BSB111 final exam paper summer school

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Queensland University of Technology
Management and Human Resources

Simple contracts-required consideration&unless required by law(eg. Sale of land)/writing,spoken&both Essential to form a contract1Intention(agreement is social,domestic=Not legai relations=presumed to not be a binding contract/agreement is commercial nature=do creating legal relations=being a binding contract)Social/domestic arrangements are presumed NOT to be legally binding(Balfour v promises sick wife)/This presumption can be rebutted if there are serious consequences(Wakeling v moved to Aus)/(Commercial)Anyone wishing to rebut the social presumption does not bear a particularly heavy burden of proof(Edwards v Skyways not pay redundancies)←Presumed TO have intention to be bound&This presumption can be rebutted(eg.Honour clause:where the parties agreed that deal was binding in honour only(Rose & Frank Co v J R Crompton & Bros Ltd)Letters of Comfort:They are meant to provide comfort, not assurance and are not promissory in nature(Kleinwort Benson Ltd v Malaysia Mining Corporation Berhad),key is looking at the language is it guarantee of a loanORjust a statement? 2Agreement(once parties intended to legal relations,is there a valid offer&been accepted?)Offer:R1,offers must be distinguished from an invitation to treatORrequest for information(BUTinvitations to treat is NOT an offer and cannot be accepted. Goods displayed on shelves or shop windows are considered to be an invitation to treat(Pharmaceutical SocietyVBoots Cash invitation to treat)/Advertising of goods or services in newspapers or on radio, television or Internet are generally considered to be an invitation to treat(Partridge v Crittenden)but sometimes can be held to be an offer(Carlill v Carbolic Smoke Ball)vending machines aren’t invitation to treat.Why? For the same reason that goods on display in a window shop are invitations to treat–commercial reality and practicality.Responding to a question does not itself create an offer (Harvey v Facey)A party who supplies information that has been requested is not intending to be bound by that response and as a result, it is not usually viewed as an offerR2,offers must be communicated to the person/persons for whom it was intendedR3,An offer may be made to a particular person to class of persons or to the whole world(Carlill v Carbolic Smoke Ball Co eg.Advertisements/catalogues:Invitation to treat, unless there are specific terms in the advertisement which demonstrate an intention to make an offer)R4,Offers may be terminated at any time prior to its acceptance.Offers can be terminated by:Revocation(ie the offer is withdrawn by giving notice to offerees).This can happen even if the offer had promised that the offer would remain valid for a certain period of time, so long as the offeree has not paid anything for that promise(Eg.Dickinson v Dodds (offer revoked)/Byrne & Co v Leon Van Tienhoven & Co (revoked too late))Rejection or counter offer (Hyde v Wrench eg.An offer may be terminated by the offeree through their words or conduct. It may also be terminated impliedly by an counter-offer which also amounts to a rejection of the original offer)Lapse of time: either at a time specified by the offeror, or else a ‘reasonable’ time (Ramsgate Victoria Hotel Co Ltd v Montefiore eg If A offers to sell his car to B, offer to remain open until midnight on Friday, B cannot accept the offer on the Saturday morning. The offer lapsed at midnight.If no time specified–depends on circumstances of each case. Offer will be short-lived in the case of perishable goods, whereas in the case of land, the offer will remain open for a longer time, but not indefinitely)Acceptance:R1,Acceptance must be in reliance on the offer.writing, oral, both&contract. a person cannot accept something that they don’t know about(R v Clarke eg.unknowing about reward gave info on criminal)R2:Unless dispensed with,acceptance must be communicated to the offeror,by the offeree.Silence on its own on the part of the offeree is insufficient (Felthouse v Bindley)Silence can be acceptance where the offeree says they’ve accepted if nothing further is communicated by a certain time”if you don’t hear from me by Friday, consider the goods mine”. Thus the offeree volunteers to take on a positive duty to reject the offer.Acceptance must be made in accordance with the terms of the offer so where the offeror specifies a particular method of acceptance, it must be followed exactly(Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd)Postal Acceptance Rule(PAR):If acceptance by post was contemplated by the parties, acceptance occurs when the letter is posted, not when it is actually received (Adams v Lindsell)Revocation of the offer by letter:to be effective must be received by the offeree before they post their letter of acceptance(Byrne v Van Tienhoven)As stated, the PAR is more of an exception than a rule. Instantaneous forms of communication (phone, fax etc) require actual receipt of the acceptance)The rule about instantaneous communications between the parties is different from the rule about the postR3:Must be absolute and unqualified:Acceptance with a condition attached is not acceptance(Masters v Cameron)-“I’ll accept if you do this”R4:Acceptance cannot be revoked.Once the offeree accepts the offer,an agreement has been reached.Offeree cant change their mind after accepting unless the offeror agrees to release them from the contract 3Consideration/Consent(price of the contract/u pay to buy&others promise)1Consideration is essential to the validity of every simple contract2Consideration that is too vague, illegal or impossible is not valid consideration(White V Bluett eg.Walking to Melbourne to Sydney in one day isn’t real consideration)3Consideration must move from the promise(Dunlop Pneumatic Tyre Co Ltd v Selfridge)4Consideration may be present(executed)OR future(executory)but may NOT be past(Roscorla v Thomas)A contract can exist if there was an implied understanding that complying with the request would be ultimately paid for once completed(Lampleigh v Braithwait)5Consideration must be sufficient not adequate.Consideration does not need to be at commercial rates but it must have some legal value even if it a ‘token’ value(Chappell & Co Ltd v Nestle Co Ltd)Repeating an existing duty imposed by law is not sufficient consideration(Collins v Godefroy)Existing duty imposed by law:If you’re already legally obliged to do something, you