1. Copyright Guy Harley 2008 1 Revision

2. Copyright Guy Harley 2008 2 Separation of Powers Designed to avoid concentration of power  Government functions divided into  legislative,  Executive  judicial  Different organs carry out each function  Parliament  Executive  Courts  Functions are kept separate

3. Copyright Guy Harley 2008 3 Separation of Powers (cont.)  Executive cannot  make laws or  adjudicate on contraventions of the law  Parliament cannot  adjudicate on contraventions of the law  Courts  Hears disputes between parties  Cannot make policy decisions

4. Copyright Guy Harley 2008 4 The Australian Constitution  Establishes 3 Branches of Government:  Chapter I - Federal Parliament  House of Representatives  The Senate  Chapter II – Executive  The Governor-General (Queen’s rep)  Government departments  Ministers  Chapter III - The Courts  High Court (s71)  Power to establish other federal courts

5. Copyright Guy Harley 2008 5 Responsible Government  Voters elect members of parliament  Major party in Parliament selects ministers  Ministers appoint the public servants  Public servants are responsible to their Minister  Ministers are responsible to parliament  Parliament is responsible to the voters

6. Copyright Guy Harley 2008 6 Australian Separation of Powers Strict Separation of Powers does not exist Ministerial responsibility Judiciary can invalidate legislation as unconstitutional Legislature can dismiss judges (joint sitting of parliament) Executive can dissolve Parliament and call new elections

7. Copyright Guy Harley 2008 7 Stare Decisis  Where a court has decided a case in a particular way, then subsequent cases involving similar facts should be decided in the same way  Precedent  Binding - Courts must follow a decision of a higher court in the same hierarchy  Persuasive - Courts will consider decisions of other courts

8. Copyright Guy Harley 2008 8 Precedent  Two Types  Mandatory  Persuasive  Persuasiveness depends on  quality of decision  jurisdiction of the court that gave the decision

9. Copyright Guy Harley 2008 9 Rules of Precedent  Lower courts must follow decisions of higher courts in the same hierarchy  A judge does not have to follow decisions of Judges at the same level. However, will be persuasive.  Judge does not have to follow decisions of higher court in a different hierarchy although they will be persuasive  Highest court in hierarchy can overrule its previous decisions

10. Copyright Guy Harley 2008 10 The Court’s Decision  Ratio Decidendi  Consists of those parts of the decision that were necessary to decide that particular case  Obiter Dictum  Statements made by Judge that are not necessary to decide the case  Remarks in passing

11. Copyright Guy Harley 2008 11 Duress  A contract entered into due to coercion or force can be rescinded  Coercion can be:  To the person;  To goods; or  Economic duress

12. Copyright Guy Harley 2008 12 Duress (cont.)  Duress to the Person  Threats of physical punishment or imprisonment to the person, his family or friends  Duress to Goods  Threats that are made against a person’s property

13. Copyright Guy Harley 2008 13 Undue Influence  The unconscionable use by one person of power possessed by him over another in order to induce the weaker party to enter into a contract  Mitchell v Pacific Dawn

14. Copyright Guy Harley 2008 14 Undue influence  Presumed in pre-existing special relationships where one party is in a position of trust and confidence  Called a “fiduciary relationship”  Cases  O’Sullivan v Management Agency (Graw 13.10.3)

15. Copyright Guy Harley 2008 15 Fiduciary Relationships  Parent & Child  Guardian & ward  Principal & Agent  Trustee & Beneficiary  Doctor & Patient  Lawyer & Client  Religious advisor & Follower  More

16. Copyright Guy Harley 2008 16 Where No Fiduciary Relationship  Weaker party must show that there is a relationship of dependence, trust & confidence  Stronger Party exerted undue influence to the extent that the weaker party could not exercise an independent judgment  There must be more than mere reliance or influence  Weaker party must show that the contract would not have been made without the undue influence

