Copyright Guy Harley Revision

Copyright Guy Harley Elements of Misrepresentation  Statement of material fact  Statement was false  Statement was addressed to the representee before or at the time that the contract was entered into  Statement induced the representee to enter into the contract  Statement caused loss

Copyright Guy Harley Statement is a Fact  Statement of past or present fact  Not  a mere puff  A misstatement of the law  Statement of future intention  Unless no real intention at time of representation  Usually, not an opinion

Copyright Guy Harley Statement is a Fact An opinion can be a fact where:  No genuine or actual belief in its truth  No reasonable person could hold opinion  The representor has special knowledge  The existence of an opinion can be a fact

Copyright Guy Harley Statement is a Fact Silence will not normally suffice  Except  Distortion of a positive representation (half truths)  Altered circumstances  Where there is a fiduciary relationship  Where contract is of the utmost good faith (e.g. insurance)

Copyright Guy Harley Categories of Misrepresentation  Fraudulent misrepresentation  Negligent Misrepresentation  Innocent Misrepresentation  Misleading & Deceptive Conduct  Term of Contract

Copyright Guy Harley Negligent Misrepresentation  There was a misrepresentation  Representor owed a duty of care to representee  Representor failed to exercise the required standard of care  Loss, which was a reasonably foreseeable consequence of the misrepresentation, was caused by misrepresentation

Copyright Guy Harley Discharge of Contract

Copyright Guy Harley Discharge of Contract A contract can be brought to an end by: 1.Performance 2.Agreement 3.Frustration 4.Breach 5.A Term of the Contract 6.Operation of Law

Copyright Guy Harley Termination by Performance  Where the parties wholly or substantially perform their obligations under the contract, the contract is discharged  Hoenig v Isaacs

Copyright Guy Harley Entire Contract  If contract requires entire performance then obligations must be strictly completed  Entire performance required where anything less than full performance would significantly devalue the worth of the contract to the other party  Cutter v Powell

Copyright Guy Harley Entire Contract Exceptions  Substantial performance  Partial performance  Divisible contracts  Tender of performance  Prevention of performance

Copyright Guy Harley Substantial Performance  Contract discharged by completion of main part of contract  Performing party paid full price less value of shortfall  Hoenig v Isaacs  Bolton v Mahadeva

Copyright Guy Harley Partial Performance  Innocent party accepts incomplete work  Quantum meruit paid to performing party for reasonable cost of completed work  Acceptance must be a genuine choice  Sumpter v Hedges

Copyright Guy Harley Divisible Contracts  Contract split into divisible parts for purposes of payment  Performance of each part requires party to pay for that part  Treated as several separate contracts

Copyright Guy Harley Tender of Performance If preforming party offers to complete contract and offer refused then performing party is discharged

Copyright Guy Harley Prevention of Performance  Where performing party is prevented from completing his obligations by the other party  Performing party is discharged from contract  Performing party can sue for  breach of contract  Quantum meruit  De Barnaby v Harding

Copyright Guy Harley Discharge by Agreement  Parties to the contract agree to discharge their obligations to one another  This latter agreement will only be binding if:  It is a valid contract; or  Promissory estoppel arises

Copyright Guy Harley Discharge by Agreement  The contract to discharge is subject to usual contractual rules e.g. economic duress  Bilateral discharge Mutual release of obligations under original contract can be sufficient consideration  Accord & Satisfaction Where one party has performed contract, the non-performing party must provide fresh consideration

Copyright Guy Harley Termination by Frustration Where:  An intervening event;  Not contemplated by the parties;  Makes performance  impossible; or  Radically different to that originally contemplated the contract is automatically terminated

Copyright Guy Harley Termination by Frustration - Examples  Destruction of Subject Matter  Taylor v Caldwell  Personal Service  Condor v The Barron Knights Ltd  Non-occurrence of an Event  Krell v Henry  Event must be central not merely a motivation  Herne Bay Steamboat Co v Hutton