cannot offer it as consideration(Glasbrook Bros Ltd v Glamorgan County Council eg.patrolling mine by minimum staff and asking for pay for extra) Existing contractual duty:Repeating an existing duty owed to the promisor is not sufficient consideration(Stilk v Myrick)Where there is payment of a lesser sum in discharge of a debt, there is usually not sufficient consideration to support the discharge(Foakes v Beer)Part payment of a debt is not sufficient consideration to discharge the debt. If later you ask to pay less and the other party agrees, you have provided nothing of value to support the variation of the contract. This is known as ‘the rule in (Pinnel’s case)Eg.part payment is acceptable if: paid before the debt is due; (Pinnel’s case); paid in a different place or in different currency; if paid by a third party(Hirachand Punamchand v Temple) 4Consent:Misrepresentation;Mistake&Unconscionable Conduct(If Intention, Agreement&Consideration are present, we have a prima facie contract: If consent is not genuine, this may affect the validity of such a contract.The following will vitiate (invalidate) consent: Misrepresentation; Mistake; Unconscionability)There are 2 possible outcomes for contracts that lack consent:Void contract: A contract that does not exist,it is void ab initio(from the beginning)Voidable contract: A contract where the innocent party has the right to terminate it.This is called rescission. Rescission is not available after an unreasonable time delay or when restitution.Misrepresentation:A misrepresentation is a false statement of fact that induces the contract so that consent is not genuine(Whittington v Seal-Hayne)3 categories of misrep:Innocent: statement-maker does not know that the representation is false; Negligent: statement-maker is under a duty of care, and carelessly makes a false statement; Fraudulent: statement-maker knowingly or recklessly makes a false statement intending it to induce the contract(Derry v Peek)Remedies for misrep: Innocent: Rescind (cancel) the contract (Whittington v Seal-Hayne) (case of sanitary poultry farm). Negligent: Rescind the contract, damages are available in the tort of negligence Fraudulent: Rescind the contract, damages in the tort of deceit.Mistake of Fact–makes a contract void: Common mistake(both parties make same mistake) For it to be ‘operative’ (that is, to have an effect on the validity of the contract), The mistake must be about the existence of the subject matter of the contract(Leaf v International Galleries) Mistakes as to the quality, nature or value of the subject matter will not affect the contract at common law. They may, at the Court’s discretion, be voidable in equity(Leaf v International Galleries)Mutual mistake(both parties make different mistake…they are at ‘cross-purposes. To determine whether the contract is void or not–Would a reasonable person consider that there was an agreement between the parties? (Raffles v Wichelhaus eg.Wrong ship shipping cargo called Peerless)Unilateral mistake(one party makes a mistake the other party knows or should know of the mistake)The rule is that if a party signs a contract, they will generally be bound, whether they have read them or not(L’Estrange v Groucob) To be operative, the mistake must be:Mistaken identity of other party(Boulton v Jones, Lewis v Avery, Cundy v Lindsay; and Phillips v Brooks)(Taking steps to see who they deal with.)Mistake as to nature of the document(non est factum) The document signed was ‘fundamentally and radically different’ to what the plaintiff thought they were signing; The plaintiff is within the class of persons entitled to rely on the defence (blind, illiterate or must rely on others); To succeed in a plea of non est factum, it must be shown that (Petelin v Cullen)There is a heavy onus of proof on the person raising the defence.The class of persons who can raise this defence are limited to(Petelin v Cullen)/For a contract to be set aside on the grounds that it was unconscionable, the plaintiff must prove(Commercial Bank v Amadio)/ What amounts to special disadvantage is difficult to accurately define, but includes poverty, sickness, illiteracy, lack of education(Blomley v Ryan)Unconscionable Conduct:For a contract to be set aside on the grounds that it was unconscionable, the plaintiff must prove(Commercial Bank v Amadio) ←Plaintiff is under a ‘Special Disadvantage’ & Defendant takes ‘Unconscientious Advantage’ of that. Involves the stronger party taking unfair advantage of the weaker party’s disadvantage. /One person is at a special disadvantage which is - sickness, age, …, infirmity of body or mind ... illiteracy or lack of education, lack of assistance where assistance or explanation is necessary”(Blomley v Ryan )/Love a ‘special disadvantage’(Louth v Diprose )Term of contract Contract made up terms express(agreed on by the parties)or implied(by ACL or statute)classed as a condition/warranty,can be written,oral,both. 1Express TermsTerm or representation?The Court applies an objective test (Dick Bentley Productions Ltd v Harold Smith Motors Ltd)-1Time lapse between statement and final agreement-2What importance did the parties attach to the statement?- 3Did one of the parties have special skill or knowledge?The Parol Evidence Rule:For a contract in writing, other evidence (eg an oral statement) is not allowed to add to, vary or contradict the written document (Van Den Esschert v Chappell)Exceptions:Other evidence may be used if the written contract does not reflect the “whole of the agreement” (Van Den Esschert v Chappell)ORThe collateral contract is supported by consideration(De Lassalle v Guildford)/To enforce a collateral contract (the statement must be promissory(JJ Savage and Sons Pty Ltd v Blakney eg. where a statement about the estimated speed of a boat did not form a collateral contract)the collateral contract must be consistent with the main contract(Hoyt’s Pty Ltd v Spencer)If the inconsistency is from the operation of an exclusion clause in the main contract, it is possible for the collateral promise to override the exclusion clause(Mendelssohn v Normand Ltd)Because of this, a ‘whole of the agreement clause’ will also stop this exceptionCondition or Warranty?Once statement found to be term, and is admissible to contract, the next step is whether the term is a Condition(an essential term of the contract. If it is breached, the innocent party has the option of termination (i.e. to end the contract) and/or damages(Assoc
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