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Expert legal advice on commercial contracts from Jameson Law. Secure your business interests. Contact us for contract solutions.

Navigating Used Car Purchase Disputes What Are Your Rights

Navigating Used Car Purchase Disputes What Are Your Rights?

  In a nutshell… Purchasing a secondhand vehicle is an experience most people will have in their lifetime. Whether it is to purchase your first car as a teenager, your family car or your everyday car, secondhand cars are a normal part of most people’s lives at some stage. Of course there are many advantages with buying a secondhand car, primarily due to the price being so much lower than that of a brand new car. The disadvantages of a used car however is that it is not new and there may be unforeseen or unknown issues following the purchase. There is always a risk associated which people accept as a general principle when they enter into the transaction. Thankfully, the purchase and sale are governed by Australian Consumer Law so that there is oversight. Motor vehicle disputes can be both expensive, stressful and time consuming. It is important to know exactly what your rights are and where you can access the best assistance. Jameson Law have a team of expert lawyers who can guide you through the process if you are in need of legal assistance due to a used car transaction. Motor Vehicle Transactions Licensed Motor Dealer If you choose to buy a used car from a licensed motor dealer you will have greater protection than if you buy a motor vehicle from a private seller. Not only do licensed dealers have insurance but they are usually businesses or companies with strict policies and procedures. Consumer guarantees exist within licensed businesses and businesses are more likely to comply with Australian Consumer Law guidelines. If you have ever purchased a motor vehicle from a licensed establishment then you would be aware that there is a sales person who is required to adhere to fair trading laws. They must seek fair market price for the vehicle and there is consumer protection. They may offer a consumer guarantee or a manufacturer’s warranty (depending on the age of the vehicle) and there is a clear process for raising and handling of complaints. Private Sale It is common for people to buy second hand cars from private sellers through websites such a gumtree, Facebook, private advertisements, etc. Whilst Australian Consumer Law does still apply to these types of sales, the consumer guarantees apply differently. A private transaction does not allow for the same types of financing options often as car dealerships. A private seller does not usually offer financing through a financial institution. All finance needs to be sorted out prior to the transaction taking place and money is to be paid in either cash or a bank transfer.   Case Study Caleb purchased a used motor vehicle from a local business in Sydney. He paid fair market value for the vehicle and has owned the vehicle for the last 3 months. Recently, the car has been having some issues and he has taken it for assessment with a mechanic. The mechanic has determined that it is a defective vehicle which was never fit for sale. The motor requires repairs which should have been fixed before sale and there are supplier defects. The local business is refusing to take liability for the motor defects. Their lawyers are claiming that the defects are a result of lack of care by the owner. Caleb has engaged a lawyer to help him sue for damages. He does not have the funds to be able to purchase a new vehicle and he is unable to sell the vehicle to recoup the funds in order to pay out the loan. Caleb’s lawyers are able to prove that the motor vehicle business was aware of the defects upon the transaction of the vehicle and failed to disclose it. He is able to receive a settlement. Motor Vehicle Disputes Warranties Whether engaging in a second hand car transaction or a brand new motor vehicle transaction, warranties need to be upheld. Manufacturers warranties for example transfer with the vehicle until the warranty expires. It is important that warranties are upheld for consumers to avoid motor vehicle disputes. Manufacturers warranties cover aspects of the vehicle such as the engine, timing belt, etc. If something happens to your motor vehicle which is covered under manufacturers warranty then you can have it repaired without needing to pay the cost or expense. You may even be able to get a refund for the vehicle if the defect is severe enough. In the event you do cover the cost of a defect without knowing it is under warranty then you can have the supplier refund you the money owing once coming to realize it is under warranty. Cooling Off Period During a motor vehicle transaction, there is a three-day cooling off period from the date of signing the contract. This is an opportunity for you to pull out of the sale if you no longer wish to go through with the contract. The contract is null and void however if the car is delivered during the three-day period as you would have already accepted its delivery. Whilst a private seller may not have you sign a physical contract for the motor vehicle transaction, any evidence of how the terms of the transaction would be evidence of a contract. I.e. price, time of transfer, etc.   In a nutshell… Henry has purchased two separate used cars under two individual private sales in the Australian Capital Territory. He has purchased many cars before in this manner and understands his legal rights. He understands they may slightly vary depending on the type of transaction he engages in as a consumer but that he is covered by consumer guarantees. Henry engaged a lawyer to assist with his motor vehicle dispute. He is concerned about being able to cover lawyers fees if he does not win his case but his lawyers are confident that the defective parts will be proven and costs awarded to cover repair. The federal court ultimately grants that damages be provided and costs covered by the

