1. Copyright Guy Harley 2008 1 Revision

2. Copyright Guy Harley 2008 2 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

3. Copyright Guy Harley 2008 3 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

4. Copyright Guy Harley 2008 4 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

5. Copyright Guy Harley 2008 5 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)

6. Copyright Guy Harley 2008 6 Categories of Misrepresentation  Fraudulent misrepresentation  Negligent Misrepresentation  Innocent Misrepresentation  Misleading & Deceptive Conduct  Term of Contract

7. Copyright Guy Harley 2008 7 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

8. Copyright Guy Harley 2008 8 Discharge of Contract

9. Copyright Guy Harley 2008 9 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

10. Copyright Guy Harley 2008 10 Termination by Performance  Where the parties wholly or substantially perform their obligations under the contract, the contract is discharged  Hoenig v Isaacs

11. Copyright Guy Harley 2008 11 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

12. Copyright Guy Harley 2008 12 Entire Contract Exceptions  Substantial performance  Partial performance  Divisible contracts  Tender of performance  Prevention of performance

13. Copyright Guy Harley 2008 13 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

14. Copyright Guy Harley 2008 14 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

15. Copyright Guy Harley 2008 15 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

16. Copyright Guy Harley 2008 16 Tender of Performance If preforming party offers to complete contract and offer refused then performing party is discharged

17. Copyright Guy Harley 2008 17 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

18. Copyright Guy Harley 2008 18 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

19. Copyright Guy Harley 2008 19 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

20. Copyright Guy Harley 2008 20 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

21. Copyright Guy Harley 2008 21 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

22. Copyright Guy Harley 2008 22 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

23. Copyright Guy Harley 2008 23 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

24. Copyright Guy Harley 2008 24 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

25. Copyright Guy Harley 2008 25 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

26. Copyright Guy Harley 2008 26 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

27. Copyright Guy Harley 2008 27 Discharge by Breach Types of Breach  Failure to perform contract  Anticipatory breach

28. Copyright Guy Harley 2008 28 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

29. Copyright Guy Harley 2008 29 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

30. Copyright Guy Harley 2008 30 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

31. Copyright Guy Harley 2008 31 Restraint of Trade

32. Copyright Guy Harley 2008 32 Illegal Contracts  A contract must be legal  Consideration must not be  illegal or  contrary to public policy  Otherwise contract is void

33. Copyright Guy Harley 2008 33 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

34. Copyright Guy Harley 2008 34 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

35. Copyright Guy Harley 2008 35 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

36. Copyright Guy Harley 2008 36 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

37. Copyright Guy Harley 2008 37 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

38. Copyright Guy Harley 2008 38 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

39. Copyright Guy Harley 2008 39 Restraint of Trade  Invalid part can be severed to allow valid part to remain  Can be enforced by injunction