MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Week 2 Law of Contract Revision.

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MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Week 2 Law of Contract Revision

Transcript of MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Week 2 Law of Contract Revision.

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Week 2

Law of Contract

Revision

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Revision Sources of Law Separation of Powers Division of Powers Court Hierarchy

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Sources of Law

Parliament The Courts

Equity Common Law

Contract LawUnconscionable Conduct

Promissory estoppel

Trade Practices Act

Fair Trading Act

Federal State

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High Court

Federal Court Family Court

Federal Magistrates Service

Court of Appeal

County Court

Magistrates Court

Supreme Court

FEDERAL COURTS VICTORIAN COURTS

Privy Council

Appeals Abolished

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Revision (cont.) Precedent

2 types Describe 2 parts of a decision

Rule of Law Citing decisions

Smith v Jones (2001) 145 CLR 203, 207 Smith v Jones [1945] 2 All ER 203, 207 Smith v Jones (2001) HCA 203, [20]

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Revision (cont.) Statutory Interpretation

3 approaches Current approach

Why Aids to interpretation Rules of interpretation

Proof Burden of proof Presumptions

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Week 2

Law of Contract

Development, Intention & Offer

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Development of Contract Law Developed in England pre 1900 Laissez faire economic environment Underlying common law principles

Freedom of Contract Equality of bargaining power

Courts reluctant to interfere unless Duress Illegal

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Recent Developments Equal bargaining power is a myth Courts developed equitable principles

Unconscionable conduct Unjust enrichment Economic Duress Promissory estoppel

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Recent Developments (Cont.) Consumer protection legislation

Trade Practices Act 1975 Fair Trading Acts Insurance Contracts Act 1987 Credit Codes Licensing Acts (e.g. Builders Licensing Act) Amendments to Sale of Goods Act

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Contract An agreement between two or more persons

that will be enforced by law May be

In writing Oral Partly in writing and partly oral

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Writing Contracts need not be in writing Exceptions

Sale of Land Guarantees Credit contracts Other statutory requirements

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Analysing a ContractIs there a contract?

What are the terms?

Is it valid & enforceable?

Has it been discharged?

Has there been a breach?

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Six Elements1. Contractual Capacity

2. Offer

3. Acceptance

4. Intention to create a contract

5. Consideration

6. Certainty

The elements are not always clear

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Intention to Contract Parties must intend their agreement to be legally

binding i.e. enforceable by a court An intention to be morally binding is not enough Objective test Distinction between

Social/domestic agreements Commercial agreements

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Intention Subjective intention

The person’s actual state of mind Objective intention

Concludes, on the basis of what a person said and did, what a reasonable person in the same circumstances would have intended

Contract law uses objective tests

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Domestic Agreements Court presumes that parties did not intend to

contract Presumption may be rebutted

Todd v Nicholls (S&O p94) Roufos v Brewster (S&O p94)

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Domestic Agreements (cont.) Court will look at

Terms of agreement Circumstances surrounding the agreement Effect of the agreement on the parties Parties conduct subsequent to agreement

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Commercial Agreements Courts presume that the parties intended to

contract Clear words are needed to rebut the

presumption Onus is on party seeking to disprove the

contract Rose & Frank v J R Crompton (S&O p95) Edwards v Skyways (S&O p95)

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Commercial Agreements (Cont.) Contrast with Clauses excluding courts

jurisdiction which are are invalid Letters of Comfort

Kleinworth Benson v Malaysia Mining (S&O p96)

Banque Brussels Lambert v Australian National Industries (S&O p97)

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Commercial Agreements (Cont.) Heads of Agreement/Letters of Intent

Air Great Lakes v K S Easter (S&O p98) Coal Cliff Collieries v Sijehama (S&O p98)

“Without prejudice” documents

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Offer Specific legal meaning An offer exists only where a reasonable person

would conclude on the facts that the person was willing to be bound in a court of law

Distinguish Indication of future conduct Invitation to treat Negotiations

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Indication of Future Conduct A mere statement of a present intention to do

something in the future is not an offer Harvey v Facey (S&O p 70) Australian Woollen Mills v Commonwealth

(S&O p71) Harris v Nickerson (S&O p71) Kelly v Caledonian Coal Co (S&O p71)

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Invitation to Treat An invitation to

Negotiate Make an offer

is not an offer but an “Invitation to Treat” The distinction lies in the objective intention of

the person making the offer or invitation to treat.