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Fitness Feud

Breaking a Sweat Over Business: The Fitness Feud of the Decade

Breaking a Sweat Over Business: The Fitness Feud of the Decade Aussie fitness sensation Cass Olholm isn’t just breaking a sweat in her workouts but also in court! Flexing her legal muscles, Cass recently delivered a knockout punch to her former employer, Bikini Body Training Company. In the red corner, we have the globally recognized Bikini Body Training Company. They were concerned that Cass’s new app, “Train With Cass,” launching this Thursday, might have subscribers sprinting away from their reigning champ, the “Sweat” program. In numbers? They feared a possible $1 million drop in revenue. A Breach of the “Restraint of Trade” Clauses In the blue corner, the rising star Cass Olholm, was gearing up to launch her app. However, the Bikini Body brand, founded by fitness mogul Kayla Itsines but now under the U.S. flag, threw in a legal jab aiming to block her launch. Their argument? A breach of the “restraint of trade” clauses. But as every good fitness enthusiast knows, it’s not about the punches you throw, but the ones you can take and keep moving. Judge Jack Costello handed the victory to Cass, allowing her to roll out her app immediately. He stated that Bikini Body couldn’t prove they had a “legitimate commercial interest” to protect, or that their 12-month restraint period was even reasonable. Ms. Olholm and Ms. Itsines were once the dynamic duo of the fitness world. Cass often graced Ms. Itsines’ Facebook videos post her Bikini Body joining in 2020. Fast forward a bit, and Bikini Body claims a whopping $65 million in revenue each year. Meanwhile, “Train With Cass” offers its fitness secrets for $21.99 a month or a yearly commitment of $139.99. Nicholas Swan, defending Bikini Body, argued that Ms. Olholm’s dazzling fitness “aura” shouldn’t be used to pump up a rival business within the 12-month clause. On the flip side, Thomas Macfarlane, coming to bat for Cass, stated it’s a stretch to hold back her goodwill, something she built over years, even before her Bikini Body days. Cass claims her non-compete was for six months, not twelve. Cass believes her fitness journey’s success isn’t just a two or three-year marathon at “Sweat.” Her hard-earned accolades and skills don’t magically disappear post-Sweat. And it seems Judge Costello sided with that logic. Contract Law Experts Sweat Over Contracts, Not Workouts! Navigating the world of contract law can be as tricky as mastering a new fitness routine. Whether you’re a rising star in the fitness world or just want to ensure your contracts are as rock-solid as your abs, Jameson Law has got your back! Dive into the details with us, so your business can flex its muscles confidently.

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contract law civil or criminal

Is Contract Law Civil Or Criminal?

