LAWS1100 Nickolas James Business law 4_e_----_(chapter_9_contract_law_enforcement_of_the_contract)

LEARNING OBJECTIVES
9.1 Who can enforce a contract, and when can they do so?
9.2 What if the other party to the contract made a mistake? What if they were pressured or threatened
or manipulated by the party seeking to enforce the contract? What if the party seeking to enforce the
contract took advantage of the other party? Is the contract still enforceable?
9.3 If the contract has been breached, when will the party seeking to enforce the contract be entitled to
damages? When can they terminate the contract because of the other party’s breach? What other
remedies are available in the event of a breach of contract?
9.4 How can a contract be terminated by agreement? When will a contract be frustrated?
CHAPTER 9
Contract law:
enforcement of
the contract
James, Nickolas. BUSINESS LAW 4E, Wiley, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/uql/detail.action?docID=4748089.
Created from uql on 2019-04-06 00:53:23.
Copyright©2014.Wiley.Allrightsreserved.

CHAPTER 9 Contract law: enforcement of the contract 325
JOHNNY AND ASH
[Johnny and Ash are at the bar of his restaurant The Lame Duck, still discussing Johnny’s new partner
Maria.]
Johnny — When Maria and I decided to become partners, Maria promised that she would not interfere
in the day-to-day running of the business. She told me that I would still be responsible for managing
the restaurant. And yet here she is, in the restaurant, bossing the staff around and acting like she is in
charge!
Ash — I imagine that must be quite frustrating.
Johnny — It is! What can I do about it? Can I force Maria to keep her promise?
Ash — Well, we have established that Maria’s promise to let you manage the restaurant was a term of
your contract with Maria. So now we need to consider whether you can enforce the contract.
Johnny — Why is that even an issue? If someone makes a promise, don’t they have to keep their
promise?
Ash — Well, there are circumstances where even a contractual promise is unenforceable. The person
enforcing the promise may not have the legal right to do so. Or it might be too late. Or there might be
a question about whether or not the promisor really made the promise of their own volition.
Johnny — Oh, I am sure Maria knew what she was doing when she made that promise.
Ash — Well, the issue then becomes one about remedies. If you could enforce Maria’ promise in a
court of law, what exactly would you want the result to be?
Johnny — What are my options?
CHAPTER PROBLEM
As you make your way through this chapter, consider whether Johnny is entitled to enforce Maria’s
promise not to interfere in the running of the business, and, if so, what remedy would be the most
appropriate.
Introduction
As we saw in the previous chapters, business is all about entering into legally enforceable agree-
ments or, in other words, making deals. When one of the parties to a deal makes a false statement
or fails to do what they promised to do, the law of contract entitles the other party to a remedy,
such as the right to terminate the contract, to seek compensation or to receive some other form of
civil remedy.
In an earlier chapter we considered the rules that regulate the making of contracts in Australia. In
the previous chapter we considered the various terms of the contract. In this chapter, we focus upon
enforcement of the contract, and consider the consequences of breaching the contract.
9.1 Entitlement to enforce
LEARNING OBJECTIVE 9.1 Who can enforce a contract, and when can they do so?
In this section we consider two issues associated with enforcement of a contract: Who can enforce the
contract? And when must legal action be commenced?

326 PART 2 Legal consequences
Privity of contract
Only a party to the contract:
•• is legally obliged to perform a contract, and
•• has the legal right to enforce a contract.
As a general rule, a person who is not a party to the contract (a third party) cannot sue or be sued for
breach of the contract. This is known as the doctrine of privity of contract.1
CAUTION!
As a general rule, only the parties to a contract can enforce the contract.
For example, if Johnny and Jin have a contract according to which Johnny will deliver and transfer own-
ership of his pizza oven to Xue, Xue cannot enforce the contract if Johnny does not deliver the oven. Jin
can sue Johnny for breach of contract, but she will not be able to recover damages since it is Xue, not
Jin, who has suffered the loss. In these circumstances Xue should have been made a party to the contract.
There are a number of important exceptions to the general rule.
•• A third party beneficiary under an insurance contract is not a party to the contract but they are never-
theless entitled to enforce the contract.
1 Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd [1915] AC 847.

Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Blue Circle Southern Cement Ltd owned and operated a limestone crushing plant in NSW. In June 1977,
Blue Circle took out a contract of insurance with Trident General Insurance Co Ltd. The insurance policy
was said to cover Blue Circle, its subsidiaries, its contractors and its suppliers in respect of liability for
various events, including personal injury during alterations and extensions to the plant. After the Trident
insurance policy was issued, McNiece Bros Pty Ltd became the principal contractor for construction
work being carried out at the plant.
In July 1979, a crane driver employed by another company who was working under the direction
of the McNiece site engineer was injured. The driver sued McNiece and was awarded damages.
McNiece claimed indemnity under the Trident insurance policy. Trident denied the claim on the
basis that McNiece was not a party to the insurance policy. McNiece sued Trident. Was McNiece,
who was not a party to the original Trident insurance policy, entitled to sue for indemnity under
the policy?
The court decided that McNiece was entitled to be indemnified under the insurance policy even
though it had not been a party to the original contract of insurance. It decided that the doctrine of
privity of contract and the rule that consideration must move from the promisee do not apply to a
policy of insurance. (As a result of the enactment of Insurance Contracts Act 1984 (Cth) s 48, it is
unlikely that such a case will arise for consideration by the courts again. Section 48 expressly allows
third parties to whom cover is extended under a contract of general insurance to sue the insurer under
that contract.)
•• If two parties make a contract and one of the parties subsequently reveals that they were acting as an
agent, the other party has the right to enforce the contract against the undisclosed principal.
•• If the parties renegotiate the contract and all three parties (the two contracting parties and the third
party) agree, the contract will be enforceable by and against the third party provided that the third
party has provided consideration. This is known as novation.
•• A buyer has statutory rights against a manufacturer even though the manufacturer is not a party to the
contract of sale.
It is also possible for one party to formally assign or transfer contractual rights (i.e. the benefit of a
contract) to a third party if:
•• the third party has provided consideration for the assignment, and
•• the other party has received notice of the assignment.
For example, if Johnny has a contract with Jin according to which Jin owes Johnny money, Johnny can
transfer the benefit of the debt to Maria if (1) Maria has given Johnny something in return and (2) Johnny
has notified Jin (preferably in writing) of the assignment of debt.
ACTIVITY 9.1 — REFLECT
Why would one person want to assign the benefit of a debt to another person?
Time limits
If one of the parties to the contract wishes to enforce the contract, they must commence legal proceed-
ings within the statutory time limit (see table 9.1). The time limits differ depending upon whether the
contract is a formal contract (i.e. a contract in the form of a deed) or a simple contract.
The time limit starts from the date when the cause of action arises, which is usually the date of the
breach of contract.

TABLE 9.1 Statutory time limits
Jurisdiction Formal contracts2 Simple contracts3
Australian Capital Territory 12 years 6 years
New South Wales 12 years 6 years
Northern Territory 12 years 3 years
Queensland 12 years 6 years
South Australia 15 years 6 years
Tasmania 12 years 6 years
Victoria 15 years 6 years
Western Australia 12 years 6 years
Why is the time limit for simple contracts so much shorter than the time limit for formal contracts?
REVISION QUESTIONS
Before proceeding, ensure that you can answer each of the following questions.
9.1 In what circumstances can a contract be enforced by a person who is not a party to the
contract?
9.2 What is the time limit within which an action under contract law must be brought?
9.2 Unenforceable contracts: lack of consent
LEARNING OBJECTIVE 9.2 What if the other party to the contract made a mistake? What if they were
pressured or threatened or manipulated by the party seeking to enforce the contract? What if the party
seeking to enforce the contract took advantage of the other party? Is the contract still enforceable?
A contract will only be enforceable against a party to the contract if that party entered into the contract
willingly. If they were bullied, pressured or manipulated into entering into the contract, the contract will
be unenforceable due to a lack of consent.
Examples of circumstances in which Johnny will be unable to enforce a contract with Jin due to Jin’s
lack of consent include:
•• Jin made a mistake about a fundamental aspect of the agreement, and Johnny unfairly took advantage
of that mistake (mistake),
•• Jin entered into the contract as a result of inappropriate pressure by Johnny (duress),
•• Jin entered into the contract because Johnny took advantage of his influence over Jin (undue influ-
ence), or
2 Limitation Act 1985 (ACT) s 13; Limitation Act 1969 (NSW) s 16; Limitation Act 1981 (NT) s 14(1); Limitation of Actions Act
1974 (Qld) s 10(3); Limitation of Actions Act 1936 (SA) s 34; Limitation Act 1974 (Tas) s 4(3); Limitation of Actions Act 1958
(Vic) s 5(3); Limitation Act 2005 (WA) s 18.
3 Limitation Act 1985 (ACT) s 11(1); Limitation Act 1969 (NSW) s 14(1)(a); Limitation Act 1981 (NT) s 12(1)(a); Limitation of
Actions Act 1974 (Qld) s 10(1)(a); Limitation of Actions Act 1936 (SA) s 35(a); Limitation Act 1974 (Tas) s 4(1); Limitation of
Actions Act 1958 (Vic) s 5(1)(a); Limitation Act 2005 (WA) s 13(1).