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Invitation to Treat Retail Displays Catalogues Advertisements Auctions Tenders

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Retail Displays Fisher v Bell (S&O p72) Pharmaceutical Society v Boots (S&O p73) In most circumstances the retailer does not

make an offer by displaying goods for sale, even where the goods are marked with a price

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Catalogues Grainger v Gough (S&O p73) If the catalogue publisher was making an offer

then it would be bound by every acceptance even if their stock was exhausted.

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Advertisements Depends on circumstances Carlill v Carbolic Smoke Ball Co (S&O p74) But note legislative restrictions e.g. Trade

Practices Act

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Auctions Bidder makes the offer Auctioneer accepts S64 Sale of Goods Act (Vic) Auctioneer announces terms at start Anyone who bids then accepts the auctioneers

offer as to terms

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Tenders Person submitting the tender makes the offer Body calling for tenders accepts any tender

Not bound to accept lowest BUT, the request for tenders may be an offer to

deal with tenders in a certain manner Hughes Aircraft v Aeroservices Australia

(S&O p76) Harvela Investments v Royal Trust Co of

Canada (S&O p76)

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Negotiations An offer will not arise merely because parties

have reached agreement on one aspect of the deal

Implied (or express) understanding that parties not bound until formal contract executed

Heads of Agreement

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Fate of An Offer Withdrawn by offeror Accepted by offeree Rejected by offeree Lapse due to passing of time Lapse due to death of offeror or offeree Lapse due to failure of condition precedent

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Withdrawing an Offer Cannot be withdrawn after accepted A contract is made when the offer is accepted The withdrawal of the offer must be

communicated to the offeree Special cases:

Unilateral offers Options cannot be withdrawn

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Withdrawing an Offer Before Acceptance Generally, an offeror may withdraw an offer at

any time before acceptance Routledge v Grant (S&OR p78) But, options cannot be withdrawn

an option is a separate enforcable obligation and cannot be withdrawn

Exists where the offeree has given consideration to keep an offer open

Goldborough Mort v Quinn (S&OR p 80)

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Withdrawal Must be Communicated Offeror must let the offeree know that the offer is

withdrawn Byrne & Co v Tienhoven & Co S&OR p79) Offeror does not have to communicate

withdrawal personally Would a reasonable person in the position of the

offeree conclude that the offer had been withdrawn?

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Withdrawing a Unilateral Offer Involves a unilateral promise e.g. Carllil v

Carbolic Smoke Ball Co (S&O p74) If offeree has acted on the promise then offeror

cannot withdraw until offeree has had a reasonable opportunity to complete

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Rejecting an Offer Once rejected, an offer cannot be accepted May be rejected expressly or by implication Implied

Offeree’s actions are inconsistent with an intention to accept

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Rejecting An Offer (Cont.) A counter offer is a rejection

Hyde v Wrench (S&O p81) Any material alteration is a counter offer

Restating the offer when accepting is not a counter offer

Turner Kempson v Camm (S&O p81)

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Rejecting An Offer (Cont.) A counter offer is a rejection (cont.)

Asking for clarification is not a counter offer Reasonable person test examine all circumstances

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Lapse of Offer Due to death of either party unless

An option; and Does not involve personal skill or service by

the deceased Due to failure of condition precedent Due to time

Express time limit Otherwise, offer remains open for a

reasonable time

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Lapse of Offer (Cont.) Due to time (Cont.)

What is reasonable time depends on: Method by which offer made Nature of the transaction Terms of Proposed Contract Actions of parties between offer &

purported acceptance Intimations as to time by offeror