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Revision. 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. Separation of Powers (cont.). Executive cannot

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separation of powers
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
separation of powers cont
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
the australian constitution
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
responsible government
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
australian separation of powers
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
stare decisis
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
  • Two Types
    • Mandatory
    • Persuasive
  • Persuasiveness depends on
    • quality of decision
    • jurisdiction of the court that gave the decision
rules of precedent
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
the court s decision
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
  • A contract entered into due to coercion or force can be rescinded
  • Coercion can be:
    • To the person;
    • To goods; or
    • Economic duress
duress cont
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
undue influence
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
undue influence14
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)
fiduciary relationships
Fiduciary Relationships
  • Parent & Child
  • Guardian & ward
  • Principal & Agent
  • Trustee & Beneficiary
  • Doctor & Patient
  • Lawyer & Client
  • Religious advisor & Follower
  • More
where no fiduciary relationship
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
where no fiduciary relationship17
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
rebutting undue influence
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
unconscionable conduct
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
  • 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
  • Mistake at Common Law makes contract void
  • Mistake at equity makes contract voidable
unilateral mistake equity
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)

unilateral mistake common law
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
  • Available for:
    • Misrepresentation
    • Undue influence
    • Unconscionable conduct
    • Duress
  • 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
notice of rescission
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
bars to rescission
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
third party rights
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)
  • 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
affirming the contract
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
clean hands
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
lapse of time
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)
anticipatory breach
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)
types of remedy
Types of Remedy
  • Termination
  • Rescission
  • Recovery of Contract Price
  • Damages
  • Equitable Remedies
    • Specific Performance
    • Injunction
    • Rectification
    • Restitution
liquidated damages
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
calculating damages
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
expectation losses
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)
mitigation of damages
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
elements of promissory estoppel
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
the promise
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
  • 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
  • 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)
  • Minimum orders to prevent detriment
  • Not necessarily the same remedy as for breach of contract
  • Not a new cause of action
  • A person cannot always act personally
  • Agencies are usually created for the making of contracts in commercial situations
  • It is a fiduciary relationship
agency contracts
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
types of agency
Types of Agency
  • Actual agency
    • Express
    • Implied
  • Agency by Necessity
  • Apparent Agency (Ostensible agency)
  • Agency by Ratification
apparent ostensible authority
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
duties of agent
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

not to make a secret profit
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)
not to disclose confidential information
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