1. Can Basil successfully avoid his obligations under the contract?
(1) Whether the contract can be terminated by breach of a term of the contract?
(2) Whether the contract can be terminated by frustration?
(1) Formality of contract
In common law, a simple contract can take any form, it can be oral or in writing. But for some kinds of contract, there are legislative requirements that they have to be in writing.
Contracts concerning interest in land are one main type of contracts required to be in writing or evidenced in writing, this has been provided for in the Statute of Frauds 1677. The written evidence can be a memorandum, but it must contain all essential terms of the agreement, they are parties, property, price and commencement date (in some jurisdiction).
(2) Express terms and Parol Evidence Rule
Express terms are terms stipulated by the parties either orally or in writing, with the intention that they form part of the contracts. The verbal words the parties actually used in the negotiation process may be used as evidence to determine some express terms of the contract. (Derya Siva)
When we have a contract in writing, if the writing appears to represent the whole contract, then it would be presumed that the written document contains every term of the contract, and no evidence will be taken to determine other terms expressed orally (Mercantile Bank of Sydney v Taylor, 1891).
The Parol Evidence Rule would be applicable when the language of the written agreement is not clear enough. In such circumstances, according to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982), oral evidence would be admissible to determine other terms of the contract.
According to case law, it is possible to vary the written terms by admitting oral evidences. But according to Abram v A V Jennings Ltd (2002), parol evidence will be admitted only to explain what the terms would be, rather than admissible as the terms themselves.
(3) To distinguish between representations and the terms of the contract.
Even if oral evidence may be admissible to determine the terms of the contract, it is noteworthy that not every statement from the parties in the negotiation would constitute a term of the contract. Those statements made only to induce the other party to enter into the contract are regarded as only representations rather than terms. And whether a particular statement is a term or a representation would depend on the intention of the parties (Derya Siva).
(4) Repudiation – termination by breach
Repudiation is a breach of condition of the contract which makes the performance of the rest of the contract impossible. A condition is an essential term of the contract which ‘goes to the root of the matter’ (Bettini v Gye). Therefore, repudiation is different from a mere breach of some of the terms of the contract. If there is repudiation by one party, the other party is terminated the contract and claim damage from the repudiating party.
A contract would be ‘frustrated’ when an ‘act of god’ occurs and makes the situation fundamentally different from what has been in the minds of the parties when concluding the agreement. In such a case, the parties may treat themselves as discharged from further performance of the contract.
According to Davis Contractors Ltd v Fareham UDC , for a contract to be frustrated, the supervening event has to be of a magnitude in making performing further obligation of the contract impossible, or fundamentally different from what the parties had contemplated.
(1) Whether the statement by Lora that the stilts had been checked for stability would be included as a term of the contract?
In our case, we have a contract regarding interest in land, therefore the contract must be in writing or evidenced in writing, and we did have a contract in writing, therefore, there is a legally enforceable contract between Basil and Lora.
Then the question come as to whether the writing document represent the entire contract between Basil and Lora, or oral evidence could be bring in to the effect that the contract include a warranty as to the stability of the stilts.
In this case, there is a clause stating that the writing contract represents the entire agreement, and no other terms outside those stated in this writing agreement would be enforceable. This term appears to be clear in stating the writing document as the entire contract and preclude the admission of oral evidence as to other term outside the contract.
In view of clause 7.1, the statement by Lora that the stilts have been checked for stability could not be included as a term of the contract.
Even if clause 7.1 was held to be not clear enough to preclude the introduction of parol evidence and the inclusion of the statement by Lora as to the stability of the stilts as a term, it would be a warranty rather than a condition. Because breach of warranty would normally not constitute repudiation which would entitle Basil to terminate the contract, and it could be argued for Lora that even if the stilts had not been checked for stability, substantial performance of the contract is still possible, and she does have the intention to perform her obligation under the contract.
Above all, even if the statement as to the stability of the stilts can be included as a term of the contract, the breach of this term may only entitle Basil to claim damages, but he could not be able to terminate the contract because of such breach, and he would not be able to avoid his obligation under the contract because of this breach.
(2) Whether the contract is frustrated therefore Basil is discharged from further performance of the contract?
Basil may argue that because there the flood is a supervening even which makes further performance of the contract impossible because the entire property collapsed after the stilts gave way. Also Basil may argue that the damage done to the property exceeds $150,000, therefore it would be fundamentally different from what he had contemplated that he was buying.
But Lora may argue that performance is still possible because the property is still there and is capable of being restored to it looks like before the flood.
The warranty as to the stilts had been checked for stability would not be included as an express term in the contract because of the effect of clause 7.1. Therefore there is no repudiation of the contract entitling Basil to terminate the contract
Arguably the contract is not frustrated by the flood because performance of the contract is still possible. Therefore Basil is not discharged from further performing the contract.
假釋證據規則適用于書面協議語言不夠清楚的情況。在這種情況下，根據Codelfa Construction Pty Ltd v State Rail Authority of NSW（1982），可以接受口頭證據來確定合同的其他條款。
根據判例法，通過口頭證據可以改變書面條款。但根據亞伯蘭v A v詹寧斯Ltd（2002），假釋證據將被接受，只解釋將是什么條款，而不是作為條款本身接受。
拒絕履行是違反合同條件，使合同的其余部分無法履行的行為。條件是合同的一個基本條款，它“觸及問題的根源”（Bettini v Gye）。因此，否認不同于僅僅違反合同的某些條款。如果一方拒絕，另一方終止合同并向拒絕方索賠。
根據Davis Contractors Ltd v Fareham UDC，要使合同受挫，隨后發生的事件必須在很大程度上使履行合同的進一步義務成為不可能，或與雙方當事人所設想的根本不同。