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Scope of CCLA.pdf
Scope_of_CCLA.pdf
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Scope of CCLA.pdf-Scope of CCLA Exclusion of Sale
Scope_of_CCLA.pdf-Scope of CCLA Exclusion of Sale
Scope of CCLA.pdf-Scope of CCLA Exc...
Scope_of_CCLA.pdf-Scope of CCLA Exclusion of Sale
Page 1
Scope of CCLA
Exclusion of Sale of Goods from CCLA
CCLA only applies to sale of goods in very limited circumstances
●
If you have a sale:
s 34
applies to grant you damages for misrepresentation
○
BUT
●
ss 36-48
(cancellation provisions)
do not apply
-
s 201(2)
provides that the common
law continues to govern the sale of goods
Crump v Wala, The Hansa Nord
●
Sale of goods continue to be governed by part 3 of CCLA
●
Legislation makes it clear that the rules of the CL continue to apply to the termination
of contracts for the sale of goods
(s 201(2))
●
Termination of sale of goods contracts remains governed by the common law
○
E.g.
Morton v Lamb, The Hansa Nord, Bunge
No real practical difference in the outcomes.
Readiness and Willingness Breach
Kumar
illustrates problem with the legislation
●
Legislation provides that on the breach of an essential term, the promisee has an
election either to affirm the contract or cancel - but the concept of breach is not defined
Bahramitash v Kumar
A failure to perform is not a breach of contract if the counterparty is not ready and
willing to perform its essential promises.
FACTS
●
Sale of land
●
Contract placed risk of damage to property until settlement with vendor
●
Post contract, pre settlement: rubbish placed on the section
○
Vendor refused to remove rubbish - wanted payment
●
Purchaser did not settle
●
Vendor cancelled due to failure of purchaser to settle
SUPREME COURT
●
Vendor had to remove the rubbish or pay compensation
●
By not removing the rubbish, vendor was repudiating - therefore not willing to perform
the obligation
●
Failure to perform is
not a breach if the counterparty is not ready and willing to
perform its essential promises
(
Morton v Lamb
)
Page 2
●
Purchaser excused from tendering
○
Tender is unnecessary where it is futile (
Jones v Barkley
-
waiver of condition)
NOTE:
vendor is not able to cancel the contract although the purchaser has not performed on
an essential term on the date set for performance.
Failure to perform is not the equivalent of
a breach.
IMPORTANT Q:
how is this consistent with
s 40 CCLA?
●
s 40: ss 36-39 to have effect in place of rules of CL and equity governing circs in which
a party to a contract may rescind it or treat it as discharged for misrep, repudiation or
breach.
●
This case is not concerned with the actual discharge for breach - the central question is
what was the breach?
●
Cannot take the HK Fir approach - need to interpret the statute intelligently
Essential Term
Legislation does not define
essentiality!
●
Nor does it define
substantiality
●
SC’s response to this problem is to interpret the term ‘essential’ as a term of art and do
so by
reference to common law
s 37(2):
what is the meaning of an essential term?
Mana Property Trust Ltd
Shows us how s 37(2)(a) should be interpreted
FACTS
●
Sale of land
●
Land worth $4.5 mil
●
Parties knew that the amount of land would be about 4.167ha
●
Contract provide for what would happen if land was not of such an amount
○
‘If the final area of the property shown on the approved survey plan is greater
or lesser than 4.7161 Ha the parties will adjust the price’
○
Clause 18.3: ‘parties acknowledge that the finale ea of the property as shown on
the approved survey plan must not be less than 4.7150 Ha’
●
Vendor (Mana) obtained certificate - land was 4.699 Ha
●
Purchaser cancelled for breach of an essential term (clause 18.3)
COURT
Was Clause 18.3 an essential term?
●
Question of construction - ascertaining intention of the parties
○
Whether the parties have agreed that performance of the term is essential to the
cancelling party
○
The likely effect of the breach and the nature of the contract
●
A useful indicator is whether the term is of
such importance that without such a
term, the promisee might have never entered into the contract
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