exam-revision-solutionsss

Studocu is not sponsored or endorsed by any college or university Exam Revision Solutionsss Contract Law (Swinburne University of Technology) Studocu is not sponsored or endorsed by any college or university Exam Revision Solutionsss Contract Law (Swinburne University of Technology) Downloaded by Shreya Gupta (sg2656558@gmail.com) lOMoARcPSD|33735488

Exam Revision Question 1 Jodie was preparing to sell her rental property to cash in on the property boom that had occurred in Melbourne recently. She realised that in order to gain maximum profit that she would need to do some minor renovations to the property before she placed it on the market. She approached Renos are Us Pty Ltd (‘Renos’), a renovation building company, to do the necessary renovation to her bathroom and kitchen area. Renos gave Jodie a quote for the work to be done and, at the bottom of the quote, in normal sized print in bright blue lettering, there appeared the following clause: Renos are Us Pty Ltd and its employees, agents and subcontractors will not under any circumstances be liable or responsible for any damage or loss that may be caused as a result of carrying out the renovations at the above- named property. Jodie was extremely busy at work and was preoccupied when she looked at the quote. She did not read the quote carefully and hence only glanced at this clause. She agreed to the quote and Renos to start work as soon as they could. The building work commenced and progressed quickly, much to the relief of Jodie. However, one night after returning home late, Jodie tripped over some PVC piping that had been left lying in the middle of the bathroom and fell onto a copper pipe sticking out of the wall (which had been left uncovered by Pete, the plumber (Renos’ subcontractor). Jodie suffered a serious injury as a result of this fall and has commenced an action for damages for her personal injuries (you may assume that Pete was negligent in leaving the pipe uncovered). Advise Jodie of her rights against Renos and Pete (the plumber). (Do not discuss the application of legislation) 1. Does the exclusion clause form part of the contract? - Found in a quote: unsigned document; Causer v Browne , a quote is considered a document that contains contractual terms forming the basis of a later contract - Reasonable steps given of the existence of the term: print was normal size and a different colour to the rest of the document – Parker v South Eastern Railway / Mendelssohm v Normand ; furthermore, Jodie did see it but didn’t bother to read it properly - The steps were taken before or when the contract was made: Thornton v Shoe Lane Parking 2. Does the exclusion clause cover what has occurred? - Exclusion clause construed according to its natural and ordinary meaning read in the light of the contract as a whole: Darlington Futures v Delco Australia - Clause will be construed strictly: Willis v Pratt - The clause is effective to exclude liability for negligence as the defendant “will not under any circumstances be liable… for any damage or loss”: White v Blackmore (‘howsoever caused’); DNFS Pty Ltd v De Neefe Signs Pty Ltd (‘all liability’). Downloaded by Shreya Gupta (sg2656558@gmail.com) lOMoARcPSD|33735488

the Victorian Government. Advise HighRail of its legal options. Determine whether the Victorian Government has the right to terminate for breach on 18 July. - ‘Time was of the essence’: HighRail obligated to complete the project by 1 September and if they did not, this would amount to a breach of an essential term: Tramways Advertising v Luna Park - However, the time for performance had yet to arrive, so was their conduct an anticipatory breach? ( Galafassi v Kelly ); Or was it otherwise a repudiation of the contract? ( Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd ) - If it did constitute a repudiatory or anticipatory breach of contract, the Vic Gov seemed to affirm the contract when it said the delay was ‘okay’ ( Immer v Uniting Church ). Such an affirmation is final: Ailakis v Olivero (No.2). - Vic Gov will likely argue that the second anticipatory breach or repudiation on 15 July also gave them the right to terminate. But HighRail will argue that the contract was frustrated in May due to the heavy rains and land slide. Frustration Could HighRail claim frustration? Have the circumstances in which the contract is to be performed been radically changed? - Commercial impracticalities are not sufficient: oOh! Media Roadside v Diamond Wheels - The test set out in Davis Contractors v Fareham and contrast with reasoning in Codelfa v State Rail Authority . - Claim under Australian Consumer Law and Fair Trading Act 2012 (Vic) for all expenses incurred up till the time of discharge of contract, including the value of any benefits from the work completed under s 36 to 38. Question 3 Mr and Mrs Weary have leased a premise in the Hyperplex shopping centre for their coffee shop business which is generating a decent income for the past 3 years. Mr and Mrs Weary are very concerned about their daughter, Matilda, who has been diagnosed as suffering from an incurable disease and who requires constant care. The income from the coffee shop is critical to ensure that Matilda can continue to have the best health care possible. The lease on the coffee shop was falling due and the Hyperplex manager, Shadey, told them that they had “better decide quickly” whether they wanted to renew their lease because there were 2 other potential tenants who would take their space “at a moment’s notice”. Despite being aware of Matilda’s illness and needs, Shadey would only offer the Wearys a new 2-year fixed lease at a substantially higher rent when they wanted a longer lease. The Wearys would have preferred to retire to look after their daughter but felt like they could not afford to give up the income from the coffee shop. They reluctantly signed the new lease, but 1 month later received a large tattslotto win and now could afford to retire. Advise whether the Wearys are able to avoid the lease at common law and or under statute. Downloaded by Shreya Gupta (sg2656558@gmail.com) lOMoARcPSD|33735488

