THE LAW OF COMMERCIAL CONTRACT Promissory Estoppel Sweeney & O’Reilly 1 st Ed. Chapter 5 pp 110 – nd Ed. Pp

THE LAW OF COMMERCIAL CONTRACT Promisory estoppel  A strict application of the rules of contract formation can lead to unjust results  Courts use equitable jurisdiction to intervene and prevent unfairness  Estoppel is used to stop a person from denying something that they have represented  Central London Property Trust v High Trees House (obiter dicta by Lord Denning) (S&OR p111\142)

THE LAW OF COMMERCIAL CONTRACT Promissory estoppel  Applies where  No consideration exists  Formalities of making a contract have not been satisfied  Walton Stores v Maher (S&OR p114\146)

THE LAW OF COMMERCIAL CONTRACT Elements 1.Assumption The promisee, on reasonable grounds, believes that a particular legal relationship exists or will exist 2.Inducement The promisor created the assumption 3.Reliance Promisee acts in reliance on promise 4.Detriment Promisee alters its position to its detriment

THE LAW OF COMMERCIAL CONTRACT Inducement  The promisor either  Induced the assumption; or  Being aware that the promisee had made the assumption, deliberately remained silent in circumstances where the promisor could reasonably have been expected to speak  The promise must be precise and unqualified  Legione v Hately (S&OR p113\144)

THE LAW OF COMMERCIAL CONTRACT The Assumption  The promisee on reasonable grounds assumed that a particular legal relationship  Existed; or  Would exist  Legal relationship includes:  A right to something  Release from an obligation  For the promisee or someone else  Now or in the future

THE LAW OF COMMERCIAL CONTRACT Reliance  The promisee acted (or refrained from acting) on the faith of the assumption.

THE LAW OF COMMERCIAL CONTRACT Detriment  The promisee will suffer a detriment if the promisor fails to perform the promise  Mere failure by the promisor to carry out the promise will not of itself amount to detriment  Je Maintiendrai v Quaglia & Quaglia (S&OR p114\145)

THE LAW OF COMMERCIAL CONTRACT Remedy  Minimum orders to prevent detriment  Not necessarily the same remedy as for breach of contract

THE LAW OF COMMERCIAL CONTRACT Section 52 Trade Practices Act Misleading & Deceptive Conduct Sweeney & O’Reilly 1 st Ed Chapter 3 pp 50 – 60 2 nd Ed pp Chapter 3 71 – 84

THE LAW OF COMMERCIAL CONTRACT Section 52 Trade Practices Act ‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’

THE LAW OF COMMERCIAL CONTRACT Elements  A corporation;  In trade or commerce;  Engages in misleading or deceptive conduct; and  Conduct is within scope of TPA.

THE LAW OF COMMERCIAL CONTRACT Scope  Trading, financial or foreign corporation; or  Operating in an Australian Territory; or  Involves an element of interstate trade; or  Conduct used postal, telegraph or telephone services; or  In the course of providing goods or services to the Commonwealth; or  Conduct by the Commonwealth or one of its instrumentalities

THE LAW OF COMMERCIAL CONTRACT Scope (cont.)  Fair Trading Acts extend scope ‘A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’ (section 9 Fair Trading Act (Vic))

THE LAW OF COMMERCIAL CONTRACT Exclusions  Certain financial services are excluded  These are covered by s12AD Australian Securities and Commissions Act which is similar to s52 TPA

THE LAW OF COMMERCIAL CONTRACT In Trade or Commerce  Very wide - applies to all ‘commercial’ conduct  Not just contracts  Not just consumer contracts  Covers:  Product claims  Statements made during the course of the sale of a business  Statements made during business negotiations  Statement by real estate agent during sale of house  Advice given by a professional person  Does not include statement of a personal nature  Political speech  Statement by house owner during sale of house

THE LAW OF COMMERCIAL CONTRACT Misleading Conduct  Does not have to be an express statement of fact  Half Truths Collins Marrickville v Henjo Investments (S&O p53\74)

THE LAW OF COMMERCIAL CONTRACT Misleading Conduct (cont.)  Silence  If the circumstances are unusual it may be unreasonable to remain silent  Demagogue v Remensky (S&O p54\75)  General Newspapers v Telstra (S&O p54\77)

