Week 8 Everything Flashcards
(27 cards)
Remedies
If one party breaches a term of the contract, a statutory term or in some cases a non-contractual representation or promise and they are not protected from liability by an effective disclaimer, there are a number of possible legal remedies available to the other party.
If one party breaches a term of the contract, a statutory term or in some cases a non-contractual representation or promise and they are not protected from liability by an effective disclaimer, there are a number of possible legal remedies available to the other party.
Rescission
Damages
Equitable remedies
Statutory remedies
Rescission
Rescission is an order of the court declaring a contract to be terminated or unenforceable. The court will as far as possible seek to restore the parties to their original positions.
Rescission is an order of the court declaring a contract to be terminated or unenforceable in the event of:
Complete non-performance
Breach of a condition
Misrepresentation
Duress, undue influence
Unconscionability
Rescission
Whether or not the other party is entitled to rescind the contract will depend upon:
Whether there has been a complete failure to perform or a partial performance, and whether the partial performance involves breach of a condition or of a warranty.
Rescission
A party will completely fail to perform if:
they make no effort to perform their contractual obligations
their actual performance is completely different from what they were required to do under the contract [fundamental breach]
prior to the time for performance they clearly indicate that they will not be performing their obligations (anticipatory breach).
A party will partially perform the contract if
A party will partially perform the contract if they comply with some of the terms of the contract but breach one or more of the other terms.
Damages
If there is a breach of a single term of the contract, whether the other party is entitled to terminate the contract will depend upon whether the term breached was a condition or a warranty
condition
A condition is a term of the contract of fundamental importance, a breach of which leads to rescission and damages for breach of contract.
Associated Newspapers v Bancks
warranty
A warranty is a term of lesser importance than a condition, a breach of which leads to damages only.
Bettini v Gye
The other party will be entitled to damages in the event of:
any breach of contract - whether total or partial, actual or anticipatory, condition or warranty, breach of a collateral contract, or misrepresentation.
The objective of the court in making an award of damages
The objective of the court in making an award of damages is to restore the other party to the position they would have been in if the breach or misrepresentation had not occurred - that is, if the contract has been performed properly.
To claim damages, the plaintiff must come under one of the two branches of the rule in Hadley v Baxendale 156 ER 145
The first branch deals with damages which are the natural result of the breach (ordinary damages)
The second branch deals with damages which should be in the contemplation of the parties as being the probable result of the breach (extraordinary damages).
If the plaintiff does not comply with either branch, damages will not be awarded.
The plaintiff is under an obligation to mitigate the loss – that is, to keep the loss down to a minimum.
If this is not done, the court will see the loss as inflated and that part of the damages which is inflated, will not be granted by the court.
Brace v Calder [1895] 2 QB 253
Equitable remedies
If the plaintiff can demonstrate to the court that an award of damages is not a satisfactory remedy, the court may decide to provide an equitable remedy, such as: Specific performance, or Injunction.
An order of specific performance
An order of specific performance is a court order directing the party in breach to fulfil the contractual obligations.
Dougan v Ley (1946) 71 CLR 142
Injunction
An Injunction is a court order prohibiting someone from doing something which will amount to a breach of contract and/or law.
Buckenara v Hawthorn Football Club Ltd [1988] VR 39
Statutory remedies
If the term breached is one of the terms implied into the contract by the sale of goods legislation, the legislation provides a range of remedies.
THE END OF THE CONTRACT
Discharge By Agreement
Both parties agree to mutually release each other from any future obligations. A contract may be ended or discharged in this way if neither party has yet performed the contract.
Neither party has yet performed the contract
If this occurs, then an exchange of promises will suffice (to constitute sufficient consideration), to end the contract.
THE END OF THE CONTRACT: Agreement
If however, one of the parties has already performed his/her own obligations and the other has not performed some duties or at all
then the party who has performed can promise to unilaterally release the other party from complete performance of their obligations. Such a promise must however, be supported by consideration from the party to whom it is made in order to be enforceable or must be in the form of a deed.
THE END OF THE CONTRACT: Agreement and As a result of a term
The parties can mutually agree to replace the existing agreement with a new agreement on different terms. This agreement is known as a novation.
Discharge as a Result of a Term in the Contract
The contract may contain a condition precedent that has been satisfied, or a condition subsequent that has also been satisfied. The test is a positive one for both situations.
It asks: ‘What is the effect on the contract if the condition is satisfied?’
If the answer is: ‘the contract is to continue’, then the condition is a condition precedent.
THE END OF THE CONTRACT: As a result of a term
example 1
A contract to sell a house subject to the purchaser obtaining finance. Until the finance is obtained, the contract is ‘suspended’. When the finance is approved, the effect is that the contract will go ahead.
If the answer is: ‘It terminates the contract’, then the condition is a condition subsequent.