Week 3 Class 1

Private
Beaton v Mcdivvet
Judges went on different directions
Frustration
concerned with back end of contract, what are the circumstances to bring
it to an end?
Kirby J

Contract

Estoppel

frustration

No contract because
no consideration,
because no
exchange. The
promise made by the
McDevits was of a
nature such a ..
[3:30] some
promises = empty
promise (not
enforceable)
maybe moral
obligation (no
legal) conditions
attatched, if you
do this Ill give you
$1000 =
conditional gift.
Attaching
conditions
More than conditional
gift for a contract. In
the particular case,
the promise was not
quid pro quo.
There has to be a
request, not only
condition, express
or implied request
for you to do
something for you
to get that benefit
or the promisor to
get some
detriment.
Over Christmas:
expression of
goodwill, not in
commercial context:
if you do this, ill do
that. Despite that it
was advantageous to
them, reduce rent,
cultivate in their
methods.
Still looked like a
conditional gift to
Kirby, over
Christmas, charity
dimension, free
accommodation
Essence of
consideration =
quid pro quo, has
to be a request in
the promise,

Promises where
generate certain
detriments on the
promisee where no
contract has come
into existence.
Source of equitable
remedy outside
contract. Once
contract exist,
obligation established
and not necessary to
consider this.

No need to deal with

frustration, as there
is no contract.

Obligation

McHugh

Mahoney

promise cannot
just hve a
condition attached
to it, has to be an
expres/implied
request in the
contract that you
will do a certain
thing for you to
get that benefit, or
for the promisor to
get a detriment (if
you do this will
not do that)
There was
consideration, there
was a deal. we don't
have the reseources
to devloep the land
ourselves if you
come in and work it
in this place we will
transfer land.
If you do this, we will
do that.
Yes

No

Not frustration

There is a legal
obligation on part of
McDivets to transfer
the land. Valid
contract, promise was
made on the basis
something will be
done by Beatons to
activate the
obligation.

yes

Was frustrated

Contractual promise,
condition attached
(they will do
something, engage in
certain agriculture,
move onto premise).

so they got into the contract and the contract was frustrated (acts of god,
earthquake) and cannot be performed
because the mechanisims of the fulfillment of the promise (namely
transfer of divison of land) but this could not take place, the sub-straten of
the contract disappeared.

Adequacy of consideration
courts wont look into the adequacy of consideration: wont impose a value,
enter into any deliberation whether or not the promises were equivalent,
comparable value.
o Aspect of the freemarket
Cannot go to court: consideration offered by other party was low in value,
gave too much. As long as the contract is not misformed in the absence of
force, the value of the consideration will not be possible to revisited by the
courts.
Obviously, lots of contracts entered are subjected to legal obligations, eg
go on bus, fare is priced by regulatory authority, by statutes, regulated.
o At CL, the courts wont bother with the amount of consideration, only
whether there has been a consideration
Woolworths v Kelly policy in the adequance of consideration is not considered.
Kirby J
free market principle: courts no
lawyer not trained to set adequate/fair price on stuff.
Contracts will never be final, once that contract is concluded, and the
courts can look into the adequacy of consideration, can subsequently get
price raised.

Sufficiency of consideration
sufficient rather than adequate
past consideration: Roscoral v Thomas
problem of past consideration, for someone seeking to enforce contractual
consideration.
Promise was made after the contract made, AFTER the contrat of the
horse was made.
That promise/assurance is gratuitious: promise that horse is easy to
ride/tame. If that was part of the original contract, then it would become a
condition
If it comes after, all the contract contained was the sale and delivery of
the horse, no warrantee of the quality or condition of the horse itself in
the contract, is not enforceable it is gratiutious, no consideration to
enforce it.
However: if you give me extra 5 pounds, I will guarantee that it is good =
good consideration
Implied promise
Express promise: expressing something that was implied, clarified in the
first contract. Why express if it is not implied
M2: express: first time, after the contract was concluded, particularly
seller recieivng complaint the horse was wild, turned to the issue and the
promise was made.
There is no principle of implied warrantee in CL, buyer beware principle.
No negotiation of warrantee for quality.
o Consumer rights: 20th century, imply into contracts merchantable
quality goods fit for the reason in which they were sold. Shift onus
to seller, banned to sell goods not of merchantable quality.
o Further protection for comsumers in Aus
CL: unless there is an express warrantee, courts wont imply such term.
Another situation in which no consideration: existing legal duty rule.
TA Sundell:
price of one of the components of the iron sheets rises sharply (if no price
variation clause, problem: need to rewrite contract, Brambles: agree to
amend it, was there consideration to amend? Yes additional consideration)
There has to be additional consideration or else just gratiutious.
Based on Stilk v Myrik: no consideration offered, already bound to do so,
the terms of the contract: already had to do everything in their power,
responsiblty defined in very general terms, so general as to cover one or
more sailors has diserted.
o No new consideration promised, their extra work is simply
gratiutious.
Policy???: seems unfair to the sailors, extra work because 2 sailors
abandoned, intutiviely unfair, do extra work, promise to renumerate them,
and renegs promise.
o Part of the dynamics of contract, is that at one point one party will
be vulnerable (eg one has executed their part and other has not, or

