self-help remedies - studentvip
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Self-Help Remedies A. Background
1. What is meant by ‘self-help’?
Making good your own rights without the intervention of the judiciary
Most disputes are settled outside the courts and most parties prefer non-judicial
settlements
Does not involve a court order but the court gives permission to a plaintiff to act
in a particular way
The affected party may seek self-help remedies and a clear entitlement to a legal
remedy will put that party in a strong bargaining position
2. Is the range of self-help remedies extensive?
The self-help remedies arise in both the context of the law of contract and in the
context of contract. However, in terms of extensiveness, it would seem that
contract has greater freedom:
o In Tort, civil recourse theorists argue that an important function of tort law is
to prevent persons from engaging in a violent recourse against one another
when they have been wronged; instead the courts vindicate the rights of the
victim in a public forum. Consistent with this theory, self-help remedies in
tort are exceptional, and there is a strong requirement that the self-help must
be reasonable
o In contract there is greater freedom for parties to bargain for remedies, but
again, courts are concerned to prevent remedies that are harsh or unfair
especially where bargaining power is unequal
Restrictions on the availability of self-help remedies must also be considered
when considering how extensive the range of self-help remedies are. Restrictions
come in the form of legislations and the common law rulings. This is considered
below.
3. When would it be appropriate to consider a self-help remedy?
When harm can be mitigated/avoided/resolved through self-defence style actions.
Where it is convenient and easy to negotiate or resolve a problem without the need for
judicial interference. The negotiation and self-resolving should be void of harm to
others.
4. What are the risks in pursuing a self-help remedy?
Harm may be caused to others as a result of the self-help remedy. E.g. evicting a
tenant and harm befalling them
You may commit a wrong of your own when pursuing a self-help remedy and as a
result be liable. For example, self-defence is a type of self-help remedy. In Fontin
v Katapodis: If there is a way to escape the threat, the court will usually find that
the use of force was disproportionate and unreasonable
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5. What restrictions are placed on the availability of self-help remedies
For tort, any self-help undertaken must be reasonable
As Winfield observed ‘self-help has always been reckoned as a perilous remedy
owing to the stringent rules against its abuse’; PH Winfield The Province of the Law
of Tort (CUP 1931) 233
o Scope of self-help may be limited by statutory enactments. E.g. in Richter v
Risby [1987] Tas R 36: discussed below.
Contract law allows more latitude in self-help as contracts arise consensually and
liberal society is generally premised on the idea that we should have freedom of
contracting
B. Tort and Self-Help Some proprietary torts give rise to self-help remedies which allow persons to defend
themselves or their property from tortious interference in some way
I. Eviction of trespassers and protection of land and goods from
trespass o Eviction of Trespassers
Possessor of land may evict a trespasser using ‘reasonable force’.
No force is justified until the trespasser has been asked to leave and has been
given a reasonable opportunity to leave.
However, if a trespass is committed with force and ‘a strong hand, a
possessor may respond with force as the intruder’s conduct indicates that a
request to leave would be futile
o Eviction of Occupiers
Owner must have a clear legal basis for entering the land, otherwise it is an
indictable offence to forcibly enter land
Criminal Code 1924 (Tas) s 79
79. Forcible entry and detainer
(1) Any person who without lawful authority enters in a violent manner, whether by actual
force or by such a show of force as to deter opposition, any lands or tenements in the
peaceable possession of another, for the purpose of taking possession thereof, whether or
not he has a right of entry thereto, is guilty of a crime.
Criminal Code 1924 (Tas) s 42
42. Defence of possession of real property with claim of right
It is lawful for a person in peaceable possession of any land or structure, with a claim of
right, and for any person lawfully assisting him or acting by his authority, to use such force
as he believes on reasonable grounds to be necessary to defend his possessions against any
person whether entitled by law to the possession of the property or not, provided that such
force is not intended and is not likely to cause death or grievous bodily harm.