•• Jin entered into the contract because Johnny unfairly took advantage of a special weakness on the part
of Jin (unconscionability).
Mistake
As a general rule, if one of the parties to a contract has made a mistake, it does not entitle them to argue
that the contract is unenforceable or terminate the contract. For example, if Ash buys an item of clothing
that turns out to be the wrong size, or a gift for a person who turns out to already have one, she is not
entitled to rely upon the mistake to get her money back. The rule here is caveat emptor, or ‘let the buyer
beware’. It is Ash’s obligation to be careful to avoid such mistakes happening, and if they do happen,
they are Ash’s responsibility.
Have you ever returned goods to a shop because you made a wrong choice? If the shop was not legally
obliged to accept the return, why do you think they did so anyway?
The three important exceptions to this rule are:
1. unilateral mistakes,
2. common mistakes, and
3. mutual mistakes.
Each of these exceptions may make a contract void (ineffective and unenforceable) due to mis-
take, provided the mistake relates to a fundamental aspect of the contract. Each only applies to a
relatively narrow set of circumstances. The courts prefer to protect, wherever possible, the reliability
and enforceability of contracts, particularly where declaring a contract void will have negative con-
sequences for a third party who has innocently relied upon the validity of the original contract. For
example, if Johnny sells his oven to Jin and Jin then sells the oven to Xue, a court is less likely
to declare the contract between Johnny and Jin void for mistake because by doing so, Xue will be
unfairly penalised.
CAUTION!
If one of the parties to a contract makes a mistake, the general rule is caveat emptor, and the party has
no legal remedy. It is only in exceptional circumstances that a contract will be void for mistake.
Unilateral mistake
A unilateral mistake is a one-sided mistake — that is, it is a mistake made by only one of the parties. As
a general rule, a unilateral mistake will not make a contract void. However, a court will refuse to enforce
a contract where one party makes a serious mistake about a fundamental aspect of the contract, the other
party knows that they have made a mistake and they seek to take unfair advantage of that mistake.
CHECKLIST
A contract will be void or unenforceable due to unilateral mistake if all of the following requirements are
satisfied.
◼◼ One of the parties has made a mistake.
◼◼ The mistake relates to a fundamental aspect of the contract.
◼◼ The other party has sought to take advantage of the mistake.

Taylor v Johnson (1983) 151 CLR 422
Johnson made a written offer to Taylor to sell 10 acres of land for $15 000. She had intended the offered
price to be $15 000 per acre but had mistakenly omitted the words ‘per acre’. Taylor strongly sus-
pected that Johnson had made a mistake, but accepted the offer as written and subsequently sought
to enforce the agreement when Johnson realised her mistake. The court decided that although unilateral
mistake about the terms of a written contract does not make the contract void, in these circumstances
the contract was unenforceable under equity because Taylor was aware of Johnson’s serious mistake
and had sought to take advantage of it — that is, because Taylor had behaved unconscionably.
The court will declare a contract void for unilateral mistake where (1) one party is mistaken as to
the identity of the other party, (2) the identity of the parties is a fundamental aspect of the contract, and
(3) the other party knows of the mistake and seeks to rely upon it.
Cundy Lindsay (1877–78) LR 3 App Cas 459
Blenkarn wrote to Lindsay ordering certain goods. Blenkarn signed the letter so that his name looked
like ‘Blenkiron Co’, a well known and reputable business in the same area. Lindsay thought that the
order had come from Blenkiron Co and forwarded the goods on credit. As soon as Blenkarn received
the goods he sold them to Cundy, and disappeared with the money. Lindsay sued Cundy for the return
of the goods. The court decided that the contract between Lindsay and Blenkarn was void for unilateral
mistake: Lindsay was mistaken about the identity of the purchaser, Blenkarn had taken advantage of
that mistake, and the identity of the purchaser was of fundamental importance in that Lindsay had
intended to deal only with Blenkiron Co and with no-one else. Since the contract between Lindsay
and Blenkarn was void, ownership of the goods did not pass to Blenkarn and could not pass to Cundy,
and Lindsay was entitled to recover the goods from Cundy.
In the above case the contract was void because the parties were doing business at a distance and the
court was satisfied that Lindsay intended to deal only with Blenkiron Co. If, however, the parties are
doing business face-to-face and the court is of the view that the mistaken party intended to deal with
whoever they were in fact dealing with, regardless of their true identity, the contract will not be void.
Papas v Bianca Investments Pty Ltd (2002) 82 SASR 581
Papas sold a car to a buyer who used false identification and paid with a fraudulently altered cheque.
The buyer used the car to obtain finance from Bianca Investments Pty Ltd (BI), a pawnbroker, and then
disappeared with the money. Papas sued BI to recover the car. The court decided that there was no
unilateral mistake as to the identity of the buyer: Papas had intended to deal with the person physically
present at the deal, not the person named in the false identification. The contract was not void, and BI
was entitled to retain the car.
‘Unilateral mistake’ also includes circumstances where one party encourages the other party to sign
a written contract without first reading it or understanding it. As a general rule, the courts are not sym-
pathetic towards a person who signs a contract without reading it. However, if (a) the party who made
the mistake had a good reason for not reading the contract (e.g. they are blind, or illiterate, or cannot
read English) and (b) the mistake is about the fundamental nature of the document they were signing,
the court may be willing to decide that the contract is void and unenforceable. This is known as non est
factum, and was discussed in more detail in the last chapter.
Common mistake
A common mistake (or bilateral mistake) occurs when both of the parties to the contract are mistaken
as to a fundamental aspect of the contract, such as the identity or the existence of the subject matter of

the contract. If the court is of the view that the agreement between the parties was conditional upon the
truth of a bilateral belief that turns out to be false, the contract will be void due to common mistake.4
For example, if Jin agrees to buy Johnny’s oven, but at the time the agreement is made and unknown to
either of them the oven has been destroyed and no longer exists, the contract between Johnny and Jin is
void due to common mistake.5
CHECKLIST
A contract will be void due to common mistake if all of the following requirements are satisfied.
◼◼ The agreement between the parties is conditional upon the truth of a belief held by both parties.
◼◼ At the time the agreement was formed, the belief was incorrect.
If the parties make a common mistake but the court decides that the contract was not conditional upon
the truth of the bilateral belief, the contract will not be void.
Leaf v International Galleries [1950] 2 KB 86
Leaf purchased a painting from International Galleries (IG). At the time of purchase, both Leaf and IG
believed the painting to be the work of the famous artist John Constable. Later, Leaf discovered that the
painting was in fact the work of another, lesser-known artist. Leaf sought to have the contract declared
voidable due to misrepresentation but in obiter dictum the court considered whether the contract was
void due to common mistake. The court stated that although both Leaf and IG had been mistaken about
the identity of the painter, the contract was not conditional upon the truth of this belief: the contract was
for the sale of ‘this painting’ not ‘a painting by Constable’, and, therefore, the contract was not void due
to common mistake.
Mutual mistake
A mutual mistake occurs when the parties to the contract believe they have reached an agreement but in
fact there has been no meeting of minds because they were both thinking of different things at the time
they made the agreement.6
For example, if Jin agrees to buy Johnny’s oven, but at the time of the agree-
ment Jin was thinking of Johnny’s large oven and Johnny was thinking of his small oven, the contract is
void for mutual mistake.
CHECKLIST
A contract will be void due to mutual mistake if all of the following requirements are satisfied.
◼◼ The agreement between the parties is conditional upon the truth of a belief held by each party.
◼◼ The belief held by each party is a different belief.
Duress
If one party compels the other to enter into the contract by expressly or impliedly threatening harm such
as physical violence, they are said to have engaged in duress.
4 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.
5 The common mistake or ‘bilateral mistake’ rule is now contained in the sale of goods legislation in each jurisdiction: Sale of
Goods Act 1954 (ACT) s 11; Sale of Goods Act 1923 (NSW) s 11; Sale of Goods Act 1972 (NT) s 11; Sale of Goods Act 1896
(Qld) s 9; Sale of Goods Act 1895 (SA) s 6; Sale of Goods Act 1896 (Tas) s 11; Goods Act 1958 (Vic) s 11; Sale of Goods Act
1895 (WA) s 6.
6 Raffles v Wichelhaus (1864) 2 Hurl C 906; 159 ER 375.

CHECKLIST
A contract will be voidable due to duress if all of the following requirements are satisfied.
◼◼ One of the parties has expressly or impliedly threatened the other party with harm.
◼◼ The threat of harm contributed to the threatened party’s decision whether or not to enter into the
contract.
Duress makes a contract a voidable contract rather than void. This means that rather than making
the contract completely ineffective, the contract is still effective and enforceable until it is terminated
by the other party. This distinction has important practical consequences when a third party is involved.
Consider again this example: Johnny sells his oven to Jin, and Jin sells the oven to Xue (see figure 9.1).
Johnny Jinsells oven to sells oven to Xue
FIGURE 9.1 Sale by buyer to third party
If the contract between Johnny and Jin is void (e.g. because of unilateral mistake), ownership of the
oven does not pass from Johnny to Jin and, therefore, Xue does not become the owner of the oven and
must return the oven to Johnny. But if the contract between Johnny and Jin is only voidable (e.g. because
of duress by Jin) it is valid and effective until Johnny terminates the contract, and if Jin has already sold
the oven to Xue before Johnny terminates the contract, ownership has effectively passed to Xue and
Johnny cannot recover the oven from Xue.
Think of another practical example to illustrate your understanding of the difference between ‘void’ and
‘voidable’ contracts.
Duress involves the threat of harm. The threat may be to the personal safety of the other party or to
that of their loved ones.
Barton v Armstrong [1973] 2 NSWLR 598
Armstrong was the chairman of the board of Landmark Corporation Ltd. Barton was Landmark’s
managing director. In mid 1966, Barton and Armstrong’s relationship began to deteriorate. In November
1966 Armstrong was removed from the board. Armstrong demanded repayment of loans owed by Land-
mark to his family company, and in January 1967, Barton on behalf of Landmark agreed with Armstrong
to buy out his interest. This agreement was set out in certain deeds signed by Barton on 17 January
1967. Barton commenced proceedings against Armstrong alleging that Armstrong had coerced him into
signing the deeds by threatening to have him murdered and by otherwise exerting unlawful pressure
upon him. He detailed numerous occasions between mid October 1966 and January 1967 in which
Armstrong made threats against Barton’s life. The court decided that the deeds had been executed by
Barton under duress and were void. Armstrong’s threats and unlawful pressure contributed to Barton’s
decision to execute the deeds (even though it may be that due to commercial necessity he would have
executed them in any event).

