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Case Notes for Contract Law Part A

Case summaries of each relevant case in Contract Law Part A.

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Contract Law (LEGL2005)

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University of Newcastle (Australia)

Academic year: 19/20

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Intention to Enter into Legal v Greek Orthodox Community of SA Inc HCA court proceedings were initiated when the Archbishop Ermogenous made a claim in the Industrial Relations Court of SA against the Community (the respondent). In the initial proceedings, the determined the respondent was liable to pay the Archbishop accumulated annual leave, and another for accumulated leave. The respondent appealed twice before their appeal was after appealing to the Full Court of the Supreme Court. This case was heard in the High Court. This case is signifiant as it rebutted that contracts were not generally formed within relationships of nature. It also provided that an objective consideration of the the correct method in ascertaining intention into establishing legal success of the Archbishop then established precedent for other cases to appellant had been the Archbishop for over two decades, The respondent for clarification was a Community: an incorporated, which acquired land, established churches, and Their nature was not only religious, but also cultural, social, and Once recruited the respondent, the appellant claimed he had he would be their employee. During the next 23 years, the the appellant the agreed upon salary (subject to pay rises), with deductions tax paid. Upon termination of this arrangement, the Orthodox refused to pay the annual and long service leave he had accumulated alleged employment. This resulted in the Archbishop initiating his claim, case was heard Gaudron, McHugh, Hayne, Callinan, and Kir JJ. The allowed Kir J did present an alternative perspective upon though ultimately agreed with the decision of the other four this case was decided in favour of the appellant the McHugh, Hayne, and Callinan JJ asserted that the first issue to consider there was an intention to create legal relations. In deciding this case, determined that there should be an objective assessment of the state of the parties. Though there are relevant presumptions in that the context social arrangement would not indicate a relevant intention, they can irrelevant as it usually only serves to place the onus (this time upon and can be discharged. Therefore, presumptions are not a whether or not an intention can and will be relationship between a minister and their church is usually of a nature that spiritual and therefore, not contractual. However, this does any possibility of an employment relationship. The respondent could be defined as a church as well as its function extended beyond the not all of its members were members of the Greek Orthodox faith. rule as to spiritual relationships not giving rise to contractual relations J assented to the majority view and extended upon analysis in that a a minister of religion does not lose its validity simply because of nature. As Australia is a secular nation, religious bodies cannot mere notion of contractual relationships, especially in this instance in and monetary entitlements were involved. He also agreed that should be In order to establish intention, there must be objective consideration of agreement between the parties and the parties Though social arrangements do not normally indicate an intention to legal relations, it does not make it Religious bodies are not exempted from the impositions of purely because of their religious CJ agreed with the trial judge in that, although the presumption as and family relations could be rebutted, the judge did not believe it should instance. The language used in the conversations were too informal to and did not indicate the presence of any obligation. The length of such was not specified and neither were the particular responsibilities a mistress. There was no supporting documentation and no consultation counsel. Therefore, Bathurst CJ agreed with the decision made the in asserting there was no intention due to the imprecise nature of and the low likelihood that Pratt had any intention of entering agreement which involved ongoing and significant JA produced additional observations. Within the conversation, Pratt what he wished to do for her, and did not express them in the manner of of promises. No terms or conditions were expressed either than of action. Her responses to his offers also did not indicate legal obligation she was extremely grateful not consistent with a legally enforceable on the lack of intention, Meagher JA assented with Bathurst Verbal agreements can constitute a contract as long as there is a high certainty engaged in the The vagueness of an agreement can act as a good indicator for a lack to enter into legal anor v Cameron 91 CLR High Court decided this case. The appellant in this case was the purchaser whilst the respondent was the vendor Cameron. This case to an originating summons from the Supreme Court of WA at the suit Co against the respondent, as they were claiming commission on given for a purchase of the land. This initiated the two the appellant and respondent for the deposit, on the basis of whether binding contract was present when the appellant had originally the purchase. Wolf J in the Supreme Court case determined that a contract had been completed between the relevant parties in This case is highly significant as it establishes three classes of contract these cases can be categorised, and therefore whether they are respondent reached an agreement that the appellant would purchase A written agreement was drawn up and signed. The alleged contract involved the phrase agreement is made subject to the preparation formal contract of sale which shall be acceptable to solicitors on the above The same day this agreement was made, a deposit of 1750 paid to the agent Dalgety. After the sale of the was terminated, both parties attempted to claim the deposit paid