Australian Contract Law

Overview

• Contract law in Australia is similar to other Anglo-American common law jurisdictions.
• Differences arise due to statute law and the divergent development of common law by the High Court, especially since the 1980s.

Key Concepts

• Quid Pro Quo: An essential element in Australian contract law.
• Law of Equity: Influences remedies available when a contractual promise is breached.
• Key Options for Practitioners: Negligent misstatement, promissory estoppel, misleading or deceptive conduct.

Contract Formation

Essential Elements

1. Agreement Between Parties: Cannot be unilateral.
2. Consideration: Requirement of something of value in exchange.
3. Capacity to Enter Legal Relations: Parties must be of sound mind and legal age.
4. Intention to Enter Legal Relations: Must be present; private agreements may not indicate this.
5. Certainty of Terms: Terms must be complete, clear, and binding.

Writing and Formalities

• Oral contracts are generally enforceable, but some exceptions exist (e.g., marine insurance, consumer credit, sale of land).

Agreement

• Analyzed through offer and acceptance.
• Offer: Willingness to be bound on certain terms.
• Acceptance: Intention to accept offer; must be communicated, not through silence.
• Postal Rule: Acceptance effective once posted, not applicable to electronic communications.

Consideration

• A promise is enforceable if supported by consideration.
• Sufficient Consideration: Doesn't refer to adequacy; even minimal value like a peppercorn suffices.
• Illusory Consideration: Agreement void if a provision is deemed illusory.

Capacity

• Minors and those mentally impaired may lack capacity.
• Ordinary Person: Presumed to have capacity.

Intention to Create Legal Relations

• Presumed in commercial arrangements, not in domestic agreements.
• Preliminary agreements need to be formalized to be enforceable.

Certainty

• The agreement must be complete and clear to be enforceable.
• Express Terms: Clearly stated and part of the contract.
• Implied Terms: Included based on the parties' intent or by law or custom.

Construction

• Express Terms: Must be known to parties before forming a contract.
• Parol Evidence Rule: Restricts external statements affecting contract terms.

Illegality

• Contracts illegal by statute or public policy cannot be enforced.
• Consequences: Include unenforceable contracts, non-recovery of transferred money or property.

Termination

• Contracts must end through completion, fixed period, or breach.

Termination Rights

• Express: Stated in the contract for specific reasons.
• Implied: Found by courts if not expressly stated.
• Termination for Breach: Depends on the term's classification (condition, warranty, intermediate).

Australian Legislation

• Sale of Goods Act implies terms about fitness and merchantability.
• Australian Consumer Law prohibits misleading or deceptive conduct.

Equitable Intervention

• Equity can make contracts voidable in cases of misrepresentation or special disadvantage.