Contract How To Make An Agreement A Contract Etienne Lawyers
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Transcript of Contract How To Make An Agreement A Contract Etienne Lawyers
Steve Brown, [email protected] www.etiennelaw.com
HOW TO MAKE AN HOW TO MAKE AN AGREEMENT A AGREEMENT A
CONTRACT!CONTRACT!
Steve Brown, [email protected] www.etiennelaw.com
Overview Of PresentationOverview Of Presentation The difference between agreements and contracts?
Agreements & contracts – how are they the same?
Why have a contract instead of an agreement?
What distinguishes Contracts & Agreements
Types of Contracts
Negotiating a contract or agreement what to watch out for:
Promissory estoppel Misleading & deceptive conduct Unconscionable conduct
Steve Brown, [email protected] www.etiennelaw.com
The Difference Between The Difference Between Agreements and Contracts?Agreements and Contracts?Agreements are not as a general
rule:
Legally enforceable
Courts will not involve themselves.
Steve Brown, [email protected] www.etiennelaw.com
The Difference Between The Difference Between Agreements and Contracts?Agreements and Contracts?Contracts are ALWAYS:
Legally enforceable
Courts will enforce as the law dictates
Steve Brown, [email protected] www.etiennelaw.com
Non Enforceable AgreementNon Enforceable AgreementIf you wash my carI’ll give you $10
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Non Enforceable AgreementNon Enforceable AgreementI’ll pick you up fordinner at 8 o’clock
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Contracts & Agreements – Contracts & Agreements – How Are They the Same?How Are They the Same?Contracts & Agreements – Contracts & Agreements – How Are They the Same?How Are They the Same?Practical Answer – they are both
Risk Minimization tools that operate as
Checklists or Rule Books by applying
Performance standards
Steve Brown, [email protected] www.etiennelaw.com
Contracts & Agreements – How Contracts & Agreements – How Are They the SameAre They the Same as Risk as Risk ToolsTools
Contracts & Agreements – How Contracts & Agreements – How Are They the SameAre They the Same as Risk as Risk ToolsTools
Contract or agreement to import coal tare and toll manufacture chemicals in Australia
Agreement to meet and discuss a form of long term supply arrangement
Contract to supply an apple
Steve Brown, [email protected] www.etiennelaw.com
Contracts & Agreement - As Contracts & Agreement - As Checklists or Rule BooksChecklists or Rule BooksContracts & Agreement - As Contracts & Agreement - As Checklists or Rule BooksChecklists or Rule Books
Who is to do what – who is supply goods or services; Who is paying for the goods or services.
When are the services\goods to be supplied – when are they to be paid for.
How are the services\goods to be supplied.
Consequences of good or poor performance.
Steve Brown, [email protected] www.etiennelaw.com
Why have a Contract Why have a Contract instead of an Agreement instead of an Agreement Why have a Contract Why have a Contract instead of an Agreement instead of an Agreement
least formal to most formal form form of Agreement oral contract of written
contract
RiskRisk
Formality &Formality &LegalityLegality
Steve Brown, [email protected] www.etiennelaw.com
What Distinguishes Contracts & Agreements?Contracts MUST comprise
An offer
Acceptance of the offer
Consideration
Between parties that have capacity to contract
An intention to be legally bound
Agreements MAY comprise
An offer
Acceptance of the offer
Consideration
Between parties that have capacity to contract
Agreements ALWAYS lack
An intention to be legally bound
Steve Brown, [email protected] www.etiennelaw.com
Types & Forms of ContractsTypes & Forms of Contracts Oral
Partly oral / Partly Written - varied by phone
Written
Informal - exchange of letters
Formal Standard
Negotiated
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Understood by industry
Legally interpreted (precedent)
Trust in project relationship
Familiarity in administration and making of claims
The Case for Standard The Case for Standard FormsFormsThe Case for Standard The Case for Standard FormsForms
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Needs of project
Non-traditional project strategy
“No risk” client /certainty of outcomes?