Contract law falls within civil law legislation and is subject to civil proceedings. Civil law proceedings comprise areas of law such as Family law, wills, contracts law, etc. Civil law involves people against people and looks to provide a remedy for individuals so they can enforce private rights against other individuals. Criminal law on the other hand, is a set of regulations both enacted and enforced by government action. This is primarily why criminal cases are always the defendant versus the state which the offence occurred in. Contract law does not feature within criminal law. Criminal law deals with community justice against singular or collective victims of violence or harm. Jameson law have a team of expert lawyer’s ready and willing to assist you with all your legal needs. They have trained and qualified criminal and civil lawyers who have an in-depth knowledge and understanding of the inner working of criminal and civil law. Contact them today to schedule your first consultation with them. What Is Contract Law? Contract legislation can be explained as a promise or set of promises which is legally binding. In this context, the promise to either do or not do something is made on the condition that the other person or entity also do something in return, usually involving monetary compensation. The area of contracts coincides with a variety of different areas of law including, corporate law, property law, private law, etc. Property law for example, involves the sale and transfer of property from one individual to another in exchange for monetary compensation. If either the seller or buyer does not abide by the conditions then the other can sue for breach of contract. A further example may be an employment contract requiring remuneration reviews at certain times of the year. If the employer does not abide by the condition to conduct that review then the employee would have recourse under breach of contract. The employee would need to be able to prove that no internal review occurred without their knowledge. A contract dispute will require the assistance of an expert contract or civil lawyer trained within that area of law. Breach of contract can be an expensive and a long process as it can nullify the contract. Civil law aims to provide a set of rules and guidelines for contracts so that people are protected from liability. All parties to a contract need to have recourse options if conditions are not upheld and there needs to be legal protections in place. If a contract dispute needs to be litigated under civil law processes then a claim will need to be filed and evidence presented regarding the breach. A legal remedy also needs to be suggested. This remedy may be that the party seeks for the contract to be upheld or that they seek for it to be nullified so they are no longer bound by its conditions. In some cases, a breach of contract may see a merge between civil and criminal law if the breach of contract involved illegal activity or created an illegal situation. You may then need to engage a team of criminal lawyers as well as a contract lawyer to assist. The Matters would be dealt with in separate courts with the contract dispute being heard in the civil court and the criminal matters being heard in either the Supreme Court or the Magistrate’s court depending on the severity. In the case of international companies, there may even be a breach of international law to consider which will complicate things even more. International legislation looks at the relationship between different countries and the obligations they have to one another. It is a merging of worldwide legal principles from many different jurisdictions. It is a specialized area of law which governs unlawful interference between countries or states as they may be referred to. Case Study Carmen has purchased a property from Alex for a purchase price of $400,000. Carmen sought that the sale be subject to a 30 day settlement as she is currently pregnant and wants to move into the property before her due date. This was a non-negotiable term for Carmen and Alex agreed. As the date approaches however, Alex learns that the property he was to move into will not be ready on time and he seeks a 60 day extension to the settlement date. Carmen is only willing to extend by 10 days. Alex refuses and Carmen now seeks to renege from the agreement. She requires an expert civil lawyer to assist with her legal arguments as she is unclear of her rights and obligations under civil law. She is confident that Alex cannot back out after she has already been approved for finance and the contract has progressed to settlement. If she does not receive a fair outcome, she is willing to appeal any decision in the same or higher courts as she is certain she is not in the wrong. Do Criminal Law and Civil Law intersect? Criminal and civil law intersect in some criminal and civil cases. A civil claim may have criminal law elements or it may been born from some level of criminal activity. Likewise a civil claim or civil dispute may uncover illegal activity which will directly result in a criminal law dispute. Criminal Law Criminal law cases are breaches of the Criminal Code Act or any other legislative laws surrounding criminal law. There are different levels of criminal offending with federal criminal charges being among the highest. State criminal law offences are split into two categories; summary offences and indictable offences. Summary offences are dealt with in the local court registry whereas indictable criminal offences are dealt with in the Supreme Court registry. The main difference between the two is that summary offences are dealt with by way of Magistrate whereas indictable offences are dealt with by way of trial by jury. If you have been charged with a criminal law offence, you will need to engage a criminal

