EXPRESS TERMS (Identifying)

Question 1

What are express terms?

Answer 1

• Terms actually agreed upon between the parties

- Can be oral or written

Question 2

Complexities when dealing with express terms?

Answer 2

the parties didn't necessarily know/understand the term but it remains an express term)
		○ Incorporation by signature
		○ Incorporation by notice
		○ Incorporation by course of dealings
		○ Statements made during negotiations

Question 3

If someone signs an agreement including terms which they are not aware of are they still bound?

Three case authorities?

Answer 3

Yes: When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not” L’strange v F Graucob (1934)

- Approved by the Australian High Court in Toll v Alphafarm (2004)  - upheld in Fitness

Question 4

Justifications for incorporation by signature

Answer 4

○ Outward intention of party: by signing it they are indicating their agreement to the terms contained. If the party chooses not to read the terms, they assume to risk encompassed.
○ Promotes certainty in contract law

Question 5

Does the signature have to be physical? (i.e. on paper with a pen)

Answer 5

No - Electronic signature is sufficient (e.g. email, online etc.)

Question 6

• Exceptions to the incorporation by signature rule

Answer 6

○ The document could not reasonably be considered a contractual document
		○ The consent to be bound has been vitiated by:
					® Misrepresentation
					® Mistake
					® Duress 
					® Fraud
					® Undue influence
					® Unconscionable dealing

Question 7

L’Estrange v F Graucob

Issue

Answer 7

• Was there an implied warranty that the vending machine would be fit for the purpose for which it was sold, or was this excluded by the express term?

Question 8

L’Estrange v F Graucob - decision

Answer 8

When a document containing contractual terms is signed, then in the absence of fraud or misrepresentation the party signing it is bound and it does not matter whtehr they have read the document or not
L’Estrange had signed the document containing the exclusion clause, regardless of the fact she didn’t read it, she was contractually bound

Question 9

Toll v Alphapharm Pty Ltd - issue

Answer 9

Issue was there a legally binding agreement between Thomas and Finesmores? Was the exemption from liability clause applicable to Finemores even though it wasn’t read by Thompson?

Question 10

Toll v Alphapharm Pty Ltd - decision

Answer 10

When a person has signed a document which is intended to affect legal relations and there is no question of duress, misrepresentation, mistake or any other vitiating element, the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms
Alphapharm authorised Thomson to contract with Finemores
- especially since there was a statement asking them to read the back of the form (where the conditions were)

Question 11

Curtis v Chemical Cleaning

Issue-

Answer 11

was the exclusion clause on the dry-cleaning receipt incorporated into the contract?

Question 12

Curtis v Chemical Cleaning - decision

Answer 12

Where the signature on a document containing contractual terms was obtained by fraud or misrepresentation the exclusion clause is not binding
Misrepresentation includes behaviors, words or conduct that misleads the other party about the existence of extent of the exemption clause
Failing to draw attention to the width of the exemption clause the assistant created the false impression that the exemption only related to beads and sequins

Question 13

Incorporation of terms into an unsigned document can be achieved through…

Answer 13

Incorporation of terms by notice
- Where there is no signed contract, a supplier of goods or services may attempt to incorporate written terms into the contract by referring to documents it has generated containing such terms
- Whether delivered or displayed terms are incorporated into a contract will depend on consideration of:
§ The time at which customer is given the written conditions;
§ The knowledge or reasonable notice customer has of the terms

Question 14

Timing for incorporation by notice

Answer 14

§ For the written terms to be a part of the contract the must be written before the contract is formed
§ Only terms made available to the parties before joining the contract can be binding
Oceanic Sun Line

Question 15

Oceanic Sun Line v Fay

Issue

Answer 15

When was the contract between Oceanic Sun Line and Fay formed? Did the foreign jurisdiction exclusion form part of the contract?