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o Eviction of Tenants
Law regarding the right of an owner of land to repossess a property from an
occupier (tenant or squatter) is complex as there are other rules relating to
the eviction of persons in possession of land which may impact upon the
availability of general law remedy
In all states, versions of the old English Statue of Forcible Entry remain in
force and make it an indictable offence to forcibly enter the land, even if one
is an owner who has been wrongfully dispossessed, unless one has a clear
legal basis for entering the land
In Tasmania, a person who is in peaceable possession of land, a structure or
a boat ‘under a claim of right’ may use force to defence his possession, even
against someone who is entitled by law to the possession of the property,
subject to certain limits on violence; Criminal Code 1924 (Tas) s 42
o Eviction of Squatters
Owners of property are entitled to evict squatters who entered forcibly
without an order of the court, as long as they use no more force than is
reasonably necessary s 79 Criminal Code will not apply if the squatter
entered forcibly
o Eviction of Licensees
Where a licence has been given to someone to enter a property, the owner of
the property may revoke the licence and eject the licensee as long as the
licensee has received notice that the licence is revoked and has been given a
reasonable time to leave and collect their property Cowell v Rosehill
Racecourse Co Ltd (1937) 56 CLR 605
If licence is revoked because the person is drunk or disorderly, force may be
used to remove him but ejection may be unreasonable if the person is
severely injured as a result or it may be negligence if the person is incapable
of navigating the traffic outside
Criminal Code 1924 (Tas) s 41
41. Defence of premises against trespasses: Removal of disorderly persons
It is lawful for a person who is in peaceable possession of any land, structure, vessel, or
place, or who is entitled to the control or management of any land, structure, vessel, or
place, and for any person lawfully assisting him or acting by his authority, to use such
force as the person using the same believes on reasonable grounds to be necessary to
prevent any person from wrongfully entering upon such land, structure, vessel, or place, or
to remove therefrom a person who wrongfully remains therein or conducts himself therein
in a disorderly manner; provided that any such force is not intended and is not likely to
cause death or grievous bodily harm.
o Eviction of Protestors
Reasonable force may be used if the protesters are deliberately obstructing
lawful work being done on property, BUT courts are not keen on self-help in
these situations, as it leads to breaches of the peace and arguments about
what was reasonable or not.
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As per Richter v Risby [1987] Ta R 36 above: in principle the minimum fore
reasonably necessary to remove the demonstrators may be used, but the
scope of the remedy of self-help in such circumstances may be proscribed
where the principles of the common law have been embodied in legislation.
In this case, the manhandling of a protestor committing a nuisance by
obstructing passage over land fell outside the provisions of Criminal Code
(Tas)
II. Self-defence of property o Possessor of land or goods may use reasonable force to protect their land or
goods but he cannot set ‘man traps’ or instruments that may cause grievous
bodily harm (unless at night for protection)
o Fontin v Katapodis: Plaintiff was a customer of a hardware store and the
defendant an employee of it. The defendant falsely accused the plaintiff of
having taken goods without payment. The parties exchanged insults and the
plaintiff hit the defendant with a measuring stick. In response, the defendant
threw a piece of glass that badly injured the plaintiff’s wrist. Trial judge rejected
a plea of self-defence claiming excessive force had been used. HC agreed taking
into account that the defendant could have escaped and that another employee
was moving in to help
Criminal Code 1924 (Tas) s. 179:
179. Setting man-traps, &c.
(1) Any person who, with intent to cause death or grievous bodily harm to any person, sets
or places, or causes to be set or placed, in any place any spring-gun, man-trap, or other
engine calculated to cause death or grievous bodily harm, or knowingly and with such
intent allows any such thing to remain so set or placed in any place under his control, is
guilty of a crime.
Charge:
Setting a spring-gun [or man-trap] [or, allowing a spring-gun (or man-trap) to remain set].
(2) This section shall not apply to any gin or trap set for the purpose of catching or
destroying vermin; nor to a spring-gun, man-trap, or engine set or maintained only during
the night in a dwelling-house for the protection thereof.
Criminal Code 1924 (Tas) s 40:
40. Defence of dwelling-house
It is lawful for any person who is in peaceable possession of a dwelling-house, and for any
person lawfully assisting him or acting by his authority, to use such force as the person
using the same believes on reasonable grounds to be necessary to prevent the forcible
breaking and entering of the dwelling-house by any person whom he believes on
reasonable grounds to be attempting to break or enter the dwelling-house with intent to
commit any crime therein, or to eject therefrom any person who has unlawfully entered the
dwelling-house, and whom he believes on reasonable grounds to intend to commit a crime
therein.
