Presentation on theme: "CLAW 5001 GROUP ASSIGNMENT Question 8- Jackhammer Pty Limited v NSW Robyn Paipai Grace Emma Kevin."— Presentation transcript:
CLAW 5001 GROUP ASSIGNMENT Question 8- Jackhammer Pty Limited v NSW Robyn Paipai Grace Emma Kevin
CLAW 5001 Key Facts Jackhammer and NSW Government (NSW) Contract signed on 1 Jan about a tunnel construction. No later than 1 Jun. 2007, 24 hours, 7 days. Statement made by NSW during the negotiation which is not included in the written contract due to oversight: “ For any reason outside of Jackhammer ’ s control, it could not carry out its work 24 hours per day, seven days per week, it would be given an extension of time of a maximum of 12 months within which to complete its work and be paid an additional $10,000 each such month. ” Injunction obtained on 1 Feb by Woollahra residents.
CLAW 5001 Statement Statements Existence Proved Nature How could the statement influence the written contract? Existence Unproved What could Jackhammer do?
CLAW 5001 Existence Proved Is the statement a promissory statement, or merely a representation?
CLAW 5001 Nature of the Statement Tests “ 1. How close in time to the completed contract was the statement made? 2. Was the statement followed by a reduction of the terms to writing and. If so, was the statement included? 3. Did one party have special knowledge or skill on which the other was entitled to rely? 4. How important was the statement in the minds of the parties? ” (Graw, 2005) Case: Oscar Chess Ltd v Williams (1975) 1 WLR 370
CLAW 5001 Nature of the Statement (cont’d) In This Case It is a very clear statement which should not create any disagreement of interpretations. It is likely that the statement is important in the minds of both parties due to the involvement of delay and additional payment compared to basic contract terms. The statement should have been included in the written contract but was missed due to the oversight of both parties. Therefore, the statement made by NSW should be a promissory one but not merely a representation in nature.
CLAW 5001 Legal Effect of the Statement The Parol Evidence Rule (Stated in Mercantile Bank of Sydney v Taylor (1981) 12 LR (NSW) 252) “ Where the contract appears in the writing to be entire, it is presumed that the contract contains all the terms of it and evidence will not be admitted of any previous or contemporaneous agreement which could have the effect of adding or varying it in any way. ” It aims to prevent any extrinsic evidence which might add, or vary the written contract, including not only oral evidence, but also any other kinds of document involved in the negotiations leading up to that written contract. (Graw, 2005)
CLAW 5001 Legal Effect of the Statement (cont’d) Exclusion of Parol Evidence Rule Mistake: In this case, it is described that the statement was not included due to the oversight of both parties, which is obvious a mistake made by both parties in reducing the agreement to writing. Therefore, the promissory statement could be added into the written contract as a new term. Extrinsic Evidence: (Pao On v Lau Yiu Long (1980) AC 614) Additional consideration that could be added into the contract to prove the real and full consideration of the parties.
CLAW 5001 Legal Effect of the Statement (cont’d) Implied Terms In Fats/By Law/By Customs In certain situations, it might be obvious that certain terms were intended by both parties but, due to inadvertence, bad drafting or other reasons, were not included in the written contract. And the court may find the terms should be given effect, through implication, to implement what parties intended. (Graw, 2005) Related Case: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
CLAW 5001 Legal Effect of the Statement (cont’d) In This Case 1. The contract is formed via negotiation between two parties. 2. It is obvious that the term which will be sought to be implied goes without saying because it has been well discussed in the negotiation and even a promissory statement was made. 3. It should have, but not been included in the contract due to inadvertence of both parties. A term similar as the statement could be implied.
CLAW 5001 Existence Unproved Injunction: It prevents Jackhammer working as planned to carry out its work 24 hours per day, seven days per week. Does it leads to Frustration?
CLAW 5001 The Effect of the Injunction- Frustration Five Conditions Supervening Event Fundamental Change No Fault of Any Party Parties didn’t considered the supervening event when the contract formed Unjust if the parties Perform based on the Original contract Frustration
CLAW 5001 The concept of “impossibility” is crucial to the doctrine of “frustration” Impossibility Absolute impossibility Radical difference Supervening illegality Futility Frustration Radical difference: it means the situation where performance has become radically difference from what was contemplated by the original contract
CLAW 5001 Application of This Case Frustration Injunction Delay performance Additional cost Radical difference
CLAW 5001 Application of This Case (cont’d) Supervening event Injunction Radical difference Both parties haven’t fault----Injunction is out of control Injunction didn’t exist when the contract formed Unjust burden of performance Injunction 10:00pm – 6:00am Additional Cost
CLAW 5001 Conclusion Therefore, the injunction can lead to frustration, which Jackhammer could rely on to seek its legal rights against NSW.
CLAW 5001 Consequences of the Injunction Consequences of the Injunctions Statement is a term NSW insists its statement in the dispute Anticipatory Breach Termination Accrued Rights and Liabilities Continuous Performance Follow what the term says Existence cannot be proved Frustration
CLAW 5001 Anticipatory Breach --- “ An anticipatory breach arises where, prior to the time appointed for performance by the promisor, the promisee justifiably terminates the performance of the contract. The promisee ’ s termination will be justified if the words or conduct of the promisor, or the promisor ’ s actual position, give rise to a repudiation of obligation or indicate that the promisor was wholly and finally disabled from the performing the contract. ” (Carter and Harland, 2002) Rule of Election: Continuous performing, or Terminate the contract
CLAW 5001 Accrued Rights and Liabilities Termination is different from rescission because it will not rescind the contract from the beginning, which makes accrued rights and liabilities become an issue. (Carter and Harland, 2002) If either Jackhammer or NSW has performed certain obligations prior to the frustration which have not received equal performance and thus lead unjust enrichment, for justice, related performances should be compensated even the contract has already been frustrated. Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361
CLAW 5001 Recommendation for Jackhammer Statement Proved Unproved Existence Status Nature Rule of Election Dispute Solved Anticipatory Breach Continuous Termination Injunction as Frustration New contract Exclusion Of the Parol Evidence Rule Implied Terms Part of Contract
CLAW 5001 Recommendation for Jackhammer Try to prove the existence of the statement and claim it as a part of the contract by resting on exclusions of the parol evidence rule or rule of implied terms. Rely on frustration to terminate the contract if existence cannot be proved. New contract can be signed between NSW and Jackhammer to finish the tunnel after the termination.