Question 16

Oceanic Sun Line v Fay - decision

Answer 16

• Conventional ticket analysis cannot be applied where the ticket is issued at the point of boarding the vessel in Greece in exchange for an exchange order and the exchange order had been issued and paid for in Sydney.
• Contract was made in Sydney when the customer paid the fare and travel agent issued the exchange order- therefore the ticket cannot alter the parties’ contractual rights and obligations (new conditions cannot be introduced)
• Where an exemption clause is contained in a ticket or other document intended by the carrier to contain the terms of carriage, yet the other party is not aware when the contract is made that an exemption clause is intended to be a term of the contract, the carrier cannot rely on that clause unless at the time of the contract the carrier had done all that was reasonably necessary to bring the exemption clause to the passengers notice

Question 17

eBay v Creative Festival

Issue-

Answer 17

was condition 6 (ticket would be cancelled if resold for profit) incorporated into the ticket purchase contracts?

Question 18

eBay v Creative Festival - judgement (timing)

Answer 18

○ For tickets purchased online from the Big Day Out website, terms of the contract were those set out on the webpage. They included a term in the form of the old condition, and did not include a term in the form of the new condition.
○ For tickets purchased online from the Ticketmaster website, those webpages did not include any reference to / ability to view the new condition. If Creative wanted to impose the new condition, it needed to bring notice of the condition to the attention of the purchaser at the time of purchase
○ For tickets purchased over the counter prior to 16 November 2006, the conditions appearing on the tickets were not drawn to the purchasers and were only made available after payment had been made and did not form part of the contract.
○ For tickets purchased over the counter after 16 November 2006, the display of a notice setting out the conditions of sale and featuring the new condition in red type was sufficient to incorporate the new condition as a contractual term

Question 19

Actual knowledge:

Answer 19

A party who actually knows that a document contains contractual terms will be bound even if he doesn’t read them

Question 20

Reasonable notice

Answer 20

If no actual knowledge, the party will still be bound if there was reasonable notice (Parker v SE Rail)

Question 21

Non-contractual document

Answer 21

If a document/sign is not reasonably thought to be contractual (i.e. non-contractual document) reasonable steps must be taken to bring it to the notice of the other party (Causer v Brown)

Question 22

Availability of referred terms

Answer 22

□ Terms referred to must be readily available (Thorton v Shoe Lane Parking), (Baltic Shipping)

Question 23

Particularly onerous terms

Answer 23

□ For particular onerous or unusual terms (in an unsigned contract) special steps must be taken to draw them to the parties attention Interfoto v Stiletto, Baltic Shipping v Dillon, Thornton v Shoe Lane Parking

Question 24

Parker v SE Rail

Issue-

Answer 24

Whether terms printed on a ticket are incorporated into the contract where Parker did not read the terms
- can the company use the exemption clause on the ticket?

Question 25

Parker v SE Rail - decision

Answer 25

• The person receiving the ticket is not bound by the conditions on the ticket if he did not see or know that there was any writing on the ticket.
• The person receiving the ticket is bound by the conditions on the ticket if:
○ he knew there was writing and believed that the writing contained conditions [irrespective of whether he has read them]; or

	○ if he did not actually know the writing contained conditions, but the circumstances of the delivery of the ticket were such that he could see there was writing on it, he is taken to have been given reasonable notice of the conditions

Question 26

Causer v Brown - issue

Answer 26

Issue- Was the exemption liability clause printed on the dry-cleaning docket incorporated in the contract

Question 27

Causer v Brown - decision

Answer 27

Non-contractual document

Onus was on the shop to prove that customer was aware, or ought to be aware that the docket was not merely a voucher or receipt and that it contained special contractual conditions
Failed to notify the customer, and therefore the exemption clause was ineffective
Receipt was not expected to contain contractual terms, therefore document insufficient
If a document/sign is not reasonably thought to be contractual, reasonable steps must be taken to bring the terms to the other party’s notice

Question 28

Thorton v Shoe Lane Parking

Issue

Answer 28

Issue- was the condition exempting Shoe Lane Parking from liability a term of the contract between itself and Thorton?

Question 29

Thorton v Shoe Lane Parking

Decision

Answer 29

Any ticket purchased from an automatic machine that’s not returnable, the conditions must be notified before the ticket is spat out of the machine
Not applying conventional ticket analysis- Terms of the offer contained in the notice displayed near the machine, customer bound by these terms so long as they are brought to their attention beforehand. Customer not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late, contract has already been made

• “All I say is that it is so wide and so destructive of rights that the court should not hold any man bound by it unless it is drawn to his attention in the most explicit way. … In order to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it – or something equally startling.”

