Category Archives: Contract

Contract, LAW FIRM

Oceanic Sun Line Special Shipping Company Inc v Fay [1998] HCA 32

ON 30 JUNE 1988, the High Court of Australia delivered Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 (30 June 1988).

http://www.austlii.edu.au/au/cases/cth/HCA/1988/32.html

The court found that a contract of carriage was made in Australia at the time of payment and that terms and conditions printed on a ticket later issued in Greece had no effect and could not alter what was already agreed in Australia.

The court held that in a contract of carriage:

  • a condition printed on a ticket has no effect to alter the contract if the ticket is issued after making the contract
  • an exemption clause (excluding liability of loss) on a ticket has no effect unless the carrier does all that is reasonably necessary to bring the clause to the passenger’s notice.

The court also held that when a defendant applies for a stay or dismissal of proceedings on the grounds of forum non conveniens (forum not appropriate), it must persuade the local court that the plaintiff’s claim should be brought in another court because the local court is a clearly inappropriate forum to determine the dispute.

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Contract, Equity, Estoppel, LAW FIRM

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 (19 February 1988).

http://www.austlii.edu.au/au/cases/cth/HCA/1988/7.html

Maher owned a commercial property at Nowra. Waltons was a national department store. Waltons and Maher entered into negotiations regarding the lease of Maher’s property conditional upon Maher demolishing the existing building and constructing a new one in accordance with Waltons’ requriements.

Waltons provided Maher with a draft lease contract. Maher suggested amendments and indicated they needed to complete the agreement in the next day or so in order to arrange building supplies before Christmas. Maher indicated that he did not want to demolish the building until he knew there was no problem with the lease. The solicitor for Waltons said to Maher that Waltons had informed him that the amendments were acceptable but would obtain formal instructions and inform him by the next day if they did not agree with any of the amendments. The solicitor for Waltons then sent Maher’s solicitor a redrafted lease with the suggested amendments and did not object to the amendments the next day, or at all. Maher then sent Waltons an executed lease by way of exchange and then proceeded with the demolition. A week later, Waltons had concerns about the transaction and, not having exchanged their counterpart of the lease, instructed their solicitor to go slow. Waltons then became aware that the building had been demolished and when the new building was 40% completed advised Maher that they did not wish to proceed with the transaction.

Maher sued Waltons in the Supreme Court of NSW, obtaining an order for specific performance or damages in lieu. An appeal to the NSW Court of Appeal was dismissed, as was an appeal to the High Court of Australia.

Per Mason CJ, Wilson, Brennan and Deane JJJ, Waltons was bound to enter into a lease agreement and estopped from denying an implied promise to complete the contract as it would be unconscionable for Waltons to take a course of inaction that exposed Maher to detriment by acting on a false assumption.

The High Court brought together proprietary and promissory estoppel under the broader principle of equitable estoppel. When a person makes a non-contractual or voluntary promise and knowingly induces the other party to act to his or her detriment in reliance on that promise, that person is precluded from resiling from the promise without avoiding the detriment. The person who makes the promise is liable to either honour the promise or avoid detriment to the other party.

Per Brennan J at 428-9:

“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.”

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Contract, LAW FIRM, Remedies, Restiution, Unjust Enrichment

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5

ON 4 MARCH 1987, the High Court of Australia delivered Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 (4 March 1987).

http://www.austlii.edu.au/au/cases/cth/HCA/1987/5.html

A builder was entitled to recover remuneration for building work done despite there being no written enforceable contract because the client had accepted the benefit and therefore was obliged under the doctrine of unjust enrichment or restitution to pay fair and just compensation for the benefit accrued.

Section 45 of the Builders Licensing Act 1971 (NSW) (which provided that a building contract is not enforceable unless in writing and signed) did not prevent a builder from bringing an action in quantum merit (“as much as he has earned”) for the work done and materials supplied.

A claim based upon quantum merit does not require there to be an implied contract. A claim in quantum meruit is based upon restitution or unjust enrichment.