to agent Dalgety. The appellant did so on the basis that there was present and therefore, as the purchase did not proceed, their be returned. The respondent did so as they claimed there was a and the deposit should therefore be kept due to the forfeit the judges deciding this case were Dixon CJ, McTiernan and Kitto JJ. It was all three judges that the agreement made had no legally and therefore ruled that the appeal should be highlighted Dixon CJ, this case can belong to one of three Where the parties intend to enter into legal relations but wish to have terms of the contract restated at a later time in a different form, the same in its Where the parties have performed at least one of the terms which on execution of a formal Where the parties have no intention to conclude their agreement until of a formal first two examples indicate the presence of a binding contract, as Sinclair, Scott Co Ltd v Naughton, and Niesmann v Collingridge The last As supported Summergreene v Parker, the third example does not legally binding effect as the parties still potentially wish to introduce into the final formal document or wish to potentially withdraw in phrases such as to indicate on a prima facie basis initial document acts as a potential contract but does not constitute a contract. It does not indicate there is a binding contract present in deposit was paid upon signing this document and therefore, the judge it should be considered a deposit on the creation of a further contract. As contract was not made, it should not be the property of the respondent now be returned to the appellants. The appeal was therefore rules applied in this Phrases such as to typically displaces the notion that will be legally original rules devised in this The categorisation of contracts into three classes which provides will typically be legally binding or Where the parties intend to enter into legal relations but wish to have terms of the contract restated at a later time in a different form, the same in its Where the parties have performed at least one of the terms which on execution of a formal Where the parties have no intention to conclude their agreement until of a formal to the point that no trust was present, he distinguished this subjective assessment insisted upon Commissioner of Stamp Duties (Qd) as the letter indicated a transaction and therefore, created which is bound different rules and is assessed objectively. This can using Trident General Insurance Co Ltd v McNiece Bros Pty Ltd states that: requirement of an intention to create a trust will be prima facie satisified if the terms of the contract expressly or that The judge used this case to satisfy that the point was without Though there is a presumption against familial arrangements giving rise relations, this is rebutted if in process of separation, as they are in the required social context to extent required From the perspective of intention in entering legal relations, it is that it for family arrangements even such as a couple separation can give rise to legal relations, especially when there significant documentation in Enterprises Pty Ltd v Jaylor Pty Ltd anor case was decided in the NSW Court of Appeal and was initially heard in Supreme Court primary judge Brownie AJ. It related to breach Initially, it was held that the parties did intend to enter into a contract, though there were further steps to be taken. Despite this intention, there was too many further steps, and therefore, a binding not present. The appellant in this instance was Helmos Enterprises Pty Ltd respondent was Jaylor Pty Ltd. It was significant as it asserted that could be legally Pty Ltd (now referred to as J) and Kingsley Australian Steakhouse Pty KAS) each had a share in Crab House (KCH). Kingsley Steak House (KSH). Helmos made an offer to purchase KAS but condition that it could also purchase the share in KCH. in a letter on 15 January 2002, offering that share at a price of and stating receipt of the exercise of offer contracts for purchase interest shall be sent to your office no later than five days from Helmos entered a contract to make the requisite purchase of formally accepted offer on 8 April 2002 of the in KCH. On 2002, informed Helmos that J and K rejected the existence legally binding agreement to transfer the Helmos then sued both K due to breach of judges presiding over this appeal was Young CJ, Hodgson and Stein JA. was allowed, with the judgment delivered Young CJ. Hodgson JA JA were in agreeance. Therefore, it was decided in favour of the appellant judgment was delivered Young CJ. The two appeal points in whether there was an intention to create legal relations, and whether a sufficient level of certainty in the Ermogenous v Greek Orthodox Community of SA Inc provided that to create legal relations should be assessed on an objective commercial agreements, there is presumption of the presence of an intention legal relations, due to the context of the agreement. Once this intention does seem indicated through the stringent employment and commercial CJ considered which class of contract this agreement could be He referred to the primary decision in allocating this case to the which is additional to the primary three discussed in Masters v AJ allocated this contract to the class in which had agreed to immediately even though there would be a more formal which could contain other and would establish a contract. This fourth class is instituted into common law Baulkham Hospital Pty Ltd v GR Securities Pty CJ analysed whether this case fell into this newer fourth class, or the producted Masters: where the parties do not have an intention to a concluded contract until the creation of a final, formal document. The does not indicate an execution of a legally binding CJ held that the contract was fully executed once the transfer was made The two purchases involving the KAS and KCH were therefore stated that this case should be allocated to the fourth for uncertainty of terms, the trial judge had determined that as there were matters to consider in relation to share in KCH, the discussions that were too uncertain to constitute