Seear v Cohen (1881) 45 LT 589
Seear pressured Cohen into signing a promissory note by telling him that if he did not, Seear would
report Cohen’s son to the police for misappropriating money. The court decided that the promissory
note was not enforceable against Cohen because he had signed it under duress.
The threat may be to the safety of the other party’s goods or property.
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298
Hawker Pacific Pty Ltd (Hawker Pacific) agreed to paint a helicopter belonging to Helicopter Charter
Pty Ltd (HC). The job was not done properly and HC returned the helicopter to Hawker Pacific to fix
the problems. When HC went to collect the helicopter from Hawker Pacific they were asked to sign an
agreement releasing Hawker Pacific from all further liability for the paint job. Hawker Pacific implied that
the helicopter would not be returned to HC unless the agreement was signed. HC signed the agree-
ment, but later claimed that it was signed under duress. The court decided that by threatening to retain
the helicopter belonging to HC, Hawker Pacific had engaged in duress, making the agreement signed
by HC voidable and unenforceable.
The threat may be to the other party’s economic or financial wellbeing. This is known as economic
duress.
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705
In April 1972, North Ocean Shipping Co Ltd (NOSC) entered into a contract with Hyundai Construction
Co Ltd according to which Hyundai agreed to build a tanker for NOSC. The contract fixed the price of
the tanker in US dollars and required NOSC to pay the price in five instalments. The first instalment
was paid. In February 1973, the US dollar was devalued by 10%. In April 1973, Hyundai requested
a 10 per cent increase in each of the final four instalments. There was no legal basis for this request.
NOSC refused the increase and paid the second and third instalments in the amounts stipulated in the
1972 contract. Hyundai refunded these payments and continued to insist on the increase. In doing so,
Hyundai made it clear to NOSC that it would not continue with construction of the tanker unless the
increase was granted. In May 1973, unbeknownst to Hyundai, NOSC chartered the tanker to Shell at
a particularly profitable rate, subject to the tanker being completed on time. In June 1973, due to the
imperative of having the tanker completed on time, NOSC agreed to the requested increase. The tanker
was delivered on time in November 1974. In July 1975, NOSC claimed the return of the extra 10 per
cent paid on the final 4 instalments. Hyundai refused and NOSC commenced legal proceedings. The
court decided that the June 1973 agreement was entered into by NOSC under economic duress and
that, consequently, NOSC had the option of either affirming or avoiding the contract. (However, because
NOSC had delayed making a claim for the return of the extra payments by more than 6 months, NOSC
had impliedly affirmed the June 1973 agreement and NOSC could neither avoid the June 1973 agree-
ment nor recover the extra payments.)
The difficulty in relation to economic duress is in establishing that the economic pressure exerted by
one party over the other was not merely the kind of pressure that is typically and legitimately brought
to bear by one business against another. The court will find financial pressure to amount to economic
duress only if the pressure is in some way unlawful.
Undue influence
The parties to the contract may have a pre-existing relationship where one party has a degree of influ-
ence or dominance over the other. If the stronger party takes advantage of their influence such that the

weaker party is not really exercising their independent judgment, the contract will be voidable by (and
unenforceable against) the weaker party on the grounds of undue influence.
CHECKLIST
A contract will be voidable due to undue influence if all of the following requirements are satisfied.
◼◼ The parties to a contract are in a pre-existing relationship such that one party has controlling influ-
ence over the other.
◼◼ The stronger party takes advantage of that influence such that the weaker party is not exercising
their independent judgment when entering into the contract.
Undue influence will be presumed where the relationship between the parties is one of the following
recognised relationships of influence:
•• doctor and patient,
•• lawyer and client,
•• trustee and beneficiary,
•• parent/guardian and child, or
•• religious leader and follower.
In these situations it will be up to the stronger party to establish that, despite the relationship, they did
not exert their influence over the weaker party in making the contract. If they are unable to do so, the
contract will be voidable.
Allcard v Skinner (1887) 36 Ch D 145
Upon joining a religious order, Allcard took a vow of poverty and donated all of her property to the order.
Five years after leaving the order, Allcard sought to have the gift set aside because of undue influence.
The court confirmed that because the relationship between the parties was one of religious leader and
follower, there was a presumption of undue influence that the religious order would have to rebut. (How-
ever, in the circumstances, Allcard had left it too long to seek to have the gift set aside, and she was
deemed to have ratified (confirmed) the gift once she was no longer subject to the undue influence.)
Where the relationship between the parties is not one of these recognised relationships of influence,
influence will not be assumed, and it will be up to the weaker party to establish that the stronger party
had a controlling influence over their decision-making. Examples of situations where such a controlling
influence might arise include contracts between:
•• spouse and spouse,
•• principal and agent,
•• accountant and client,
•• bank and client,
•• employer and employee, and
•• carer and patient.
If the weaker party can establish that the stronger party does in fact have such a controlling influence
it will then be up to the stronger party to convince the court that they did not take advantage of that
influence.
Johnson v Buttress (1936) 56 CLR 113
Buttress was 67 years old, illiterate, unintelligent and ignorant of business affairs. He had a history of
relying on the advice of others in relation to business matters and had made frequent changes to his
will. In 1931, he had become increasingly reliant on the advice of a distant relation of his deceased

wife, Mary Johnson. In April 1931, Buttress transferred a cottage to Johnson for no consideration.
The transfer was executed in Johnson’s solicitor’s office. Buttress did not have independent advice
about the transfer and there was evidence to show that he did not understand the irrevocable nature
of the transfer. Buttress died in 1934. His son sued to have the transfer of the cottage set aside on
the basis that it was made under undue influence. The court decided that the evidence established
that a relation of trust and confidence did exist between Buttress and Johnson such that the pre-
sumption of undue influence arose. The Court further decided that Johnson was not able to rebut this
presumption. The court explained as follows: ‘The jurisdiction of a court of Equity to set aside gifts
inter vivos [made while living] which have been procured by undue influence is exercised where undue
influence being presumed from the relations existing between the parties, the presumption has not
been rebutted. Where certain special relations exist undue influence is presumed in the case of such
gifts. These relations include those of parent and child, guardian and ward, trustee and cestui que trust
[beneficiary], solicitor and client, physician and patient, and cases of religious influence. The relations
mentioned, however, do not constitute an exhaustive list of the cases in which undue influence will
be presumed from personal relations. Wherever the relation between donor and donee is such that
the latter is in a position to exercise dominion over the former by reason of the trust and confidence
reposed in the latter, the presumption of undue influence is raised.’7
Unconscionability
To be a valid and enforceable contract, both of the parties to the agreement must behave conscionably;
that is, they must behave fairly. A contract will be void due to unconscionable conduct if one party has
unfairly taken advantage of a special weakness or disadvantage of the other party.
Kitto J in Blomley v Ryan (1956) 99 CLR 362 explained the concept of unconscionability as follows:
Whenever one party to a transaction is at a special disadvantage in dealing with the other party because
illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his
ability to conserve his own interests, and the other party unconscientiously takes advantage of the oppor-
tunity thus placed in his hands.
Blomley v Ryan (1956) 99 CLR 362
In February 1952, Blomley’s father approached Ryan regarding the sale of Ryan’s grazing property in
New South Wales to Blomley. Ryan responded that he would not be interested until the end of the year
and that the price would be £33 264. Later that year, Ryan indicated that he would not be interested in
selling the property until May 1953. Nevertheless, on 21 April 1953, Ryan signed a contract for the sale
of the property to Blomley for £25 000. The contract confirmed the terms of an agreement that had been
concluded on 20 April 1953 between Ryan, Blomley’s father and an agent who was acting on behalf
of Blomley. At the time of making the agreement and signing the contract, Ryan was 78 years old and
had been on a drinking bender for several days. Blomley, his father and the agent were aware of Ryan’s
drinking habits. Blomley’s father and the agent had brought a bottle of rum to the meeting on 20 April
1953. Ryan did not obtain a copy of the contract until July 1953. He obtained legal advice and decided
not to complete the contract. Blomley commenced proceedings seeking specific performance of the
contract or, alternatively, damages for breach of contract. The court decided that at the time the agree-
ment was made and the contract signed, Ryan was not capable of understanding its nature or effect
and Blomley was aware of this. Consequently, the contract was unconscionable and equity would not
enforce the contract by granting specific performance or allow it to be enforced at law.
7 Johnson v Buttress (1936) 56 CLR 113, 119.