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thumbs up contract

Thumbs Up or Thumbs Down? How an Emoji Changed Contract Law

Imagine this: You’re buying something big, maybe a car. After some discussion, the seller sends you a photo of the written agreement. You reply with a “thumbs-up” emoji. Most of us would see this as a casual gesture of acknowledgment. But in a recent Canadian court case, that single emoji was deemed enough to finalize a contract. In a groundbreaking decision, the King’s Bench for Saskatchewan determined that a simple “thumbs-up” emoji can carry the weight of a legally binding agreement, leading to an award of over $82,000 in damages for breach of contract. This case, titled South West Terminal Ltd v Achter Land & Cattle Ltd, marks a significant moment in the ongoing adaptation of contract law to contemporary digital communication. South West Terminal Ltd (SWT) and Achter Land & Cattle Ltd have shared a longstanding business relationship. On March 26, 2021, following a flax contract advertisement by SWT, the two entities negotiated terms. SWT’s representative drafted the contract and upon signing, sent a picture of the document via text to Chris Achter, representative of Achter Land & Cattle Ltd. His reply? A simple “thumbs-up” emoji. However, no flax was delivered by the stipulated date, leading SWT to seek legal recourse. The crux of the dispute hinged on the interpretation of that emoji. SWT maintained it was an acceptance of the contract’s terms, while Achter viewed it as merely an acknowledgment of receipt. The historical context proved pivotal. Previously, Achter had affirmed agreements using terms like “ok”, “yup”, or “looks good.” Given this precedent, the Court surmised a reasonable observer would view the emoji as an affirmative response. The Court dismissed concerns about potential ambiguities with other emojis and emphasized that adapting to technological advancements is paramount. In essence, the court cannot, and should not, attempt to fight the tide of technology and its common usage. The Implications The significance of this case reverberates beyond the specific transaction and into the broader implications of contract law’s interaction with modern technology. Historically, contract law has demonstrated adaptability. As societies transitioned from oral to written agreements, from wax seals to ink signatures, and from parchment to electronic documents, the essence of what constitutes an agreement has evolved. This case builds upon this tradition of adaptability. Key determinants in this judgment were: 1. Existence of Previous Contracts: Prior communications and transactions between the parties established a pattern. The emoji, though non-traditional, aligned with their previous modes of contract acceptance. 2. Legal Adaptability to Technology: From physical signatures to digital indications of agreement, the law has evolved. The thumbs-up emoji, in the context of this case, met the dual purpose of a signature: identification and acceptance. 3. Embracing Modern Communications: The Court’s forward-thinking stance exemplifies an understanding of the evolving nature of communications. As technology continues to advance, the judicial system will likely face novel situations requiring flexible interpretations. In a landmark decision, the court declared that the emoji did count as agreeing to the contract. It might sound funny, but with $82,000 at stake, it’s clear that emojis aren’t just for fun chats anymore! While this case presents an intriguing evolution in contract law, caution is warranted. Relying on emojis, or other non-traditional means, to enter into contracts can be fraught with uncertainty. Context matters. Here, the parties’ history and prior communications were vital in the interpretation. Without such context, the outcome might differ. That said, the case serves as a reminder of the ever-evolving landscape of contract law. As digital communication becomes increasingly ubiquitous, both the courts and commercial entities need to be prepared. The “thumbs-up” emoji might just be the beginning. While this case is from Canada, international courts, including those in Australia, might look at this precedent when making their own decisions. That means what happens in one country’s courtrooms could shape the rules in another country. Considering the weight emojis can now carry in legal matters, the next time someone sends you a “thumbs-up” emoji, especially in a business convo, maybe double-check what they mean. A quick “Are we good to go?” or “Just confirming, is that a yes?” might just save you from a world of emoji confusion! Whether you’re a businessperson or just texting friends, it’s good to remember that sometimes an emoji can say a thousand words… or in this case, confirm a big money deal!