any legally binding CJ overruled this decision as he determined that these terms were and therefore could have been resolved without any requirement agreement between parties. The appeal was allowed was therefore There is a presumption of an intention to enter into legal relations within a commercial In this instance, a preliminary agreement can serve as legally binding govern the relationship of the parties to the contract and a consensus had been reached on the terms JA referred to a number of authorities one of them Brogden Railway Co which supported the concept that conduct can give a contract. However, this conduct must be of such a nature that it of the intention to enter into legal also asserted that the exchange of files on 19 July did not, of itself, give rise to It is not unambigous as though an intention could be present the parties could also have simply intended that the clients could be the appellant otherwise they could lose their business. The contract have been separate and still be pending further conjunction to this, he considered it to be incomplete as there were still to be discussed and negotiated. The transfer of the files did not negate for a deed but only depicted a further intention to create and legally binding contract at a later JA ordered that the appeal be applied in this case As held Sinclair Scott Co v Naughton, there is a fourth class of can indicate intention to enter into legal There is a general presumption within a commercial context that there is to enter into legal The further parties have proceeded within an agreement, the likelier are to give effect to established and affirmed in this case Conduct of the parties involved can establish intention to enter into even without the confirmation of a concluded Therefore, contracts can be inferred from the acts and speech of the Crown v Clarke 40 CLR this appeal was heard in the High Court. It was initially heard the Supreme Court McMillan CJ, but then allowed the Full subsequent appeal. The Crown then appealed to the High Court. This case to unilateral contracts that involved offers to a wide demographic in the general public. The appellant was the Crown and the respondent Clarke attempted to claim one thousand pounds from the Crown due to in 1926 made the Commissioner of Police that stated they the Government of WA to offer this reward for information lead to the arrest and convictions of the person or persons who committed of Walsh, inspector of police, and Pitman, police sergeant. A month proclamation, a man named Treffene and Clarke were arrested in the murder. Clarke gave information as to the details of the murder a man named Coulter was also arrested. T and C were then convicted giving evidence. Clarke now attempts to claim the this case was heard Isaacs ACJ, Higgins J, and Starke J. It was decision in favour of the Crown, the appellant, that the appeal should Isaacs ACJ Clarke had previously admitted that when giving he was not acting in consideration of the proclamation but order to clear himself from a false charge of murder. Therefore, he had no moral claim to the reward. Motive acts as a very strong evidence of state To create contractual obligation, there must be offer and acceptance. In it was performance of condition that acted as acceptance. However, it had a performance that was conducted due to consideration of the offer and to it. Appeal should be J The appeal should be allowed. Clarke succeed unless he contractual obligation. However, he had already stated his was to clear himself of the charge. He did not mentally assent to the As well, the information given did not lead to the arrest of Treffene as he before the information was J performance of conditions of such a universal offer is an acceptance However, the individual must act on its faith or in reliance of it. This is that can be excluded upon the facts. It can be excluded. The appeal performance of conditions of such a universal offer is an acceptance of the individual must act on its faith or in reliance of it. This is an can be excluded upon the create contractual obligation, there must be offer and acceptance. In this case, performance of condition that acted as acceptance. However, it had to be that was conducted due to consideration of the offer and not Holdings Ltd v Bathurst City Council NSWCA the respondent was the Council and the appellant was Ltd. It was heard in the NSW Court of Appeal, after being decided P there is a lack of consensus as to whether restitutionary damages are an unwelcome invader or a legitimate development of the terms can be impled four Implications contained in express words of Implications from nature of Implications from Implications from business If offeree takes advantage of offer and has opportunity to reject it, then taken to have accepted it under the terms it was For conduct to amount to implied acceptance of an offer, it must be of character to lead to an inference on the part that had been accepted the plaintiffs and was to be acted Oil Australia Ltd v Wellcome International Pty Ltd ors three appeals were heard altogether. In two of the appeals, against judgments given in favour of three franchisees of Mobil In the third, two franchisees appeal against a judgment given in favour In this instance, Mobil appealed agains the order made in favour Therefore, the respondent is Wellcome and the appellant is Mobil. It in terms of unilateral contracts and is in favour of the offeror liberty to revoke the offer even after partial performance the the claims originated in statements made Stumbles, the Mobil. Their claim asserted that two representations were made: 1) any year a dealer achieved in the Circle of Excellence would be given tenure Mobil and 2) if they did so for six years, Mobil them an additional nine. conduct included: 1) they sent franchisees including these representations, 2) the 1991 magazine address, and 3) in 1991, they arranged regional meetings of its to a similar format. In 1993, Mobil announced a delay and instead there would be a discount of franchise fees. In adopted a new franchise scheme and in 1996, they abandoned the Circle