Identifying the express terms 2

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1 LAWS1075 CONTRACTS Identifying the express terms 2 Written terms and signature ( ) 2 From notice ( ) 4 From a course of dealing ( ) 6 Parol evidence rule ( ) 9 From statements made ( ) 7 Construing the express terms 10 The Use of Extrinsic Evidence ( Moodle extract) 10 The Process of Construction ( ) Exclusion clauses ( ) Implied terms 13 In law and in fact ( ; 15.35) From custom ( ) 14 Australian Consumer Law 15 Australian Consumer Law: An Overview (Moodle) Standard form contracting ( ) Unfair contract terms ACL ss Consumer Guarantees ACL ss 3, 51-64A Remedies: ACL ss 232, 236-9, 243, , Frustration 17 Termination 19 By agreement ( textbook) 19 Failure of contingent condition ( textbook) 22 Breach ( ; ) 25 Repudiation ( ; ) 28 Delay ( ; , ) 30 Restrictions on Termination 32 Ready and willing ( ) Election ( ) 33 Estoppel and waiver ( up to para 100) 34 Relief against forfeiture ( textbook) 35 Damages 37 Measure of damages for breach of contract The compensation principle ( ) Expectation damages ( ; ) and Clark v Macourt [ ] 37 Reliance damages 39 Gains based damages (26.155; ) 40 Limits on damages 40 Date of assessment ( ) Causation and remoteness ( ; ) 41 Mitigation ( ) 42 1

2 Disappointment/distress ( ) 43 Contributory negligence (27.205) 44 Termination under express term (27.220) 44 Liquidated damages 45 Actions for debts 46 Debts ( ) Misrepresentation 49 Rescission 53 Misleading of deceptive conduct 55 ACL s 18 + remedies 58 Mistake 59 Duress 63 Identifying the Express Terms Express contained Incorporation of terms from a notice Timing of notice Knowledge/reas notice Incorporation of terms from course of dealings Uniform & Term must arise regular from C doc Written terms and Signature Objective approach what would have a reasonable person understood if placed in circumstances? (Codelfa) Effect of signature Signature = presumption of intention to be bound signed doc = party bound by terms w or not he/she has read it: L Estrange L Estrange v Graucob [1934] P entered C to buy ciggy machine from D Signed doc on brown paper headed Sales Agreement which was an order form & contained printed terms of sale When delivered, the machine didn t work properly P sued for B of implied warranty machine wasn t fit for required purpose D relied on exclusion clause: excluded any express condition, statement or warranty P induced by misrep to sign w/out knowing terms = C not binding D Decision found for D Doc signed = immaterial w P read & understood its content Signed docs diff to unsigned docs where reas awareness/notice is necessary No evidence of fraud or misrep Can t pick & choose terms all are binding 2

3 Parties are bound by terms of C doc which they sign subjective knowledge & understanding irrelevant Exceptions: fraud, misrepresentation, statutory exceptions/limitations L Estrange decision today ACL probably would render exclusion clause void Toll (FGCT) v Alphapharm (2004) Alpha was a sub-distributer for EB of a flu vaccine On EB s behalf, Richard Thompson agreed w/ Alpha to collect, deliver & store the vaccine which req constant refrigeration RT sub-c Finemores Services to transport the vaccine RT sugg to A to also use F s services A accepted sugg & RT made nec arrangements Alpha had no direct contact w/ F A gave RT a cover letter w/ a quote which stated its services were subj to conds on the reverse of the consignment notice h/w no such notice was given A rep of RT signed a Credit Application form which incl. certain rates & conds immed above signature space was a written req to read the T&C before signing the rep signed w/out reading Conds: o Cl 6 F not liab for any loss/damages o Cl 5 customer entered C own behalf Goods were damaged during transportation as temp dropped too low A sued F for damages BOD as bailee Prior decision W cl 6 is part of the C; If so, did RT C on behalf of A Decision A bound cl 6 formed part of the C no misrep RT signed on behalf of A Courts not concerned w/ subjective intention what each party by conduct or words would ve led a reasonable person in situation to believe Absence of fraud/misrep = signature binding Reasonable notice o Was F obliged to give reasonable notice about the terms? Signed doc = no obligation to give reas notice where there s a signature Unsigned = must give reas notice Agency o Alpha req the services of F o RT authorised to enter agreement as agent of Alpha Signature = prima facie consent Rights and liabilities determined objectively No onus to prove reasonable notice where there is a signature EXCEPTIONS In what circumstances may the effect of a signature be avoided? Where the signature is induced by: o Misrepresentation o Fraud 3