17. Copyright Guy Harley 2008 17 Where No Fiduciary Relationship  Court will look at:  The equality of the bargain  The weaker party’s ability to make free and independent choices  Domination by one party  Dependency on another  Need for guidance, advice and support  Low intelligence, weak mindedness, illiteracy  Age & Health  Lack of independent financial or legal advice

18. Copyright Guy Harley 2008 18 Rebutting Undue Influence  Party in weaker position made an independent decision of their own free will  No pressure or influence as weaker party encouraged to seek independent advice  Weaker party was paid market price

19. Copyright Guy Harley 2008 19 Unconscionable Conduct  One party takes advantage of the other parties special disability to the extent that the contract is unfair or unconscionable  Blomley v Ryan (Graw 7.8.2)  Commercial Bank v Amadio (Graw 13.11.4)  Elements  Special disability  Absence of any equality between the parties  Disability evident to other party

20. Copyright Guy Harley 2008 20 Mistake  A party cannot get out of a contract because they made a mistake  Exceptions:  Mistake due to other party’s misrepresentation, unconscionable conduct etc.  Common mistake  Mutual mistake  Unilateral mistake  Mistake as to nature of document

21. Copyright Guy Harley 2008 21 Mistake  Mistake at Common Law makes contract void  Mistake at equity makes contract voidable

22. Copyright Guy Harley 2008 22 Unilateral Mistake - Equity  One party is mistaken as to a fundamental term; and  Other party is aware, or should be aware, of the mistake  Mistaken party will suffer detriment if not allowed to rescind Taylor v Johnson (Graw 11.5.3)

23. Copyright Guy Harley 2008 23 Unilateral Mistake – Common Law  Mistake as to Identity  If Third Party rights involved, identity must be important  Ingram v Little (Graw 11.5.4)  Mistake as to nature of document  Non est factum

24. Copyright Guy Harley 2008 24 Rescission  Available for:  Misrepresentation  Undue influence  Unconscionable conduct  Duress

25. Copyright Guy Harley 2008 25 Rescission  Effect  Contract is terminated ab initio (i.e. it is as though there never was a contract)  cancels the contract from the point of termination  Procedure  Innocent party rescinds by giving notice to the other party

26. Copyright Guy Harley 2008 26 Notice of Rescission  Innocent party must give notice of rescission to other party  Notice can be implied from conduct  Academy of Health & Fitness v Power

27. Copyright Guy Harley 2008 27 Bars to Rescission  Third Party rights adversely affected  Substantial restitution not possible  Innocent party affirms contract  Party wishing to rescind does not have “clean hands”  Lapse of time

28. Copyright Guy Harley 2008 28 Third Party Rights  Rescission is not permitted if the legal rights of an innocent third party will be adversely affected  For example, where goods have been on sold in good faith and for value to a purchaser  But, rescission will be effective where it occurs before the third party gains an interest  Car & Universal Finance Co v Caldwell (Graw 12.7.3)

29. Copyright Guy Harley 2008 29 Restitution  The parties must be capable of being restored to substantially the position they were in before the contract was entered into  Known as “Restitution”  Court can make consequential orders  Precise restitution is not necessary  Alati v Kruger  Brown v Smitt  Not possible where services already supplied pursuant to a contract of service

30. Copyright Guy Harley 2008 30 Affirming the Contract  Rescission is not permitted if the contract has been affirmed  After discovering misrepresentation, innocent party does any act which indicates that he is treating contract as still running  A delay in rescinding can amount to an affirmation

31. Copyright Guy Harley 2008 31 Clean Hands  Rescission will not be permitted if party seeking to rescind has also done something wrong under the contract  E.g.  One party makes misrepresentation  Other party has breached the contract by not carrying out their obligations

32. Copyright Guy Harley 2008 32 Lapse of Time  Lapse of time will not normally deprive innocent party of right to rescind except if long period  Leaf v International Galleries (Graw 12.8.4)

33. Copyright Guy Harley 2008 33 Anticipatory Breach  Before time for performance, one party indicates intention not to perform contract Anticipatory breach  Hochster v De La Tour (Graw 15.5.1)  Contract not automatically discharged  Innocent party may:  Treat contract as repudiated and claim damages, or  Perform the contract and claim contract price  If contract remains on foot still subject to law of frustration  Avery v Bowden (Graw 15.5.4)

