University of Queensland Law of Contract B

Development

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  Blomley v Ryan (leading authority before Amadio) – cheap sale of land by alcoholic while buyer supplying alcohol.
  
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    HC said undervalue is not enough.
    
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    Fullagar J- special disadvantage- poverty, need, sickness, age, sex, infirmity of body/mind, drunkenness, illiteracy/lack of education, lack of assistance/explanation where necessary.
    
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    Does not appear necessary that party at disadvantage should suffer loss or detriment by the bargain.
    
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  Amadio per Mason J - the categories are not closed.
  
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  Berbatis - mere inequality of bargaining power is not a special disadvantage.
  

Elements

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  Essentially five elements:
  
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    1. Party seeking relief must at time of entering into transaction suffer from a special disability vis-a-vis the other party;
    
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    2. The special disability must seriously affect the party’s capacity to judge or protect their own interests;
    
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    3. The other party must know of the special disability;
    
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    4. That party must take advantage of the opportunity presented by the disability; and
    
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    5. The taking of advantage must be unconscionable.
    
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  If these elements are established there is a presumption that the transaction was unconscionable.
  
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  Can be rebutted by showing either steps were taken which negative the special disability or the unconscientious taking of advantage (eg the receipt of independent advice), OR that the transaction was otherwise fair, just and reasonable.
  
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  CBA v Amadio - elderly Italian migrants (no English, no independent advice) guarantee debts of son for mistaken amount (bank knew son was in financial trouble). Bank knew of disadvantage.
  
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    Was unable to show that there had been no taking advantage (ie parents had had advice) or that transaction was otherwise fair, just and reasonable.
    
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  Louth v Diprose - HCA extended doctrine to emotional dependency.
  
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  Bridgewater v Leahey - Farmer made a will, but sold land to nephew at undervalue. He was compos mentis and did this to have the business carry on. Was an astute businessman and had taken legal advice. Held unconscionable transaction.
  
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  Kakavas v Crown Melbourne - Property developer with gambling problem. HC stressed autonomy of parties. Say he was in control, didn’t suffer disability of the relevant kind. Have to have actual knowledge of disability.
  
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    Had been suggested in obiter in Amadio that constructive knowledge was enough- not anymore.
    
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    Implicitly acknowledged that HC went too far in Louth.
    

Statute

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  Section 20- unconscionable conduct within the meaning of the unwritten law.
  
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  Section 21- unconscionable conduct in connection with goods or services (not limited to common law). In trade/commerce.
  
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  Section 22- matters the court may have regard to for the purposes of section 21.
  

Remedies

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  Rescission
  
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  Statutory remedies
  

Performance and Agreement

Discharge

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  A contract is discharged by:
  
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    Exact performance as per the contract unless…
    
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      Law does not concern itself with minor issues – Shipton Anderson v Weil
      
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      Intention of parties shows substantial performance sufficient – Luna Park
      
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    Agreement
    
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    Breach
    
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    Frustration
    

Method of performance

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  Performance should not have to be demanded – MS Fashions v BCCI
  

Alternative methods of performance

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  If not specified, the performer can choose how to perform – Reed v Kilburn Co-operative Society per Blackburn J
  

Vicarious performance

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  Vicarious performance is permitted unless:
  
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    Stated within the terms
    
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    Element of personal skill or expertise or personal confidence – Bruce v Tyley
    
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  Reasonable person test applicable in deciding this – British Waggon Co v Lea
  
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  Court may imply term that performance is to be personal: “exercise every care” inconsistent with vicarious performance – Davies v Collins
  

Variation of performance

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  Variation of performance must be supported by consideration and is a matter of intention – Tallerman v Nathans per Kitto J
  
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  Keep in mind Williams v Roffey and economic duress.
  

Order of performance

Condition precedent

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  Performance by A is a condition precedent to the liability of B.
  

Concurrent conditions

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  Performance by A and B is to take place at the same time. See SOGA s 30 regarding delivery of goods and payment.
  

Independent promises

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  Each party can enforce their promise even though they have not performed their own.
  
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  Courts reluctant to classify promises as independent unless their intentions are very clear: Kingston v Preston.
  
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  Disincentives performance and destroys the traditional reciprocity of contract.