Question 30

Baltic Shipping v Dillon

Issue-

Answer 30

When was the contract between Baltic and Dillon formed?

Question 31

Baltic Shipping v Dillon

Decision

Answer 31

• Terms cannot be added after a contract is entered into without the agreement of the passenger - they are contractually ineffective
  
  • When was the contract made? Booking form made it clear that the contract would arise “only at the time of the issuing of tickets”
  • But at the time Dillon received the ticket, unless Mrs Dillon took active steps of her own, she still had no knowledge of the ticket terms
  • The shipping company has a responsibility to bring unusual conditions to the notice of passengers before they can be bound by them
  • Dillon was entitled in law to take the view she would be issued with a ticket which would contain no unusual provisions of which she was not on notice. The limitation of liability conditions were such unusual provisions. The shipping company took no adequate steps to give her notice of these
• **For particularly onerous or unusual terms, special steps must be taken to bring the terms to the other party’s attention

Question 32

Incorporation of terms by a course of dealings

• what is it?
• why does this apply?

Answer 32

• Where parties to a contract have had a history of dealings:
  ○ Terms of an earlier contract can be held to be terms incorporated into a later contract
  ○ This is so even though the parties may not explicitly incorporate the old terms into the later contract and principles of timing, reasonable notice and drawing attention to onerous terms is not complied with

Question 33

Justifications for incorporation by a course of dealings

Answer 33

○ The party to be bound has, by continuing to deal with the party seeking to impose the contractual term, evidenced a willingness to be bound by that term
○ Efficiency - there is no point in “reinventing the wheel” for every subsequent transaction. Reasonable to infer the parties’ knowledge of the terms and their willingness to be bound by them

Question 34

Requirements for incorporation by course of dealings?

Answer 34

• The course of dealings must have been regular and uniform
  
  • A lack of similarity between each transaction suggests there is not necessarily an agreed set of terms to be applied to each one
  • The document relied upon in previous transactions must be reasonably capable of being considered a contractual document
  • A course of dealings involving the same document with conditions in each transaction does not necessarily mean the conditions were ever effectively incorporated into any one of those contracts

Question 35

New South Wales Lotteries Corporation Pty Ltd v Kuzmanovski [2011] FCAFC 106 - issue

Answer 35

Did the Act and Rules (Public Lotteries Act) form part of the contract?

Question 36

New South Wales Lotteries Corporation Pty Ltd v Kuzmanovski [2011] FCAFC 106 - rule

Answer 36

Rules were incorporated because it was stated clearly

• The ticket contained on its face the following statement in prominent typescript:
	○ THIS TICKET IS GOVERNED BY THE PUBLIC LOTTERIES ACT 1996, THE REGULATIONS AND THE RULES
• Such a “statement unambiguously sought to incorporate the statutory requirements of the Lotteries Act and its subsidiary legislation into the contract”

Question 37

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd - issue

Answer 37

Was Stilletto bound to pay the excessive late fee written on a note with conditions?

Question 38

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd - rule

Answer 38

• If one condition in a set of printed conditions is particularly onerous or unusual, then the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party
  
  • In this case condition 2 was a very onerous; the fee was exorbitant. Nothing was done by Interfoto to bring it to Stiletto’s attention
  • Stiletto was not liable to pay the fee

Question 39

Balmain Ferry v Robertson

Issue-

Answer 39

was Robertson contractually bound to pay the penny to Balmain Ferry?

Question 40

Balmain Ferry v Robertson- rule

Answer 40

Robertson had entered the wharf with knowledge of the conditions imposed by Balmain, had used the ferry service many times before
Therefore he must be taken to have impliedly agreed to the terms of the agreement- could not get out of the wharf without payment of another penny, consented to the Balmain’s employees preventing him from leaving in that way without further payment

Question 41

Rinaldi & Patroni v Precision Mouldings - issue

Answer 41

• Condition No. 5 purported to exempt Rinaldi from liability for damage caused to the boat in the course of transporting it
• The boat was damaged when the truck carrying the boat went under a low bridge. Precision sued for damages. Rinaldi relied on the exemption of liability condition
**Could Rinaldi rely on the exemption of liability clause condition 5?

