Lecture Notes on Contract Law

7.5 Formalities

Key Question: Do contracts always have to be in writing and signed?

• Common Law: Contracts do not have to be in writing or signed.
  • Can be verbal or implied by conduct.
• Legislation Requirements: Certain contracts must be in writing and signed:
  • Arbitration agreements
  • Assignments of copyright, designs, patents
  • Assignments of life insurance policies
  • Bills of exchange, promissory notes, cheques
  • Consumer credit and hire-purchase contracts
  • Transfers of shares
• Evidenced in Writing: Some contracts require documentation to prove existence and terms:
  • Transfer of land or interest in land (e.g., leases)
  • Sale of goods over $20 (WA and Tasmania only)
  • Guarantees
• Desirability of Written Contracts:
  • Provides evidence of existence and terms
  • Emphasizes legal consequences
  • Indicates intention to be legally enforceable

Electronic Contracts

• Electronic Transactions Act 1999: Allows electronic form for legal requirements unless specified otherwise.
  • Includes writing, signature, document production, information recording, retention.

7.6 Capacity to Contract

Key Question: Can children or individuals with disabilities form contracts?

• Legal Capacity Required: A contract is only enforceable if both parties have capacity.
  • Minors: Generally under 18 years.
    • Contracts enforceable by minors but not against them, with exceptions:
      1. Contracts for necessaries
      2. Beneficial contracts of service
      3. Contracts involving continuing interests or obligations
  • Persons Lacking Intellectual Capacity:
    • May include disability, insanity, intoxication.
    • Contracts for necessaries enforceable against them.

Case Examples

• Bojczuk v Gregorcewicz (1961): Loan for immigration not considered a necessary.
• Hamilton v Lethbridge (1912): Apprenticeship considered beneficial and enforceable.
• Corpe v Overton (1833): Minor withdrew from partnership and recovered investment.

9.1 Entitlement to Enforce

Key Questions: Who can enforce a contract? When?

• Privity of Contract: Only parties to a contract can enforce it.
• Exceptions:
  • Third-party beneficiaries in insurance contracts
  • Contracts involving undisclosed principals
  • Novation with third-party agreement
  • Statutory rights against a manufacturer

Time Limits

• Legal proceedings must commence within statutory time limits based on jurisdiction and contract type.

9.2 Unenforceable Contracts: Lack of Consent

Key Question: What if consent was not willingly given?

• Mistake: Does not generally void a contract unless it involves a fundamental aspect and one party takes unfair advantage.
  • Unilateral Mistake: One-sided mistake; known by the other party and unfairly exploited.
  • Common Mistake: Both parties share a mistaken belief about a fundamental aspect; void if conditional on the belief.
  • Mutual Mistake: Both parties misunderstand terms; void if no meeting of minds.

Duress and Undue Influence

• Duress: Contract entered under threat; voidable.
• Undue Influence: Stronger party takes advantage of influence over weaker party; voidable.

Unconscionability

• Contracts must be conscionable; void if one party takes unfair advantage of the other's weakness.

Misrepresentation

• Types: Fraudulent, negligent, innocent.
• Contracts voidable if entered under misrepresentation.

Unenforceable Promises

• Not all promises during negotiations are enforceable unless included in the contract terms.

Conclusion

• Understanding formalities, capacity, and enforceability is crucial in contract law.
• Each aspect has specific conditions under which a contract may be deemed unenforceable.