Addresses particular problems of standard forms
The Case for One-off The Case for One-off ContractsContractsThe Case for One-off The Case for One-off ContractsContracts
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Contractual Contractual Concepts - OfferConcepts - OfferContractual Contractual Concepts - OfferConcepts - Offer An offer must be made
Invitations to treat are not offers Oral, written or conduct
When does an offer end
Withdrawal
Rejection
Lapse of time
Death of offeror or offeree
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Is This an Offer?Is This an Offer?
Are you interestedin buying Tanalith?
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Is This an Offer?Is This an Offer?
I will sell you 2 tonne of Tanalith for $5,000.
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Contractual Concepts -Contractual Concepts -AcceptanceAcceptanceContractual Concepts -Contractual Concepts -AcceptanceAcceptance An offer must be accepted on exactly the same terms
as offered
Oral
Written
Conduct
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Examples of AcceptanceExamples of AcceptanceExamples of AcceptanceExamples of Acceptance Letter
Telephone
Fax
Face to face
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Examples of Acceptance And even email under the electronic transactions acts
Worldwide Web
Email Sender Email Receiver
BLUE Co. RED Co.
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Contractual Concepts -Implied Terms Business efficacy
The Moorcock (1889)
Statute
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Negotiating What to Look Out For…promissory Estoppel What is it?
Cases
Central London Property Trust v. High Trees House Limited
Waltons Stores v. Maher
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Elements NecessaryElements Necessary Elements necessary to enforce a promise under the
doctrine of estoppel
Some form of legal relationship either exists or is anticipated to exist between the parties.
A representation or promise by one party.
Reliance by the other party on the promise or representation.
The party relying on the promise must suffer a detriment.
Unconscionability.
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Unconscionably for Unconscionably for Promissory EstoppelPromissory EstoppelUnconscionably for Unconscionably for Promissory EstoppelPromissory EstoppelThree elements must be present:
"Special disability"
Exploitation of the weakness
Unfair or "unconscientiously" to procure agreement in the circumstances
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Central London Property Trust v
High Tree House Limited (1947)
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Waltons Stores v Maher (1988)
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Negotiating What to Look Out For…Statutory Impact on Contract Law
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Statutory Impact on Contract Statutory Impact on Contract LawLawStatutory Impact on Contract Statutory Impact on Contract LawLaw Misleading or deceptive conduct
Trade practices act (Cth) ss 52 & 53 (commerce act (NZ))
Fair trading act (NSW) s. 42
Unconscionable conduct
Trade practices act (Cth) pt IVA
Fair trading act s. 43
Contracts review act (NSW only)
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Misleading or Deceptive Misleading or Deceptive ConductConductMisleading or Deceptive Misleading or Deceptive ConductConduct Strict liability
Actual deception
Overall impression
Product puff
Silence
Ambiguity
Erroneous assumption
Half truths
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Four principles were established in the case of Taco Co of Australia v Taco Bell Pty Ltd (1982) ATPR 40-303 as assisting to determine whether conduct is misleading or deceptive.
1. The relevant section of the public must be identified.2. All people within that section must be considered including the
intelligent and not so intelligent, the educated and uneducated.3. Evidence that someone was misled is helpful, but is neither
conclusive nor essential.4. When a misconception has arisen it is important to determine
why, in order to see if it was the business' conduct that caused it.
Misleading conduct - s 52 Example
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A SECOND PRINCIPLE:
It's the overall impression on the target audience that counts
silence can be misleading - if there is a duty to speak
a prediction can be misleading - if there's no reasonable ground to make it
silence can be misleading - if there is a duty to speak
a prediction can be misleading - if there's no reasonable ground to make it
Misleading conduct - s 52Misleading conduct - s 52
Steve Brown, [email protected] www.etiennelaw.com
What Conduct Can Be Misleading?
Misleading conduct can occur in any business communication, such as:
advertising, brochures, commercials
Tenders
Exclusion clauses
telephone conversations
business proposals
....in fact, just about anywhere
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Exclusion Clauses & S 52 You cannot contract out of s 52.
In entering into this agreement the purchaser acknowledges that it has not relied on any statement, representation or warranty by or on behalf of the vendor whether express or implied as to ...
Clarke equipment Australia ltd v Covcat Pty ltd felling machine, exclusion clause in contract no effect.
