OBLIGATIONS FINAL EXAM NOTES
AGREEMENT
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OFFER
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General Rules
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Revocation of offers
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ACCEPTANCE
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General Rules
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Method and Communication of Acceptance
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Conventional analysis
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Different methods of acceptance
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Acceptance by SILENCE?
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Acceptance by CONDUCT
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Postal Acceptance
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Instantaneous communication
CONSIDERATION
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General Rules
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Benefit/Detriment Requirement
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Bargain/Exchange Requirement
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Insufficient consideration
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Illusory consideration
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Past Consideration
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Existing legal duty rule
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EXCEPTIONS TO THE EXISTING LEGAL DUTY RULE
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Bona fide compromise exception
CERTAINTY
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General Rules
(P.S. click this)
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OMISSION OF ESSENTIAL TERMS
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ABSOLUTELY ESSENTIAL
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MAY BE ESSENTIAL
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AGREEMENTS TO AGREE - deferred decision
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Agreements to negotiate - dispute resolution clauses
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UNCLEAR, VAGUE, INCOMPLETE LANGUAGE
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ILLUSORY PROMISE
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Conclusion - Severance and Waive
INTENTION
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General Rules
(P.S. click this)
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Commercial Agreement?
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Letter of comfort - document accepted by a lender from a
person…
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Domestic or family or NON-commercial arrangement?
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Agreements with Government?
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Preliminary Agreement - conditional clauses?
PROPERTY RIGHT
(p. 40)
FORMALITIES
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Under s126 of Instruments Act 1958 (Vic),
(P.S. click this)
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Written memorandum or note of the agreement
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Authenticated signature fiction
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Consequences of Non-Compliance with the Statute
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Equity
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Part performance
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Equitable estoppel
PRIVITY
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General Rules
(P.S. click this)
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Non-Application of the Privity Doctrine
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Agency
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Circumventing the Privity Doctrine
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Estoppel
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Trust
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Tort
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Misleading or deceptive conduct
MISLEADING OR DECEPTIVE CONDUCT
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1. Was the transaction in trade or commerce?
(P.S. click this)
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(Employee situation)
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2. Who must be misled? Audience and standard
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If the conduct is directed to specific identified individuals
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if the conduct is directed to the public at large
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3. Are the conducts in question misleading conduct?
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Puffery
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Silence or non-disclosure
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Positive representation as to past or present fact
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Contractual promises or warranties about current state of affairs
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Statements as to future matter/event
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Passing on information
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4. REMEDIES for breaching s18(1) ACL?
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Loss or Damage?
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How to determine whether and when loss or damage has been
suffered…
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Causal connection
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Who may be liable to compensate (perpetrator and
participants)?
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5. Is there apportionment of damages under s236 ACL?
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6. Is the DISCLAIMER or EXCLUSION CLAUSE (if any) effective…
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Disclaimers
ESTOPPEL
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Common Law Estoppel or Equitable Estoppel?
(P.S. click this)
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Common law estoppel
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Equitable Estoppel
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Proprietary Estoppel
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Promissory Estoppel
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Elements of Estoppel
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ASSUMPTION
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INDUCEMENT
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DETRIMENTAL RELIANCE
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REMEDY
RESTITUTION
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Is P’s claim a claim for WORK and LABOUR done?
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Quantum Meruit (the amount earned)
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Free acceptance
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Request
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Total failure of consideration
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Is P’s claim a MONEY HAD AND RECEIVED claim?
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Payment made because of MISTAKE
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Payment made because of COMPULSION
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Payment made with TOTAL FAILURE OF CONSIDERATION
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Can D claim a DEFENCE?
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Change of Position
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Illegality
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Estoppel
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Good Consideration
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Voluntary Settlement of an Honest Claim
MISLEADING OR DECEPTIVE CONDUCT
● (MUST) To determine whether P (Representee) has a statutory cause of actionagainst D (Representor(s)) under s18(1) of the Australian Consumer Law (ACL, also denoting Competition and Consumer Act 2010 (Cth)), P will need to establish that D engaged in ‘conduct’ ‘in trade or commerce’ that is ‘misleading or deceptive or is likely to mislead or deceive’.
