Transcript Slide 1
Revision
Copyright Guy Harley 2008
1
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
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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
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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
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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
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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
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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
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Precedent
Two Types
Mandatory
Persuasive
Persuasiveness depends on
quality of decision
jurisdiction of the court that gave the decision
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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
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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
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Duress
A contract entered into due to coercion or force
can be rescinded
Coercion can be:
To the person;
To goods; or
Economic duress
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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
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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
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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)
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Fiduciary Relationships
Parent & Child
Guardian & ward
Principal & Agent
Trustee & Beneficiary
Doctor & Patient
Lawyer & Client
Religious advisor & Follower
More
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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
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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
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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
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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
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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
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Mistake
Mistake at Common Law makes contract void
Mistake at equity makes contract voidable
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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)
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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
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Rescission
Available for:
Misrepresentation
Undue influence
Unconscionable conduct
Duress
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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
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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
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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
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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)
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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
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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
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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
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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)
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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)
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Types of Remedy
Termination
Rescission
Recovery of Contract Price
Damages
Equitable Remedies
Specific Performance
Injunction
Rectification
Restitution
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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
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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
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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)
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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
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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
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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
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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
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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)
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Remedy
Minimum orders to prevent detriment
Not necessarily the same remedy as for breach
of contract
Not a new cause of action
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Agency
A person cannot always act personally
Agencies are usually created for the making of
contracts in commercial situations
It is a fiduciary relationship
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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
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Types of Agency
Actual agency
Express
Implied
Agency by Necessity
Apparent Agency (Ostensible agency)
Agency by Ratification
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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
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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
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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)
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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
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