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enforce settlement court orders

Section 73 of the Civil Procedure Act: Enforcing Settlement

Transfer of property from trustee to beneficiary and asset protection Depending on your personal circumstances, having an asset protection strategy in place that involves a family trust, fixed trust or unit trust can be pivotal in protecting your investment properties and estate, as well as potentially access a transfer duty exemption or concession when transferring to beneficiaries. The Duties Act 2000, Section 36 of the Duties Act 2000 – transfer of property to beneficiary of a fixed trust, Section 36A of the Duties Act 2000 – transfer of property to a beneficiary of a discretionary trust and Section 36B of the Duties Act 2000 – transfer of property to a beneficiary of a unit trust have the following general requirements: Duty (if any) must have been paid when the property first become subject to the trust. The transferee must have been a beneficiary of the trust when the property was acquired and became an asset of the trust (i.e. the relevant time). There must be no consideration for the transfer and the transfer of property from trustee to beneficiary must not be part of a sale or other arrangement. The exemption is available for property that has been subdivided or consolidation. Property derived from a subdivision or consolidation of titles forms part of the same dutiable property which first become subject to the trust. Fixed and unit trusts For fixed trusts and unit trusts a complete stamp duty exemption can apply where: the dutiable value of the property not more than the value of the beneficiary’s or unit-holder’s interest in the trust (the exemption applies on a proportionate basis), and; the property distribution reduces the beneficiary’s or unit-holder’s interest in the trust. Discretionary trusts (Family Trusts) For discretionary trusts the stamp duty exemption applies equally to all subject beneficiaries and the distribution to a particular beneficiary does not extinguish or reduce the beneficiary’s interest in the trust. Therefore, duty exemptions will apply where the subject beneficiary must have been a beneficiary at the relevant time or must have become a beneficiary after the relevant time by reason of: Becoming a spouse or domestic partner of a beneficiary; or Becoming an adopted child or step child, or being a lineal descendant of, a beneficiary; or Becoming an adopted child or step child, or being a lineal descendant of a spouse or domestic partner of a beneficiary. This stamp duty exemption will not override the requirement of the trust deed permitting the trustee to exercise its discretion to distribute the property to the subject beneficiary and the trustee must remain in compliance with the particulars of the trust deed. Capital gains tax and family trust distributions tax obligations also need to be taken into consideration. Independent financial advice on the holistic tax implications of the title transfers by a registered tax agent is critical.

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Commercial Contract Law Submarine

Whatever floats your…submarine

Australia backs out of contract with French company Naval Group In 2016, Australia signed a contract with French company Naval Group to supply Australia with 12 diesel-electric Barracuda submarines over a 25 year period. In mid-September 2021, Australia unceremoniously withdrew from its contract with France and signed a new defence treaty with the United Kingdom and the United States. It is argued that the American submarines provide superior capabilities to the French, thereby better meeting the security needs of Australia. The treaty known as AUKUS, involves Australia purchasing eight nuclear-powered submarines from the United States as well as participating in other activities such as increased intelligence sharing. The aim of the treaty is to improve security in the Asia Pacific as a result of increasing tensions with China. Naturally, France was upset with Australia. So much so that it withdrew its Ambassador, an unusual move for allies. It is also estimated that the Australian Government may be liable for up to $400 million in compensation for terminating the contract. If you are experiencing a contractual dispute such as a conveyancing matter, or commercial matter contact our office for a free initial consultation.

