copyright guy harley 2008 1 revision. copyright guy harley 2008 2 separation of powers designed to...

1Copyright Guy Harley 2008

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 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

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

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

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

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


Precedent

Two Types Mandatory Persuasive

Persuasiveness depends on quality of decision jurisdiction of the court that gave the decision


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

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


Duress

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 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

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 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

Parent & Child Guardian & ward Principal & Agent Trustee & Beneficiary Doctor & Patient Lawyer & Client Religious advisor & Follower More


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 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

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

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


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


Mistake

Mistake at Common Law makes contract void Mistake at equity makes contract voidable


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

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


Rescission

Available for: Misrepresentation Undue influence Unconscionable conduct Duress


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


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

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

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)


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


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

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 will not normally deprive innocent party of right to rescind except if long period

Leaf v International Galleries (Graw 12.8.4)


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

Termination Rescission Recovery of Contract Price Damages Equitable Remedies

Specific Performance Injunction Rectification Restitution


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

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 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

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

1. RelationshipA relationship (usually contractual or pre-contractual) exists between the parties

2. PromiseA promise not to assert legal rights

3. ExpectationPromisee expects promise to be kept

4. ReliancePromisee acts in reliance on promise

5. DetrimentPromisee alters its position to its detriment

6. UnconscionableUnconscionable to allow promisor to break 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


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


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)


Remedy

Minimum orders to prevent detriment Not necessarily the same remedy as for breach

of contract Not a new cause of action


Agency

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

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

Actual agency Express Implied

Agency by Necessity Apparent Agency (Ostensible agency) Agency by Ratification


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

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

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

Fiduciary relationship Duty to disclose facts material to Principal’s

decision to contract with Third Party Must act in Principal’s best interests

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