It must be established that the stronger party was aware of, or should have made themselves aware of,
the other party’s special weakness or disadvantage.
CHECKLIST
A contract will be void due to unconscionability if all of the following requirements are satisfied.
◼◼ One of the parties to the contract has a special weakness or disadvantage.
◼◼ The other party knows about or should know about that special weakness or disadvantage.
◼◼ The other party takes unfair advantage of that special weakness or disadvantage.
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
Mr and Mrs Amadio, an elderly couple who spoke little English, were asked by their son to mort-
gage their property to the Commercial Bank of Australia as a guarantee for the debts that he owed.
Mr and Mrs Amadio agreed, believing that their son’s business was successful and that their lia-
bility would be limited to $50 000. They were wrong on both counts. The bank manager took the
mortgage and guarantee documents to Mr and Mrs Amadio to sign. The manager did not explain
the documents to Mr and Mrs Amadio, nor did he check to see if they understood the risk and lia-
bility they were assuming. Mr and Mrs Amadio signed the documents without reading them. When
the son defaulted on his loans, the bank sought to enforce the mortgage and guarantee over Mr
and Mrs Amadio’s property. The court decided that the mortgage and guarantee were void due
to unconscionability on the part of the bank. Mr and Mrs Amadio were in a position of special
disadvantage because of their ignorance of their son’s indebtedness, their age and their inability to
read and understand English. The bank knew about this disadvantage and should have taken steps
to ensure that Mr and Mrs Amadio were better informed. The bank’s failure to do so amounted to
unconscionable conduct.
A ‘special weakness or disadvantage’ may include:
•• an inability to speak or read English,
•• illiteracy,
•• lack of education,
•• poverty,
•• sickness,
•• age or youth,
•• lack of intellectual capacity,
•• ignorance of important facts, or
•• intoxication.
Bridgewater v Leahy (1998) 194 CLR 457
A farmer transferred farming land worth $700 000 to his nephew for $150 000. The farmer’s widow and
daughters challenged the transaction. The court decided that it was an unconscionable transaction: the
farmer uwas 84 years old at the time; the same local solicitor acted for both the farmer and the nephew,
and the farmer did not receive independent legal advice; the farmer relied heavily upon the nephew,
who had worked for him for 25 years; and the nephew had taken advantage of the farmer’s position of
disadvantage.
In one notable case the ‘special weakness’ included being in love.

Louth v Diprose (1992) 175 CLR 621
Diprose was a solicitor and Louth was his client. Diprose was twice-divorced and middle-aged. He
became infatuated with and emotionally dependent upon Louth. Louth claimed that she and her two
children were about to be evicted from their home, and convinced Diprose to give her $60 000 for the
purchase of a house. Diprose later sought to recover the gift, and the court decided to set the gift aside
because of Louth’s unconscionable conduct: Diprose’s unrequited love for Louth put him at a special
disadvantage, and Louth had unconscionably exploited Diprose’s love for her to benefit herself.
Consider the cases described under the headings ‘mistake’, ‘duress’ and ‘undue influence’, and identify
those that could also be categorised as ‘unconscionability’.
The notion that a contract can be set aside on the grounds of unconscionability is an equitable notion
developed by the courts, but the legislature has adopted the notion, and unconscionable conduct is now
prohibited by Part 2-2 of the Australian Consumer Law (ACL). Two types of unconscionable conduct are
prohibited by the ACL:
1. unconscionable conduct generally: ACL s 20, and
2. unconscionable conduct when supplying goods or services to, or acquiring goods or services from, a
person other than a listed public company: ACL s 21.
These sections are examined in detail in a coming chapter.
Unfairness
The Australian Consumer Law also seeks to address the use of unfair terms in consumer contracts.
ACL s 23 states:
1. A term of a consumer contract is void if:
(a) the term is unfair; and
(b) the contract is a standard form contract.
A finding by a court that a term is unfair, and therefore void, means that the term is treated as if it
never existed. This section will also be examined in detail in a coming chapter.
In New South Wales, the Contracts Review Act 1980 (NSW) allows the court to refuse to enforce a
contract, to declare a contract void, or to vary the terms of a contract if it is of the view that the contract
is ‘harsh, oppressive, unconscionable or unjust’.
REVISION QUESTIONS
9.3 In what circumstances will a contract be unenforceable due to the lack of consent by one of the parties?
9.4 What is ‘caveat emptor’?
9.5 When will a mistake by one of the parties make the contract void?
9.6 What is ‘unilateral mistake’ and when will it make the contract void?
9.7 When will a mistake about the identity of the other party make a contract void?
9.8 What is ‘common mistake’ and when will it make the contract void?
9.9 What is ‘mutual mistake’?
9.10 What is ‘duress’ and in what circumstances will it make a contract voidable?
9.11 What is the difference between ‘physical duress’ and ‘economic duress’?
9.12 What is ‘undue influence’ and in what circumstances will it make a contract voidable?
9.13 When will ‘undue influence’ be assumed? If it is not assumed, can it still be pleaded?
9.14 What is ‘unconscionability’ and in what circumstances will it make a contract voidable?

9.3 Remedies
LEARNING OBJECTIVE 9.3 If the contract has been breached, when will the party seeking to enforce
the contract be entitled to damages? When can they terminate the contract because of the other party’s
breach? What other remedies are available in the event of a breach of contract?
If one party breaches a term of the contract (or, in some cases, a non-contractual representation or
promise) and they are not protected from liability by an effective disclaimer, a number of possible legal
remedies are available to the other party including:
•• rescission,
•• damages,
•• equitable remedies, and
•• statutory remedies.
In this section we consider each of these remedies in detail.
Rescission
Rescission is termination or cancellation of the contract as a consequence of a breach of the contract by
the other party. Rescission may be a remedy granted by the court or the rescission may be conducted
by the innocent party and, if challenged by the party allegedly in breach, subsequently endorsed by the
court. For example, if Johnny breaches his contract with Jin, Jin can either attempt to rescind the con-
tract herself, or she can commence legal proceedings and seek an order to the court that the contract is
rescinded.
When rescission is granted or endorsed by the court, the court will as far as possible seek to restore
the parties to their original positions. For example, if after taking delivery of the pizza oven Jin is able
to have the contract rescinded, Jin will have to return the oven to Johnny, and Johnny will have to repay
the purchase price to Jin.
Why would a party not wish to terminate a contract despite the other party’s breach?
Not every breach of contract will entitle the other party to terminate the contract. The right to ter-
minate the contract will depend upon whether there has been a complete or a partial failure to perform,
and whether the partial failure to perform involves breach of a condition or of a warranty.
Complete failure to perform
A party to a contract will completely fail to perform if:
•• they make no effort at all to perform their contractual obligations,
•• their actual performance is completely different to what they were required to do under the
contract, or
•• prior to the time for performance they clearly indicate that they will not be performing their obli-
gations (anticipatory breach).
For example, if Johnny and Jin agree that Jin will pay $10 000 for the pizza oven on Thursday, and on
Wednesday Jin tells Johnny that she cannot afford to pay for the oven, Jin will have completely failed to
perform by way of anticipatory breach.
A complete failure to perform will entitle the other party to terminate the contract. It will also entitle
the other party to damages and to equitable remedies such as specific performance or an injunction, con-
sidered below.
If Jin breaches the contract by anticipatory repudiation, Johnny is entitled to terminate the contract
immediately and sell the oven to someone else, even if the actual time for Jin’s performance has not

yet arrived.8
However, Johnny should be careful not to act too promptly, because if it turns out that he
was not entitled to terminate the contract early, his action will itself amount to a breach of the contract
entitling Jin to a remedy.
Gold Coast Oil Co Pty Ltd v Lee Properties Pty Ltd [1985] 1 Qd R 416
Gold Coast Oil (GCO) entered into a contract with Lee Properties (LP) according to which GCO
would lease certain premises from LP following the completion of certain alterations to the prem-
ises by GCO. GCO informed LP that the alterations would not be completed until economic con-
ditions became more favourable. LP terminated the contract and GCO challenged its right to do so.
The court decided that GCO’s conduct amounted to anticipatory breach and that LP was therefore
entitled to terminate.
Partial failure to perform
In most cases the party in breach of the contract will be in breach not because of a complete failure to
perform but because they have only partially performed the contract. A party to a contract will partially
fail to perform the contract if they comply with some of the terms of the contract but breach one or more
of the other terms.
Partial failure to perform is still a breach of the contract, entitling the other party to damages and
the range of equitable remedies. But what about rescission? If one party breaches a single term of the
contract, is the other party entitled to terminate the contract? This will depend upon whether the term
breached was a condition or a warranty.
Condition or warranty
A condition is a term of the contract of fundamental importance. In the absence of such a term, the party
favoured by the term would not have entered into the contract in the first place. If one party breaches a
term that is a condition, the other party has the right to:
•• confirm the contract and recover damages, or
•• terminate the contract and recover damages.
A warranty is a term of the contract of lesser importance. In the absence of such a term, the party
favoured by the term would have entered into the contract anyway. If one party breaches a term that is
a warranty, the other party does not have the right to terminate the contract, although they will still have
the right to seek one of the other remedies described below, including damages.
Sometimes the parties will explicitly categorise the various terms of the contract as conditions or war-
ranties. More commonly, the categorisation must be worked out from the conduct of the parties and the
context of the transaction.
Bettini v Gye (1876) 1 QBD 183
Bettini was a singer and Gye was a promoter. Bettini and Gye entered into a contract according to
which Bettini would sing for Gye at various events over a 15-week period. Bettini was obliged to
attend rehearsals for 6 days before the first event, but missed 4 days of rehearsals due to illness.
Gye sought to terminate the contract. Was the term requiring Bettini’s attendance at rehearsals a
condition or a warranty? The court decided that it was warranty: the requirement that Bettini attend
rehearsals was a term of lesser importance, not a term of vital importance. Gye was not entitled to
terminate the contract.
8 Mahoney v Lindsay (1980) 33 ALR 601.

