Contract Law

Contracts are central to our everyday lives. A contract can be verbal or written (sometimes both) and is a legally binding agreement that establishes the terms and conditions which bind the parties.  In addition, the law will sometimes imply terms into a contract.
There are many traps and pitfalls in contract law. A Court might interpret a provision in a way which a party might never have expected. A contract might fail because it is not supported by consideration (value). A party might renounce the contract where they have no right to. This is why it is so important to obtain legal advice before entering into a contract under which you incur significant liabilities or obtain significant rights, and before taking action to breach (or respond to a breach) of contract.
Contracts can take many form, including:
  • business agreements
  • agency agreements
  • agreements for the sale/supply of goods
  • insurance contracts
  • joint venture agreements
  • put and call options
  • production and distribution contracts
  • financing contracts
  • guarantees, mortgages, loan agreements,
  • employment contracts and contracts for the sale of land etc
You even enter into a contract when you buy a newspaper. The law of contract touches us all.
At Craddock Murray Neumann we offer expert advice to anyone requiring assistance with a contract. The services we provide include:
  • contract negotiation
  • drafting contracts
  • advising on termination of contracts
  • enforcing contracts
  • recovery of damages as a result of a breach of contract
  • defending proceedings where a breach of contract is alleged
Further information
Contact Craddock Murray Neumann Lawyers on (02) 8268 4000 for friendly professional service.
Contract: the rules of the game
Date: Jun 15, 2015

The traditionally accepted view of law is that it is an independent set of rules governing society routinely applied by reference to existing precedent. The law is considered autonomous and distinct from custom, morality, religion and politics. In western civilisations, legal systems are built on liberal foundations.

Private contractual arrangements and government intervention
Date: Jun 12, 2015

The law was not constructed on a bare canvas, but on value-laden foundations. Ordinarily, when a house is built on a sloping block, the nature of that slope determines the type of structure erected upon it. The structure is changed to suit the conditions of the landscape, not vice-versa. It is no different with the law.

Religious officers, contracts and legal relations
Date: Jun 11, 2015

In commercial transactions, the onus of proving (on the balance of probabilities) that a contract does not exist rests with the party disputing what courts presume to be an agreement intended to have legal force. For disputes concerning family members, courts take the viewpoint that “each house is a domain into which the King's writ does not seek to run, and to which his officers do not seek to be admitted”.

Consideration in contract law
Date: Jun 10, 2015

The doctrine of Consideration is concerned with the price paid for a promise. Consideration is something of legal value given in exchange for a promise.

A contract that is not a contract
Date: Jun 09, 2015

Equitable Estoppel is a cause of action that protects parties’ reliance on promises which have the appearance of a contract, but which do not satisfy the elements needed to create binding legal relations, that result in detriment to one party. The case of Waltons Stores (Interstate) Ltd v Maher is a landmark case which has greatly affected the common law of contract.

PPSA Protection and Perfection
Date: May 25, 2015

Despite the transitional periods having expired last year, the requirements (and existence) of the Personal Property Security Register (PPSR), created pursuant to the Personal Property Security Act 2009 (Cth) (PPSA), remain unknown to many consumers and suppliers. If you are involved in business or personal transactions regarding the provision of goods on any terms other than a cash on delivery basis, or you have a line of credit with suppliers, or provide a line of credit to others, you should familiarise yourself with the PPSR and PPSA.

Testamentary Freedom Can Be Restricted by Contract
Date: Nov 19, 2014

It is well settled that a person can, by contract, restrict his or her testamentary freedom. This can be done in several ways.

The authority of an agent to enter into contracts on behalf of a corporation
Date: Nov 14, 2014

Corporations are a separate legal entity, distinct from the people that manage or operate the company. The ability to insulate corporate wealth and assets from the personal wealth of those involved in the company is what makes the corporation such an attractive business model. Due to the separate legal entity status, the corporation has the legal capacity and powers of an individual, including the ability to enter into contracts on its own behalf. One way the company can exercise its legal capacity is through an agent to whom it grants authority.

