knowledge will be present in most situations where a representation induces an
assumption, due to the proximity of the parties
5. Detrimental reliance: the plaintiff acts or abstains from acting in reliance on the assumption or expectation;
a. The relying party must have acted on the assumption in such a way that she will suffer a detriment if the
representing party is able to depart from the representation.
b. Two types of loss – expectation loss and reliance loss. Reliance loss is the key to detrimental reliance.
Financial loss incurred in the bargain
b.i. Must be substantial (Hawker Pacific; Thompson v Palmer)
c. Ashton v Pratt (No 2); Sidhu v Van Dyke; Australian Financial Services and Leasing Pty Limited v
Hills Industries Limited
d. Not a narrow or technical concept (Aust Financial Services)
e. Was there a material disadvantage or change in position? Aust Financial Services
f. Detriment does not need to be monetary (Thompson v Palmer)
6. Reasonableness: The plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not
fulfilled; and
a. The reliance must be reasonable.
b. (i) Did the relying party act reasonably in adopting the relevant assumption?
c. (ii) Did the relying party act reasonably in taking the detrimental action?
d. Cosmopolitan Hotel (Vic) v Crown Melbourne Limited
e. Mobil Oil – it’s not reasonable to rely on a promise that is forbidden by statute / is illegal
7. Unconscionable conduct the defendant has failed to act to avoid that detriment whether by fulfilling the
assumption or expectation or otherwise.
a. Dependent entirely on the facts
UNCONSCIONABLE CONDUCT (a party’s weakness or vulnerability)
HEADING: Did ____ act unconscionably? Was it unconscionable for ______?
Relief for unconscionable conduct can be granted when one stronger party knowingly takes unconscientious advantage of
the special disadvantage of another party.
In order for unconscionable conduct to be found it must be established that:
1. ____ suffered from a special disadvantage (Blomley); and
2. ____ had knowledge of ___’s special disadvantage (Amadio); and
3. ____ took unconscientious advantage of ____ (Louth).
1. Did ___ suffer from a special disadvantage? (Blomley v Ryan – situational (i.e. love – Louth v Diprose) or
constitutional (i.e. illiterate – Cth v Amadio))
a. Definition of special disadvantage (Blomley v Ryan, Kitto J): illness, ignorance, inexperience, impaired
faculties, financial need or other circumstances affecting his ability to conserve his own interests…
b. Option A: fits with Blomley (constitutional disadvantage)
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Document Summary
Headings / issues / rule / application / conclusion. For example, where illegality is concerned it would make sense to begin with a statement of the underlying purpose behind that set of rules. What are the competing principles that are at play? (ii) you should then set out the relevant rules that apply to illegality (or whichever other area of law is relevant). This is pretty much going to point you in the right direction with your analysis because setting out the rules more or less groups together all of the sub-issues that you then need to explore. It also identifies any latent rule v rule conflicts. (iii) it might be helpful, but not always, to consider how other courts have addressed the relevant rules. Sidhu v van dyke reliance loss, estopped, partner, reliance, promise, property, mistress/affair. Cth v amadio limited english and literacy, misrepresentations, son and parents, unconscionable, constitutional disadvantage.