1. Economic Duress - Illegitimate pressure (actual or threatened unlawful conduct) to induce someone to enter into a contract: Crescendo Management v Westpac . - No unlawful conduct towards the commercial interest of the Wearys. All Shadey has done is offered a harsh business deal to the Weary when they were in a difficult position. 2. Unconscionability - One party must be in a position of ‘Special Disadvantage’; and the other party knows or ought to know of that special disadvantage and takes unfair advantage of that position: Commercial Bank v Amadio - Would the Wearys satisfy the ‘Special Disadvantage’: Blomley v Ryan – circumstances include age, illness, poverty, drunkenness, inexperience or lack of education – Wearys don’t satisfy any of those circumstances; would the illness and needs of their daughter suffice? Commercial vulnerabilities don’t amount to special disadvantage: ACCC v CG Berbatis . - What about under the Australian Consumer Law (ACL)? S 20: unconscionability is as defined under common law – ACCC v Samton . - A remedy is possible under s 21 ACL which is wider than s 20 in relation to what constitute unconscionable conduct which s 21(4) makes it clear that parliament did not intend the section’s operation to be limited to the unwritten law relating to unconscionable conduct and s 22 provides a list of matters that the court may consider when deciding whether a particular conduct was unconscionable in a s 21 sense. Relevant matters under s 22 includes: (a) Para (a) relative bargaining positions – Hyperplex has greater bargaining power; (b) Para (d) pressure was exerted on the Wearys which arguably may be an unfair tactic used against them; (c) Para (f) whether Hyperplex’s conduct was consistent in similar transactions renewal of leases – no enough info from the facts; (d) Para (l) Shadey does not appear to have acted in good faith - These factors alone do not necessarily mean that the Wearys can establish a claim under s 21, there should also be a ‘moral tainting in the transaction’: Wolfe v Permanent Custodians Ltd . If they are successful under s 21, they would be entitled to a remedy under s 243 for an ancillary order to set aside the lease Question 4 On 1 September, Al (as developer) entered into a building contract with Bridgette for the construction of 6 waterfront townhouse in Altona. The main clause of the building contract that they have signed provides as follows: 1. The contract price is $800,000 2. The contract price shall be paid as follows: (a) $100,000 upon the contractor clearing the site; (b) $400,000 after completion of the walls, floors, roof and plumbing to all townhouses; (c) $300,000 upon full and final completion in accordance with the Victorian Building Code Downloaded by Shreya Gupta (sg2656558@gmail.com) lOMoARcPSD|33735488

What damages is Al entitled to recover? → Remoteness of damage: Hadley v Baxendale (1) Cost of rectification work – 1 st limb (2) Loss from the sale of the townhouse units – 2 nd limb: Al informed Bridgette that the units were required for marketing in October which arguably means that she has special knowledge of the prospective sales of the units. (3) Loss suffered from the loan extension – arguably 1 st limb; a loan is within the usual course of things from such a building project → Measure of damages: Commonwealth of Australia v Amman Aviation/Robinson v Harman – the plaintiff must be placed in the position they would have been in had the contract been performed – compensation for Al’s loss of expectation; damages will be assessed as at the date of breach ( Jamal v Moolla Dawood Sons & Co ) – 11 December. (1) Since only $100,000 is the estimated value of the remaining work, this means that Bridgette has completed about 87.5% of the work, she would have justification to recover under the contract the sum of $700,000 under the doctrine of substantial performance ( Hoenig v Isaacs ). Total loss payable is $100,000 which should be deducted against the amount owing to Bridgette ($800,000 - $100,000 (paid already under the contract) - $10,000 (plumbing defects) - $100,000 (estimated remedial work) = $590,000 (this is still owing to Bridgette ); (2) The loss of value from the 2 townhouses sales (Unit 1: $10,000 ($500k - $490k) and Unit 2: $20,000 ($450k - $430k) = $30,000 ); (3) The extra payment on the loan is $20,000. → Before damages can be claimable, there is a duty on the part of Al to take all reasonable steps to mitigate their loss – Payzu v Saunders . Has Al mitigated? They sought another builder but has chosen to wait till the end of January. Bridgette indicated that there was evidence that another contractor could be available to complete the work by 24 December: on this basis, it is therefore likely that losses can only be claimable as at 12 December for the loss in value to the townhouses (which is $30,000 altogether) and possibly a proportionate reduction in interest payment if the other townhouses could have been sold earlier. In any event, all material facts are not completely available in the question for a determinative outcome, but it is important to note that Al is only required to act reasonably, and not to take undue steps, or to take unnecessary risk or to spend money that they cannot afford simply to mitigate their loss – Burns v MAN Automotive. Downloaded by Shreya Gupta (sg2656558@gmail.com) lOMoARcPSD|33735488