Contracts

What the unit requires

Some variation may be expected in the breadth and detail of the topics. In general, however, knowledge of the formal requirements for concluding contracts, capacity, the content and interpretation of contracts, their performance and discharge, and available remedies, together with an understanding of the broad theoretical basis of contract would be expected.

• a Formation, including capacity, formalities, privity and consideration
• b Content and construction of contract
• c Vitiating factors
• d Discharge
• e Remedies
• f Assignment,

Topics and descriptor are the instrument's own words, transcribed in curriculum-spine-data.ts. UAR Sch 1 cl 2 states that the topics need not all be taught in a single subject, so the mapping from units to topics is many-to-many.

The ideas that decide the mark

• Consideration is a bargain, not a benefit received

  Consideration must be given in exchange for the promise. A benefit conferred for other reasons, or a promise to do what one is already obliged to do, is not consideration. Estoppel now provides a route where consideration is absent but reliance is not.

  The usual error: Treating any detriment to the promisee as consideration, which makes almost every promise enforceable and the doctrine meaningless.

• Construction is one exercise: text, context and purpose

  The words are read in their commercial context and against the purpose the instrument was meant to achieve. The former requirement that ambiguity be identified before context could be considered has been abandoned, so context is available from the start.

  The usual error: Applying a "plain meaning" rule first and refusing context unless the words are ambiguous — the older approach, now wrong.

• The classification of a term determines the remedy

  A condition is essential, and its breach allows termination. A warranty is lesser, and its breach allows damages only. An intermediate term allows termination only if the breach is sufficiently serious, judged by the consequences.

  The usual error: Calling every important term a condition, which converts every breach into a right to terminate.

• Vitiating factors operate before construction

  Misrepresentation, misleading or deceptive conduct, duress, undue influence and unconscionable dealing attack the formation of the contract or the quality of consent. Construction asks what the words mean once the contract exists.

  The usual error: Arguing that the parties "cannot have meant" something in order to avoid a vitiating factor, which confuses the two enquiries.

• The penalties test is proportionality, not a pre-estimate

  A clause is penal if it imposes a detriment out of proportion to the innocent party's legitimate interest in performance. Whether it was a genuine pre-estimate is relevant but not decisive.

  The usual error: Applying the older "genuine pre-estimate of damage" test as the sole criterion, which under-detects penalties where the sum was calculated but is still out of proportion.

How it is assessed

• Problem questions built around formation or termination, with a construction question embedded — the construction point is usually worth the most.
• Statutory overlay questions under the Australian Consumer Law, particularly misleading or deceptive conduct and unconscionable conduct.
• Short-answer questions on doctrine: consideration, intention, privity, and the distinction between damages and debt.

Whether the unit assesses the ACL alongside the common law, and how the marks are split between formation, construction and remedies, are institution-specific. Not recorded here.

The authorities

Each was resolved against the corpus. Where a paragraph could be verified it is given; where it could not, the case is cited without one rather than with an invented paragraph.

• Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95Pinpoint verified

  Intention to create legal relations as an objective assessment, not a presumption from category.

  Cite at [2002] HCA 8 at [25] (Gaudron, McHugh, Hayne and Callinan JJ)

• Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424Pinpoint verified

  The bargain requirement in consideration, and why a conditional benefit is not a promise.

  Cite at (1954) 92 CLR 424 at 434

• Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387AustLII paragraph

  Estoppel as the route where consideration fails, and the reliance-based foundation of it.

  Find it at (1988) 164 CLR 387, AustLII [23] (Deane J) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

• Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337Held, no pinpoint

  The classic statement of contextual construction, including its now-superseded ambiguity gate.

  held, but no paragraph of the AustLII text ranked as discussing this proposition — cite the case without a pinpoint

• Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165Pinpoint verified

  Signature and the objective approach to whether terms were incorporated.

  Cite at [2004] HCA 52 at [42] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ)

• Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104Pinpoint verified

  The current statement of construction, and the removal of the ambiguity threshold.

  Cite at [2015] HCA 37 at [65] (French CJ, Nettle and Gordon JJ)

• Associated Newspapers Ltd v Bancks (1951) 83 CLR 322Pinpoint verified

  Conditions and the right to terminate, and how essentiality is determined.

  Cite at (1951) 83 CLR 322 at 332

• Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205Pinpoint verified

  Penalties extended beyond breach of contract, and the shift to a proportionality test.

  Cite at [2012] HCA 30 at [44] (French CJ, Gummow, Crennan, Kiefel and Bell JJ)

• Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525Pinpoint verified

  How proportionality is actually assessed, and the legitimate-interest concept.

  Cite at [2016] HCA 28 at [221] (Keane J)

• Baltic Shipping Co v Dillon (1993) 176 CLR 344AustLII paragraph

  Damages for disappointment and distress, and the exceptions to the rule against them.

  Find it at (1993) 176 CLR 344, AustLII [2] (Mason CJ) — AustLII's own numbering. This judgment predates paragraph numbering, so cite the case without a pinpoint in an exam.

Boundaries

Authorities whose existence is established but whose text this corpus cannot hold. They are citable; the reason they cannot be pinpointed is stated.

• Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64Digitisation gap

  Reliance damages, and the limits of expectation loss where profits cannot be proved.

  CLR 174 (1991) is inside the undigitised 1960-1997 band

  CLR 174 (1991) is inside the undigitised 1960-1997 band

The method

1. Establish the contract before interpreting it: offer, acceptance, consideration, intention, capacity, and any formality. If formation fails, nothing downstream matters.
2. Deal with vitiating factors next, and only then construction. An answer that construes a contract it has just argued is void is internally inconsistent.
3. For construction, work from text to context to purpose explicitly, and identify the commercial result each reading produces. The party whose reading produces an absurd result loses.
4. For termination, classify each term before analysing breach, and state the consequence of the classification. The classification is the answer to the remedy question.
5. For damages, state the measure (expectation or reliance), then the limits (causation, remoteness, mitigation), then any agreed sum and whether it is a penalty.

What loses marks

• Construing before establishing formation or validity

  The analysis then rests on a contract that may not exist or may be voidable, and the conclusion is unsupported.

• Using "plain meaning" to exclude context

  That is the superseded approach. Context is admissible from the start and the marks are for using it.

• Labelling every important term a condition

  Classification turns on essentiality, not importance, and misclassifying hands the client a termination right they do not have.

• Confusing damages with debt

  An agreed sum recoverable as a debt is not subject to mitigation or remoteness in the same way. The distinction changes the answer.

• Answering the penalty question by comparing the sum to actual loss only

  Proportionality is measured against the innocent party's legitimate interest in performance, which may exceed their proved loss.