Associated Newspapers Ltd v Bancks (1951) 83 CLR 322
Associated Newspapers Ltd was the publisher of a newspaper and Bancks was a cartoonist. Bancks
entered into a contract with Associated Newspapers Ltd to provide a weekly full-page cartoon that
Associated Newspapers Ltd promised to publish on the front page of its comics section. For three
weeks Associated Newspapers Ltd published Bancks’ cartoon on page 3 of the comics section. Bancks
sought to terminate the contract. Was Associated Newspapers Ltd’s promise a condition or a war-
ranty? The court decided that the circumstances indicated that it was a condition, because if Associ-
ated Newspapers Ltd had not promised to publish the cartoon on the front page, Bancks would not
have entered into the contract. Bancks was therefore entitled to terminate the contract.
Late performance of a contractual obligation will usually be treated as a breach of a warranty rather
than a breach of a condition, unless the parties have expressly agreed that timely performance is an
essential term of the contract.
Why is a party to a contract entitled to terminate the contract if the other party breaches a condition but
not if they breach a warranty?
Intermediate terms
Sometimes it is not possible to categorise a term of the contract as either a condition or a warranty. Such
terms are called intermediate terms. Whether or not a breach of an intermediate term entitles the other
party to terminate the contract depends upon the seriousness of the breach: a serious breach will justify
termination, a minor breach will not. A serious breach is a breach that deprives the other party substan-
tially of the benefit for which they entered into the contract in the first place.
Cehave NV v Bremer Handelsgesellschaft mbH; The Hansa Nord [1976] QB 44
Cehave NV purchased a shipment of citrus pellets from Bremer Handelsgesellschaft mbH (BH) to
be used as animal feed. The contract required the pellets to be in ‘good condition’. The pellets were
not in good condition, although they were still good enough to use as animal feed. Was Cehave NV
entitled to reject the shipment and terminate the contract? The court decided that the term requiring
the pellets to be in good condition was an intermediate term, and that, therefore, Cehave NV would
only be entitled to terminate the contract in the event of a serious breach of the term. The breach
in this case was not a serious breach because the pellets could still be used by Cehave NV for the
purpose for which they were purchased. Cehave NV was obliged to accept and pay for the pellets,
although he was entitled to damages from BH as compensation for the decline in the value of the pel-
lets as a result of the breach.
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
A contract existed between the Council and Sanpine relating to development by Sanpine of the
Council’s land. Sanpine was obliged under the terms of the contract to maintain certain financial records,
and when financial mismanagement contributed to the Council eventually going into administration, the
Council administrator terminated the contract with Sanpine. Sanpine insisted that the administrator was
not entitled to terminate the contract because the terms that had been breached were not conditions.
The court decided that the terms relating to the keeping of financial records were either conditions or
intermediate terms, the breach of which had been so serious that the administrator was entitled to ter-
minate the contract.

CAUTION!
A breach of contract will not necessarily entitle the other party to terminate the contract. It will depend
upon whether the breach is of a condition or a warranty, or a serious or minor breach of an intermediate
term.
Loss of right to payment
The party who has partially failed to perform the contract cannot enforce the contract themselves, so if
the other party refuses to pay for the partial performance, the party in breach cannot compel them to pay
except in certain circumstances.
For example, if Johnny delivers the pizza oven to Jin on Saturday instead of on Friday as agreed, he
has partially failed to perform the contract and is in breach of one of the terms. If Jin then refuses to pay
for the oven, can Johnny still enforce the contract?
Partial failure to perform will not lead to the party in breach completely losing the right to enforce
payment in the following circumstances.
1. If the contract between the parties is ‘divisible’, the party in breach can enforce payment for those
parts of the contract that have been performed. A divisible contract is one under which the party pro-
viding the goods or the services is payable in stages (e.g. a builder being entitled to payment upon
completion of each stage of construction). Even though the party has not completely performed the
contract they are entitled to enforce quantum meruit payment (i.e. the amount they deserve) for those
stages that have been completed. On the other hand, if the contract is one that requires performance in
full before the entitlement to payment arises, the party in breach cannot enforce payment unless they
fall within one of the other two exceptions. A contract will be presumed to be divisible in the absence
of express words to the contrary.
Cutter v Powell (1795) 6 Term R 320; 101 ER 573
Cutter agreed to sail as second mate for Powell on a return voyage from London to Jamaica in return
for a payment of 30 guineas. Cutter completed most of the voyage but died before the ship returned to
London. Cutter’s widow sued for part payment based on the proportion of the voyage that Cutter had
completed. The court decided that the contract was not divisible, that Cutter was only entitled to pay-
ment upon complete performance and that Cutter’s wife was not entitled to any payment at all in the
circumstances.
2. If the party in breach has substantially performed their obligation (i.e. there is only a small difference
between what the party was required to do and what they actually did), the party in breach will still
be entitled to enforce payment, subject to a small adjustment in the price to reflect their failure to
perform the contract completely.9
In the example with Johnny and Jin, it is likely that Johnny will be
able to rely upon this exception to recover payment from Jin subject to a small adjustment for the late
delivery.
3. If the other party has chosen to accept the partial performance, the party in breach can enforce
payment but they will only be paid quantum meruit rather than the full amount agreed upon in
the contract. This means that the other party will be entitled to a pro rata reduction in the price
payable.
9 Hoenig v Isaacs [1952] 2 All ER 176.

Steele v Tardiani (1946) 72 CLR 386
Tardiani was engaged by Steele to cut firewood. The contract provided that Tardiani was to cut the
wood to be six inches in diameter and that Steele would pay Tardiani six shillings per tonne of wood.
Tardiani delivered 1500 tonnes of cut wood, but it was cut into pieces ranging from six to fifteen inches
in diameter. Was Tardiani entitled to insist upon payment? The court decided that Tardiani had partially
failed to perform the contract and that he was therefore in breach. However, Steele had accepted the
partial performance by Tardiani because Steele knew that Tardiani was cutting the wood too wide, but
had told Tardiani that Tardiani would be paid anyway. Steele had waived his right to insist on complete
performance, and Tardiani therefore had the right to enforce payment to the value of the work actually
done.
A well drafted contract will avoid uncertainty about this issue by clearly setting out the consequences
of a partial failure to perform in terms of entitlement to payment.
Damages
A plaintiff will be entitled to damages in the event of:
•• any breach of contract by the defendant, whether total or partial, actual or anticipatory, condition or
warranty,
•• breach of a collateral contract by the defendant, or
•• fraudulent or negligent misrepresentation by the defendant.
The objective of the court in making an award of damages is to restore the plaintiff to the position
they would have been in if the breach or misrepresentation had not occurred; that is, if the contract has
been performed properly (as in the following examples).
•• If Jin defaults under a loan contract with Johnny, Johnny is entitled to damages equivalent to
the total amount of repayments, including interest, which he would have received if Jin had not
defaulted.
•• If Johnny contracts with Jin to sell his pizza oven to Jin for $10 000 and Johnny then refuses to
complete the contract, Jin is only entitled to claim damages if she is unable to buy a similar oven
elsewhere for the same price or lower. If she can buy the same oven elsewhere but at a higher price,
the amount of her damages claim will be the difference in the prices, plus any additional expenses
incurred in finding the other oven.
•• If, on the other hand, Jin breaches the contract by refusing to accept delivery of Johnny’s oven,
Johnny will only be entitled to claim damages if he cannot sell the oven to someone else at the
same price or higher. If he can only sell the oven to someone else at a lower price the amount of his
damages claim will be the difference in the prices, plus any additional expenses incurred in finding
the other buyer.
If the plaintiff has not suffered any actual loss as a result of the breach of contract, they will only be
entitled to nominal damages. This is a token amount (e.g. $1) that merely affirms that the defendant
was in the wrong.10
In practice, a plaintiff in these circumstances is unlikely to have commenced a legal
action in the first place.
In exceptional circumstances, such as where the defendant has intentionally breached the contract in
an effort to maliciously cause harm to the plaintiff, the court may award exemplary damages. This is an
award of damages in an amount above and beyond mere compensation and is intended by the court to
penalise or punish the defendant and to act as a deterrent.11
10 Charter v Sullivan [1957] 2 QB 117.
11 Hospitality Group Pty Ltd v Australian Rugby Union (2001) 110 FCR 157.

