Revision

1. Revision

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. Precedent • Two Types • Mandatory • Persuasive • Persuasiveness depends on • quality of decision • jurisdiction of the court that gave the decision

9. 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

10. 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

11. Duress • A contract entered into due to coercion or force can be rescinded • Coercion can be: • To the person; • To goods; or • Economic duress

12. 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

13. 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

14. 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)

15. Fiduciary Relationships • Parent & Child • Guardian & ward • Principal & Agent • Trustee & Beneficiary • Doctor & Patient • Lawyer & Client • Religious advisor & Follower • More

16. 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

17. 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

18. 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

19. 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

20. 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

21. Mistake • Mistake at Common Law makes contract void • Mistake at equity makes contract voidable

22. 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)

23. 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

24. Rescission • Available for: • Misrepresentation • Undue influence • Unconscionable conduct • Duress

25. 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

26. 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

27. 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

28. 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)

29. 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

30. 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

31. 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

32. 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)

33. 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)

34. Types of Remedy • Termination • Rescission • Recovery of Contract Price • Damages • Equitable Remedies • Specific Performance • Injunction • Rectification • Restitution

35. 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

36. 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

37. 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)

38. 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

39. Elements of Promissory Estoppel • RelationshipA relationship (usually contractual or pre-contractual) exists between the parties • PromiseA promise not to assert legal rights • ExpectationPromisee expects promise to be kept • ReliancePromisee acts in reliance on promise • DetrimentPromisee alters its position to its detriment • UnconscionableUnconscionable to allow promisor to break promise

40. 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

41. 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

42. 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)

43. Remedy • Minimum orders to prevent detriment • Not necessarily the same remedy as for breach of contract • Not a new cause of action

44. Agency • A person cannot always act personally • Agencies are usually created for the making of contracts in commercial situations • It is a fiduciary relationship

45. 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

46. Types of Agency • Actual agency • Express • Implied • Agency by Necessity • Apparent Agency (Ostensible agency) • Agency by Ratification

47. 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

48. 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

49. 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)

50. 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