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GROUP ASSIGNMENTQuestion 8-Jackhammer Pty Limited v NSW

Robyn Paipai GraceEmmaKevin

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Key Facts Jackhammer and NSW Government (NSW) Contract signed on 1 Jan. 2006 about a tunnel co

nstruction. No later than 1 Jun. 2007, 24 hours, 7 days. Statement made by NSW during the negotiation

which is not included in the written contract due to oversight:

“For any reason outside of Jackhammer’s control, it could not carry out its work 24 hours per day, seven days per week, it would be given an extension of time of a maximum of 12 months within which to complete its work and be paid an additional $10,000 each such month.”

Injunction obtained on 1 Feb. 2006 by Woollahra residents.

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Statement

Statements

Existence Proved

Existence Unproved

Nature

How could the statement influence the written contract?

What could Jackhammer do?

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Existence Proved

Is the statement a promissory statement, or merely a r

epresentation?

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Nature of the Statement

Tests “1. How close in time to the completed contract was the

statement made? 2. Was the statement followed by a reduction of the term

s to writing and. If so, was the statement included? 3. Did one party have special knowledge or skill on which

the other was entitled to rely? 4. How important was the statement in the minds of the

parties?” (Graw, 2005) Case: Oscar Chess Ltd v Williams (1975) 1 W

LR 370

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Nature of the Statement (cont’d)

In This Case It is a very clear statement which should not

create any disagreement of interpretations. It is likely that the statement is important in the

minds of both parties due to the involvement of delay and additional payment compared to basic contract terms.

The statement should have been included in the written contract but was missed due to the oversight of both parties.

Therefore, the statement made by NSW should be a promissory one but not merely a representation in nature.

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Legal Effect of the Statement

The Parol Evidence Rule (Stated in Mercantile Bank of Sydney v Taylor (1981) 12 LR (NSW) 252)

“Where the contract appears in the writing to be entire, it is presumed that the contract contains all the terms of it and evidence will not be admitted of any previous or contemporaneous agreement which could have the effect of adding or varying it in any way.”

It aims to prevent any extrinsic evidence which might add, or vary the written contract, including not only oral evidence, but also any other kinds of document involved in the negotiations leading up to that written contract. (Graw, 2005)

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Legal Effect of the Statement (cont’d)

Exclusion of Parol Evidence Rule Mistake: In this case, it is described that the statemen

t was not included due to the oversight of both parties, which is obvious a mistake made by both parties in reducing the agreement to writing. Therefore, the promissory statement could be added into the written contract as a new term.

Extrinsic Evidence: (Pao On v Lau Yiu Long (1980) AC 614) Additional consideration that could be added into the contract to prove the real and full consideration of the parties.

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Legal Effect of the Statement (cont’d)

Implied Terms In Fats/By Law/By Customs In certain situations, it might be obvious that certain term

s were intended by both parties but, due to inadvertence, bad drafting or other reasons, were not included in the written contract. And the court may find the terms should be given effect, through implication, to implement what parties intended. (Graw, 2005)

Related Case: Codelfa Construction Pty Ltd v State Rail Authority of New

South Wales (1982) 149 CLR 337

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Legal Effect of the Statement (cont’d)

In This Case1. The contract is formed via negotiation between

two parties.2. It is obvious that the term which will be sought

to be implied goes without saying because it has been well discussed in the negotiation and even a promissory statement was made.

3. It should have, but not been included in the contract due to inadvertence of both parties.

A term similar as the statement could be implied.

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Existence Unproved

Injunction:

It prevents Jackhammer working as planned to carry

out its work 24 hours per day, seven days per week.

Does it leads to Frustration?

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The Effect of the Injunction-Frustration

Five Conditions

Supervening Event

Fundamental

Change

No Fault of Any Party

Parties didn’t considered the supervening event

when the contract formed

Unjust if the parties Perform based on the

Original contract

Frustration

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The concept of “impossibility” is crucial to the doctrine of ------“frustration”

Impossibility

Absolute impossibility

Radical difference

Supervening illegality

Futility

Frustration

Radical difference: it means the situation where performance has become radically difference from what was contemplated by the original contract

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Application of This Case

Frustration

Injunction

Delay performance Additional cost

Radical difference

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Application of This Case (cont’d)

Supervening event Injunction

Radical difference

Both parties haven’t fault----Injunction is out of control Injunction didn’t exist when the contract formed Unjust burden of performance

Injunction

10:00pm – 6:00am

Additional Cost

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Conclusion

Therefore, the injunction can lead

to frustration, which Jackhammer could rely on to seek its legal rights against NSW.

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Consequences of the Injunction

Consequences of the Injunctions

Statement is a term Existence cannot be proved

NSW insists its statement in the dispute

Follow what the term says

Anticipatory Breach

Frustration

Termination

Continuous Performance

Accrued Rights and Liabilities

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Anticipatory Breach

---“An anticipatory breach arises where, prior to the time appointed for performance by the promisor, the promisee justifiably terminates the performance of the contract. The promisee’s termination will be justified if the words or conduct of the promisor, or the promisor’s actual position, give rise to a repudiation of obligation or indicate that the promisor was wholly and finally disabled from the performing the contract.” (Carter and Harland, 2002)

Rule of Election: Continuous performing, or Terminate the contract

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Accrued Rights and Liabilities Termination is different from rescission because it will no

t rescind the contract from the beginning, which makes accrued rights and liabilities become an issue. (Carter and Harland, 2002)

If either Jackhammer or NSW has performed certain obligations prior to the frustration which have not received equal performance and thus lead unjust enrichment, for justice, related performances should be compensated even the contract has already been frustrated.

Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361

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Recommendation for Jackhammer

Statement

Proved Unproved

ExistenceStatus

Nature

Rule of Election

DisputeSolved

AnticipatoryBreach

Continuous Termination

Injunction asFrustration

New contract

ExclusionOf the Parol

Evidence RuleImpliedTerms

Part ofContract

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Recommendation for Jackhammer

Try to prove the existence of the statement and claim it as a part of the contract by resting on exclusions of the parol evidence rule or rule of implied terms.

Rely on frustration to terminate the contract if existence cannot be proved.

New contract can be signed between NSW and Jackhammer to finish the tunnel after the termination.

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THANKS