Liquidated and unliquidated damages
Damages that can be easily calculated in advance are liquidated damages. For example, if Johnny is
2 months in arrears in the payment of the rent for his restaurant, the damages payable to his landlord are
easily calculated: the monthly rent multiplied by two.
Damages payable to the plaintiff that cannot be easily calculated in advance are called unliquidated
damages. Examples of unliquidated damages include compensation for the plaintiff’s pain and suf-
fering, anxiety, distress, disappointment, frustration or discomfort as a result of the breach of contract.
The terms of the contract are unlikely to include a pre-estimate of such damages and it will be up to the
court itself to calculate them.
Sometimes the parties to a contract calculate in advance the quantity of damages to which one party
will be entitled in the event of breach by the other party, and include a ‘liquidated damages clause’ in the
contract. As long as the liquidated damages clause is a genuine pre-estimate of likely losses, the court
will enforce the clause. If, however, the clause is interpreted as imposing a penalty on the defendant it
will not be enforced and the court will calculate the damages payable for itself.12
Direct and indirect losses
In the event of a breach of contract by the defendant, the plaintiff will be entitled to compensation for
direct losses and may be entitled to compensation for indirect losses.
Direct losses are those losses incurred by the plaintiff that flow naturally from the breach according to
the ordinary course of events. Damages payable for direct losses are called general damages (or normal
damages).
Koufos v C Czarnikow Ltd; The Heron II [1969] 1 AC 350
Czarnikow Ltd and Koufos entered into a contract according to which Koufos would ship a quantity of
Czarnikow Ltd’s sugar from Romania to Iraq. Koufos took 10 days longer than expected to deliver the
sugar and, as a result of a decline in the price of sugar over that period, Czarnikow did not make as much
money when the sugar was sold in Iraq. Czarnikow Ltd sued Koufos for breach of contract and sought
damages to compensate him for the amount of the loss. The court decided that the loss incurred as a
result of the drop in the price of sugar was a direct loss arising from Koufos’ breach: Koufos would have
been aware that a delay in delivery might lead to such a loss.
Losses that are not caused directly by the breach or that would not ordinarily be expected to result
from the breach are called indirect losses or consequential losses. Such losses are recoverable only if it
can be shown that the parties had the possibility of such losses in mind when the contract formed — for
example, if the plaintiff had expressly made the defendant aware of the possibility of such a loss. Dam-
ages payable for indirect losses are called special damages (or abnormal or extraordinary damages).
Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145
Hadley was the owner of a mill and Baxendale was a courier. Hadley engaged Baxendale to deliver a
broken mill shaft to the shaft manufacturer for repair. Baxendale promised to deliver the shaft the next day,
but actually took a number of days to make the delivery. Because Hadley only had the one shaft, the mill
stood idle for the whole time the shaft was being transported and repaired. Hadley sued Baxendale for
breach of contract and he sought compensation for his loss of profits for that period. The court decided
that Hadley’s loss of profits was an indirect loss caused by Baxendale’s breach. As such, Hadley was only
entitled to compensation if it could be shown that Baxendale was aware of the possibility of such a loss at
the time the contract was formed. Baxendale did not know that the shaft was Hadley’s only shaft and that
the mill would be idle without it, and in the court’s opinion Baxendale was entitled to assume that Hadley
had a spare shaft. Hadley was not entitled to compensation for the loss of profits.
12 O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359.

CAUTION!
The defendant is not liable for all of the harm suffered by the plaintiff as a result of the defendant’s
breach of contract, only for those losses incurred by the plaintiff that are either natural or anticipated.
Mitigation
When one party breaches the contract, the other party is under an obligation to mitigate their loss.13
This means that they are obliged to take all reasonable steps to minimise their loss. If, for example,
Johnny breaches a five-year commercial lease by vacating the property six months before the expiry
of the lease term, the landlord is not entitled to leave the property vacant for the six months and then
claim from Johnny damages equivalent to six months rent. Rather, the landlord is obliged to take all
reasonable steps to seek a new tenant, and the amount of their damages claim is limited to the loss
actually incurred by them: the cost of re-advertising the property, rent for the period that the property
was vacant, and the shortfall, if any, between the monthly rent payable by Johnny and the rent being
paid by the new tenant.
As you will recall from an earlier chapter, a person harmed by the negligence of another has a similar
obligation.
Brace v Calder [1895] 2 QB 253
The plaintiff was an employee of a partnership. When the partnership was dissolved the plaintiff’s
employment contract was effectively, and illegally, terminated. Two of the partners became the new
owners of the business and they offered to re-employ the plaintiff on the same terms as his original
employment. The plaintiff refused the offer and instead sued the original partnership for damages for
breach of contract. The court decided that while the partnership had in fact breached the plaintiff’s
employment contract, the plaintiff had by refusing the offer of new employment failed to comply with his
obligation to mitigate, and the court awarded the plaintiff nominal damages only.
Why does the law require a party to mitigate their loss?
Equitable remedies
If the plaintiff can demonstrate to the court that an award of damages is not a satisfactory remedy, the
court may decide to provide an equitable remedy. Equitable remedies include specific performance and
injunction.
Give three examples of situations where an award of damages would not be a satisfactory remedy for
the plaintiff.
13 Payzu Ltd v Saunders [1919] 2 KB 581.

Equitable remedies are discretionary: it is up to the court to decide whether or not an equitable remedy
should be granted. Equitable remedies will not be granted if:
•• an award of damages would be adequate,
•• the plaintiff has delayed in bringing the action (called laches), or
•• the plaintiff has behaved unfairly or unconscionably.
Specific performance
An order of specific performance is a court order directing the defendant to fulfil their contractual obli-
gations. In other words, instead of ordering the defendant to pay monetary compensation to the plaintiff,
the court orders the defendant to do what they promised to do under the contract.
The court will not order specific performance if the contract is one that requires the defendant to pro-
vide a personal service, since (1) such a contract requires goodwill on the part of the defendant and if
they were ordered to carry out the service they may do so poorly, and (2) the court would have to mon-
itor the defendant’s performance on an ongoing basis, which courts are usually unwilling to do.14
The court will not order specific performance if the defendant has failed to deliver certain goods to
the plaintiff and those goods are readily available from another supplier. In such circumstances damages
will be an adequate remedy. Specific performance will only be ordered if the goods are unique or rare,
or have a special or particular value.
Dougan v Ley (1946) 71 CLR 142
Ley contracted with Dougan to purchase Dougan’s taxicab and operating licence. Dougan then changed
his mind and Ley sued Dougan for breach of contract. Ley sought an order for specific performance.
The court granted the order: taxicab operating licences were not readily available on the market, and
therefore an award of damages was not an adequate remedy.
Injunction
An injunction is a court order forbidding someone from engaging in particular conduct that will be
a breach of the law or infringe the legal rights of another. An injunction may be sought by the plain-
tiff to prevent the defendant from engaging in a threatened or anticipated breach of contract, or in an
actual ongoing breach of contract. An injunction is more likely to be granted than an order for specific
performance.
Buckenara v Hawthorn Football Club Ltd [1988] VR 39
Buckenara was contracted to play professional football for the Hawthorn Football Club. One of the
terms of the contract provided that Buckenara could not play for any other club during the period of
the contract with Hawthorn. When Buckenara expressed an intention to play for another club, Hawthorn
successfully obtained an injunction prohibiting Buckenara from doing so.
An injunction thus differs from an order of specific performance because the defendant is not being
compelled to actually perform the contract (which, as we have seen, courts are often reluctant to do),
only prohibited from engaging in particular conduct that would amount to a breach of the contract. The
defendant can still refuse to perform their contractual obligations in other ways.
Injunctions are used in a wide variety of situations, not only in the event of a breach of contract. For
example, we explained in an earlier chapter that they can be used to prevent a person committing a tort.
14 JC Williamson Ltd v Lukey Mulholland (1931) 45 CLR 282.

Statutory remedies
If the term breached is one of the terms implied into the contract by the sale of goods legislation, the
legislation provides a range of remedies.
Seller’s remedies
If it is the buyer of goods who has breached the contract, the legislation grants the seller certain
remedies.15
•• If the buyer refuses to accept delivery of the goods, the seller is entitled to compensation for any
expenses thereby incurred.
•• If the buyer has not paid for the goods and the seller still has possession of the goods, the seller can
retain possession of the goods until they are paid, or resell the goods to another buyer.
•• If the buyer refuses to pay for the goods, the seller is entitled to sue for the price.
Buyer’s remedies
If it is the seller of goods who has breached the contract, the legislation grants the buyer a number of
remedies.16
•• If the seller has failed to deliver the goods, the buyer is entitled to sue the seller for damages. If the
goods are rare or unique and damages would not be an adequate remedy, the buyer is entitled to sue
for specific performance.
•• If the seller has delivered the goods, but the goods are in breach of the implied terms relating to title,
description, fitness, quality or sale by sample, the buyer will be entitled to sue the seller for damages.
•• If the implied term that has been breached by the seller is described in the legislation as a war-
ranty, then the buyer is only entitled to sue for damages. If, however, the implied term that has been
breached by the seller is described in the legislation as a condition, then the buyer is also entitled to
reject the goods and treat the contract as at an end. The buyer loses this right if they are deemed to
have accepted the goods.
Additional remedies available to consumers under the ACL are examined in a coming chapter.
REVISION QUESTIONS
9.15 What is the remedy of rescission?
9.16 Does anticipatory breach entitle the other party to terminate the contract?
9.17 What are the consequences of partial failing to perform a contract?
9.18 What is the difference between a ‘condition’ and a ‘warranty’?
9.19 What is an ‘intermediate term’? When will breach of an ‘intermediate term’ entitle the other
party to terminate the contract?
9.20 When will a person who has partially failed to perform a contract be entitled to enforce the contract?
9.21 How are damages calculated?
9.22 What are (a) nominal damages, and (b) exemplary damages?
9.23 What are (a) liquidated damages, and (b) unliquidated damages?
9.24 When will the plaintiff be entitled to compensation for (a) direct losses, and (b) consequential losses?
9.25 What does it mean to say that the plaintiff has a duty to ‘mitigate’ their loss?
9.26 What is specific performance and when will it be awarded?
15 Sale of Goods Act 1954 (ACT) ss 41–52; Sale of Goods Act 1923 (NSW) ss 40–51; Sale of Goods Act 1972 (NT) ss 40–52;
Sale of Goods Act 1896 (Qld) ss 39–50; Sale of Goods Act 1895 (SA) ss 37–48; Sale of Goods Act 1896 (Tas) ss 42–53;
Goods Act 1958 (Vic) ss 44–55; Sale of Goods Act 1895 (WA) ss 37–48.
16 Sale of Goods Act 1954 (ACT) ss 54–56; Sale of Goods Act 1923 (NSW) ss 53–55; Sale of Goods Act 1972 (NT) ss 53–56;
Sale of Goods Act 1896 (Qld) ss 52–54; Sale of Goods Act 1895 (SA) ss 50–52; Sale of Goods Act 1896 (Tas) ss 55–57;
Goods Act 1958 (Vic) ss 57–59; Sale of Goods Act 1895 (WA) ss 50–52.