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III. Self-defence of the person o A person may act with reasonable force to defend himself or a third person
o Test for self-defence in both criminal and tort law: ‘whether the accused believed
on reasonable grounds that it was necessary in self-defence to do what he did’;
Zecevic v DPP (Vic) (1987) 162 CLR 64
Court’s judgment of whether an action is a ‘reasonably necessary’ act of
self-defence turns on the nature of the attack, whether property or a person is
attacked, and changing legal and social standards as to the degree to which
property may be protected
o Burden of proof: In criminal proceedings, it lies on the accused. In tort it will be
upon the balance of probabilities.
o If there is a way to escape the threat, the court will usually find that the use of
force was disproportionate and unreasonable: “Before applying force in self-
defence, a person threatened with violence is obliged by law to take whatever
reasonable means are open to him, other than the use of force by himself, to
avoid the force threatened against him” (Hogarth J, Rozsa v Samuels [1969]
SASR 205)
Criminal Code 1924 (Tas) s 46
46. Self-defence and defence of another person
A person is justified in using, in the defence of himself or another person, such force as, in
the circumstances as he believes them to be, it is reasonable to use.
IV. Recovery of Goods o Recaption
Allows a person with an immediate right to possession to retake wrongfully
possessed goods using reasonable force. They can also forcibly enter the
land of the tortfeasor, or a third party who helped take the goods, in order to
retrieve them.
Whether or not you can enter the land of an innocent third party to retrieve
goods is uncertain.
o If goods came onto the innocent 3rd party’s land by accident the
possessor may enter the land, whereas if they did not, the possessor may
not enter and may only make a demand for the goods, and the 3rd party
may not be liable to deliver the goods unless he has exercised dominion
over them; Fitzgerald v Kellion Estates Pty Ld (1977) 2 BPR 9181
A right to recaption is relevant to common law rescission. If a person
recaptures his goods transferred pursuant to a contract which is rescindable
at common law for fraud or duress, this is clear evidence of an election to
rescind. However, a person with an equitable right to rescind does not have
a right to seize goods transferred under the impugned transaction and,
indeed a person who does so may be liable in trespass or conversion
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o Replevin
Similar to reception but has developed in the context of creditor law
A secured creditor may file a writ of replevin to obtain possession of goods
over which she has security, upon provided a bond or other security to the
sheriff until the court decides the final entitlement to the good (‘levying
distress’ on goods)
Extent of availability of replevin in Australia is unclear. It may extend to
persons beyond creditors, and is theoretically available to all kinds of
takings amounting to trespass
o Specific Restitution
This is a right to ask the court to order specific restitution of goods – not,
technically, self-help remedy as the court is involved.
However, the limitations of this doctrine explain why courts allow persons
to obtain goods themselves; it is partly because the plaintiff is unlikely to be
able to get her goods back pursuant to a court order unless the goods are
unique. Otherwise a plaintiff is likely to only get damages.
However, if damages are inadequate (as if, for example, the defendant has
gone bankrupt and is unable to pay), then specific restitution may be
awarded.
V. Abatement of nuisance o Nuisance = a substantial & unreasonable interference with the use and
enjoyment of land (e.g. water, smoke, noise, undermining of the land etc).
o Abatement= refers to the act of removal of the source of the nuisance but does
not extend to acts undertaken to alleviate the effects of the interference; Young v
Wheeler
o Not clear whether costs of abatement are recoverable – most cases say no,
because the abatement destroys the nuisance. Cases preventing recovery of costs
of abatement have been criticised for providing an incentive to let the nuisance
destroy the property rather than attempt to nip the nuisance in the bud
o Can only do what is necessary to avert the harm and the law restricts recovery of
damages once abatement has occurred. If there are 2 ways of bating a nuisance,
the less harmful must be adopted unless it would injure a 3rd party or the public.
Traian v Ware [1957] VR 200 is a case where abatement was unreasonable
Facts: Plaintiffs and defendants were farmers on adjoining blocks of land
situated on a slope. Plaintiff’s land is downhill from the defendant’s land.
Plaintiff’s land has a bank at the top of the lower land to prevent it from
being flooded. During heavy rain, the bank caused water to collect on the
defendant’s higher land. On 3 occasions, the defendants entered the
plaintiff’s land and cut the bank without notice. Sudden flow of water
damaging the plaintiff’s crops and orchard. Plaintiffs sued the defendants for
damages in nuisance and trespass and sought an injunction against the
defendants.
Held that the plaintiffs had an obligation to receive natural flow of the water
from the defendant’s land and that this was a nuisance. However, persons
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who seek to abate a nuisance must generally give notice of an intention to do
so, because entry onto someone else’s land is prima facie a trespass.