awards, which made it impossible for franchisees to attain pleaded promissory estoppel, breach of contract, and contravention the appeal was heard Lockhart, Lindgren, and Tamberlin JJ. was decided in favour of Mobil and this was Stumbles did refer to the scheme as being a long way off The variety of circumstances in which franchisees were placed anomalies in which the supposed promises could have effect, coupled with that they would not fall until quite some years hence could not construe as a legally enforceable offer. It was highly developmental and scheme was highly submits that even if it was an offer, Mobil revoked the offer the offer accepted, and specific performance was not was a unilateral contract an offer of a reward in return for an act. It unfair however that the offeror be at liberty to revoke once the commenced performance. Abbott v Lance produces evidence that once there offer in exchange for the doing of an act, it becomes irrevocable once the been partly performed. The judges disagreed and did not agree with proposition. Mobil was at liberty to revoke its offer, especially simply commencing the act could have been any number of terms of promissory estoppel, it is necessary that the representations could an assumption. The nine for six proposal was raised as a to the one for one proposal but no promise was made. Such commitment cannot give rise to an expectation of a particular In terms of detriment, certain franchisees increased staff after paid additional wages. There were also extra costs due to training, and discounting. Mobil stated this is relatively minor and many of these matters were smart business practices. The not proportionate to the grant of the nine year terms of misleading conduct, it is based on the statements made silence in not informing dealers that the offer made was incorrect. held that it is not sufficient to establish that a representation was made to event and that a contrary decision was simply made afterwards. There grounds for making the It was held that it is not sufficient to establish that a representation to a future event and that a contrary decision was simply There were reasonable grounds for making the Abbott v Lance produces evidence that once there is an offer in exchange doing of an act, it becomes irrevocable once the actions have been The judges disagreed and did not agree with the Mobil was at liberty to revoke its offer, especially simply commencing the act could have been any number of Hunter CDC v Australian Chilling Freezing Co Ltd 118 after issue was raised, a consultative opinion of the Supreme sought the arbitrator. The Supreme Court advised them that Clause 5 and therefore void. The arbitrator that asked for consultation that the Council was not entitled to increase either its demand or The Council appealed to the High Court. Therefore, the Council is him a job, at which an employee share scheme was mentioned, with up of shares made available to participating scientists. It was also none of the details had been worked out. Pace accepted this employment was recorded in a contract. No share scheme was ever established and after four years, then suing them for breach of this case was heard Kir P, McHugh JA and Hope JA. The former in assent whilst the latter delivered a dissenting judgment. The case in favour of the P Courts will not enforce contracts with provision that suggest essential terms is illusory. It is the essence of business that parties will But the law cannot enforce a regime of fairness on all transactions. It that such schemes were not unknown for talented scientists however, was not provided that it was common. There is no settled that could be used for it. One of the conditions obeyed was that if a a specified range of possibilities, the court will hold the party to There is little doubt that the respondent would not have accepted without this addition. However the term is too uncertain of content. There standard reference point. The appeal should be JA a contract made for consideration which is illusory is consideration is illusory if its fulfilment depends upon an unfettered in the promisor. However, where there is a firm promise in a it will only be considered illusory if there is no acceptable standard The value of shares is also highly speculative. Even if the shares could Pace was warned that the details of the scheme had not been The mention of the scheme was not a binding promise but instead as to the therefore, not promissory. Both that Pace would have the right to participate in the share scheme he did not obtain that right and their discussion never reached the it was a legally enforceable right. The appeal should be JA Biotech did not have a discretion as to whether it would establish its promise require it to establish a scheme. Biotech was bound to make that was honest and reasonable. The concept of reasonableness should The role of staff equity schemes is well established to enable the court reasonableness to them. I would allow the appeal in Courts will not enforce contracts with provision that suggest agreement terms is The courts will not resolve ambiguity as to which the parties upon if it is to an unacceptable A contract made for consideration which is illusory is v Brew 118 CLR this case was heard in the High Court. The respondent was the appellant was Whitlock. It was heard at first instance and then on the Full Court initially. It related to Brew sued Whitlock to recover 15,600 pounds paid as a deposit under for the sale of land. On 21 December 1961, the respondent entered into for purchase from the appellant of land. The price was a deposit of 16,500 pounds. It was paid in instalments with the 15,600 pounds and the second amount not paid at all. The issue is contract is uncertain and this case was heard Taylor, Menzies, and Owen JJ, McTiernan JJ. All were in agreeance except for the dissenting judgment McTiernan J. decided in favour of the respondent, with the Full judgment The contract was too uncertain to be Menzies, and Owen JJ it was previously decided that omission of a specify the term of, or the rent payable under, any lease to be