9.27 What is an injunction?
9.28 What statutory remedies are provided by the sale of goods legislation to (a) sellers, and (b) buyers?
9.4 The end of the contract
LEARNING OBJECTIVE 9.4 How can a contract be terminated by agreement? When will a contract be
frustrated?
We have explained that a contract can come to an end because both parties have performed their obli-
gations, or because the contract has been terminated by one party as a result of a breach of the contract
by the other party.
In this section we consider two other ways a contract can come to an end: agreement and frustration.
Agreement
The parties to the contract can agree to voluntarily end the contract. There are a number of different
ways this can happen.
•• Both parties can agree to mutually release each other from any future obligations. The consideration
for each party’s promise not to enforce the contract is the other party’s promise to do the same thing.
•• The party who has already fully performed their own obligations can promise to unilaterally release
the other party from complete performance of their obligations. This promise is only enforceable if it
is in the form of a deed, or is supported by consideration, or satisfies the requirements of promissory
estoppel (see the discussion regarding part payment of existing debts in an earlier chapter).
•• The parties can mutually agree to replace the existing agreement with a new agreement on different
terms; this is called novation (see above). The consideration for release from the old contract is entry
into the new contract.
•• The contract may contain a condition precedent that has not been satisfied, or a condition sub-
sequent that has been satisfied.
Frustration
Something might happen that is not the fault of either of the parties but which makes performance of
the contract impossible or only possible in a way that neither of the parties anticipated. This is called
frustration. For example, Johnny might agree with Jin that he will sell Jin his pizza oven for $10 000.
Unfortunately, after the contract is formed but before delivery can take place, Johnny’s oven is destroyed
by fire. He no longer has a contractual obligation to provide an oven to Jin, and he does not have to com-
pensate Jin for failing to provide the oven, because the contract is said to have been frustrated.
A contract will come to an end as a result of frustration if a ‘supervening event’ makes performance
of the contract either completely impossible or at least impossible to perform in the way originally
envisaged by the parties, and it would be unjust to compel either party to proceed with the contract. The
contract will not be frustrated if either party caused the supervening event, or if the contract provided for
the supervening event either expressly or by implication.
CHECKLIST
A contract will be frustrated if all of the following requirements are satisfied.
◼◼ A ‘supervening event’ has made performance of the contract either completely impossible or at least
impossible to perform in the way originally envisaged by the parties.
◼◼ Neither party caused the supervening event.
◼◼ The contract did not provide for the supervening event either expressly or by implication.
◼◼ It would be unjust to compel either party to proceed with the contract.

Examples of supervening events include the following.
•• The subject matter of the contract is unexpectedly destroyed.
Taylor v Caldwell (1863) 3 B S 826; 122 ER 309
Taylor and Caldwell entered into a contract according to which Caldwell would hire his hall to Taylor for
four concerts. Between the making of the contract and the dates of the booking, Caldwell’s hall was
destroyed by fire. Taylor sought damages (compensation) from Caldwell as a result of his failure to pro-
vide the hall. The court decided that the contract had been frustrated and that Caldwell was under no
further contractual obligation to provide a hall to Taylor.
•• The sale of goods legislation specifically states that if there is an agreement to sell specific goods and,
before risk passes to the buyer, the goods perish without any fault on the part of the seller or buyer,
the agreement is avoided.17
•• One of the parties to the contract dies, where the contract required them to perform a personal service.
•• An unexpected change in the law makes performance of the contract illegal.18
•• The anticipated event that gave rise to the contract in the first place does not, in fact, occur.
Krell v Henry [1903] 2 KB 740
Henry and Krell entered into a contract according to which Henry would rent a room in Krells’ home for
one day to watch the coronation procession pass by in the street below. The coronation procession was
cancelled, but Krell nevertheless sought to enforce the contract. The court decided that the contract
had been frustrated by the cancellation of the coronation procession.
•• The conditions under which one of the parties is obliged to perform their obligations change
dramatically.
Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Codelfa was engaged by the NSW State Rail Authority (SRA) to build two tunnels in Sydney. When
agreeing upon a price, Codelfa had believed that it would be possible to work on the tunnel 24 hours a
day, but shortly after commencing work local residents obtained an injunction that imposed limits upon
the hours Codelfa could undertake construction work. The delays imposed by the injunction meant that
Codelfa’s costs would be substantially increased. Had the contract been frustrated? The court decided
that the injunction was an unforeseen event outside the control of the parties, and that while perfor-
mance by Codelfa was still possible it would be in a manner substantially different to that originally
envisaged by the parties. The contract had been frustrated and Codelfa was able to negotiate a new
contract, on different terms, with SRA.
While it is not necessary to show that performance is completely impossible, it is necessary to show
that as a result of the frustrating event, performance will be substantially different, not merely more diffi-
cult or more expensive for one of the parties.
17 Sale of Goods Act 1954 (ACT) s 12; Sale of Goods Act 1923 (NSW) s 12; Sale of Goods Act 1972 (NT) s 12; Sale of Goods
Act 1896 (Qld) s 10; Sale of Goods Act 1895 (SA) s 7; Sale of Goods Act 1896 (Tas) s 12; Goods Act 1958 (Vic) s 12; Sale of
Goods Act 1895 (WA) s 7.
18 Esposito v Bowden (1857) 7 El Bl 763; 119 ER 1430.

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
The Fareham Urban District Council engaged Davis Contractors Ltd (DC) to construct 78 houses within
six months. Due to a shortage of labour and materials the work took longer than expected and cost
an additional £17 000. DC wished to renegotiate the price payable by the council and argued that the
original contract had been frustrated. The court decided that the contract had not been frustrated. DC’s
costs had unexpectedly increased, but this did not amount to performance only being possible in a
manner unanticipated by either of the parties.
The frustrating event must be beyond the control of the contracting parties. If the event was the out-
come of the deliberate actions or decisions of one of the parties, it is not frustration.19
Why is it necessary that the frustrating event be ‘beyond the control of the parties’?
When a contract is frustrated, all outstanding obligations of the parties are discharged. However, any
obligations that have already been performed cannot be reversed or recovered. In the example above, if
Jin had already paid a deposit for the oven to Johnny before the frustration event, that deposit cannot
be recovered. The exception is if there has been a ‘total failure of consideration’ — in other words, Jin
has received nothing at all from Johnny in return for paying the deposit. In those circumstances Jin can
recover the deposit from Johnny.
Legislation in New South Wales and South Australia allows a person to recover money paid, or pay-
ment for performance rendered, under a contract that has subsequently been frustrated.20
REVISION QUESTIONS
9.29 In what ways can the parties to a contract end the contract by agreement?
9.30 When will a contract be frustrated?
9.31 What is the effect of frustration?
In conclusion
•• According to the doctrine of privity of contract, a contract can only be enforced by — and against —
a party to the contract. As a general rule, it cannot be enforced by or against third parties.
•• A contract may be unenforceable if (1) both parties made a common mistake or a mutual mistake,
or one party made a unilateral mistake that the other party has unfairly sought to take advantage of;
(2) one party pressured the other party into entering into the contract using physical or economic
duress, or undue influence; or (3) one party unconscionably took advantage of a special weakness or
disadvantage on the part of the other party.
•• A breach of contract will entitle the other party to terminate the contract if the breach was of a con-
dition and not a warranty, or it was a serious breach of an intermediate term. It will also entitle them
to claim damages, that is, monetary compensation. The other party may be entitled to equitable rem-
edies such as specific performance or an injunction, but these remedies are only granted if damages
19 Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524.
20 Frustrated Contracts Act 1978 (NSW); Frustrated Contracts Act 1988 (SA).

are demonstrated to be an inadequate remedy. If the contract is for the sale of goods, the sale of goods
legislation may offer additional remedies.
•• The parties to a contract can agree to end a contract by agreement. If a supervening event outside the
control of the parties makes performance of the contract impossible, or only possible in a way the
parties did not anticipate, the contract is said to have been frustrated.
JOHNNY AND ASH
[Johnny and Ash are sitting in the now empty bar. There are four empty coffee cups on the table,
indicating that they have sat talking for some time.]
Ash — Okay, so we have established that Maria’s promise not to interfere with the running of the
business was a term of the contract between the two of you, and that by not keeping her promise she
is actually in breach of the contract.
Johnny — That’s great! So now what?
Ash — Well, we should work out what it is, exactly, that you want.
Johnny — What are my options?
Ash — Well, if you sued her for breach of contract you might be entitled to monetary compensation.
Or the court might be willing to order Maria to keep her promise and stop interfering with the running
of the business. Or you might even be entitled to terminate the contract with Maria completely.
Johnny — Can I arrange for Maria to be arrested and thrown into jail?
Ash — No, Johnny. Do I need to explain the difference between civil law and criminal law again?
Johnny — That’s okay. I remember. Actually, I am happy to keep going with our partnership. I just
want to make sure that we do things the way we originally agreed.
Ash — Okay, that would be specific performance, or possibly even an injunction to prevent Maria
coming into the restaurant every night and taking control. Of course, we would prefer not to actually
go to court and get orders for specific performance or an injunction. If things get that serious your
relationship with Maria – who is after all your business partner – are likely to get rather tense.
Johnny — So what do I do?
Ash — As usual, we start by trying to talk it though and negotiate a mutually satisfactory outcome.
Organise a meeting with Maria and remind her of her promise. Gently let her know that you are
confident that her promise is in fact a term of the contract that the two of you made. Ask her nicely
to stick to what you both agreed. Hopefully that will resolve the matter, and things won’t have to get
litigious.
Johnny — I’ll give it a shot. . . . Will you come with me?
Ash — Sure. But not as your lawyer. I‘ll be there as your friend.
Johnny — Is that what we are Ash? Friends?