○ D fits the definition of ‘persons’ as body corporate (company) or individual: s2C(1) Acts Interpretation Act 1901 (Cth).
● If misleading or deceptive conduct is pleaded there must be a ‘clear identification’ of the alleged contravening conduct(s) (per French and Kiefel in BMW), which in the present context are ____________________; ___________________ etc. These conducts have all occurred in the lead-up to P’s entering into the dealing / arrangement / contract / transaction.
1. Was the transaction in trade or commerce?
● (MUST) It is the character of the conduct that is the subject of complaint, so far as the person doing the act is concerned, that is critical: Williams v Pisano.
● (MUST) While s2 ACL provides an unhelpful definition of “trade or commerce” as that “within Australia or between Australia and places outside Australia”, Concrete Constructions usefully elucidates that to be considered “in trade or commerce”, D’s conduct must itself be an aspect of transactions which of their nature bore a trading or commercial character.
● (MUST) On the facts, this is readily established as D’s representation was clearly made as part of and not merely incidental to the business/commercial transaction being carried out and directed towards P: Concrete Constructions.
○ (Exception) It is insufficient if the conduct was undertaken incidentally to, or merely in connection with, the carrying on of a trading or commercial business, e.g. internal communication by one employee to another: Concrete Constructions.
○ (Exception) Private sales (of land)
■ Representations preceding a private sale (of land) by an (private) individual (D) are not made “in trade or commerce” unless arising in a business context rather than for personal reasons or purposes: Williams v Pisano; O’Brien.
■ This is so even if the ordinary means of trade or commerce (such as engaging a real estate agent, advertising in a newspaper): Williams v Pisano.
■ Even though parties are usually liable for conduct of their agents, this does not allow the imputation of trading or commerce attributes of the agent's business activities back to the vendor, i.e. the private individual: Williams v Pisano.
■ The mere fact of renovation undertaken to sell property does not mean conduct occurred in trade or commerce, as the property was of private nature; nor would it matter that the vendor intends to purchase, renovate and sell another property: Williams v Pisano. ● (Employee situation)
○ D, as an employee/agent, can himself or herself breach the prohibition against misleading or deceptive conduct under s18 ACL even though s/he engaged in conduct (e.g. selling product, providing service, entering transactions, encouraging investment) on behalf of their employer, since it is not to the point that D is not the business proprietor or that their activities were an aspect of the trade or commerce of their principal, not themselves: Houghton v Arms.
■ This may allay P’s concern that the company may be insolvent. ○ Conduct engaged in on behalf of a person (principal) is deemed to have
been engaged in also by the principal (employer) him/herself: Williams v Pisano. Therefore the principal can also be sued under s18 ACL.
2. Who must be misled? Audience and standard
● In order to establish the standard for determining the misleading quality of D’s conduct(s) in question, it is necessary to identify the relevant audience to whom D’s conduct was directed: Butcher v Lachlan Elder Realty.
If the conduct is directed to specific identified individuals
● On the facts, the alleged misleading conduct of D was directed to the specific identified individual of ______.
● Therefore, as per the majority’s characterisation Butcher v Lachlan Elder Realty, whether conduct is misleading or deceptive is judged objectively by its likely effect on a reasonable person with the attributes of the individual(s), and consideration
must be given to the conduct of D in relation to P and totality of the circumstances (e.g. nature of the parties, character of the transaction and content of representation), which will be analysed later.
if the conduct is directed to the public at large
● On the facts, the alleged misleading conduct of D appeared to be directed to the public at large (e.g. mass advertising). This is analogous to McHugh J’s approach to the question of relevant audience in Butcher, where he observes that the real estate agent’s conduct was directed to a class of reasonable potential purchasers of a particular kind of property at a specific price range.
● Therefore, as per Campomar and Butcher, whether the conduct is misleading or deceptive is judged objectively by reference to the effect such conduct would have on an ordinary, reasonable member of the representative class of persons to whom the conduct was directed. In this sense, the characteristics of a reasonable member of the class must be ascertained.
