Much has been written extra-judicially on the tort of inducing breach of contract. The focal point has been the elements of the cause of action and their underlying principles. It is not the intention of this article to once again rake over the previous decisions. There has been little analysis however on what defences are available to an alleged tortfeasor. Notably, one of the leading texts on tort law in Australia devotes a mere two pages to the tort’s defence. This is not a criticism of the learned authors, rather a reflection on the obscurity surrounding the defence. At least two commentators have lamented that the defence of justification has not received the attention it deserves and the ambiguity with respect to what heads of damages are available6 is still awaiting High Court resolution. Fortunately, there has now been enough judicial consideration to, at the very least, adumbrate the defence in the context of the law in Australia and discern its underlying principles and rationale.
In Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas), a question concerning the law of remoteness in contractual damages came before the House of Lords. The decision they handed down potentially heralded a rewriting of the established approach. Although the five Law Lords unanimously allowed the appeal, their reasoning was split between the orthodox approach applying a ‘reasonable contemplation’ test of remoteness first outlined in Hadley v Baxendale and a radical challenge to that orthodoxy in the form of an ‘assumption of risk’ principle which emphasises the voluntary assumption of liability for both primary and secondary obligations in contract law. This essay proposes to answer three questions. Part I asks what was the principle articulated in The Achilleas and what is its content. Part II assesses how this principle sits relative to the orthodox model of remoteness in contract. Part III then takes a comparative approach and attempts to answer the question as to whether Australian contract law will embrace or reject the ‘assumption of risk’ principle.
The theme that runs through our law of contract is that the reasonable expectations of honest men must be protected. It is not a rule or a principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. It affords no licence to a Judge to depart from binding precedent. On the other hand if the prima facie solution to a problem runs counter to the reasonable expectations of honest men, this criterion sometimes requires a rigorous re-examination of the problem to ascertain whether the law does indeed compel demonstrable unfairness. (Steyn LJ in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194, 196 cited by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc [2004] FCA 1159) This paper reviews the developments which have taken place over the last year in the following areas of contract law. 1. Surrounding circumstances and the construction of con- tracts 2. Repudiation and termination of contracts 3. Promises to act in good faith 4. Promises to negotiate in good faith 5. Assignment and novation 6. Performance securities 7. When is a document a deed?
For over 46 years the Commercial Law Association of Australia (CLA) has been a 'quiet achiever' serving the interests of practitioners in both commerce and law.
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