granted to Co meant that it was uncertain and therefore the contract is void. The also uncertain within this instance. If the condition is not severable, then contract fails. In deciding this, intention of the parties must be clause cannot be ignored as is not solely for benefit of one the parties and waived. The appeal should be J the appeal should be allowed. It is not necessary for its validity clause should specify the time of commencement of the proposed lease, or the rent if these matters can be inferred. These matters can be the circumstances. In perceiving intention, the parties did believe that be J the provisions of the lease are not quite certain. And in enforcing of the contract, it would seem to alter the contract. It is clear that had no intention of agreeing on a sale which would entitle the purchaser possession without having to grant any lease to Shell Co. The from condition 5 would be a different sort of sale. There can be for enforcing something that has not been agreed. The appeal Uncertain clauses in a contract can render the contract Even if there are uncertain clauses present, the contract can still if the clause can be severed from the contract without altering nature of the contract, as aided the intention of the Even if essential matters certain, they can be inferred from Development Ltd v Commonwealth 121 CLR this case was heard in the High Court. It related to intention specifically within agreements made with government Uncertainty in a contract can be examined with reference to the intention allegedly contracting Promissory expressions which reserve discretion the promisor to acts do not create a legally binding contract with the Parliamentary approval and appropriation of funds can aid in producing intention to enter into a legally binding v Phillott 105 CLR the Chief Justice in the initial Supreme Court case found that of pounds paid the plaintiff to the defendant, over was loan, of which most of it had not been repaid therefore, judgment was given amount. In 1956, the respondent sued the appellant on the same causes which was discontinued in 1956. A typed document was signed stating that any court proceeding commenced Philott against be discontinued and shall not again be commenced, and Ballantyne had or claim against Phillott. The initial plaintiff was Phillott and the Ballantyne. The appellant in this instance is Ballantye whilst the respondent This case related to consideration in the form of a written document not backed verbal the appellant was the defendant in an action started in the Supreme 1957, in which the respondent claimed over pounds in money lent, in money paid, and over money owing on a dishonoured The plaintiff did not deny that she had received large sums of money from from but stated that it had been given to her, as she had mistress for many this case was heard Menzies J, Windeyer J, and Dixon CJ. It was not judgment as the latter dissented. The case was decided in favour of as the appeal was J the evidence relating to the typed document was in The plaintiff could recollect nothing of it whilst the defendant stated she guilt in his mind and caused him to ask her forgiveness. It was then a clerk typed up the handwritten document in an official capacity. had claimed the plaintiff libelled her to enforce guilt but there was for such proceedings. The document is not in the form of an the appellant made no promise to the respondent. If a promise is to be must be implied from the context of the document or surrounding language of the document is not consistent with a promise it is simply and not a withdrawal, of the claim. Therefore, the document cannot consideration. The appeal should be J the plaintiff in bringing this action went back on his written the law does not prevent this unless the defendant had given him that promise, which I believe she has failed to establish. She did not have claim against him, though she may have asserted so. The document does to be a renunciation of any of her claims. I would dismiss the CJ it is clear that the plaintiff intended to renounce his rights but must be established. The question is whether the that she had no right or claim against him amounted to a anything of significance and was taken in exchange the plaintiff. I believe document did amount to legal signifiance. The appeal should be The law does not prevent a party from reneging on a promise has not been given for If a promise is to be implied, it can be implied from context of surrounding v Edwards 1 ALR this appeal was heard in the High Court. The respondents and the appellant was Wigan. The District Court gave judgment holding the 22 April agreement was bona fide and the concrete slab a major fault and would require demolition and would cost over The appeal was dismissed in Full Court of Supreme in a contract dated 15 April 1969, Edwards agreed to purchase from land with a house the latter had built. The house was near 22 April, respondents had a discussion with appellants and gave them a list that required attention before finalisation. The appellant responded do everything before settlement. Edwards then gave a document dictated appellant that minor defects set out here would be rectified one week would be approved. Settlement occurred on 2 June. The respondent to defects that had not uet been no further work was done appellant. Defects additional to those in list arose (the dampness was until after this action was brought however). The action commenced claimed damages but gave no reference to this case was heard Mason J, Gibbs J, Walsh J, Menzie J, J. The former three was in agreeance while the latter two dissented. was decided in favour of the J outlines facts foremost. Issue: whether there was valuable promise of 22 April. The general rule is that a promise to perform duty is no consideration, at least when the promise is made a party to contract, when it is made to the promisee under that contract, and it do no more than the promisor is bound to do under that contract. A this is that it is sufficient consideration when given way of bona There was valuable consideration to support the 22 April

