The Law Handbook 2024

Chapter 7.1: How contract law works 687 It has also been held that court injunctions – that made it impossible for a party to do the amount of construction work they had agreed to do – automatically terminated a contract by frustration (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24). Sometimes, parties agree to ‘force majeure’ clauses that set out the precise consequences if certain events occur that are beyond the parties’ control. For example, a force majeure clause may provide that in the event of a strike, flood, war or global pandemic, the time for delivery of a shipment is merely delayed, rather than the contract being automatically terminated. Breach of contract As set out above, breach of contract by one party may entitle the other party to terminate the contract, where the breach constitutes ‘repudiation’ or breach of a condition or an intermediate term that causes substantial loss of benefit. If a party breaches a term that is considered to be a warranty, the wronged party does not have the right to terminate the contract but can still claim damages (see ‘Terms may be conditions or warranties’ and ‘Remedies for breach of contract’, above). It should be noted that termination of a contract means that unlike where a contract is rescinded (i.e. made void from the beginning), the contract is valid up to the point of termination such that accrued rights and obligations remain intact and parties are only discharged from any outstanding obligations. Contacts Australian Competition and Consumer Commission (ACCC) Melbourne office: Level 17, 2 Lonsdale Street, Melbourne Vic 3000 Tel: 1300 302 502; 9290 1800 Web: www.accc.gov.au/consumers/buying-products-and- services/contracts Consumer Action Law Centre Level 6, 179 Queen Street, Melbourne Vic 3000 Tel (admin): 9670 5088 Tel (legal advice line): 1800 466 477 (Tuesday–Thursday, 10 am to 1pm) Web: www.consumeraction.org.au