Question 42

Rinaldi & Patroni v Precision Mouldings - rule

Answer 42

The cart was not a contractual document
In previous dealings, this condition was not incorporated
Terms must be consistently incorporated in previous dealings

Question 43

• Parole Evidence Rule

Answer 43

○ It prevents extrinsic evidence being given to add to, vary or contradict the terms of a contract as they appear in a written document;

Question 44

How to tell if the parole evidence rule applies?

Answer 44

Is the document wholly in writing?

A document wholly in writing will be subject to the parole evidence rule

Question 45

Determining if the document is wholly in writing? Was it the parties’ intentions that the written document would form the entire contract?

Answer 45

® Strict approach: If the written document appears on it’s face to be the complete record of the parties’ agreement it is.
® Flexible approach: Court considers circumstances as a whole to determine if their intentions were that it was wholly in writing (State Rail Authority)
® Note: Entire agreement indicates an agreement was intended to be wholly in writing (Saleh v Romanous)
® Note: High Court has not conclusively decided which approach should be applied

Question 46

If the parole evidence rule applies (contract is wholly in writing) statements made during negotiations be incorporated?

Answer 46

No -

EXCEPT estoppel or collateral contract

Question 47

What are the exceptions which can be applied to incorporate extrinsic evidence if the parole evidence rule applies?

Answer 47

Estoppel or collateral contract

Question 48

Three requirements for a collateral contract to apply?

Answer 48

® 1. The statement is promissory – JJ Savage
® 2. The statement was made to induce entry into the main contract – JJ Savage;
® 3. The statement is consistent with the main contract – Hoyts v Spencer

Question 49

If the parole evidence rule does not apply when can statements made during negotiations be incorporated?

Answer 49

A statement made during negotiations can form part of the contract if in all the circumstances a reasonable person in the position of the parties would have considered the statement to be a contractual promise.
Consider
- timing
- importance
- language
- relative expertise
- existance of a formal contract
- any other relevant circumstances

Question 50

Effect of timing on determining if a statement would be considered a contractual promise

Answer 50

□ The closer a statement is made to signing / finalising a contract, the more likely that it is to be promissory, because it is more likely to induce entry into the contract, and there is no opportunity for independent enquiry - Van Den Esschert

Question 51

Effect of importance on determining if a statement would be considered a contractual promise

Answer 51

□ A statement which, in the circumstances, was highly significant or important in the transaction is more likely to be promissory than an statement of lesser significance Van Den Esschert

Question 52

Effect of language on determining if a statement would be considered a contractual promise

Answer 52

JJ Savage, Oscar Chess
□ Language must be promissory
□ E.g. ‘I promise’ ‘I guarantee’ ‘I warrant’
□ Statements of opinion or belief are not promissory

Question 53

Effect of relative expertise on determining if a statement would be considered a contractual promise

Answer 53

§ Relative Expertise - Oscar Chess, Dick Bentley
A statement made by a party with expertise to a person who is inexperienced is more likely to be promissory that a statement made by a party known to be inexperienced, or statements made between two experienced parties

Question 54

Effect of existance of a formal contract on determining if a statement would be considered a contractual promise

Answer 54

□ A formal written document will often suggest that any statements made by the parties during the negotiations not included in the written contract were not intended to be part of the final contract
□ Courts are very reluctant to hold oral statements to be legally binding if they are later superseded by a formally executed written agreement Equuscorp
□ BUT not always: There was a formal contract in - Van Den Esschert but a warranty was still found

Question 55

State Rail v Heath Outdoor

Issue-

Answer 55

Were the oral assurances given by the representative of State Rail authority before the agreements were signed a part of the terms of the agreements, and hence did this limit State Rail Authority’s right to terminate the agreement

Question 56

State Rail v Heath Outdoor - judgement

Answer 56

• Used the flexible approach to determining if the parole evidence rule applied
• The extrinsic evidence makes it clear that the Plaintiff knew that the representative of the Defendant making the statements about Clause 6 had no authority to change the contract in any way, and thus could not add terms to the contract.
  Thus, their discussion did not add terms to the contract, and the contract was entirely written.