4 o o Mistake Where doc cannot reas be considered a C doc e.g. has another function (e.g. receipt) Misrepresentation Curtis v Chemical Cleaning (1951) Ms Curtis (P) took a white wedding dress to D s shop for cleaning P given paper title receipt to sign P asked why she had to sign & assistant said D wouldn t accept liability for any damages caused during cleaning by beads/sequins P signed had cond: This/these articles is accepted on cond that the cleaners aren t liable for any damage h/w arising or delay Dress returned w/ a stain & P sued for damages D relied on exclusion clause on the signed receipt Prior decision W there was a misrepresentation at time of signature Decision found for the P misrep at time of signature Misrepresentation o Shop assistant failed to articulate the scope to the exemption cl led P to believe it only covered dam from beads/sequins = D cannot rely on exclusion clause Nature of doc: o Receipt Not reasonable to expect C T&C o Receipt not likely to be a C doc o Even if assistant had said nothing, customer still wouldn t have been bound due to impression that doc contained no conds Signature may be refutable where obtained by misrep or where it wasn t known that the doc was C in nature Where conduct of offeror gives impression doc has no conds = signature not binding Incorporation of terms by notice One party may claim that C includes terms delivered before/at time of transaction: For terms to be binding: 1. Terms must have been available before C was formed 2. Reasonable steps must ve been taken to bring them to notice Timing Terms available before contract is made Oceanic Sun Line v Fay (1988) 4

5 Mr Fay (P) booked a cruise in Greece from D P given an exchange order upon payment to be exchanged for ticket upon boarding Upon arrival in Athens, P given ticket which cont. a cond that any action brought ag the D would be in the jurisdiction of Greek courts P seriously injured on the cruise and sued in NSWSC D applied for stay of action W the C was entered upon P s payment of the fare W cl 13 on the ticket formed part of the C D terms contained on the ticket formed part of the C Decision found for the P - C formed in NSW at time of payment when exchange order was received = additional terms on the ticket aren t included in the C C formed upon purchase of ticket Term must be available at time of formation or party wishing to impose the term must have given reasonable notice of the term s inclusion o Cond on back of ticket issued after C made = ineffective o No reasonable notice = clause not part of C Oceanic would ve had to have put the clause on the exchange order so to give reas notice For a term/clause to form part of the C it must been available at the time C entered unless reasonable notice was given to inform party of the term Knowledge/notice Party must be aware doc contains C terms OR; Must have had reasonable notice of the terms reasonable notice = no knowledge requirement Factors determining reasonable notice: Type of C Nature of terms Circumstances of the case Thornton v Shoe Lane Parking P parked his car in an automated ticketed carpark owned by D Outside there a notice w/ fare & read: All cars parked at owner s own risk P entered, received a ticket & parked ticket had in fine print: This ticket is issued subject to the conds of issue displayed on the premises notice inside carpark = only aware after entry P returned & there was an accident & he was severely injured Prior decision When was the C formed? W the cond on the ticket formed part of the C of parking D ticket was a C doc w/ an exclusion clause Decision appeal dismissed found for the P C formed upon payment of the fare = terms delivered on the ticket after P entered premises aren t valid 5

6 Terms must be available/p must be aware of terms before C made should ve been included on the notice outside No evidence P was aware of terms before payment = not bound P couldn t refuse condition once he had already paid o o Ticket it merely a receipt of payment on terms offered & accepted prior to payment Committed beyond recall? perhaps there should be an opp to refund once notice of terms of ticket has been given Party only bound if aware of the term or; party introducing the terms must do what is sufficiently reasonable to bring the term to the notice of the other party Unusual terms require more effort to bring to reasonable notice Baltic Shipping v Dillion (1991) P booked cruise w/ D s company 10 days later P received a booking form that stated C of carriage/booking made only at the time of issuing of tickets contained terms on ticket P paid full fare & received ticket 2 weeks before the cruise Ticket included conds limiting liability for personal injury & damage Ship sank during cruise & P sought dam for loss & injury W the terms on the ticket formed part of the C W sufficiently reasonable notice of terms was given D admitted liability but claimed the conds on the ticket excluded its liability for dam Decision appeal dismissed found for P limitation clause didn t form part of C of carriage P didn t receive sufficient notice of the condition only had proper notice after receiving the ticket = lim clause not part of C Availability of conditions in D s office = insuff notice more could ve been done to inform customers of the cond e.g. could ve drawn attention to exemplary clauses on booking form For terms on a ticket to be incorporated into a C, reasonably sufficient notice of those terms must be given to the party to be bound Incorporation of terms by course of dealings Requirements: COD must have been regular and uniform: Henry Kendal & Sons Term must arise from a C doc Doc relied upon in previous transactions must reasonably be considered a C doc, rather than having appearance of mere receipt or docket: DJ Hill v Walker Balmain New Ferry v Robertson (1906) BNF ran a ferry business on a wharf where fares were only collected upon the wharf There was a notice at entrance that 1 penny was to be paid upon entry & exit no matter if person travelled on the ferry or not Mr Robertson paid the fare & upon missing the ferry attempted to leave the wharf through the turnstile which provided the only exist aside from the water 6