○ In Butcher, McHugh J attributed to the class of persons many of the characteristics the majority attributed to the Butchers, e.g. wealthy consumers who would have access to legal advice.
3. Are the conducts in question misleading conduct?
● The conduct(s) at issue will be analysed separately one-by-one.● To be caught by s18(1) ACL, D’s conduct need only be misleading or deceptive, and the court will ask the rather common-sense question of whether D’s conduct(s) had the capacity to mislead P into error: Henjo; BMW.
● As a general rule, since s18(1) ACL is a strict liability provision, it is not necessary to show intention on the part of D to mislead or deceive; thus liability can result from innocent (i.e. non-intentional) conduct: Hornsby Building; see also Concrete Constructions and Houghton.
○ (Exception) The alleged misleading conduct consists of silence: s2(2)(c)(i) ACL.
○ (Exception) The alleged misleading conduct is a representation as to future matter/event: s4 ACL.
Types of conduct
Implications
Puffery ● Puffery, as obviously exaggerated extreme claims part of the ordinary stuff of commerce, are not generally misleading or deceptive conduct, as a reasonable person would not interpret a puff literally: General Newspapers v Telstra; Carlill; Leonard v Pepsi.
○ However, if there is show of ‘sincerity’ and the terms are sufficiently clear, certain (e.g. specifying response expected from consumers), definite and assertive, whereby it would be reasonable for a reasonable person to be misled, then it is not mere puffery: Carlill; Leonard v Pepsi.
Silence or non-disclosure
● Sections 2(2)(a) and 2(2)(b) ACL respectively stipulate that “engaging in conduct” and “conduct” include “refusing to do any act”, i.e. silence or non-disclosure, to which the s18(1) prohibition extends.
○ A failure to disclose an alteration of circumstances after a statement has been made, or a failure to correct a statement where the maker later acquires knowledge which shows that the statement was inaccurate, can be misleading conduct.
○ A half-truth is misleading conduct, just as it is a misrepresentation under the general law.
● On the facts, the RELEVANT FACT that was not disclosed in D’s representation was _________.
● Intention? - The words ‘otherwise than inadvertently’ in s2(2)(c)(i) ACL suggest that silence must be deliberate and intentional in order to be misleading.
○ However, this matter has not been definitively resolved by the High Court and is subject to continuing debate.
○ In Demagogue, Gummow J suggested that silence is but just one factor which should be considered in light of all the circumstances in which it occurred. Thus, the question of intention is not necessarily integral to the core inquiry into whether there has been conduct that is misleading, of which silence may merely be a part. ○ If intention obvious
■ Based on the fact that _________, D’s silence conduct was clearly intentional and deliberate. Therefore, regardless of whether an intention requirement exists, P’s claim would certainly not fail for want of D’s intention, and may continue on to the next stage: reasonable expectation test.
○ If intention not obvious or absent
■ Based on __________, D’s silence conduct appeared to be inadvertent, accidental and not deliberate. Hence, P’s case may fall short of the intention threshold. Yet, since it remains debatable whether silence needs to be deliberate, in the event that it does not, P’s claim may succeed where the reasonable expectation test is satisfied.
● Test - For silence or non-disclosure to constitute misleading or deceptive conduct, P has to prove that the circumstances are such as to objectively give rise to the reasonable expectation from the representee’s perspective that the relevant fact would/should be disclosed by the representor (D): Kimberley; Demagogue; Miller v BMW; Butcher.
○ (Exception) The reasonable expectation test is not relevant where the representation statement is false and the undisclosed fact merely serves to confirm/correct the falsity, because the representation itself is ‘in all probability’ misleading: French CJ and Kiefel J in BMW. In other words, the reasonable expectation test is relevant when the representation is true (half-truth) but the non-disclosure of the qualifying information would be misleading or deceptive. ● (If audience = public at large) As established earlier,
the reasonable expectation test should allow for the expectations of the ordinary and reasonable members of the representative class of possible victims. Whether there is a reasonable expectation is very much a matter of context.