QUIZ
1 X, a real estate agent, arranges for a house owned by Y to be leased to two tenants, Mr Z
and Mrs Z. Which of the following is least likely to be permitted to enforce the rental
contract?
(a) X.
(b) Y.
(c) Mr Z.
(d) Mrs Z.
2 Which of the following mistakes will not render a contract void?
(a) The buyer has mistakenly purchased the wrong colour product.
(b) The buyer has purchased a product that they mistakenly believe to be a valuable antique and the
seller knows about the buyer’s mistaken belief.
(c) The buyer has agreed to purchase shares in a company; unknown to both the buyer and seller
the company has been liquidated.
(d) The buyer thought they had agreed to purchase product ‘A’ from the seller; the seller thought
they had agreed to sell product ‘B’.
3 Which of the following is least likely to be classified as duress?
(a) A threat to cause harm to the property of the other party to the contract.
(b) A threat to cause harm to the property of the person making the threat.
(c) A threat to cause physical harm to the other party to the contract.
(d) A threat to cause physical harm to a close relative of the other party to the contract.
4 In which of the following contracts will undue influence not be presumed?
(a) A contract between doctor and patient.
(b) A contract between lawyer and client.
(c) A contract between husband and wife.
(d) A contract between parent and child.
5 Which of the following is NOT an essential requirement in establishing unconscionable
conduct by X in a contract between X and Y?
(a) X has a special weakness or disadvantage.
(b) X knows about or should know about that special weakness or disadvantage.
(c) X takes unfair advantage of that special weakness or disadvantage.
(d) None of the above.
6 If one party fails to fully perform their obligations under a contract, the other party is not
entitled to terminate the contract if
(a) the breach is of a condition.
(b) the breach is of a warranty.
(c) the breach is a serious breach of an intermediate term.
(d) none of the above.
7 Late performance of a contractual obligation will usually be treated as
(a) a breach of a condition.
(b) a breach of a warranty.
(c) a breach of an intermediate term.
(d) not a breach of contract.

8 X agrees to rent equipment to Y for a period of six months at a rental of $10 000 per month.
After two months Y returns the equipment and makes no further rental payments. One
month later, after spending $50 advertising the equipment, X is able to rent the equipment to
Z for $9000 per month for six months. What is the amount of the damages that X is entitled
to from Y?
(a) $10 050
(b) $13 050
(c) $16 050
(d) $40 050
9 A contract is not frustrated by
(a) an event that makes performance by one of the parties more expensive or inconvenient than
expected.
(b) the destruction of the subject matter of the contract.
(c) an unexpected change in the law, making performance illegal.
(d) the non-occurrence of an event that gave rise to the contract in the first place.
10 X has paid Y a deposit for a room in the hotel of Y. Before the date of the booking the hotel is
flooded. In this case, which of the following statements is correct?
(a) X cannot recover the deposit because the contract has been frustrated.
(b) X cannot recover the deposit because the contract is void ab initio.
(c) X can recover the deposit because Y has breached the contract.
(d) X can recover the deposit because there has been a total failure of consideration.
EXERCISES
EXERCISE 9.1 — MISTAKE
Johnny buys a pair of diamond earrings for $4000 for Ash for her birthday from Gemstone Jew-
ellery. Ash insists upon only wearing ‘ethical’ jewellery and Gemstone Jewellery insists that the
diamonds in the earrings are not conflict diamonds. When Ash later has the earrings valued for
insurance purposes she learns that Gemstone Jewellery were mistaken and that the diamonds are
in fact conflict diamonds. What rights does Johnny have against Gemstone Jewellery? Focus on
the law of mistake.
EXERCISE 9.2 — DURESS
The waiters at Johnny’s restaurant, Dan and Sam, have been pestering Johnny for weeks about getting
an increase in their hourly rate. Johnny repeatedly explains to Dan and Sam that he cannot agree to a
pay rise without first speaking to his accountant, and that he will not have time to do so until the end of
the month. Dan and Sam are becoming increasingly frustrated with Johnny’s refusal to consider their
request. One Friday evening, during the busiest part of the shift, Dan and Sam confront Johnny and tell
him that unless he agrees to increase their hourly rate by $5 per hour, they are going to walk out, leaving
him to serve the customers on his own. Johnny has no choice but to agree to their request. He promises
to adjust their pay as requested. Is Johnny legally obliged to keep his promise? Focus upon whether or
not Dan and Sam have engaged in duress.
EXERCISE 9.3 — UNDUE INFLUENCE
Ross, Ash’s next door neighbour, is illiterate and suffers from severe depression. Ross relies upon Ash
for advice and support. Ross wants to sell some land that he owns and Ash agrees to buy the land from
Ross. Ross accepts the first price that Ash offers (without seeking independent legal or financial advice)
and Ross signs the contract of sale. Ross’s brother Robert has now called Ash to express his concern
about the contract price. Can Ross cancel the sale?

EXERCISE 9.4 — CONDITIONS AND WARRANTIES
Ash agrees to buy Stephen’s car. She meets Stephen at his house where she hands over a bank cheque
in exchange for the transfer papers and the keys to the car. When she gets into the car she discovers that
there is no fuel in the fuel tank. Assuming that it is a term of the contract that the fuel tank contains fuel,
can Ash insist upon terminating the contract and getting her money back as a result of Stephen’s breach?
EXERCISE 9.5 — PARTIAL PERFORMANCE
Johnny engages Elaine to repaint the interior of his restaurant. Elaine has quoted Johnny $5000 for the
job. Before she finishes the job, Elaine informs Johnny that she is moving to Melbourne with her boy-
friend and will not have time to finish. Johnny is annoyed, and refuses to pay Elaine any more than the
cost of the paint she has used, which he estimates to be $1000. In what circumstances can Elaine insist
upon being paid more than $1000?
EXERCISE 9.6 — DAMAGES
Johnny arranges for his new pizza oven to be installed in his restaurant by Gary. According to the
terms of their agreement, Gary is to install the oven on 20 February. He, in fact, installs the oven
one week later on 27 February. As a result of Gary’s breach, Johnny’s planned launch of a new range
of vegan pizzas is delayed by a week. The advertising flyers he had printed for the launch have to be
thrown away and a new set of flyers printed. Also during that week, he had to explain to a number of
disappointed customers that the pizzas were not yet available. And because Johnny had to close the
restaurant on the 27th instead of the 20th (to allow Gary to install the oven properly), he had to cancel
an extremely lucrative private function booked by the Vegan Food Appreciation Society, which then
decided to go to a different restaurant. If Johnny sues Gary for breach of contract, how will Johnny’s
damages be calculated?
EXERCISE 9.7 — FRUSTRATION
Ash made a contract to purchase Stephen’s car. Ash paid a deposit of $500 with payment of the balance
of the purchase price to take place on 11 November 2016 at 10.00 am. On 8 November Ash loses her
driver’s licence due to accumulated loss of points. Can Ash refuse to proceed with the purchase? If so,
can she recover the deposit?
KEY TERMS
agent A person who acts on behalf of a principal who is legally responsible for the actions of the
agent.
assign To transfer rights or property.
caveat emptor (‘let the buyer beware’) The principle that each party to a contract is responsible for
protecting their own interests.
common mistake A mistake made by both parties to a contract. Also known as a ‘bilateral mistake’.
condition A term of a contract of fundamental importance.
condition precedent A term in an agreement that provides that the agreement will not be enforceable
until the happening of a certain event.
condition subsequent A term in an agreement that provides that the agreement is enforceable
immediately but will cease to be enforceable upon the happening of a certain event.
consideration The price paid for the other party’s performance of a contract.
damages Monetary compensation; a type of civil remedy.
deed A written contract that (1) has been signed by the parties before a witness, ‘sealed’ and
‘delivered’, or (2) is expressed to be a deed. Also known as a ‘formal contract’.
direct loss A loss incurred by the plaintiff that flows naturally from the breach of contract by the
defendant according to the ordinary course of events.

LAWS1100 Nickolas James Business law 4_e_----_(chapter_9_contract_law_enforcement_of_the_contract)

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