Plaintiffs were awarded damages for trespass because of their ‘unauthorised
and high handed’ conduct. Defendants were also not entitled to injunction as
they elected to abate. However, a declaration was made that the defendants
were entitled to have the natural flow of water discharged onto the plaintiff’s
land
C. Contract and Self-Help
I. Rescission o Conventional understanding of rescission both at common law and equity is that
it is a self-help remedy, exercised by the right holder giving notice of their
election to rescind to the other party; Alati v Kruger
Termination Rescission
- Breach of Contract
- ‘Innocent’ party treats contract as no
longer binding
- Further performance discharged
- Rights and obligations from partial
execution remains
- Pay damages as if contract properly
performed
- Formation of contract was affected by
vitiating factor
- Contract is voidable
- Choice to rescind (‘avoid’) Contract
- No rights and obligations under the
contract
- Return to original position
o Rescission is often combined with other remedies such as restitution and
damages for tort of deceit, however damages for breach of contract is not
available (as contract does not exist)
Right to rescind at common law Right to rescind at equity
- Where a transaction has been
brought about through fraud
(Universe Tankships Inc
endorsed in Crescendo
Management Pty Ltd v Westpac
Banking Corporation)
- Misrepresentation (Including innocent
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)
o There are 5 elements of rescission:
Contract
Vitiating factor in the formation of the contract
Election to rescind the contract
Restitutio in integrum (restoration of parties to pre-contractual position) is
possible
No bars to restitution (no defence)
a) Election to rescind the contract
A plaintiff must elect to rescind.
Doctrine of election only allows for one choice to be made; P can either
terminate contract and claim damages or rescind contract and obtain
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restitution. The election to rescind extinguishes the right to enforce the
contract and/or claim damages for breach
Rescission can be partial
Traditionally at common law and equity, rescission must be total. Plaintiff
must elect to rescind, or can affirm, a transaction, but cannot do both; hence
not open to a plaintiff to elect to rescind party only of a transaction and
affirm another. However, HC of Australia endorsed partial rescission where
there is unconscionability:
Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102
Facts
Vadasz was a director of Vadipile, a company in financial difficulty. It owed money to
Pioneer Concrete for past concrete supplies and needed a personal guarantee from Vadasz
as a condition of further deliveries. Vadasz signed a guarantee of Vadipile’s past and future
indebtedness to Pioneer Concrete. At trial it was found he had been induced to do so by a
representation of PC that the guarantee related only to future indebtedness, not to past
indebtedness.
Here, the appellant gained the future supply of concrete on credit. The appellant sought
rescission, however, of the complete agreement, to take the concrete that had been supplied
on credit after the agreement was signed.
Total rescission would require payment or return of goods supplied subject to credit, after
the guarantee signed. Not truly possible.
Deane, Dawson, Toohey, Gaudron, & McHugh JJ:
Consequences of rescission – respondent has not sought to overturn the finding of
misrepresentation. Nor did the respondent contest the rescission of the ‘past indebtedness’
guarantee. The question: whether the trial judge was entitled to order (partial) rescission
on a footing which left the appellant liable to the respondent for debts incurred after the
guarantee was signed (for concrete received on future credit).
Common law will not govern this case: Complete restitution is not available here, where
the Respondent's consideration was letting the Appellant buy goods on credit, and where
that credit has already been used.
Equity:
In this case, the Appellant wishes to rescind the contract, but not pay back the credit he
received. Basically, what the Appellant is asking for is to be relieved of his obligations and
receive all his rights. He wants to keep all the concrete free of charge.
"The appellant seeks to be relieved completely and unconditionally from all liability under
the guarantee, leaving the respondent without either its subsequently supplied goods or any
payment for them.”
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In equity, and especially in rescission, the judge often looks to what is just and what is
unconscionable. It can be both a reason for setting aside a contract, but also for only setting
aside certain part of the contract.
"Thus unconscionability works in two ways. In its strict sense, it provides the justification
for setting aside a transaction. More loosely, it provides the justification for not setting
aside the transaction in its entirety or in doing so subject to conditions, so as to prevent one
party obtaining an unwarranted benefit at the expense of the other."
In this case, the notion of unconscionably of the Appellant serves as justification to only
put the contract aside partially.