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Contract Compensation

Elements Plaintiff has a cause of action in contract – namely, a breach of contract; Defendent’s breach of contract has in fact injured or caused a loss to the plaintiff – causation; The loss suffered by P is not too remote; and P has not breached his or her ‘duty’ to mitigate unnecessary loss The onus is on the plaintiff to prove the first three elements. Generally, the plaintiff’s case or cause of action, including causation must be proven on the balance of probabilities; Sellars v Adelaide Petroleum NL The plaintiff is presumed to have taken reasonable steps towards mitigation. The burden is on D to show that P has failed to take reasonable steps towards avoiding unnecessary loss; Banco de Portugal v Waterlow Step 1: Cause of actions There is a primary right in contract that has been breached that gives rise to a secondary right subject to satisfying the required elements. There is only one cause of action = a breach of contract. Step 2: Damages “Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed” ; Robinson v Harman per Parke B. Step 3: Causation The ‘but for’ or causa sine qua non test; and The ‘common sense’ test. Novus Actus Interveniens? Contributory Negligence? Mitigation Assessment  The plaintiff must prove that the defendant caused the breach which resulted in the claimed damage in order to recover loss. The test should be determined by reference to the ‘common sense approach’ with the ‘but for’ test being used as the threshold criteria test: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506, 533; Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310. “But for” test is inadequate when considering multiple causes or intervening events and is not the exclusive test; March v E M H Stramare. HC accepted common sense based analysis of causation; March v E M Stramare. P will not receive the full amount claimed in damages where P is guilty of contributory negligence or where there is a new intervening act (novus actus interveniens [ NAI])   But for Test The ‘but for’ test asks the question but for the defendant’s tortious act would the plaintiff’s loss not have occurred?   If the answer is yes then causation is said to have been established: March v Stramare The role of the ‘but for’ test is really a threshold criteria.   If the ‘but for’ test produces a negative response then normally there will be no causation but an affirmative answer does not mean that causation is always established. It is a mistake to read this Court’s cautionary words about the ‘but for’ test as an expulsion of that notion from consideration where the question of causation is in contest.  On the contrary, a sufficient causal connection will, generally speaking, be established if it appears that the plaintiff would not have suffered the damage complained of but for the defendant’s breach of duty: Chappel v Hart (1998) Common Sense Test The test which is to be applied is that of the ‘common sense’ test.   This means that the tribunal of fact must assess all the surrounding circumstances and make a value judgement as to the cause of the plaintiff’s loss: March v Stramare Novus Actus Interveniens? (part of ‘but for’) Consider whether the breach ‘materially caused or contributed to the harm suffered’: Chappel v Hart It must be so causally important that ‘it can be treated in a practical sense as the sole cause of the damage’: Alexander v Cambridge Credit Corp Ltd Concurrent causes – consider whether the first breach has been ‘disarmed of its harmful potentiality’: Ibid 583 (Stephen J). The issue of intervening events breaking the chain of causation between the defendant’s breach of contract and the plaintiff’s loss was considered by the NSWCA in Alexander v Cambridge Credit Corp; In order to establish a causal connection between a breach of contract and the damage suffered, the plaintiff only needs to show that the breach was a cause of the loss; it need not be the exclusive cause, it need only have ‘causally contributed’ to the loss. Where a number of factors combined to produce the loss or damage, the “but for” test is only a guide. Ultimate question is whether as a matter of common sense, the relevant act or omission was a cause. A later event may be so potent so as to overwhelm the original wrong. In this case the economic change did overwhelm the auditor’s breach. Contributory Negligence? (part of the ‘but for’ test) Lexmead Ltd v Lewis [1982] – HCA held that this would breach the chain of causation and would reduce damages. Astley v Austrust Ltd (1999)– HCA said contributory negligence only applies to torts so a plaintiff who was aware of defect could sue in contract for 100% of loss. The law permits the reduction of damages for contributory negligence whether an action is framed in contract or tort. If a person can sue for both contract and torts, contributory negligence can be used. If there is only liability in contract, then Astley v Austrust still applies. If D breaches a contractual and tortuous duty of care owed to P (as is common in profession negligence cases), and P is guilty of contributory negligence, the court will reduce P’s damages in both tort and contract “to such an extent as the court thinks just and equitable”. Step 4: Remoteness Remoteness limits liability for loss which the defendant has caused. The crucial question is whether, on the information available to the defendant when the contract is made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the