● (If audience = specific individual) As established earlier, the relevant audience is the specific individual(s) of _________. Thus, as per Miller v BMW and Butcher, the reasonable expectation test should allow for the expectations of that individual, whereby the question of whether there is reasonable expectation of disclosure requires close analysis of all the circumstances, factual matrix and context surrounding the silence conduct and up to the time when P entered the dealing, including:
○ The impression created by the positive conduct or representation
○ Nature of the parties
■ Butcher (Analogous/Distinguishable?) ● In Butcher, the majority found that
the claimant and the estate agent defendant were in unequal bargaining power positions, which weighed against the claimant’s case. The claimant was found to be a commercially experienced, sophisticated, wealthy, shrewd and intelligent businessman who had the capacity to engage professional legal services to investigate the veracity and nature of the representation. Meanwhile, the defendant was described as a countryside estate agent small in scale and size with little staff, and hence was not holding itself out as having a particular scope of expertise or skills such as verification of information.
● But in Butcher, Kirby J (dissenting) characterised the claimants as mere domestic partners who, though
sophisticated, may not be alert to the nuances of land law. Hence the estate agent was not exempted from the positive need to disclose.
■ BMW (Analogous/Distinguishable?) ● In Miller v BMW, the claimant was
found to be an experienced premium lender of equal bargaining power and competence to the representor, and had the capacity to understand the document if attention was sufficiently paid.
■ (Distinguishable) Yet, the facts of the present case may be distinguishable from Butcher and BMW as P was merely an unsophisticated, inexperienced consumer and was not of ‘equal bargaining power and competence’ to D, which means that D had the obligation to volunteer the undisclosed information to ensure fairness in their commercial negotiations.
○ Character of the transaction
■ Butcher (Analogous/Distinguishable?) ● The nature of the dealing/venture in
Butcher was extremely expensive
and serious. Therefore, it is reasonably foreseeable that a reasonable person would have paid close attention to any information or details presented, e.g. through documents or brochures, especially when the document/brochure was short with very little written on it and therefore very convenient to read.
○ Contents of the representation ■ Ambiguity in the content?
■ Does the content already contain info relevant to the representee (but just that attention was not drawn to it), like the policy document in BMW which already discloses
the nature of the insurance?
○ What each party KNEW about the other
■ (Analogous/Distinguishable?) In Butcher, McHugh J (and Kirby J) (dissenting) found that Butcher made it clear that he was relying on the accuracy of the brochure diagram, and the fact that Elder estate agent had doubts about the proposed renovations， but still kept silent and did not correct Butcher or remind that the brochure diagram may be wrong, especially when everything Elder said to Butcher at the inspection was premised on Butcher’s mistake, meant that the silence amounted to misleading conduct.
● P may draw on McHugh J’s argument in Butcher to support the claim of reasonable expectation of disclosure by D.
■ However, D could respond by arguing that the prohibition against misleading or deceptive conduct does not require a party to commercial negotiations to volunteer or draw attention to information in order to assist the decision-making of the other party or to avoid the consequences of careless disregard of another party of equal bargaining power and competence: Miller v BMW.
■ Importantly, a reasonable expectation and positive obligation of disclosure does not arise simply because one party knows that a particular matter is likely to be of importance to the other party: Miller v
BMW. This does not mean that there was an obligation on the representee to conduct further inquiries or investigation as to the accuracy of information provided (Henjo), but this may be a pertinent factor to consider where the particular history and
nature of the transaction or parties indicate so.
■ But if D knew that the undisclosed information is necessary for P to not suffer harm or loss, there may be a greater expectation of disclosure.
○ How long P has had to read the representation before entering into deals
■ In Butcher, the claimant had plenty of time to read the representation (brochure) before the auction, and given the short length of the brochure and the serious nature of his venture, it is not inappropriate to make a more detailed examination of the representation.
■ But a more impressionistic analysis, focusing on the immediate impact of the conduct, might be more appropriate where the document was only briefly looked at before a decision was made: Butcher. ○ The representor’s whole course of conduct
(per McHugh J in Butcher)
■ As per McHugh J (dissenting) in Butcher, the effect of the relevant statements or actions or any silence or inaction must be holistically deduced from the whole course of conduct, and thus the significance of one specific conduct cannot be overstated. ■ In Butcher, McHugh J (dissenting), taking a
broader view of the conduct that the estate agent engaged in, observes that the brochure representation and the silence are but just one aspect of the interactions between Butcher and Elder; regard must be had to the fact that Elder was actively involved in the inspections.
