Home » Contract Law – Masters v Cameron

Contract Law – Masters v Cameron

I hope you had a happy new years eve. I would like to thank you for your previous work. The standard was very high! If there was a criticism it was the standard was too high (still a student – not a legal professional!). So thanks.

I require the addition of a fleshing out category 1 to 4 and a general formalizing of what I have written (plus 5 or 6 foot notes (even of stuff I have written).

Total text cannot exceed 1,100 words.

If you have added too much to the text (it’s currently at 950 words) cut the top half of the essay. The markers are mainly looking at the categories of Masters v Cameron (1954) 91 CLR 353.

Here are some files to help you

p102-103: http://www.mediafire.com/download.php?ci6mbqz7d2wqcr7

p104-105: http://www.mediafire.com/?jeuncbl5czbhnqx

p106-107: http://www.mediafire.com/download.php?209wgiz7r6ubqzo

p108-109: http://www.mediafire.com/download.php?fjxbwwb5dismu8j

p110-111: http://www.mediafire.com/download.php?v63qlmaswa0py0q

Pls. let me know if you have any issues.

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After several weeks of negotiations in relation to the leasing of certain commercial premises in North Ryde, Declan, the owner of the premises, reached a basic agreement with Reece. They recorded the agreement in a written document which said as follows:

Re: Agreement for lease of Declan s Premises at 49 Costanza Road, North Ryde.

1. Rent for three year term starting on 1 February to be as agreed or failing agreement as determined by the valuer, Waldo von Erich.

2. Standard form of lease to be issued by the independent legal firm of Ron Fury & Associates, and both parties to use reasonable endeavours to expedite and agree on final form of lease to be executed in line with the intent of this agreement.

Both Declan and Reece signed this document.

Declan has since decided that he does not want to lease the premises to Reece and seeks your advice as to whether there exists an enforceable contract between himself and Reece.

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Written Essay:

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To understand if a lease is binding on a party we must look at a variety of case law and statutory requirements.

The first test is under the Conveyancing Act (NSW) Section 54A which states that a contract regarding land (such as the buying of land) must be in written form for it to be a valid contract. The lease agreed upon by both XXX and XXX (the lessor) is in written form, and therefore the contract fulfils the statutory requirement of the Act.

To actually form a valid, binding contract there must be sufficient certainty and it also must be sufficiently complete so that the lessor and lessees rights and obligations can be identified and therefore enforced.

For example the contract may be considered incomplete (and so not valid) if the lessor and lessees cannot reach agreement on all of the essential terms or have decided that an essential term should be determined by future agreement (an agreement to agree is not enforceable).

A court may find a contract unenforceable because the terms are too uncertain for a meaning to be attributed by a court. Or another issue may be that a term is illusory because the contract allows on of the parties total discretion as to whether to perform an action they have promised to perform..

As an example of incompleteness in the In the contract it states:
1. Rent for three year term starting on 1 February to be as agreed or failing agreement as determined by the valuer, Waldo von Erich.

This clause would be considered by the court as an agreement to agree on essential clause and this would not allow the contract to be enforceable as it produces Incompleteness, as a contract must contain all the essential terms for it to be valid as Lloyd LJ states (Pagnan spA v Feed products Ltd) The law cannot enforce a incomplete contract.

However in Booker Industries Pty Ltd v Parking (Qld) Ltd (1982) 149 CLR 600; 43 ALR 68, the High Court of Australia did decided that although the parties could not agree to the rent (an essential clause for a lease) because the lease contained a mechanism to allow a 3rd party to determine the rental amount, then the essential clause is there.

Therefore this machinery in the clause allows the contract to be enforceable. This follows the general thought that courts will attempt to give efficacy to commercial contracts.

As such there are few available reasons for the lease to be found unenforceable. However there is an avenue that requires further investigation. In clause 2 it states “

2. Standard form of lease to be issued by the independent legal firm of Ron Fury & Associates, and both parties to use reasonable endeavours to expedite and agree on final form of lease to be executed in line with the intent of this agreement.

This clause could throw up an issue of uncertainty as it requires both parties to use reasonable endeavours to agree on a formal lease. The case Masters v Cameron (1954) 91 CLR 353 provides guidance on this issue. The High Court created a number of categories that provides an aid in understanding on whether an agreement to contract is binding.

In Masters v Cameron the High Court provided three legal aids to provide guidance to lower courts on how they should deal with subject to contract clauses.

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The first category was where the parties had agreed upon all terms and intended to be bound, but also wanted terms in a formal contract. The second category is where both parties agree on the terms, but have made the performance of a essential term dependent on the execution of a formal contract.

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More often than not it can be quite difficult to determine when a contract has been formed. During negotiations usually there is a significant amount of contact between the lessor and lesser. To understand if a lease is binding on a party If the contract does not have the clause subject to contract then it is a matter of construction and the courts will look to the wording.

To get around courts general wish to enforce a contract a variety of methods can be used to show the court that the parties did not wish to be bound. These include constructing the language of the document in a specific way (such as subject to contract ), or using a letter of intent or a heads of agreement. This informs the court that the intention is that there is no agreement until a formal contract has been signed.

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There has been suggested that there is a fourth category. This is where
The more traditional view is that an agreement to negotiate is impossible;

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An essential aspect is that recognition by the parties that the existing terms are to binding immediately and exclusively
we must look at the terminology and language of the lease, with the main clause that deals with issue stating:

and both parties to use reasonable endeavours to expedite and agree on final form of lease to be executed in line with the intent of this agreement.

A further point to consider is whether there is uncertainty in a standard contract. In United Group Rail Services Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 Allsop P stated An agreement to agree to another agreement may be incomplete if it lacks essential terms of the future bargain.

The other side could argue that both parties would have some idea as to what was in the standard agreement prepared by Ron Fury & Associates as many of the details of a standard lease could be readily implied (just as many terms of sales contract can be implied by Court), due to the familiarity of such agreements.

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