7 P refused to pay another penny & the company s officers tried to detain him. P eventually got out through a gap in the turnstiles P sued for assault and FI Decision found for Balmain Robertson bound by term req payment of a penny to leave wharf Robertson frequently used the ferry service & having paid the fare he must have been aware of the terms reasonable to assume he knew the terms Party s knowledge of a system or procedure upon which a C is based from previous dealings = terms which are implied from that procedure will be incorporated into future dealings with the same system or procedure Rinaldi & Patroni v Precision Mouldings (1986) SC WA W terms contained in cart notes were part of the C D excluded by the exemption clause contained in the cart notes Decision Cart notes cannot be seen as C in nature cart notes more records of dealings Terms est from a course of dealings must be regular, uniform & found within contractual docs From statements made pre-contractual negotiations Promissory statement Mere statement/representation Status: C term Status: Non-C term Action: B of C term Action: misrepresentation Remedy: damages Remedy: rescission of C What must the court consider when assessing w statement forms part of the contract? 1. W the evidence of the alleged term is admissible parol evidence rule may exclude 2. W the parties would ve intended the statement to be included JJ Savage & Sons v Blakney (1970) Blakney wished to buy a boat from Savage Savage sent him a letter which stated the fuel consumption, power & speed o It made specific mention of an estimated speed of 15 mph Blakney took the advice as to the speed & ordered the boat, despite another expert told him diff C made & executed written doc made no mention of boat s speed The boat could only go 12 mph & B sued W the rep about the boat speed was a C cond or warranty B the rep about the boat s speed was a cond of the C or a collateral warranty Decision found for Savage Evid didn t est that the statement in the letter was promissory only that Blakney accepted Savage s estimate as sufficient to found his own judgement as to the speed of the vessel. Look at the actual language to determine the meaning & w promissory in nature o Estimated speed nature of these words? 7

8 o Merely opinion of the boat maker estimation not promissory Q = w there was a promise given about the speed that was consideration for entry into the C There needed to be an express cond in the C about the speed of the boat For a statement to be considered a term of the C it must be promissory in nature Oscar Chess v Williams [1957] D bought car from the P & traded in his old one P described his car as a 1948 Morris as was provided in the rego book Car was actually a 1939 model, valued $115 less than the dealer had allowed as a trade-in. D was unaware of incorrect info in rego book Prior decision found for P year of car was a cond W the statement of P regarding the year model of the car was a prom statement or innocent misrep P year model of the car was an express term of the C cond or a warranty Decision found for the D innocent misrepresentation Q = w statement was promissory or a mere rep D had no personal knowledge of car s year of manufacture relied on info in rego book Clearly no warranty made about year of car statement of belief D lacked knowledge or expertise & made statement to P who was an experienced car dealer unlikely he intended his statement to be binding For a statement to constitute a C term it must be more than a statement of belief Dick Bentley v Harold Smith [1965] Bentley (D) bought a car from Smith (A) upon the rep that its mileage was miles Later became clear mileage was much greater & car req repairs Bentley bought an action for B of warranty W the statement about the car s mileage was a warranty or an innocent misrep Decision appeal dismissed found for Bentley statement was a warranty Rep made in COD that is made w/ intent to induce the other party is prima facie a warranty Perspective of reasonable bystander A was an experienced car salesman = should ve investigated car mileage before making rep Must consider circs expertise of representor/representee A was a salesman Non-fraudulent statement, h/w was a statement of fact & was a C warranty = B gives rise to action for damages The relevant expertise of the parties must be considered when determining w a statement was promissory or merely representational The Parol Evidence Rule Exceptions to PER 8

9 Collateral Contract Promises made indep but connected to main C party agrees to enter main C as consid Requirements statement must be: o Promissory: JJ Savage & Sons v Blakney o Intended to induce entry: JJ Savage o Consistent w/ the terms of the main C: "requirement of consistency": Hoyt's v Spencer Hoyt s v Spencer (1919) HCA legal force of a CC Spencer (D) was the lessee of Hoyt s (P) premises Written lease prov that lessor could term at any time by giving lessee at least 4 weeks notice in writing of intention to do so Lessor later gave notice to term Lessee alleged that, in consid of his taking the lease, lessor agreed not to ex right except in cert circs W a CC existed between the lessor & the lessee that stip lessor wouldn t ex right to term D P made CC that it wouldn t ex right to term = B the CC by exercising his right Decision found for lessor CC not binding inconsistent w/ main C [148] Written C = complete record of parties agreement if parties wish to include any oral evid they must shew that written doc wasn t intended as complete rec Requirement of consistency = CC may add to the main C, but it cannot be inconsistent so to alter the prov of the main C [147] nale = CC must be supplementary only to the main C CC must be consistent with the main C in order to be binding on the parties Note Consistency req = CC may have narrow scope to give C force to an oral rep varying written C If CC is inconsistent it must be tested against the PER must prove C is partly written/oral Estoppel Unclear w PER prevents an estoppel from being established Saleh v Romanous [2010] NSWCA w estoppel can prevent operation of the PER Romanous entered C for sale of land from Saleh on assumption that s Saleh s brother Edmond, who owned the adjoining land, would participate in a joint venture to dev the properties Before C, Saleh said to Romanous that if Eddie didn t agree the C could be term & all $ ret Romanous wasn t able to neg a joint venture w/ Ed, so he term & sought to recover the dep Prior decision Trial prom E prevented Saleh from enforcing C of sale W prom E trumps the PER Decision found for Romanous confirmed prom E could op despite entire agreem cl in the C Prom estoppel is an E restraint = not subject to CL PER 9