other at one point is absolutely critical to supply what they need)

other party to exercise extortion of demand. The acute vulnerability,
the courts has refused to enforce these extortionate demands, only
enforcing the original contract to prevent the extortionate behavior
o Courts after try to strike balance, enforece contracts no extortion, at
same time prevent the efnroceability of contract that has bad faith,
extortion, undue influence, middle way between two extremes that
explain the case law.
[47:20]
[59:30]
existing legal duty rule
creditor promises to take lower figure, after taking cash, enforces the
original contract because subsequent promise was gratious, no
consideration.
Foakes v Beer:
court order to be paid to a date in full, go to creiditor to pay the court
order in installments, until the whole debt is paid off, agreeded and
signed, the complies with the terms of that agreement.
After he paid, the creditors wanted interest on top of that amount.
Creditor tried to enforce the implication of the original contractual
obligation.
No further consideration was given for this promise, therefore
unenforceable. Effectively means the original proposal stands.
o Wants ot modify the original contract, but only can modify with
contractual mechanism, eg consideration to modify with
consideration.
o The debtor agrees, but no consideration is given, so far as the
courts is concerned, the original contractual arrangement remains
unmodified. Exiting contractual duty, which remains
unmodified. There is a gratioutous promise no more than
that.
Sense of unease, of the courts to refuse the attempted modifications.Lord
Blackburn p121:
o Unusual dissent, expresses sentitment, obliquely, implicitly are the
sentiments in the judgements which try to create exceptions to the
existing legal duty.
o Key point/rationale: there is an existing business practice all men of
business, 19th century commercial law cases, courts refer to
business practices as a reference point to develop legal doctrines.
Courts don't want to modifiy the law to create inconvieience in the
commercial field.
o The understanding in commerce, becomes an important
determining factor in reaching decision.
Ppl in business awlays want to make profit will change
contract, unilaterally. Eg business going downhill, lot of
commercial sense, reduce the amount payable. Very rationale,
court should give effect to these salvage efforts instead of
blanket rules to these are completely not legally enforceable.

If this is so, disadvantage of all parties business will

not entered into contracts.

Williams
US courts/authorties keener to pick up these arguments, significant shit
away from existing legal duty approach.
Builder in a difficult job, losing money, tells contract he cannot do this any
more and threatnening to walk off the job. Particular problem for the
contractor: had to pay penality clauses in place, may be very onerous.
Half finished buildings, very hard to get contractors to get other
contractors to finish other builders work.
Roffey looks like also in serious problems, bankrupsty, salvage operation.
Doesns tlook like a case of economic duress, extortion
o Rather Bonifiede,
Roffey did not pay up with the rearranged payments. Only made one
additional payment. Once entered into this novel arrangement, he did not
even pay up to the original payment.
Trial judge looking at the equitable situation, Williams looks like a
particularly hard done litigant, willing to do the work, nearly finished and
Roffey still didn't pay. Indicated that they may have never intended to give
this arrangement in the first place. Another reason to give another
exception to the existing legal duty.
Trial judge: practical benefit on the promisor (roffey) Williams (promisee)
where the rpomissor gets a pracdtical benefit (avoid being sued by stiff
penatlity cuases by head contractor, find different builders, pratical
benefit which will effectively constitute suffiecnet consideration)
Must be under the condition that there is no economic duress: if any
evidence of economic duress, it wont be possible to rely on this exception
2 requirements: practical benefit on promisor and no duress/extortion
(clearly no evidence of this,Williams came up with is proposal because he
was in financlal difficulty, not seeking to get unfair advantage of willaism
under these stiff penalty clauses)
o avoid the mischief the original policy was set to address while
letting the original party get remedies.
o Economic duress: subjective motive, simply responding to external
factors (as opposed to own greed) will constitute practical benefit as
opposed to duress.
Musuemci: Australian application of the pricnipel
significantly the English cout of appeal has not extended the Williams rule
in depths.
Where a contractual obligation is ONLY payment to debt, FOAKES remains
there. RESELECT.
Foakes: doesn't matter whether there is a practical benefit, there is no
consideration, the original contract stands, unenforcenabe
o Williams: ONLY IN NON DEBT CASES, if practical, no duress,
sufficient
Not extort, very good reasons for change of rent, as they were under big
competitor,

o BENEFIT TO LANDORD: have all the tenants filled, reduced rent is

beter than no rent at all, take another land lord to find another
tenant, going to be a gap when a tenant leaves.
Todays situation: many competitor tenants, to get many
higher $: argue: still time to find, for prospective tenants,
seeing closed, would lower, cost of adveristing. All points to
that there are signfnicant practical benefits.
o One pay of looing at practical benefit is looking at the costs
involved in enforcing the original contract. If the cost in enforcing he
roginal contract is nomre than the benefit ie less benefit in enforcing
the contract, than agreeing in modification of the contract then this
is practical benefit.
How much cost landlord? Court, court order, tenant bankrupt,
hazards of ligigation costs, will deliver them less benefits, in
fiancnial difficulties.
o ANOTHER way of assessing whether or not this partiucalr promise.
Not under economic duress, but generally acted in good faith,
then that is enough to bring. Broaden rule in favor of promises.
o No economic duress.