transaction. For example, if an agent enters into a contract for their principal, they do not become a party to the contract, even if they sign the relevant documents on behalf of their principal. However, the scope of section 18 of the ACL is very broad. It prohibits any conduct in trade or commerce that is misleading. It does not matter whether the conduct that is likely to mislead, then they are potentially in breach of section 18. (2) Parol Evidence Rule When a contract seems to be complete, the courts would assume that the parties intended it to contain all the agreed terms. Therefore, further additional oral terms would not be allowed. Eg. ambiguity as to quality. Exceptions: ambiguity as to identification; when there are errors recording the agreed terms (eg. Amounts payable) (3) Mitigation of Loss When it can be proved by the defaulting party that the non-defaulting party takes no action in trying to mitigate their losses, damages claimed will be limited to the part of loss that was unavoidable. However, the non-defaulting party is not obliged to take risks, or spend money they cannot afford in mitigating their losses. As long as the non-defaulting party has acted reasonably in the circumstances at the time of the breach in taking the action they did, then even if the result is counter-productive, the nondefaulting party is entitled to recover both the actual loss suffered, as well as the additional expenses incurred. Note: In the case of an anticipatory breach of contract, the non-defaulting party is given a choice by law whether to terminate performance or not. This choice can be made freely, regardless of whether the option chosen results in a higher claim for damages than the alternative would have. (4) If hidden defects in g/s supplied amount to a breach of condition, or to a serious breach of an innominate term, the non-defaulting party will be entitled to reject what was supplied and put a stop to further performance. Termination of performance is not an available remedy for less serious hidden defects. (5) The remedy of termination means termination of the defaulting partys right to perform, not termination of the contract itself. Termination of performance does not wipe out the entire contract. Hence, any performance that has already been satisfactory made prior to the breach is not affected. Besides, any outstanding obligations remain enforceable at law, so that the nondefaulting party has a contractual right to claim damages for the defaulting partys breach of contract. The payment of damages has the effect of discharging these obligations in lieu of actual performance. (6) For a breach of condition implied into the contract by the sale of goods legislation, a buyer is entitled to reject the goods and treat the contract as repudiated. This right exists until the buyer
accepts the goods (or, in some states, until the buyer becomes owner of the goods bought). Damages for a breach of condition may also be claimed. For a breach of warranty (or after the buyer has accepted the goods, or become owner of them), the buyer may not reject the goods, but may claim damages.
Duress
A contract can be set aside on grounds of duress if
Threats of violence are made either directly against the contracting party, or against a
person who is related or close to them. It does not matter whether the threats were the only reason for agreeing to the contract- its enough for the plaintiff to prove that a threat of harm was one of the reasons for which they entered into the transaction.
Threats to economic harm Threats to detain, damage or otherwise unlawfully deal with another persons goods
Undue Influence
(1) Relationships that are presumed to have general controlling influence: Parent and child Guardian and ward Doctor and patient Solicitor and client Trustee and beneficiary Religious advisor and believer Stronger party has the onus of proving that no undue influence was actually exercised. (2) Relationships in which a general controlling influence is proved to exist Husband and wife Principal and agent Accountant and client Banker and customer Dentist and patient Employer and employee The weaker party may be able to prove that the stronger party had a general controlling influence. If so, a presumption of undue influence arises and the stronger party has the onus of proving that no undue influence was actually exercised in relation to the contract in question. (3) If the contract was made as a result of undue influence, the weaker party may be able to set aside the contract as void ab initio. However, he will have to ask for this within a reasonable time.
Mistake
(1) Mistakes that prevent agreement Agreement is judged objectively: what would a reasonable person conclude from the external evidence? When there is no objective consensus, no contract is created: the agreement is legally void. (2) Bilateral mistakes Mistakes like this (mistake about the identity of the subject matter of the contract) do not necessarily prevent the creation of a valid contract. To decide whether the contract is valid despite a bilateral error, the courts ask whether it can be inferred from the known facts that the agreement was conditional on the truth of the mistaken belief. If it was, then the contract is voidable performance must be reversed. However, contracts with mistakes about quality are seldom treated as voidable unless the error makes the thing contracted for essentially different from the thing that it was believed to be. (3) Unilateral mistake The courts would not provide relief to unilateral mistakes UNLESS it can be proved that the one party has contracted on disadvantageous terms under a misapprehension of fact, and when, knowing this, the other party act in a way that prevents discovery of the true facts.
Misrepresentation
(1) Intentional misrepresentation Intentionally leading the other party into error is deceit, and creates liability in tort law. Fraud provides the legal basis for an action in tort for damages and the plaintiff is allowed to rescind the contract. Because a representation is not a term of the contract, the plaintiff has no action against the defendant for breach of contract, even if the statement made by defendant is untrue. (2) Unintentional misrepresentation If a negligent (without duty of care) misrepresentation as induced a person into a contract, the contract can be set aside as void. The plaintiff can also bring an action in tort law for damages, based on the defendants negligent misrepresentation. (3) If a misrepresentation is made neither deliberately nor negligently, but innocently, then any contract induced by that representation cannot be set aside as void, and no action would lie in tort or contract law for damages. (4) To avoid the contract, the plaintiff must communicate their decision to the other party without delay after discovering the true facts. Failure to do so will be interpreted as a decision to affirm, rather than rescind, the contract. The right to avoid a contract will also be lost if the party seeking rescission has done anything since discovering the facts that is inconsistent with an intention to rescind.
Guarantee that goods sold to a consumer are not subject to any security, charge or encumbrance that was not disclosed in writing at the time of sale. Nor may the goods be made subject to any such security after the sale but before title is transferred to the consumer. (6) Availability of spare parts and repairs for a reasonable period (7) Express warranty
Deceit
Plaintiff must firstly prove that the defendant made a representation knowing it was false or with reckless disregard for the truth Plaintiff must also prove that the defendant intended the plaintiff to rely and act on the statement, and that s/he actually did so.
Negligence
Requirements: (1) The defendant owed the plaintiff a duty of care Harms are reasonably foreseeable Relationships that give rise to a duty of care e.g. manufacturer and consumer (2) The duty of care was breached by the defendant (3) As the result of the defendants breach, the plaintiff suffered some loss or injury that was not too remote.
Apparent authority
If the principal has represented in some way to third parties that the person they have dealt with is an authorized agent, and a third party has relied on it when dealing with the agent, so that they would suffer a detriment if the authority were later denied, then the principal is not permitted to deny the agents apparent authority. Its also sometimes referred to as ostensible authority or authority by estoppel. When apparent authority exists, the principal will be bound by the acts of the agent, even if these acts were in fact prohibited by the principal.
An undisclosed principal is not entitled to ratify an unauthorized act. Ratification is only permitted when the third party is aware that the person they are dealing with is acting as an agent, and when the principal is either identified or identifiable as a particular person. A principal cannot, by ratification, give validity to any transaction for which the principal lacked capacity for, or which was for some reason legally void, either at the time that the transaction was entered into, or at the time of ratification.
(1) Even though the agent intended to act on behalf of his principal or company, without disclosing that he is acting on behalf of others, it would be assumed that the agent intended to be personally liable to the contract. Once the existence of the principal becomes known, the third party has a choice whether to enforce the contract against the agent or the principal. (2) An agent might disclose that they are acting for a principal, and expressly or impliedly guarantees that they have been given the authority needed to enter into the transaction on behalf of the principal. If it turns out that, despite giving this guarantee, that in fact they have no such authority, the agent may be liable in contract to the third party for a breach of their warranty of authorityliable for losses flowing from that breach