Copyright Guy Harley Termination by Frustration - Examples  Supervening Illegality  Performance becomes illegal due to change in law  Denny, Mott & Dickson Ltd v Fraser & Co Ltd  Not just because performance becomes difficult or expensive  Tsakiroglou & Co Ltd v Noblee Thorl

Copyright Guy Harley Termination by Frustration (Cont.) Frustration does not apply where:  The event was caused by the party seeking to rely on the frustration  Maritime National Fish Ltd v Ocean Trawlers Ltd  Contract makes specific provision for the event  Clark v Lindsay  The party seeking to rely on frustration foresaw the event

Copyright Guy Harley Effect of Frustration  Contract is void from date of frustration (not ab initio)  Parties released from all further obligations  All contractual obligations owed before date of frustration must be performed  Chandler v Webster  Prepayments can be recovered where a compete failure of consideration  Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd

Copyright Guy Harley Frustrated Contracts Act 1988  Changes common law position  Court may order  a refund of monies paid under a frustrated contract  Compensation for any performance that occurred prior to frustration

Copyright Guy Harley Discharge by Breach  Cannot terminate for any breach no matter how slight  Can only terminate for breach of a condition  Other terms are called “warranties”  Breach of conditions allows the innocent party to terminate the agreement and sue for damages  Breach of a warranty only entitles the innocent party to seek damages

Copyright Guy Harley Discharge by Breach Types of Breach  Failure to perform contract  Anticipatory breach

Copyright Guy Harley Anticipatory Breach  Before time for performance, one party indicates intention not to perform contract Anticipatory breach  Hochster v De La Tour  Contract not automatically discharged  Innocent party may:  Treat contract as repudiated and claim damages, or  Perform the contract and claim contract price  Avery v Bowden

Copyright Guy Harley Termination by a Term of the Contract  Parties may have agreed that the contract would be terminated upon the happening or non-happening of a certain event  The term may be automatic or merely provide an option to terminate  Term may give only one party the option to terminate

Copyright Guy Harley Procedure for Termination  Terminating party must not affirm contract  Once terminated, terminating party cannot change mind  Termination means that the parties are relieved from all future obligations.  Termination does not affect rights and obligations that have already accrued  If not terminated, other party must continue to be able to perform contract

Copyright Guy Harley Restraint of Trade

Copyright Guy Harley Illegal Contracts  A contract must be legal  Consideration must not be  illegal or  contrary to public policy  Otherwise contract is void

Copyright Guy Harley Public Policy  Injurious to public life  Contrary to the nations foreign affairs (trading with the enemy)  Interference with administration of Justice  “injurious to the public good” but not serious enough to be illegal  Immoral contracts  Prejudicial to family life  Restraint of trade

Copyright Guy Harley Restraint of Trade  One party agrees to restrict their right to carry on a trade or business  Examples  Employee agrees not to work for employers competitor after end of employment  Vendor of business agrees not to open similar business  Business agrees to take supplies exclusively from one supplier

Copyright Guy Harley Restraint of Trade Restraint of Trade clauses are void because  Prevents person from earning a living  Deprives public of persons expertise  All citizens should be free to ply their trade

Copyright Guy Harley Restraint of Trade  A restraint of trade clause is only enforceable to the extent that it is reasonable  Nordenfelt v Maxim Nordenfelt  It will only be reasonable if it is  In the public interest (having regard to protection of competition), and  no wider than is reasonably necessary to protect the legitimate interests of the party relying on it  ICT v Sea Containers  Peters (WA) Ltd v Petersville Ltd

Copyright Guy Harley Restraint of Trade Factors to determine if restraint is reasonable  The nature of the activities being restrained  Protection of trade secrets is valid Foster v Suggett  Solely preventing competition is not valid Herbert Morris v Saxelby  Time span  Geographic extent  Papstravou v Gavan

Copyright Guy Harley Trade Secrets  Is it in the public domain or secret?  Does the employee have sufficient knowledge of the trade secret to exploit it  Did employee acquire this knowledge in the course of his employment

Copyright Guy Harley Restraint of Trade  Invalid part can be severed to allow valid part to remain  Can be enforced by injunction