Why are some guarantees unenforceable?
Date: Nov 12, 2014

A guarantee is a promise by a third party to be liable to a lender for the obligations of a debtor, if the debtor defaults on their obligations. These are serious undertakings as they can render a guarantor liable for the whole amount owed by the debtor. Guarantees become enforceable when the debtor has defaulted on their obligations. However, there are numerous reasons why a guarantee may be unenforceable.

What is a guarantee?
Date: Nov 10, 2014

When a creditor provides a party with a loan or the provision of goods or services on credit, a sincere promise by the debtor to repay the loan is rarely satisfactory. Such a promise will be no good to a creditor if the debtor goes bankrupt, no matter how much they wanted to honour their obligations. Therefore it is normal for a creditor to require some other source of repayment they can look to if the worst should happen. This is known as a guarantee.

Is there anything I can do if my insurer refuses to pay my claim? – section 54 Insurance Contracts Act 1984 (Cth)
Date: Nov 07, 2014

An insurer can deny your claim for any number of reasons, which can be a devastating blow to your business or personal finances. Often it is due to a failure to comply with certain conditions in your contract such as notifying your insurer immediately when an incident occurs, maintaining certain safety standards or updating your insurer on changes to your circumstances. Insurers used to be allowed to draft their insurance contracts to give them a right to terminate the contract for even minor breaches of contract or breaches which didn’t cause the loss or any prejudice to the insurer. However, since the introduction of the Insurance Contracts Act 1984 (Cth), insured’s have been granted some significant protections which were intended to more fairly balance the interests of both parties. One of the most controversial sections in this respect is section 54.

A recent example of construing commercial contracts - Visy Paper Pty Ltd v Glass Granulates Pty Ltd [2014] NSWSC 1387 (10 October 2014)
Date: Nov 06, 2014

In this recent case of the NSW Supreme Court decided by Sackar J, the construction of a commercial contract was in dispute. The plaintiff, Visy Paper Pty Ltd (‘Visy’), runs a recycling service, picking up waste products from around Sydney and processing them at their recycling plant. They entered into a Supply Agreement with Glass Granulates Pty Ltd (‘Granulates’) which runs a glass recycling plant, to supply them with glass. A condition of the Supply Agreement is that Granulates agrees to deal with ‘rubbish’ which might be mixed in with the glass so long as it doesn’t exceed 7% of the load. The definition of ‘rubbish’ in the Supply Agreement is ‘paper, plastic, cardboard and other contaminants in the glass fines, which are not recoverable by Granulates and must be disposed of at a licensed waste facility.’

Duty of Utmost Good Faith in Insurance Contracts
Date: Nov 04, 2014

In dealing with contracts, you likely will have encountered terms which require contracting parties to deal with each other in ‘good faith’. This means that you have a general obligation to deal with the other party honestly and fairly. The duty is sometimes provided for expressly and often implied into a contract. Insurance contracts, however, are in a special category. Due to specific legislation regulating insurance contracts, a duty of ‘utmost good faith’ is implied into every insurance contract made after 1 January 1986 and must be complied with by both parties to the insurance contract. However, what ‘utmost good faith’ actually involves is far from clear.

Capacity of Parties in Contracts
Date: Nov 03, 2014

Before ensuring the parties have fulfilled all the formal elements of a contract, a more fundamental issue to consider is whether both parties have capacity to enter into a contract. Capacity refers to a party’s legal ability to enter into a contract. It will not assist a party if they’ve simply made a mistake or misunderstood a contract. Rather, the requirement is intended to protect people from being taken advantage of who may not fully understand what they’re doing by reason of age, mental disability or intoxication.

Vitiating factors in contract: Mistake
Date: Oct 28, 2014

Even when all the formal elements of a contract have been complied with, the law acknowledges human foibles which cause us to make mistakes, act unethically towards one another or unfairly use an advantage or knowledge against another. Therefore, rules have been formulated to counteract the effect of these human failings.

Vitiating factors in contract: Misrepresentation
Date: Oct 24, 2014

Even when all the formal elements of a contract have been complied with, the law acknowledges human foibles which cause us to make mistakes, act unethically towards one another or unfairly use an advantage or knowledge against another. Therefore, rules have been formulated to counteract the effect of these human failings

Vitiating factors in contract: Duress
Date: Oct 22, 2014

Even when all the formal elements of a contract have been complied with, the law acknowledges human foibles which cause us to make mistakes, act unethically towards one another or unfairly use an advantage or knowledge against another. Therefore, rules have been formulated to counteract the effect of these human failings.

