LAWS1015 Lecture 11 Flashcards
Termination by Agreement
A subsequent agreement to terminate an existing agreement must comply with the 4 elements of contract formation. A deed of settlement and release (deed is valid consideration).
The performing party can provide sufficient consideration by agreeing to release the non-performing party from their obligations. However, a release provided by the non-performing party does not constitute sufficient consideration because the performing party has no remaining obligations under the contract. The non-performing party must provide “fresh” consideration (i.e. satisfaction) (e.g. monetary payment or different performance).
(Tallerman v Nathan’s Merchandise)
P: contract originally in writing can be terminated by a subsequent oral contract
(McDermott v Black)
P: satisfaction may be provided in the form of a promise or by the actual doing of the promised act
P: If the consideration is a promise (e.g. promise to pay money) then the accord and satisfaction will be complete and the non-preforming party will be released from the obligations under the original contract immediately upon the promise being made.
(Concut v Worell)
P: In absence of an express explanation, whether a subsequent agreement merely varies or completely terminates the original contract will depend on the objective intentions of the parties disclosed by the terms and circumstances of the subsequent agreement (e.g. recitals)
e. g An intention to terminate the original will likely be inferred where: obligations in subsequent are inconsistent, the 2 agreements cannot be supposed to have been intended to co-exist.
e. g An intention to terminate is unlikely to be inferred where the subsequent agreement cannot stand alone as a new and independent contract. Or where the parties cannot be presumed to have intended to abandon their rights under the original contract.
F: Written employment did not terminate oral contracts. Expressly preserved the accrue rights of the employee in respect of leave entitlements.
Conditioned precedent
must be fulfilled before parties are bound to perform under the contract
Conditioned subsequent
parties obligations to perform are immediately binding but will come to an end should specified condition occur.
(Maynard v Goode)
P: If no time is specified, courts will construe the contract as requiring the contingent condition to be fulfilled within a reasonable time.
F: transfer of land conditioned subsequent, did not allow reasonable time.
(Perri v Coolangatta Investments)
P: If contingent condition applies to performance of a specific obligation, contract will remain intact, and only that particular obligation would be discharged.
P: If contingent condition applies to performance of the whole contract, both parties can elect to terminate.
P: However, if condition was not fulfilled by the default of a party in failing to co-operate, that party will not be entitled to rely upon the failure of the condition as a reason for terminating
P: Condition making contract for sale of land subject to the sale of purchaser’s property was entirely for benefit of purchaser, and was therefore capable of being waived by purchaser.
(Hoenig v Issacs)
Given I’ve performed, am I entitled to contractual price?
1st: entire (cutter v powell) or severable (steele v tardiani)? (i.e. is payment attached to each part of performance or payment conditional upon completion) (e.g. payment schedule isn’t linked to performance, therefore entire)
2nd: did the parties objectively intend strict or substantial performance? Question of construction. (for services: de minimis rule: trivial breaches/minor defects)
3rd: compare performance obligations: Whether the breach goes to the root of the contract?
4th: adjust contract price to reflect the defects by using cost of cure approach, or the difference in value approach (Jacobs & Youngs v Kent)
F: Interior designer entitled to contract price less cost of defects $55
(Bolton v Mahedeva)
compare performance obligations:
- if cost of rectifying is high compared to contract price, then no substantial performance.
- whether work is ineffective for its primary purpose?
F: heating system lower than it should be. fumes so you couldn’t be in room to enjoy heating.
(Jacob & Youngs v Kent)
P: adjustment for trivial and innocent omissions is not the cost of replacement, but the difference in value.
F: used diff brand. Court held that they did substantially perform, pipes were laid out well, and quality was equal.
(Sumpter v Hedges)
P: may still be entitled to claim reasonable remuneration for services performed on quantum meruit basis.
T: whether other party had the opportunity to reject the work but did not do so?
F: buildings abandoned therefore no substantial performance. can’t reject work that’s attached to the land therefore no quantum meruit claim.
(Steele v Tardiani)
F: took wood that wasn’t cut to strict specifications and sold it. Had opportunity to reject work.
(Hansa Nord)
Given you’ve breached the contract, do I have a right to terminate, or only a right to seek damages?
1st: express right to terminate for breach defined in contract?
2nd: at common law, party can terminate for breach of a condition, or a serious breach of an intermediate term. Breach of a warranty will only give right to damages.
F: animal pellets “good condition”. not serious breach because still resold the lesser quality pellets. therefore not entitled to reject goods.
(Tramways advertising v Luna Park) endorsed by HCA (Associated Newspapers v Bancks)
T: whether the promise is of such importance that the promisee would not have entered the contract unless he had been assured of the strict/substantial performance of the promise, and this ought to have been apparent to the promisor?
e.g. the fact that parties have considered termination for breach of some terms but no did not provide for others, indication that the term was not sufficient important to be classified as a condition.
F: at least 8 hrs on each and every day. matter of construction. (refer to purpose of contract? what is the contract?)
F: 1st page condition, can only be breached in 1 way.
