Contract Law

The economic analysis identifies four functions of contract law1 that serve to ensure that parties to a contract are protected. It is also concerned with the overall effect of the economic rule that either promotes or discourages efficient outcomes,2 "rather than with results in a particular case". 3 It can been seen in the Begbie4 case that the court was mindful of achieving this outcome in their decision to strike down Mrs Begbie's part of the contract, while Mr Brokken and Mr Cheers were still liable for their parts of the contract. 

The feminist analysis of contract law is concerned with obtaining fair and equitable terms for women before the law. This can only be achieved with the courts moving away from using, what Margaret Thornton calls, the "benchmark man"6 and the "normative linkage between the masculine and rationality" in their decisions process. The doctrine of unconscionability, as seen in the Garcia8 case, is where a one party to a contract has acted against the other party in way that has been unfair or misleading, or exerted extreme pressure or undue influence, or was not forthcoming with relevant information.

The court will either set a part of the contract aside as in the Begbie case or they will strike down the whole contract as in the Garciacase, depending on the factors involved in the case, with each case decided on it own merits. Pamela Ann Begbie v State Bank of New South Wales Limited; Leslie Matthew Cheers; John Brokken and Anivor Pty Ltd No. QG24 of 1991 FED No. 899 Equity – Guarantees (1994) ATPR 41-288 (Begbie Case) Facts of the Case

Mrs Begbie owned properties at Toorbul, Eight Mile Plains, Clayfield and Boondall, with income from the Toorbul, Boondall and Eight Mile Plains properties. Mr Cheers was a director of Snowlakes Pty Ltd which was in a very bad financial position and had a history of blowing out the company's overdraft substantially. He also had a history of bad personal debt and he also was involved with a number of other companies. Mr Brokken was Cheers accountant and had known him for a long period of time and was aware of his client's bad financial management.

He had only ever met Begbie once. Mr Henshaw was the manager of the State Bank of New South Wales branch in Bundall and he was personally keeping an eye on the Cheers and Snowlakes accounts. He had never met Begbie. By developing a 'relationship' with Mrs Begbie, Mr Cheers was able to gain access to her assets, within a very short time of meeting her, to shore up his failing company (Snowlakes Pty Ltd) and service his personal debts under the guise of developing her Eight Mile Plains property.

He managed to get her to sign at least one mortgage along with other documents and he then forged her signature on another mortgage and on other documents relating to what she thought was for the development of her Eight Mile Plains property. Cheers along with Brokken and Begbie were directors of a shelf company Anivor Pty Ltd that Cheers used to obtain the mortgages over Begbie's properties (Eight Mile Plains and Toorbul).

Begbie was also made guarantor of the loans without her knowledge. The way in which Cheer did his dealings with the bank alerted Mr Henshaw to the possibility that Begbie did not have independent legal advice. However, contrary to the bank policy he did not take the step to ensure that she was fully informed, instead he continued to deal with Cheers with this knowledge and the knowledge that Cheers had proved himself a financial risk on many previous occasions.