Insured’s Duty of Disclosure for Insurance Contracts
Date: Oct 08, 2014

Both parties to an insurance contract are primarily concerned with prudently apportioning their risk. Therefore there is a higher expectation than in other contracts, that both parties will disclose all relevant facts prior to entering into the contract, to allow an accurate assessment of the risk. While both parties are expected to disclose all facts material to the proposed insurance of which they are aware, the insured also has a statutory duty of disclosure.

Are some bank fees unenforceable? - Paciocco v ANZ [2014] FCA 35
Date: Oct 06, 2014

Bank customers in Australia are eagerly awaiting the outcome of ANZ’s appeal to the High Court after the Federal Court’s decision in February 2014 decided that the fees ANZ charge for the late payment of credit cards are unenforceable. The decision will have a huge impact on the banking industry. If the Federal Court’s decision prevails on appeal, it is likely that many of the fees charged by all the big banks will be challenged.

Notification of Unusual Terms in Insurance Contracts
Date: Oct 06, 2014

Insurance contracts by their nature are usually quite long and complicated. It is tempting to be complacent and not thoroughly read through them, especially if you have multiple insurance policies covering different types of risk and your policies always seem to say the same things.

Exclusion Clauses in Insurance Contracts
Date: Oct 03, 2014

The ability to insure against certain unavoidable risks provides an invaluable financial safety net in our society. However, insurance companies are profit-based and will not hesitate to refuse your claim if they are entitled. One of the most common ways this occurs is due to the operation of exclusion clauses. Many an unwary customer has been stung because they didn't fully understand what they were covered for and what obligations they had to comply with to ensure they would be insured.

Application of the rule in Flight v Booth for ‘off the plan’ contracts
Date: Sep 14, 2014

Following on from Kannane v Demian Developments, the case of Higgins v Statewide Developments Pty Ltd [2010] NSW 183 presents a more recent attempt at applying the rule in Flight v Booth to ‘off the plan’ property sales.

Are some contracts unenforceable? Illegality and public policy
Date: Sep 14, 2014

Even if you have complied with all the formalities and requirements of a valid contract, the law may still refuse to enforce an illegal contract. A contract may be illegal because it is prohibited by statute or because it infringes a rule of public policy.

Contracts – intention to enter into a legally enforceable relationship
Date: Sep 14, 2014

As noted in earlier article ‘what is a contract’ a contract is a legally binding promise. The requirements for a valid and enforceable contract are.

Rescinding ‘off the plan’ contracts - the Rule in Flight v Booth
Date: Sep 14, 2014

Purchasing a property before it is built, also known as purchasing ‘off the plan’, can be a rewarding yet risky enterprise, especially if the finished product isn’t the same as what you contracted to buy. The contract may provide for certain limited circumstances which allow you to rescind (revoke) the contract. There is, however, also some legal rules which may be able to help. One such rule is called ‘the rule in Flight v Booth’. The NSW case of Kannane and Ors v Demian Developments P/L [2005] NSWSC 1193 sets out when the rule in Flight v Booth will apply.

What is a managed investment scheme?
Date: Sep 14, 2014

Wading through the quagmire of financial services can be daunting, but being fully informed about, and understanding, your options will ensure you are choosing the best financial arrangement for your circumstances.

What is consideration?
Date: Sep 14, 2014

Consideration is one of the key elements of creating a contract, along with having a settled agreement between two or more parties and an intention to enter into legal relations . Basically, consideration means ‘value’. The provision of consideration in the creation of a contract involves the passing of value between the contracting parties. This is the essential nature of a contract, namely a bargain involving quid pro quo. Consideration is of particular importance, as it distinguishes between those contracts that should be enforced by the courts and those that are merely gratuitous, such as a promise to make a gift.