34. Copyright Guy Harley 2008 34 Types of Remedy  Termination  Rescission  Recovery of Contract Price  Damages  Equitable Remedies  Specific Performance  Injunction  Rectification  Restitution

35. Copyright Guy Harley 2008 35 Liquidated Damages  Available where price, or mechanism for fixing price, is stated in the contract  Called “liquidated damages”  Preferable to damages because there are no problems with establishing the amount claimed  Can claim if there has been substantial performance of the contract unless there is a term in the contract to the contrary

36. Copyright Guy Harley 2008 36 Calculating Damages  The amount of damages should place the innocent party in the same position that he would have been in had the contract been properly performed  The court cannot refuse to award damages just because they are difficult to calculate  Damages can include  Expectation loses  Personal injuries  Disappointment, distress and discomfort

37. Copyright Guy Harley 2008 37 Expectation Losses  Expectation losses include loss of profits  Loss of a promised chance or commercial opportunity may be claimed  Damages will be awarded by “reference to the degree of probabilities, or possibilities, inherent in the plaintiff’s succeeding had the plaintiff been given the chance which the contract promised” – Sellars v Adelaide Petroleum (S&O p275)

38. Copyright Guy Harley 2008 38 Mitigation of Damages  Plaintiff has a duty to mitigate losses  Cannot claim losses which could have been reduced or avoided by the taking of reasonable steps

39. Copyright Guy Harley 2008 39 Elements of Promissory Estoppel 1.Relationship A relationship (usually contractual or pre-contractual) exists between the parties 2.Promise A promise not to assert legal rights 3.Expectation Promisee expects promise to be kept 4.Reliance Promisee acts in reliance on promise 5.Detriment Promisee alters its position to its detriment 6.Unconscionable Unconscionable to allow promisor to break promise

40. Copyright Guy Harley 2008 40 The Promise  One party either  Made a promise; or  Being aware that the other party was acting on an assumption, deliberately remained silent in circumstances where the they could reasonably have been expected to speak

41. Copyright Guy Harley 2008 41 Expectation  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

42. Copyright Guy Harley 2008 42 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  Central London Property Trust v High Trees (Graw 6.6.2)

43. Copyright Guy Harley 2008 43 Remedy  Minimum orders to prevent detriment  Not necessarily the same remedy as for breach of contract  Not a new cause of action

44. Copyright Guy Harley 2008 44 Agency  A person cannot always act personally  Agencies are usually created for the making of contracts in commercial situations  It is a fiduciary relationship

45. Copyright Guy Harley 2008 45 Agency - Contracts  Two contracts  Between agent & principal  Between Principal and Third Party  A principal is liable for the acts of an agent that are committed within his authority

46. Copyright Guy Harley 2008 46 Types of Agency  Actual agency  Express  Implied  Agency by Necessity  Apparent Agency (Ostensible agency)  Agency by Ratification

47. Copyright Guy Harley 2008 47 Apparent\Ostensible Authority  Agent has no actual authority but Principal’s actions lead Third Party to believe that Agent has authority  4 conditions  A representation made by Principal to Third Party  No actual authority  Third Part is induced to enter into contract  Principal had capacity to enter contract

48. Copyright Guy Harley 2008 48 Duties of Agent  To follow Principal’s instructions  To use reasonable care & skill  Not to make a secret profit  Not to disclose confidential information  To keep proper accounts Breach of duty = breach of contract

49. Copyright Guy Harley 2008 49 Not to Make a Secret Profit  Agent must not take advantage of position to obtain extra benefit from Third Party of which Principal is not aware  Reiger v Campbell-Stuart (Study Materials)

50. Copyright Guy Harley 2008 50 Not to Disclose Confidential Information  Fiduciary relationship  Duty to disclose facts material to Principal’s decision to contract with Third Party  Must act in Principal’s best interests