Positive representation
as to past or present fact
● Representation does not have contractual force.
● A representation as to past or present fact, if false, may see the contract set aside (in common law, equity or
under the ACL); and may result in damages being payable under the ACL.
● (MUST) Positive representation as to past or present fact is definitely captured by s18(1) ACL since s2(2)(a)&(b) ACL provides that a reference to “engaging in conduct” and “conduct” includes, inter alia, doing any act.
○ A half-truth is misleading conduct, just as it is a misrepresentation under the general law.
○ A factually true statement may still lead to error (e.g. if there’s silence or non-disclosure or other misleading conduct)
● Representations of past or present fact can be proven true or false.
● If representation is true
○ D’s representation was true because the facts clearly indicate that _________.
○ Therefore, D’s representation conduct is unlikely to be misleading or deceptive under s18(1) ACL. ● If representation is false
○ D’s representation was false and therefore misleading or deceptive under s18(1) ACL, because the facts clearly indicate that ________. ○ However, can D argue that the investigation of the
accuracy of the representation was outside the scope of its expertise, i.e. was merely passing on information? This depends on the nature of the parties.
■ Butcher (Analogous/Distinguishable?) In Butcher, the majority found that the representor was a countryside estate agent small in scale and size with little staff, and hence was not holding itself out as having a particular capacity and scope of expertise or skills such as verification of information.
● If analogous to Butcher → D’s representation conduct may be unlikely to trigger the operation of s18(1) ACL.
■ In both Butcher and BMW, the respective claimants were found to be sophisticated, experienced in the type of dealing at issue and of equal if not stronger bargaining power and competence than the representor.
● If analogous to Butcher and BMW → A reasonable person with the attributes of P would reasonably understand that the representation in question may be erroneous and therefore not misleading or deceptive under s18(1) ACL.
Contractual promises or warranties about current state of affairs
● The breaking of a contractually enforceable promise about a current state of affairs may result in contractual liability AND damages being awarded under the ACL. ● (MUST) The making of a statement/promise as to a
presently existing state of affairs, if false, may be engaging in misleading or deceptive conduct under s18(1) ACL, where the statement/promise is embodied as a provision or warranty of a contract: Accounting
Systems 2000.
○ (MUST) This is because s2(2)(a)&(b) ACL provides that a reference to “engaging in conduct” and “conduct” includes “the making of, or giving effect to, a provision contract or the giving of a covenant”.
● According to Accounting Systems 2000, even if there was no intention by D to mislead, a false contractual warranty still constitutes misleading or deceptive conduct; it is irrelevant that D was unaware of the falsity of the warranty.
● A 3rd party not privy to the contract which contains the misleading contractual warranty may still be able sue under s18 ACL, which is not limited to contracting parties: Accounting Systems 2000.
Statements as to future
● (Why rely on ACL?) Parties may need to rely on the ACL where the promise is unenforceable under contract law doctrines because:
matter/event contract;
○ The contract of which the promise is part may not be validly formed;
○ Even where the contract is validly formed, statute of frauds/formalities requirement may prevent enforcement of the contract and promise; or
■ Since the unenforceable contract is not rendered void, the contract can serve as evidence to support the MDC argument.
○ Doctrine of privity prevents enforcement of the promise. ● (MUST) D’s (representor) statement about a
future matter (including representation and promise, contractual or otherwise) will be deemed to be misleading (thus in breach of s18(1) ACL) unless the court is satisfied that D has reasonable grounds for making such a statement at the relevant time: s4(1) ACL;
Futuretronics.
○ Under s4(2) ACL, D will be prima facie taken NOT to have had reasonable grounds unless evidence is adduced to the contrary.
○ Under s4(3)(a) ACL, mere adducing of evidence of the contrary by D does not mean D will be taken to have had reasonable grounds and therefore have overcome the deeming effect of s4(2); evidence must point to the actual existence of reasonable grounds.
