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Revision

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Elements of Misrepresentation

   Statement of material fact Statement was false Statement was addressed to the representee before or at the time that the contract was entered into  Statement induced the representee to enter into the contract  Statement caused loss 2

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Statement is a Fact

  Statement of past or present fact Not  a mere puff   A misstatement of the law Statement of future intention  Unless no real intention at time of representation  Usually, not an opinion

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Statement is a Fact

An opinion can be a fact where:  No genuine or actual belief in its truth    No reasonable person could hold opinion The representor has special knowledge The existence of an opinion can be a fact

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Statement is a Fact

Silence will not normally suffice  Except  Distortion of a positive representation (half truths)   Altered circumstances Where there is a fiduciary relationship  Where contract is of the utmost good faith (e.g. insurance)

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Categories of Misrepresentation

     Fraudulent misrepresentation Negligent Misrepresentation Innocent Misrepresentation Misleading & Deceptive Conduct Term of Contract

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Negligent Misrepresentation

  There was a misrepresentation  Representor owed a duty of care to representee  Representor failed to exercise the required standard of care Loss, which was a reasonably foreseeable consequence of the misrepresentation, was caused by misrepresentation 7

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Discharge of Contract

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Discharge of Contract

A contract can be brought to an end by: 1.

2.

Performance Agreement 3.

4.

5.

6.

Frustration Breach A Term of the Contract Operation of Law

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Termination by Performance

  Where the parties wholly or substantially perform their obligations under the contract, the contract is discharged Hoenig v Isaacs

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  

Entire Contract

If contract requires entire performance then obligations must be strictly completed Entire performance required where anything less than full performance would significantly devalue the worth of the contract to the other party Cutter v Powell 11

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Entire Contract

    Exceptions  Substantial performance Partial performance Divisible contracts Tender of performance Prevention of performance

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Substantial Performance

   Contract discharged by completion of main part of contract  Performing party paid full price less value of shortfall Hoenig v Isaacs Bolton v Mahadeva 13

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Partial Performance

    Innocent party accepts incomplete work Quantum meruit paid to performing party for reasonable cost of completed work Acceptance must be a genuine choice Sumpter v Hedges

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Divisible Contracts

 Contract split into divisible parts for purposes of payment  Performance of each part requires party to pay for that part  Treated as several separate contracts 15

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Tender of Performance

• If preforming party offers to complete contract and offer refused then performing party is discharged

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Prevention of Performance

 Where performing party is prevented from completing his obligations by the other party   Performing party is discharged from contract Performing party can sue for  breach of contract  Quantum meruit  De Barnaby v Harding

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Discharge by Agreement

 Parties to the contract agree to discharge their obligations to one another  This latter agreement will only be binding if:   It is a valid contract; or Promissory estoppel arises 18

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Discharge by Agreement

 The contract to discharge is subject to usual contractual rules e.g. economic duress  Bilateral discharge Mutual release of obligations under original contract can be sufficient consideration  Accord & Satisfaction Where one party has performed contract, the non-performing party must provide fresh consideration

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Termination by Frustration

  Where:  An intervening event; Not contemplated by the parties; Makes performance  impossible; or  Radically different to that originally contemplated the contract is automatically terminated

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Termination by Frustration - Examples

 Destruction of Subject Matter  Taylor v Caldwell  Personal Service  Condor v The Barron Knights Ltd  Non-occurrence of an Event  Krell v Henry   Event must be central not merely a motivation Herne Bay Steamboat Co v Hutton 21

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Termination by Frustration - Examples

 Supervening Illegality  Performance becomes illegal due to change in law  Denny, Mott & Dickson Ltd v Fraser & Co Ltd  Not just because performance becomes difficult or expensive  Tsakiroglou & Co Ltd v Noblee Thorl 22

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Termination by Frustration (Cont.)

Frustration does not apply where:  The event was caused by the party seeking to rely on the frustration  Maritime National Fish Ltd v Ocean Trawlers Ltd  Contract makes specific provision for the event  Clark v Lindsay  The party seeking to rely on frustration foresaw the event 23

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Effect of Frustration

   Contract is void from date of frustration (not ab initio) Parties released from all further obligations All contractual obligations owed before date of frustration must be performed  Chandler v Webster  Prepayments can be recovered where a compete failure of consideration  Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd 24

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Frustrated Contracts Act 1988

  Changes common law position Court may order   a refund of monies paid under a frustrated contract Compensation for any performance that occurred prior to frustration

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Discharge by Breach

    Cannot terminate for any breach no matter how slight Can only terminate for breach of a condition Other terms are called “warranties” Breach of conditions allows the innocent party to terminate the agreement and sue for damages  Breach of a warranty only entitles the innocent party to seek damages 26

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Discharge by Breach

Types of Breach  Failure to perform contract  Anticipatory breach

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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 Contract not automatically discharged Innocent party may:  Treat contract as repudiated and claim  damages, or Perform the contract and claim contract price Avery v Bowden 28

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Termination by a Term of the Contract

 Parties may have agreed that the contract would be terminated upon the happening or non-happening of a certain event  The term may be automatic or merely provide an option to terminate  Term may give only one party the option to terminate 29

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Procedure for Termination

 Terminating party must not affirm contract  Once terminated, terminating party cannot change mind  Termination means that the parties are relieved from all future obligations.

 Termination does not affect rights and obligations that have already accrued  If not terminated, other party must continue to be able to perform contract 30

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Copyright Guy Harley 2008

Restraint of Trade

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Illegal Contracts

  A contract must be legal Consideration must not be  illegal or  contrary to public policy  Otherwise contract is void

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Public Policy

    Injurious to public life Contrary to the nations foreign affairs (trading with the enemy) Interference with administration of Justice “injurious to the public good” but not serious enough to be illegal    Immoral contracts Prejudicial to family life Restraint of trade

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Restraint of Trade

 One party agrees to restrict their right to carry on a trade or business  Examples    Employee agrees not to work for employers competitor after end of employment Vendor of business agrees not to open similar business Business agrees to take supplies exclusively from one supplier 34

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Restraint of Trade

  Restraint of Trade clauses are void because  Prevents person from earning a living Deprives public of persons expertise All citizens should be free to ply their trade

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Restraint of Trade

 A restraint of trade clause is only enforceable to the extent that it is reasonable  Nordenfelt v Maxim Nordenfelt  It will only be reasonable if it is  In the public interest (having regard to protection of competition), and  no wider than is reasonably necessary to protect the legitimate interests of the party relying on it   ICT v Sea Containers Peters (WA) Ltd v Petersville Ltd 36

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Restraint of Trade

Factors to determine if restraint is reasonable  The nature of the activities being restrained  Protection of trade secrets is valid Foster v Suggett  Solely preventing competition is not valid Herbert Morris v Saxelby  Time span  Geographic extent  Papstravou v Gavan

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Trade Secrets

  Is it in the public domain or secret?

Does the employee have sufficient knowledge of the trade secret to exploit it  Did employee acquire this knowledge in the course of his employment 38

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Restraint of Trade

 Invalid part can be severed to allow valid part to remain  Can be enforced by injunction 39

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