South Pacific Contract Law

Jennifer Corrin-Care

• Publisher: Routledge-Cavendish
• Year: 2015
• Print ISBN: 9781859416181
• eBook ISBN: 9781135340070
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

This book presents the general principles of contract law that apply in the countries of the University of the South Pacific ('USP') region - Cook Islands, Fiji Islands, Kiribati, Marshall Islands, Nauru, Niue, Tokelau, Tonga, Tuvalu, Samoa, Solomon Islands, and Vanuatu. It is unique in that it provides the only up-to-date survey of regional authorities for the principles of contract operating within the region.

Like many other branches of the law, contract law has yet to establish its own identity in the South Pacific. However, whilst it is still based on the law of England, there are significant differences between English contract law and South Pacific contract law. The text provides a clear explanation of this divergence and highlights regional innovations, both in the form of legislation and local case law. It also examines the role of customary law and provides a comprehensive study of the significant differences between the law of contract in individual regional countries.

Comparison is made between regional law with current English contract law, and with the contract law of Australia and New Zealand, particularly where regional courts have preferred that law to the law of England. This book is essential reading for all students of contract law in the South Pacific and constitutes a very useful source book and guide for academics and practitioners, from within and outside the region.

CHAPTER 1

INTRODUCTION

INTRODUCTION

This book deals with the general principles of contract law that apply in the University of the South Pacific (‘USP’) region.¹ Like many other branches of the law, contract law has yet to establish its own identity in the South Pacific. It is still based on the law of England,² with little ‘localisation’ through national parliaments or courts. However, there are significant differences between English law and South Pacific contract law. Divergence is partly a result of the fact that the English law of contract has moved on. Legislative reforms and developments in the common law do not necessarily apply in the region, due to a ‘cut-off’ date having been imposed.³ It is also the result of regional innovation, both in the form of legislation and local case law, as regional courts gradually develop a regional jurisprudence more suited to local circumstances.⁴

Finally, there is customary law, which governs agreements and disputes at the village level in some countries. Where customary law is now a formally recognised source of law, it may also have effect outside the village setting.

There are also significant differences between the law of contract in each of the regional countries, and the phrase ‘South Pacific contract law’ is used in this book to distinguish regional law from that of England and Wales, rather than to denote a uniform law of contract in South Pacific countries. These differences are partly the result of different approaches taken by regional courts, particularly in how far they are prepared to depart from the common law of England. They are also the result of countries having different ‘cut-off dates’ from each other, and of legislative innovation by some regional parliaments. The status and application of customary law also differs from country to country.⁵

This book examines the general principles of contract law applying throughout the USP region. It also contains a comparative element in that itpoints out distinguishing features of the law of individual countries. It also highlights significant differences between the regional law of contract and the contract law of England. Reference is also made to the contract law of Australia and New Zealand, particularly where regional courts have preferred that law to the law of England.

Definition of a contract and the law of contract

A contract is a legally binding agreement made between two or more people who intend it to have legal effect. There are therefore two elements:

• an agreement; and
• legal enforceability.

Additionally, one needs to know:

• what are its terms;
• when is it broken; and
• what are the remedies for breach.

As common sense would suggest, the law of contract is the law that governs contracts. But just what that consists of, and whether there can really be said to be one general law governing all contracts, is a matter of academic dispute.⁶ One definition which has been put forward is that contract law is:

... that branch of the law which determines the circumstances in which a promise shall be legally binding on the person making it.⁷

In addition to the general principles of contract, which are the subject matter of this book, particular rules apply to particular types of contract, such as sale of goods contracts, insurance contracts, employment contracts, shipping contracts, and construction contracts. These commercial laws are not covered in depth in this work.

SOURCES OF CONTRACT LAW IN THE SOUTH PACIFIC REGION

Having looked at what contract law is, it is important to understand the sources of contract law in the South Pacific. In other words, to be able to answer the question ‘where does the law of contract come from?’.

Common law and equity in the South Pacific region

Contract is a ‘common law’ subject.⁸ That is, it is derived from judicial decisions, as opposed to Acts of Parliament.⁹ Equity also plays an important role in the law of contract. Equity consists of rules originally made by the Lord Chancellor, and then by the English Court of Chancery, to assist in ameliorating the rigidity and harshness of the English common law.

The cases that establish the principles of contract are mainly English. Most of them are from the 19th and 20th centuries, having developed to accommodate the growth in commerce and the changes brought about by the Industrial Revolution in Britain. The common law of contract is continuing to develop through modern cases, not only in England, but also throughout the Commonwealth and in other common law countries. It is therefore extremely important to know whether, and to what extent, the cases that embody modern developments apply in the South Pacific.

Generally, common law and equity apply throughout the region. In most countries, it is the English common law (and equity) which have been adopted as part of the law.¹⁰ However, in Samoa, it has been held that the courts are free to choose from amongst common law principles as developed throughout the Commonwealth.¹¹ The courts in Fiji Islands have also shown an inclination to follow Australian and New Zealand contract precedents in preference to the English law.¹² In Nair v Public Trustee of Fiji and the AG of Fiji,¹³ Lyons J said:

In my opinion the future of the law in Fiji is that it is to develop its own independent route and relevance, taking into account its uniqueness and perhaps looking to Australia and New Zealand for more of its direction. This certainly is the implication when reading s 100(3) of the Constitution¹⁴ which establishes that the customary law of Fiji shall become part of the overall body of law of this country and further, as to the later assertion, this was the sentiment expressed by the Chief Justice when convening the Supreme Court. Thus it is timely that this modern doctrine of equitable estoppel as formulated and approved by the High Court of Australia and the Court of Appeal of New Zealand be incorporated into the law of Fiji …

In Marshall Islands, American common law is more relevant.¹⁵ In cases involving French law decided in Vanuatu, decisions of French courts may be of persuasive value.¹⁶

In all cases, there are conditions on the application of common law.
Generally, these are that:

• the principles must be consistent with the Constitution and/or other local Acts of Parliament;
• they must be appropriate/suitable to local circumstances.

This means that the principles of common law may be altered by local statute. They may also be discarded by regional courts if they are inappropriate to the country in question.¹⁷ For example, in Australia and New Zealand Banking Group Ltd v Ale,¹⁸ the Supreme Court, considering the English common law doctrine of unjust enrichment, held that:

... the co...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• PREFACE
• TABLE OF CASES
• TABLE OF LEGISLATION
• CHAPTER 1: INTRODUCTION
• CHAPTER 2: FORMATION OF AN AGREEMENT
• CHAPTER 3: UNCERTAIN AND INCOMPLETE AGREEMENTS
• CHAPTER 4: INTENTION TO CREATE LEGAL RELATIONS
• CHAPTER 5: CONSIDERATION
• CHAPTER 6: ESTOPPEL
• CHAPTER 7: PRIVITY OF CONTRACT
• CHAPTER 8: TERMS
• CHAPTER 9: FORMALITIES
• CHAPTER 10: INCAPACITY
• CHAPTER 11: MISREPRESENTATION
• CHAPTER 12: DURESS, UNDUE INFLUENCE AND UNCONSCIONABILITY
• CHAPTER 13: MISTAKE
• CHAPTER 14: ILLEGALITY
• CHAPTER 15: FRUSTRATION
• CHAPTER 16: DISCHARGE BY AGREEMENT
• CHAPTER 17: DISCHARGE BY PERFORMANCE
• CHAPTER 18: TERMINATION FOR BREACH
• CHAPTER 19: REMEDIES
• CHAPTER 20: E-COMMERCE