○ Section 4(3)(b) ACL clarifies that s4(2) does not place the onus of proving reasonable grounds on any person, including D the representor. D only has to lead and tender evidence to displace the presumption of s4(2), regardless of whether or not the evidence can ultimately successfully establish reasonable grounds on the balance of probabilities. Once D has done this, the burden of proof shifts back to P to prove that D has no reasonable grounds and thus that the representation was misleading or deceptive. If P can do so, the D will be in breach of s18(1) ACL. ○ Under s4(4), s4(1) does not imply that a
automatically not misleading merely because the person has reasonable grounds for making the representation.
● (MUST) Reasonable grounds are to be determined through the assessment of whether D has BOTH genuine intention AND objective capacity (to perform/fulfil/confirm the future obligation or matter) at the time of making the statement from a reasonable person perspective: Futuretronics.
○ E.g. consider - D’s state of knowledge at the time of making the representation
● (Scenario - breach of contractual term?) As per Futuretronics (per Ormiston J), it is wrong to view every contractual obligation as an unqualified promise to perform the stipulated act, and thus every unfulfilled contractual promise as misleading or deceptive conduct.
○ Unconditional / unqualified promises - Where there is an unconditional / unqualified promise which forms part of the contractual obligations, it is proper to treat that promise as a representation as to a future matter, and the promise will be misleading (and thus in breach of s18(1)) unless D has reasonable grounds: s4(1) ACL.
○ Conditional / qualified promises - As per Ormiston J in Futuretronics, unless it could be shown that under no circumstances would D (promissor/representor) have fulfilled the promise, qualified and conditional promises (e.g. contingent upon another party performing some reciprocal obligation; or upon some other circumstances), while capable of amounting to representation as to future conduct, will usually lead to the conclusion that D has reasonable grounds (s4(1) ACL), since the qualified nature of the promise will make it difficult to demonstrate a lack of intention by D to perform.
Passing on information
● If D is simply passing on information produced by a third party “for what is it worth”, D may not be liable even if that information was erroneous and thus misleading, especially where any belief in the truth or falsity of the
information is disclosed: Butcher.
● Whether D is liable under s18(1) for passing on misleading information turns on the case-specific circumstances and context of the conduct.
○ Did D have any control or authorship over the information? If yes → likely liable; if no → unlikely liable
○ Did D choose to present or adopt the info as if it is his/her own? If yes → likely liable (and whether conduct is misleading depends on the accuracy of the info); if no → unlikely liable
○ Did D hold itself out to own, know, or have investigated or the capacity to verify the veracity of the information? If yes → likely liable; if no → unlikely liable
■ Consider nature of the parties ● Butcher
(Analogous/Distinguishable?)
○ In Butcher, the majority found that the representor was a countryside estate agent small in scale and size with little staff, and hence was NOT holding itself out as having a particular capacity and scope of expertise or skills such as verification of complex information. Meanwhile, the claimants Butchers were found to be financially sophisticated, intelligent and experienced, whereby a reasonable person in their position would appreciate that the agent was merely passing on information obtained from a 3rd source.
● Karawi Constructions
(Analogous/Distinguishable?)
Karawi Constructions as an example of the representor holding themselves out as possessing particular expertise. In Karawi Constructions the agents held themselves out as consultants specialising in the sale of that type of property and the representation was to a ‘hard physical fact’ – the precise amount of lettable floor area. Neither of these features are present in Butcher.
○ Was D making a representation as to the information's truth or falsity, e.g. through endorsing the info (likely liable), OR did D expressly disclaim any belief in the truth or falsity of the information being passed on, e.g. via disclaimers (unlikely liable): Butcher?
■ In Butcher, the brochure, a short simple document, contained express disclaimers that the agent did not have knowledge about the truth of the survey diagram (i.e. disclaimer in direct reference to the alleged misleading info in question), and that the survey has been produced by someone else. The disclaimers appeared in a legible font, were clearly noticeable and “there to be read”. The brochure was with the Butchers for quite a long time. A reasonable person, reading the brochure as a whole, could therefore not have been misled by the estate agent.