Collins Marrickville Pty ltd v Henjo investments Pty ltd.
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Tenders & S 52Tenders & S 52 Representations that a project will take a stated
period of time and it does not or the start is delayed beyond the time it is represented to commence may amount to misleading and deceptive conduct.
Section 51A shifts onus of proof for predictions. A representations as to future action must be made upon reasonable grounds.
O’Connor & sons Pty ltd v Entact clough Pty ltd.
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Tenders & s 52Inaccurate
Drawings part of a RFT contained inaccurate information Phillip and Anton Homes Pty Ltd v Cth (1988)
Quantity surveyor’s estimates and certifications leading to progress claim BFC Ltd v ABW Nominees (1992)
Representation about no asbestos Emmanuele v Chamber of Commerce & Industry SA Inc (1988)
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Tenders & s 52 A RFT that does not indicate that strict
compliance with the terms of the tender is essential gives to a tenderer not shortlisted to injunct the tender process (MacMillan’s case)
A tender that is not evaluated in accordance with how tenders were represented to be evaluated may be misleading (Hughes Aircraft v Airservices Australia)
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* Pic for illustration purposes only
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Whooping Savings!
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Negotiating What to Look Out For…unconscionable Conduct Prohibits conduct that is
unconscionable within meaning of unwritten law (51AA)
Protects consumers from conduct that is, in all the circumstances, unconscionable (51AB)
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What is ‘unconscionable’?
The term ‘unconscionable’ is not specifically defined, allowing for the courts to develop a wide interpretation.
Generally it may involve:
• exploitation by a stronger party of a weaker party
• going beyond normal hard commercial dealing
• contrary to concepts of good business conscience and fairness.
May be seen as an abuse of a firm’s market power in its dealings with disadvantaged or powerless people or business.
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Unconscionable Conduct - Example
Pritchard v Race Cage Productions Pty Ltd
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Unconscionable Conduct
[[A] person should not be permitted to use or insist upon his legal rights to take advantage of another's special vulnerability or misadventure for the unjust enrichment of himself.
Olex Focas Pty Ltd v Skodaexport Co Ltd 1997
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High Risk Situations - Continued
I will give’emtwo secondsto say Yes
Well we have a deal!I am notsure I
have readeverything
Yes. Ofcourse.
Got you..
1. Where the stronger party knows, or ought to know, that the weaker party did not fully understand the transaction
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Aim of Unconscionable Conduct
• Stop the unlawful conduct
• Compensation / Restitution for Victims
• Future Compliance ie. preventing future breaches (by same person or others who might be tempted to breach)
• Deterrence and/or punishment
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Negotiating Contracts & Agreements Other Things to Watch… Letters of intent
Heads of agreement
MOU’s
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Checklist to Ensure HoA, MOU Etc Is a Contract (ie Binding)
the document should be dated and validly executed by both parties
there should be an explicit statement that the document is meant to be binding
if an essential term is absent or uncertain, the agreement will be void for uncertainty or construed as incomplete, ie. the parties should have agreed the terms that are regarded as essential, for example:
In a simple Heads of Agreement to lease a building the following matters must have been agreed and should be accurately identified - the parties, the premises, the term of the lease, the rent or other consideration payable, review dates and rights of renewal
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Checklist to Ensure HoA, MOU Etc Is a Contract (ie Binding)
If there were any unresolved issues there should be a provision for agreement to be reached by resort to an expert or an arbitrator or by another mechanism
You should ensure that all documents that are referred to as "attached" to the heads of agreement are attached, and that the parties have initialled all amendments and the foot of each page
If there is a particular form of agreement to be entered into at a later date (for example, Koppers standard terms of trade), then this should be attached or clearly identified in the document to avoid uncertainty
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Checklist to Ensure HoA, MOU Etc Is a Contract (ie Binding)
The document should be clearly drafted in plain English to reflect the intention of the parties with all the essential terms and conditions incorporated so that each other knows:
Who is to supply what or pay for the supply;
When are the goods or services to be supplied and paid for;
How are the goods or services to be delivered; And.
The consequences for none performance.
Set out the checklist.
Steve Brown, [email protected] www.etiennelaw.com
Open Forum
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