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Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
Contract Law
Part 3
Chapter 9
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher. Slides prepared by Kay Fanning.
Express terms of contract statements
(made throughout negotiations)
Dependant upon:
• Time statement made
• Form of statement
• Special skills and expertise being relied upon
• Intention of parties,
resulting in
Mere representation
(collateral contract)
Term of contract
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-2
Express terms of contract statements
(made throughout negotiations)
Resulting in
Mere representation
No damages
Term of contract
BREACH
Damages
Warranty
TEST: Did party enter contract
because of term?
NO
Damages
Condition
i.e. term of vital
importance
YES
Damages
Rescinds contract
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-3
Conditions
• Precedent condition: A term that must be satisfied
before the contract can be enforced.
• Subsequent condition: Term of contract that
will terminate the contract due to an event, or
act of a party to the contract, occurring.
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-4
Implied terms
By Courts (Officious Bystander Test)
• Reasonable and equitable
• Contract ineffective otherwise
• So obvious didn’t need to be included
• Clearly expressible
• Not contradictory to other terms
By Statute Law
• Trade Practices Act 1974 (Cwlth)
By Custom or Trade Usage
• Certain, reasonable, notorious
• Not contradictory to express terms
• Not contradictory to statutory restrictions
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-5
Exemption and exclusionary
terms
Ticket Cases
Test:
• Is exemption clause a term of the contract?
(Reasonable Person Test)
- Receipt (No exemption)
- Document with contractual terms (exemption).
• Notice of clause before or at time contract is made.
Non-Ticket Cases
• Exemption clause is a term of the contract.
• Notice of clause before or at time contract is made.
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-6
Doctrine of privity on contract
• Only parties to a contract can sue or be sued on
the contract.
Exceptions
Insurance Contracts Act 1984 (Cwlth)
• Person(s) acting as agent or trustee
• Person assigning rights and liabilities to another
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-7
Discharge of a contract
•
•
•
•
•
•
Performance
Agreement between parties
Provision for discharge
Operation of law
Frustration
Breach
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-8
Discharge of contract
Performance
Actual
Tender
(attempted performance)
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-9
Discharge of contract
Agreement
Cancellation of original
agreement
Mutual Discharge
Both parties agree
to end the contract
Substitution of a new
agreement
Release
Party can release other
party from obligations
Novation
Replaced by new
contract involving
third party
Accord and satisfaction
Release one party for
new agreement with
further consideration
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-10
Discharge of contract
Provision for discharge
Options to terminate
Conditions subsequent
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-11
Discharge of contract
Operation of law
Bankruptcy
Material alteration
Merger
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-12
Discharge of contract
Provision for discharge
Options to terminate
Conditions cubsequent
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-13
Discharge of contract
Frustration
(i.e. impossibility of performance
of a contract through no fault
of either party)
Destruction of
subject matter
Failure of an
event to take
place
An event that is
unforeseen must
occur
Contract of
personal service
The occurrence
of the event must
not be the fault
of either party
Change in law
The frustrating
event must occur
after the contract
has occurred
Government
interference
The frustrating event
must make performance
of the contract radically
different from what was
agreed by the parties
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
Increase in the
burden of
performance
9-14
Discharge of contract
Breach
Anticipatory
Renunciation
during
performance
Impossibility
of performance
Actual
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-15
Remedies
Condition
Right to rescind
Specific performance
Injunction
Quantum meruit
Damages (reasonably foreseeable)
Ordinary
Normal
(mitigate losses)
Exemplary
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-16
Specialty contracts
• Lease
One party grants exclusive possession of property
to another party for a period of time.
• Hire purchase
The owner of goods hires the goods in exchange
for regular payments to the hirer. Title passes
after all payments have been made.
• Franchise agreement
Agreement between a supplier of a product or
service, or an owner of a trade mark or copyright
(Franchisor), and a reseller (Franchisee).
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-17
Franchise agreement
• Franchise agreement - A marketing
tool and means by which, through a
contract, the franchisor grants the
right to a franchisee for the use of:
- a product
- services
- a trade mark
- copyright, etc.
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-18
Advantages
For franchisor (seller)
• Ability to penetrate markets quickly
• Access to capital resources
• Risk sharing
For franchisee
• Instant reputation
• Arranged marketing
• Financial expertise
• Established business
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-19
The franchising code of
conduct
•
•
•
•
•
•
•
•
Disclosure document
Cooling-off period
Copy of lease
Association of Franchisees
Prohibition of general release from liability
Transfer of the franchise
Termination of a franchise
Resolution of disputes
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-20
Trade Practices Act 1974 (Cwlth)
Part IV
• Section 45: Exclusionary Provisions
• Section 46: Monopolies
• Section 47: Exclusionary Dealing
• Section 48: Resale Price Maintenance
Part IVA
• Section51AA: Unconscionable Conduct
Part V
• Section 52: Misleading and Deceptive Conduct
Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
9-21