Chapter 9 - Contract law (Part 3). At the end of this chapter you should understand: the tests that determine whether a statement is a term of a contract, the difference between a condition and a warranty, conditions precedent and conditions subsequent and be able to provide examples, express and implied terms,...
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Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Copyright © 2000 McGraw-Hill Australia Contract Law Part Chapter 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 Term of contract (collateral Copyright 2003 McGraw-Hillcontract) Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e 9-3 Copyright © 2000 McGraw-Hill Australia by Barron & Fletcher Slides prepared by Kay Fanning 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 Copyright Condition i.e term of vital importance YES Damages Rescinds contract 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-4Australia Copyright © 2000 McGraw-Hill 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-5Australia Copyright © 2000 McGraw-Hill 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-6Australia Copyright © 2000 McGraw-Hill 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-7Australia Copyright © 2000 McGraw-Hill 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-8Australia Copyright â 2000 McGraw-Hill 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-9Australia Copyright © 2000 McGraw-Hill Discharge of contract Performance Actual Copyright Tender (attempted performance) 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-10 Copyright © 2000 McGraw-Hill Australia Discharge of contract Agreement Cancellation of original agreement Mutual Discharge Both parties agree to end the contract Copyright Release Party can release other party from obligations Substitution of a new agreement Novation Replaced by new contract involving third party Accord and satisfaction Release one party for new agreement with further consideration 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-11 Copyright © 2000 McGraw-Hill Australia Discharge of contract Provision for discharge Options to terminate Copyright Conditions subsequent 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-12 Copyright © 2000 McGraw-Hill Australia Discharge of contract Operation of law Bankruptcy alteration Copyright Material Merger 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-13 Copyright © 2000 McGraw-Hill Australia Discharge of contract Provision for discharge Options to terminate Copyright Conditions cubsequent 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-14 Copyright © 2000 McGraw-Hill Australia Discharge of contract Frustration (i.e impossibility of performance of a contract through no fault of either party) Failure of an Destruction of Contract of event to take Change in law subject matter personal service place An event that is unforeseen must occur Copyright The occurrence of the event must not be the fault of either party Government interference The frustrating event must occur after the contract has occurred Increase in the burden of performance The frustrating event must make performance of the contract radically different from what was agreed by the parties 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-15 Copyright © 2000 McGraw-Hill Australia Discharge of contract Breach Anticipatory Copyright Renunciation during performance Impossibility of performance Actual 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-16 Copyright © 2000 McGraw-Hill Australia Remedies Condition Right to rescind Specific performance foreseeable) Injunction Quantum meruit Exemplary Damages (reasonably Ordinary Normal (mitigate losses) Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9-17 Copyright © 2000 McGraw-Hill Australia 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-18 Copyright â 2000 McGraw-Hill Australia 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-19 Copyright â 2000 McGraw-Hill Australia 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-20 Copyright © 2000 McGraw-Hill Australia 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-21 Copyright © 2000 McGraw-Hill Australia 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 by Barron & Fletcher Slides prepared by Kay Fanning 9-22 Copyright © 2000 McGraw-Hill Australia ... discharge Operation of law Frustration Breach Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9- 9Australia Copyright... 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 by Barron & Fletcher Slides prepared... 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 9- 12 Copyright © 2000 McGraw-Hill Australia Discharge of contract