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Contract Rescission lawyer

Contract Rescission

Rescission Introduction and Overview Both the common law and equity recognise that, in certain circumstances, a party may have a right a right to rescind, avoid or “set aside” an overview effective transaction. Prior to rescission, the transaction is voidable rather than void à valid and effective, albeit subject to avoidance at the election of the right holder. A right to rescind arises at common law in cases where a transaction has been brought about through fraud: Load v Green A right to rescind arises in equity in as far wider range  of circumstances such as: misrepresentation: Alati v Kruger unilateral mistake: Taylor v Johnson duress: Barton v Armstrong undue influence: Johnson v Buttress unconscionable dealing: Louth v Diprose breach of fiduciary duty: Maguire v Makaronis Rescission is a self-help remedy both at common law and equity, exercised by the right-holder giving notice of her/his election to rescind the other party: Alati v Kruger Rescission allows the reversal or unwinding of a transaction ab intio so as to restore the parties to their original positions. Rescission enables or effects restitution benefits transferred pursuant to the impugned transaction The practical effect of rescission is to undo, and in this sense reverse, the conferral of benefits (valuable contractual rights) on the other party. Rescission often effects personal restitution – e.g money has been paid pursuant to a contract Rescission can also have proprietary effect as where rescission is sought to obtain the return of title to an asset that has been transferred pursuant to a contract or gift. The requirement of restitutio in integram Both at common law and in equity, a party’s right to rescind a contract or other transaction is conditional on restitutio in integram – that is, the transaction must be capable of being unwound so that both parties are restored to their original position.   Difference: Common law requires precise resitutio in integram – any change in the nature of received benefit, however minor, or use of benefit by the P, however brief, precludes rescission. Hunt v Silk and Blackburn v Smith Rescission was barred because the parties had briefly taken possession of land pursuant to the impugned transaction. It was not possible for the P to return the use of the land and hence restitutio in integram was impossible.   Equity adopts a more flexible approach – The requirement of resitutio in integram is satisfied provided that the parties can, through the taking of accounts and making of the appropriate consequential orders, be returned “substantially” to their original positions.   Case: Clark v Dickson Facts: The P sought to rescind a transaction at common law for the purchase of shares brought about as a result of the D vendor’s fraudulent misrepresentation. Held [Erle J]: The P cannot avoid the contract under which he took the shares, because he cannot restore them in the same state as when he took them. After three years of working of the mine, and trying to make a profit, he cannot restore the shares as they were before this was done. He also changed the nature of the article: the shares he received were shares in a company on the cost book principle; the P offers to restore them after he has converted them into shares in a joint stock corporation. …The offer to restore these shares is not made till after the company is in the course of being wound up, when all chances of profit is over, and the shares can only be a source of loss.   Held [Crompton J]: When once it is settled that a contract induced by fraud is not void, but voidable at the option of the party defrauded, it seems to me to follow that, when that party exercises his option to rescind the contract, he must be in a state to rescind; that is, he must be in such a situation as to be able to put the parties into their original state before the contract. …He has changed their nature: what he now has and offers to restore are shares in a quasi corporation now in process of being wound up Tha P must rescind in toto or not at all; he cannot both keep the shares and recover the whole price If he cannot return the article he must keep it, and sue for his real damage in an action on the deceit The true doctrine is, that a party can never repudiate a contract after, by his own act, it has become out of his power to restore the parties to their original condition Held [Campbell CJ]: The P, on his own shewing, cannot rescind the contract and sue for money had and received, but must seek his remedy by a special action for deceit. In that action, if he proves what he states, he will recover, not the original price, but whatever is the real damage sustained Case: Alati v Kruger Facts: The respondent sought to rescind a transaction for the purchaser of a fruit business brought about as a result of the appellant’s vendor’s fraudulent misrepresentation as to the takings of the business. Held [Dixon Cj, Webb, Kitto and Taylor JJ]: The contract had been induced by fraudulent misrepresentation….the respondent…might sue for damages for breach of the warranty contained in cl.21, for the statement in the clause clearly formed one of the terms of the contract and was not only a representation; but he could not do this and rescind the contract for misrepresentation…. …Provided that he was in a position to restore to the appellant substantially that which he had received under the contract he might avoid the purchase and sue to recover his purchase money back from the appellant, with interest and also with damages for any loss which he may have suffered through carrying on the business in the meantime. If the case had to be decided according to the principles of the common law, it might have been argued that at the date

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Remedies from rescission to restitution