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Contract, LAW FIRM, Trusts

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64

ON 25 OCTOBER 1984, the High Court of Australia delivered Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 (25 October 1984).

http://www.austlii.edu.au/au/cases/cth/HCA/1984/64.html

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Sydney, Australia

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Contract, Insurance, Insurance Contracts Act 1984, LAW FIRM, Law reform, Legislation

Insurance Contracts Act 1984 (Cth)

ON 25 JUNE 1984, the Commonwealth Insurance Contracts Act 1984 was enacted.

http://www.austlii.edu.au/au/legis/cth/consol_act/ica1984220/

The Act introduced a range of measures to promote good faith and fairness in contractual dealings between insurers and their insured.

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Commercial Law, Contract, Equity, LAW FIRM

Commercial Bank of Australia Ltd v Amadio [1983] HCA 14

ON 12 MAY 1983, the High Court of Australia delivered Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (12 May 1983).

http://www.austlii.edu.au/au/cases/cth/HCA/1983/14.html

“Equity – Mortgage and guarantee – Right to set aside – Unusual transactions between bank and customer – Bank’s failure to disclose to mortgagor guarantor – Misrepresentation.

Guarantee – Guarantor under disability – Dealing with bank – Bank knowing of disability – Unconscionable bargain – Onus of proof – Whether transaction should be set aside unconditionally.”

An elderly Italian migrant couple had mortgaged land they owned as a guarantee for a loan from the bank to their son’s business. The business then went into liquidation and the bank demanded payment of the guarantee and then attempted to exercise a power of sale over the land.

The Amadios argued that the guarantee and mortgage should set aside as:

  • they spoke limited English;
  • they did not receive independent advice and were not advised to do so;
  • they were not aware of their son’s financial situation, although the bank was; and
  • they mistakenly believed that the liability was limited to $50,000.

The court held that the mortgage and guarantee must be set aside as it was unconscionable for the bank to enter into those transactions in circumstances where the bank through it’s superior bargaining power had gained an unconscientious advantage to the detriment of the Amadios who suffered a special disability.

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Sydney, Australia

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Appeals, Contract, Evidence, LAW FIRM

Taylor v Johnson [1983] HCA 5

ON THIS DAY in 1983, the High Court of Australia delivered Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422 (23 February 1983)

Per Mason ACJ, Murphy and Deane JJ “…a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension.” (at 342).

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Contract, Injunctions, LAW FIRM

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24

ON 11 MAY 1982, the High Court of Australia delivered Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (11 May 1982).

Codelfa contracted with the State Rail Authority’s predecessor, the NSW Commissioner for Railways, to perform the excavations on Sydney’s Eastern Suburbs railway. It was agreed that Codelfa would perform three shifts per day over a fixed period, but they were unable to meet this requirement because of injunctions brought by local residents.

Codelfa sought damages from the SRA on two grounds: (1) that there was an implied term that if they were restrained by injunctions the SRA would extend time for completion or would indemnify Codelfa for any losses caused by the injunctions; in the alternative, (2) that the contract was frustrated by the injunctions.

Mason J at 352 observed that the “true rule” regarding the admission of evidence of the surrounding circumstances is that such evidence is admissible if the language of the contract is ambiguous or capable of more than one meaning but is not admissible to contradict the language which has a plain meaning.

The court held that there was no implied term. Even if a term needed to be implied to give efficacy to the contract, the was not a term “so obvious it goes without saying”. The court referred with approval to its earlier decision in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596.

Codelfa was nevertheless successful with the court holding that the contract was frustrated because “the performance of the contract in the events which have occurred is radically different from performance of the contract in the circumstances which it, construed in the light of surrounding circumstances, contemplated”.

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Sydney, Australia

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Contract, LAW FIRM

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd

ON 12 OCTOBER 1979, the High Court of Australia delivered Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 (12 October 1979).

http://www.austlii.edu.au/au/cases/cth/HCA/1979/51.html

Lawyer
Peter O’Grady
BA, LLB, Grad Cert Leg Prac, Acc Spec Lawyer
Contract, LAW FIRM, Property Law

Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21

ON 30 APRIL 1976, the High Court of Australia delivered Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444 (30 April 1976).

“Vendor and Purchaser – Sale of land – Contract of sale – Refusal by purchaser to complete – Anticipatory breach – Suit for specific performance by vendor – Continued refusal by purchaser to complete – Whether vendor entitled to rescind and claim damages.”

A contract may be rescinded by a vendor for repudiation whilst an action for specific performance is on foot if the purchaser refuses to complete and acts as though it intends to be no longer bound by the contract.

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Sydney, Australia

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