THE LAW OF COMMERCIAL CONTRACT Misleading Conduct (cont.)  Opinions  An opinion is not normally misleading conduct unless  The opinion was not genuinely held  It is an opinion by an expert  If it is unsupported by the facts  RAIA Insurance Brokers v FAI (S&O p55\78)

THE LAW OF COMMERCIAL CONTRACT Misleading Conduct (cont.)  Promises & Predictions  Not normally deceptive conduct unless  A promise made by a person who has no intention of carrying it out  No reasonable grounds for the prediction (s51A(1) TPA)  Wheeler Grace & Pierucci v Wright (S&O p55\78)

THE LAW OF COMMERCIAL CONTRACT Misleading Conduct (cont.)  Promises & Predictions (cont.)  The onus is on the person making a promise or prediction to prove that he had reasonable grounds  section 51A(2) Trade Practices Act)  Futuretronics v Gadzhis (S&O p56\79)  Mere puffs  Not deceptive conduct

THE LAW OF COMMERCIAL CONTRACT Mental element  No requirement for:  Fraud; or  Negligence  Yorke v Ros Lucas (S&O p52\74)  Will not be liable if:  Not the source of the information; and  Disclaims responsibility

THE LAW OF COMMERCIAL CONTRACT Vicarious Liability  A corporation is liable for the conduct of its  Directors  Employees  Agents  Any person who acts at the direction or with the consent of the corporation Section 84(2)(b)

THE LAW OF COMMERCIAL CONTRACT Causation  Damages only if conduct caused loss  Futuretronics v Gadzhis  Sweetman v Bradfield (S&O p58\81)  No reduction for Contributory Negligence  I & L Securities v HTW Valuers (S&O p 82 2 nd Ed only)  Will change – Corporate Law Economic Reform Program Bill  Reliance  No loss caused by conduct if no reliance on it  Reliance not required for claims by competitors for false marketing  Does not have to be sole cause

THE LAW OF COMMERCIAL CONTRACT Disclaimers and Exclusion Clauses  Must be prominent to be effective against claims for misleading conduct  Bateman v Slayter (S&O p57\80)

THE LAW OF COMMERCIAL CONTRACT Remedies  Damages  Contract – restore plaintiff to position it would have been in if contract performed  Tort – restore plaintiff to position if tort not committed (i.e. restore plaintiff to pre-contract condition)  S 52 – Difference between plaintiff’s present position and the position it would have been in but for the misleading conduct  Can include loss of commercial opportunity

THE LAW OF COMMERCIAL CONTRACT Remedies  Damages  Can be awarded against corporation’s  Directors  Employees  Agents If they were involved in the conduct  Injunctions

THE LAW OF COMMERCIAL CONTRACT Remedies  Declaration  Court may declare contract wholly or partly void (s87 TPA)  Accounting Systems 2000 v CCH Australia (S&O p59\84)  Variation  Court can vary the terms of the contract  Mr Figgins v Centrepoint Freeholds (S&O p60\84)

THE LAW OF COMMERCIAL CONTRACT Criminal Representations  S 53 TPA creates criminal offences for certain false representations  Services are of a particular standard, quality, value or grade  Goods are new  A particular person has agreed to acquire goods or services  Goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits

THE LAW OF COMMERCIAL CONTRACT Criminal Representations  S 53 TPA (cont.)  Sponsorship, approval or affiliation of the corporation  Price  Availability of facilities for the repair of goods or of spare parts for goods  Place of origin of goods

THE LAW OF COMMERCIAL CONTRACT Criminal Representations  S 53 TPA (cont.)  The need for any goods or services  The existence, exclusion or effect of any condition, warranty, guarantee, right or remedy  All are covered by civil provisions of s52 TPA

THE LAW OF COMMERCIAL CONTRACT ProvisionTPAASICAVIC Misleading or deceptive conduct 5212DA9 Predictions51A12BB4 Injunctions8012GD149 Damages8212GF159 Other remedies8712GM158 Unconscionable conduct51AA12CA7 Unconscionable conduct – consumers 51AB12CB8 Unconscionable conduct – small business 51AC12CC8A & 8B