Rescission Nature of the Remedy (general) Rescission is the reversal of a transaction so that each party is restored to its original position. Rescission is a remedy of both the common law and equity. Common law rescission is confined to contracts, but rescission in equity extends to gifts and other transactions. Rescission and termination (void and voidable contracts) ‘Termination’ refers to the position where there has been a breach of a contractual condition, and the promisee has elected to terminate further performance of the contract. Contracts that are liable to rescission are described as ‘voidable’ rather than ‘void’. Voidable contracts are effective unless and until there is an election to rescind or avoid the contract. By contrast, if a contract is void, there is nothing to rescind. Because rescission operates ab initio (from the beginning), an election to rescind a voidable contract extinguishes the right to enforce the contract according to its terms, including any accrued right to damages in contract or specific performance. Common law must precisely go back to the start, while Equity law substantially from the start.   (Set aside contract get money back = questions wants rescission) Elements of Rescission The remedy of rescission requires three elements to be satisfied: Must have a contract in place, the presence of a vitiating factor in the formation of the contract; an election to rescind the contract; and restitutio in integrum, the restoration of both parties to their respective pre-contractual positions. i.e the car you sold, comes back to you. Element 1: Vitiating Factors Misrepresentation and Mistake; Duress; Undue Influence; and Unconscionable Dealing Misrepresentation  A contract can be voidable for misrepresentation if the representor has made a misrepresentation of fact that induced the representee to enter into the contract. ‘There must be a representation/statement of fact’  This may be express or implied; except in contracts, where there is a duty to disclose all relevant matters. The traditional rule is that mere silence is not actionable at common law. However, silence in the form of a partial truth may be misleading because ‘concealment of a fact may cause the true representation of another fact to be misleading, and may thus become a substantive misrepresentation’: Curwen v Yan Yean Land Co Ltd (1891). Types of Statements The following three types of statements have been distinguished from ‘statements of fact’: Statements of opinion or belief: Generally provide no grounds for rescission if the opinion or belief is honestly held. Bisset v Wilkinson [1927]. Facts: A vendor of a farm made a statement as to the sheep-carrying capacity of a farm. The land in question had never been used as a sheep farm to the knowledge of both the vendor and purchaser. Held: The statement was held to be a statement of opinion, thereby denying the purchaser rescission of the contract when the statement proved to be untrue. Smith v Land and House Property Corp. Facts: Vendors of a property made a statement to the purchaser, stating that the existing tenants were ‘most desirable tenants’. The vendors knew that this was untrue, as the tenant was chronically in arrears of rent. Held: Bowen LJ: If the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best involves very often a statement of material fact, for he impliedly states that he knows facts which justify his opinion. Thus, as the vendor’s opinion was an assertion of a particular fact that nothing had occurred between the vendor and tenant which could be considered to make the tenant unsatisfactory, the contract could be set aside for misrepresentation. Statements of intention: ‘A mere suggestion of possible purposes to which a portion of the money might be applied would not have formed a basis for an action of deceit. There must be a misstatement of an existing fact: but the state of man’s mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man’s mind at a particular time is, but if it can be ascertained it is as much a fact as anything else. A misrepresentation as to the state of a man’s mind is, therefore, a misstatement of fact’: Edgington v Fitzmaurice (1884). Statements of law: Have also been treated as statements of opinion. Accordingly, an honest stated opinion on a matter of law provides no basis for rescission: Eaglesfield v Marquis of Londonberry (1876). But a fraudulently stated opinion on a matter of law is treated as statement of fact because it implies that the representor honestly holds that opinion. Rescission is therefore allowed in cases of fraudulently stated opinions on matters of law: West London Commercial Bank Ltd v Litson (1884). Statements of foreign law are always treated as statements of fact Elements The representation must be false when acted upon If there are continuing and changing circumstances the representor is under a duty to correct the representation if aware of such changes; With v O’Flanagan [1936] Ch 575. Inducement Principles governing inducement (Gould v Vaggelas) per Wilson J: Notwithstanding that a representation is both false and fraudulent; if the representee does not rely upon it he has no case. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not reply on the representation. The representation need not be the sole inducement. It is sufficient so long as it plays some part. Rescission at common law: the concept of fraud

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