Held: This means the contract is rescinded only to the extent of the past debt. The
Appellant still serves as a guarantor for the credit he received after the guarantee.
b) Restitutio in Integrum
Transaction must be capable of being unwound so that both parties are
restored to their original position
Defendant must make restitution and the plaintiff counter-restitution, of any
benefits received pursuant to the transaction
Common Law Equity
Common law traditionally requires precise
restitutio in integrum. This means that any change
in the nature of a received benefit, however minor,
or use of a benefit by the plaintiff, however brief,
precludes rescission. Thus in Hunt v Silk,
rescission was barred because the parties had
briefly taken possession of land pursuant to the
impugned transactions. It was not possible for the
plaintiff to return this use of land and hence
restitutio in integrum was impossible
Strictness of this doctrine at
common law stands in contrast
with the flexible approach adopted
in equity, where the requirement of
restitutio in integrum is satisfied
provided that the parties can,
through the taking of accounts and
making of appropriate
consequential orders, be returned
‘substantially’ to their original
positions
Alati v Kruger (1955) 94 CLR 216
Facts
Respondent sought to rescind a transaction for the purchase of a fruit business brought
about as a result of the appellant vendor’s fraudulent misrepresentations as to its takings.
Defendant made some representations about how much the store makes and this turned out
to be false. It was near to a supermarket which was undermining its business. Hence
Plaintiff sought rescission of the contract and restoration to original positions
When P realised that the business was not as good as it was made out to be, he had three
choices open to him.
1. Sue for damages for breach of warranty - he could not do this and rescind the contract.
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2. Sue for damages for fraud to recover the difference between the price paid and a fair
value. If he did that - that would affirm the purchase.
3. If he could restore what he had received, then he could avoid the contract, and recover
the money paid plus interest and costs. This was what he wanted to do. He wanted out of
the arrangement.
This 3rd choice was taken.
Dixon CJ, Webb, Kitto, & Taylor JJ [222]:
At common law
It is possible that the respondent was not entitled to rescission because “he could not return
to the appellant in specie” that which he had received under the contract, in the same plight
as he had received it (Clarke). f the case had to be decided according to the principles of
the common law, it might have been argued that at the date when the respondent issued his
writ he was not entitled to rescind the purchase, because he was not then in a position to
return to the appellant in specie that which he had received under the contract, in the same
plight as that in which he had received it
Equity
"equity has always regarded as valid the disaffirmance of a contract induced by fraud even
though precise restitutio in integrum is not possible, if the situation is such that, by the
exercise of its powers, including the power to take accounts of profits and to direct
inquiries as to allowances proper to be made for deterioration, it can do what is practically
just between the parties, and by so doing restore them substantially to the status quo"
"The difference between the legal and the equitable rules on the subject simply was that
equity, having means which the common law lacked to ascertain and provide for the
adjustments necessary to be made between the parties in cases where a simple handing
back of property or repayment of money would not put them in as good a position as
before they entered into their transaction, was able to see the possibility of restitution in
integrum, and therefore to concede the right of a defrauded party to rescind, in a much
wider variety of cases than those which the common law could recognize as admitting of
rescission"
Majority decision
Appeal failed but the judgement was varied to restore to the defendant Alati the chattels
that was possible to be returned and the defendant had to pay the plaintiff the balance of
the purchase money and interest. Equitable remedy.
Fullagar J
Agreed with the majority, with comments: restitutio in integrum is a condition of
rescission. The purchaser remaining in possession has a “duty of care to preserve the
property to be returned”. If the property includes the goodwill of a business, then the
purchaser in possession must carry on that business and take reasonable care to preserve
the goodwill. If he commits a breach of this duty and deterioration results, of two
consequences may follow according to the circumstances of the particular case. 1. The
court may find having regard to the conduct of the purchaser that it would not be equitable
to decree rescission. Or while not thinking it proper to refuse a decree, the court may make
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it a condition of the decree that the purchaser shall compensate the vendor in respect of the
deterioration of the property.
Correct view of the facts is that the defendant failed to establish that any loss had really be
suffered through any breach of duty or unreasonable conduct o the party of the plaintiff.
One is left with a strong impression that the establishment and development of the
‘supermarket’ were big factors in this case.
Maguire v Makaronis (1997) 188 CLR 449
Facts:
The appellants (solicitors) loaned $250,000 to their clients, the respondents, the Makaronis
couple. It was secured over a property they owned. It was used to buy a poultry farm,
which failed. They defaulted on the loan repayments after only one payment. Appellants
demanded repayment of the entirety of the moneys secured and instituted proceedings for
possession of the mortgaged property. Respondents counter-claimed arguing that the
mortgage should be set aside for breach of fiduciary duty. Court found a breach of
fiduciary duty had been committed by the appellant and the mortgage should be rescinded.
Question then became the conditions on which rescission must occur.