What is the difference between a retail client and a wholesale client?
Date: Sep 14, 2014

In considering managed financial schemes, you may have noticed a distinction between retail and wholesale clients. This distinction is important as a great deal of obligations and compliance requirements for managed investment schemes are dependent on whether they cater to retail or wholesale clients. For more information about managed investment schemes please refer to ‘What is a managed investment scheme?’.

What recommendations should be made to a retail client and how should they be made?
Date: Sep 14, 2014

There are two types of clients which participate in managed investment schemes; wholesale and retail clients. In a general sense, wholesale clients are more likely to be experienced and well-resourced investors, whereas retail investors likely have limited knowledge of the financial markets and limited funds. For more information on the distinction between retail and wholesale clients, please refer to our earlier articles. In recognition of the potential vulnerability of retail clients, there a number of safeguards and disclosure requirements to ensure that they are as well-informed as possible.

When should a warning be given?
Date: Sep 14, 2014

Understandably the investment of money in any type of financial product comes with its risks. In order to educate clients, and make them aware of the potential dangers of investing in particular financial products, statute requires a number of general and specific warnings to be given. It is hoped that, combined with the documents that must be provided (for more information about the recommendations given to clients please see earlier articles ), the warnings will encourage clients to thoroughly consider the suitability of products and seek sufficient professional advice.

When will a court enforce an unwritten contract in relation to land?
Date: Sep 14, 2014

As discussed in the earlier article ‘Does a contract need to be in writing’, some contracts, such as those dealing with land, must be in writing to be enforceable. Despite this seemingly strict requirement there are some narrow circumstances in which a court will enforce oral contracts relating to land in order to avoid injustices. This exception is known as the doctrine of ‘part performance’.

Can I use extrinsic evidence to interpret a contract? – The application of the ‘parol evidence rule’
Date: Sep 10, 2014

Some of the most common disputes about contracts relate to how they are to be interpreted. Words are malleable and can mean different things to different people depending on their perspective, values and intention at the time of creating the contract. For example, if you have a written contract with someone to cut down ‘three trees’ on your property, you may assume the other party knows the particular trees you’re referring to due to your previous discussions. However, unless it’s specified in the written contract, they may be able to argue they have contracted to cut down any three trees on your property.

Costs orders - who pays the costs of legal proceedings?
Date: Aug 25, 2014

The Court has power under Section 98 of the Civil Procedure Act 2005 to determine by whom, to whom and to what extent the costs of the proceedings are to be paid.

Caveats, interests in property and contracts – does my contract give me a caveatable interest?
Date: Aug 18, 2014

Section 74F of the Real Property Act 1900 (NSW) permits a person who claims to be entitled to a “legal or equitable estate or interest in land” to lodge with the Registrar-General a caveat, prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled.

Does a contract have to be in writing?
Date: Aug 12, 2014

Generally, there is no requirement that contracts have to be in writing. As we are constantly entering into contractual arrangements throughout the day we cannot be expected to document everything.

What is a contract?
Date: Aug 08, 2014

Most people think of contracts as mountains of paperwork and fine print. But chances are you enter into numerous contracts every day without even realising it. Every time you buy goods, get a ticket for a car park, engage a plumber or agree to a website’s terms and conditions you have entered into a contract.

LITIGATION - Frequently Asked Questions
Date: Dec 04, 2012

Deciding how to settle a dispute - Choosing a process - Commencing litigation - Pre-trial procedures - Discontinuance or withdrawal - Enforcement of judgments - Costs of Litigation - Time limits - Lawyers

Colleges, Registered Training Organisations (RTOs) and the Australian Skills Quality Authority
Date: May 29, 2012

On 30 June 2011 the Vocation Training and Accreditation Board (VETAB) which regulated the operation of Registered Training Organisations (RTOs) ceased operations and was replaced with a new national regulator – ASQA (the Australian Skills Quality Authority).

Buying a property: the Australian Dream
Date: Sep 15, 2011

Claiming your piece of the ‘Australian Dream’ is becoming harder and, with more at stake than ever, buyers should be aware that it will not be always easy nor problem free. Your best defence in keeping the dream from becoming a nightmare is to simply arm yourself with the best possible information and advice.

The modern approach to contract interpretation
Date: Aug 31, 2011

Jireh International Pty Ltd v Western Export Services [2011] NSWCA 137.

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