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Case Notes for Contract Law Part A

Course: Contract Law (LEGL2005)

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University: University of Newcastle (Australia)

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Intention to Enter into Legal Relations

Case Note:

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8

Introduction:

These court proceedings were initiated when the Archbishop Ermogenous (the

appellant) made a claim in the Industrial Relations Court of SA against the Greek

Orthodox Community (the respondent). In the initial proceedings, the Industrial

Magistrate determined the respondent was liable to pay the Archbishop $23,989.35

for accumulated annual leave, and another $10,672.80 for accumulated long

service leave. The respondent appealed twice before their appeal was finally

allowed after appealing to the Full Court of the Supreme Court. This case was then

finally heard in the High Court. This case is signifiant as it rebutted the

presumption that contracts were not generally formed within relationships of a

social nature. It also provided that an objective consideration of the case’s context

was the correct method in ascertaining intention into establishing legal relations.

The success of the Archbishop then established precedent for other cases to follow.

Facts:

The appellant had been the respondent’s Archbishop for over two decades, since

1970. The respondent – for clarification – was a Community: an association,

sometimes incorporated, which acquired land, established churches, and recruited

clergymen. Their nature was not only religious, but also cultural, social, and even

sporting. Once recruited by the respondent, the appellant claimed he had been

indicated he would be their employee. During the next 23 years, the respondent

paid the appellant the agreed upon salary (subject to pay rises), with deductions of

PAYE tax paid. Upon termination of this arrangement, the Orthodox Community

then refused to pay the annual and long service leave he had accumulated through

his alleged employment. This resulted in the Archbishop initiating his claim, as

outlined before.

Outcome:

This case was heard by Gaudron, McHugh, Hayne, Callinan, and Kirby JJ. The appeal

was allowed unanimously; Kirby J did present an alternative perspective upon the

case, though ultimately agreed with the decision of the other four judges. Therefore,

this case was decided in favour of the appellant – the Archbishop.

Reasons:

Gaudron, McHugh, Hayne, and Callinan JJ asserted that the first issue to consider is

whether there was an intention to create legal relations. In deciding this case, it

was determined that there should be an objective assessment of the state of affairs

between the parties. Though there are relevant presumptions in that the context of

their social arrangement would not indicate a relevant intention, they can be

somewhat irrelevant as it usually only serves to place the onus (this time upon the

appellant) and can be discharged. Therefore, presumptions are not a strong

indicator whether or not an intention can and will be established.