Brennan CJ, Gaudron, McHugh & Gummow JJ:
Doing equity – the court addressed the question as to whether the lower appeal court erred
in granting rescission to set aside the mortgage without calling upon the respondents to
honour their obligations to repay the money and interest secured by the mortgage. The
appeal court set aside the mortgage on the condition that the loan principal be repaid with
interest, and set its own loan repayment schedule and interest rates. To set aside the
mortgage without asking the appellants to repay the money given would go beyond
previous cases such as Barron v Willis. There the plaintiff sought and obtained relefi which
had the effect of declaring void certain deeds only in so far as they deprived her of a power
of appointment, this being the matter concerning which she had not properly been advised
This case may be compared with Vadasz v Pioneer Concrete (a misrepresentation case).
The joint judgement of the high court set aside this judgement, and set aside the mortgage
on the condition that the respondents repay the principal sum outstanding and interest,
calculated from the principal sum outstanding, at a commercial rate. This was to achieve
restitutio in integrum as closely as possible.
c) Bars to rescission
Restitution is not possible where there is bar. These include:
o 3rd party has acquired an interest in property- cannot restore parties to
pre-contractual position
o Destruction of property
o Affirmation- P has affirmed the contract by their conduct
o Delay- can be construed as an affirmation of the contract
o A clause within the contract that P had not relied on representation- will
not apply to fraudulent misrepresentations, only innocent
representations
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o Hardship to the defendant- if rescission of a contract would cause
hardship to D then rescission will not be allowed; Hartigan v
International Society for Krishna Consciousness
o Laches – failure to do something reasonable within a certain time with
an independent mind (independent of undue influence, mistake, &c.)
II. Liquidated damages and penalties o Stipulate the amount of damages which arise (a liquidated damages clause).
Sometimes parties may stipulate other practical consequences of breach (such as
forfeiture of an interest)
o The law of contract normally upholds the freedom of parties, with no relevant
disability, to agree upon the terms of their future relationships; Ringrow Pty Ltd
v BP Australia Pty Ltd [2005] HCA 71. Hence parties may include any terms
they want in a contract including the remedies for breach of its provisions.
o However, there are a number of important exceptions to this:
Enactment of legislation such as the Australian Consumer Law means that
parties to contracts are not entirely free to contract as they wish; Andrews v
Australia and New Zealand Banking Group Ltd
Both equity and common law preclude ‘penalties’ in contracts. A penalty is
a payment of money or an obligation imposed in terror of the other party
(intended to frighten or intimidate) whereas a liquated damages clause is a
genuine pre-estimate of the losses suffered; Dunlop Pneumatic Tyre Co ltd v
New Garage and Motor Co Ltd: Clause is likely to be a penalty if the sum
stipulated is extravagant and unconscionable in comparison with the greatest
loss that could be conceivably be proved to have followed from the breach
III. Debt o Easier for a plaintiff to recover a debt than damages
o Debt: Definite sum of money which, under the terms of the contract, the
defendant is due to pay the plaintiff either in return for the plaintiff completing a
specified obligation under the contract (such as the delivery of goods pursuant to
a contract of sale) or upon the occurrence of a specified event (such as a sum
payable under an insurance policy, or the payment of a sum pursuant to a
guarantee)
o When the specified event which triggers the debt occurs, the debt is said to have
‘accrued’
o Rules against penalties do not apply to acceleration of a debt; O’Dea v Allstates
leasing System (WA) Pty Ltd. However, those rules apply where the contract
provides that upon the defendant’s failure to pay the specified sum, a larger sum
becomes payable; Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co
Ltd
o Finally, parties may declare in the contract that certain terms are so important to
them that their breach will give rise to the right to end performance. Contracts
may also detail when or how termination will occur. Parties may also provide
that if certain events occur outside the control of either of them, then both parties
are released from contract
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IV. Other stipulated contractual remedies o Parties may declare in the contract that certain terms are so important to them
that their breach will give rise to the right to end performance. Contracts may
also detail when or how termination will occur.
Termination clauses protect the party who can rely on the termination
clause to end the contract and give the other party an incentive to perform
Consequently, they have sometimes been held to be penalties,
particularly where the termination clause also stipulates damages to be
paid upon termination; AMEV-UDC Finance Ltd v Austin
The use of termination clauses in a consumer contract context is likely to
be limited by provisions in the Australian Consumer Law which prevent
businesses form including unfair terms in consumer contracts
o Parties may also provide that if certain events occur outside the control of either
of them, then both parties are released from contract