Question 57

Hoyt’s Pty Ltd v Spencer

Issue-

Answer 57

Cold Spencer terminate the lease based on the negotiations made prior to the formal agreement that he would not terminate during the 4 year currency.

Question 58

Hoyt’s Pty Ltd v Spencer

Answer 58

Two separate contracts found- the main contract- the lease agreement and a subsequent contract- a promise by the lessor that his power to terminate the lease is restricted
Hoyt’s suing for breach of a collateral contract- not wholly in writing, parol evidence rule applies
Collateral contract must be consistent with the main contract, must be separate from the main agreement and can not alter the rights created by the main contract
**This case, collateral contract was inconsistent with the main contract, collateral contract not legally enforceable

Question 59

Saleh v Romanous

Issue

Answer 59

• could Saleh rely on estoppel to enforce the contract of sale with Romanous

Question 60

Saleh v Romanous - judgement

Answer 60

• The parol evidence rule does not operate to prevent the operation of promissory estoppel in relation to pre-contractual negotiations
  
  • But this is not a universally held view. Courts are divided as to whether parol evidence rule precludes the admission of extrinsic evidence to establish an estoppel

Question 61

Saleh v Romanous elements

Answer 61

• assumption - he’d get money back
  
  • inducement - it is a clear and unequivicable statement
  • detrimental reliance - purchased the land but doesn’t want without the venture
  • reasonableness - brother, and clear statement
  • unconscionability - yes, clear statement, now stuck with block of land
  • departure - not paying back deposit and making him go through with purchase of land

Question 62

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd

Issue-

Answer 62

Could the investors rely on oral loan agreements made on different terms in order to limit their liability

Question 63

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd - rule

Answer 63

Bound by the terms of the signed document, parol evidence rule applies
Party executing a formal written agreement is bound by it

Question 64

Van den Esschert v Chappell

Issue-

Answer 64

Could the purchaser of the house rely on statements made during negotiations about white ants being a part of the contract

Question 65

Van den Esschert v Chappell - judgement

Answer 65

Parole evidence rule applies (written contract - for land)
Collateral contract exists
- Promissory
- Induced - wouldn’t have signed the main contract without it
- Not inconsistent
- Statement was of a highly important nature

Question 66

JJ Savage v Blakney

Issue-

Answer 66

was the term “estimated speed 15MPH” negotiated prior to the contract being formed, a term of the contract?

Question 67

JJ Savage v Blakney - judgement

Answer 67

Statement relied upon as a term of contract must be promissory and not merely representational
“estimated” indicates an expression of opinion, therefore not a promissory contractual term
“If it was that important, Blakney should have included it in the written contract or had JJ Savage repeat the statement in clear promissory language”

Question 68

Oscar Chess Ltd v Williams - issue

Answer 68

was the term of the car being a 1948 model a part of the contract

Question 69

Oscar Chess Ltd v Williams - judgement

Answer 69

Not contractual term

• language used: not promissory - statement of belief
• relative expertise: obvious to the parties that Williams had no personal knowledge of the year of manufacture. He was relying on the registration book. It is unlikely in these circumstances that the seller would warrant the year of manufacture. Oscar Chess had the expertise so if anyone, he should have realised the mistake.

Question 70

Dick Bentley v Harold Smith - issue

Answer 70

was Smith’s guarantee of the car’s quality a term of the contract?

Question 71

Dick Bentley v Harold Smith - judgement

Answer 71

Whether warranty was intended depends on the conduct of the parties, their words and behaviour rather than their thoughts
If a representation is made in the course of dealings for the purpose of inducing the other party to act on it, that is prima facie ground for inferring the representation was intended as warranty
Distinguished Oscar Chess, not an innocent representation, reasonable to be bound by the term because of his expertise and the fact that it induced entry into the contract