Incorporation EVALUATION Flashcards
Explain
Pre-contractual statements (PCS) may be incorporated and become terms if it was the parties’ intent for them to be in the contract. Otherwise, they are representations.
There are various factors that can be considered when looking at this. L’Estrange v
Graucob shows that if written statements are signed, they are binding even if not read or
understood. Interfoto v Stiletto shows there is an exception to this for harsh or unusual
statements, which need specific attention drawn to them. Grogan v Robin Meredith shows this rule only applies to contractual documents. Additionally, Curtis v CCD shows that if verbal clarifications are made about signed agreements, the verbal statement is the thing that is incorporated.
Sometimes PCS on separate documents may be incorporated, but only if they were clear at
the time that the contract was made. For instance, the exclusion was not clear in Chapelton v BUDC as it was not displayed on the sign , whereas in Parker v SE Railway, the
exclusion was clear on the sign and ticket. Even saying rules existed and could be found
was reasonable enough in O’Brien v MGN. However, Thornton v shoe Lane Parking
shows that more onerous exclusions need more attention, and the statements must not
come after the contract, eg. the sign came after the completed contract (at the ticket
machine) so was not incorporated.
For verbal statements, the importance to the representee is considered, as in the timing of
the statement and contract. For instance, in Birch v Paramount Estates, the model house
was clearly important because he agreed then and there without seeing the other house.
Additionally, any special knowledge of the representor may be relevant. The fact that the
seller was a car dealer meant his PCS could be expected in the contract in Dick Bentley v
Harold Smith, but the private seller’s PCS were not incorporated in Oscar Chess v Williams.
Lastly, PCS may be incorporated through a regular course of dealings. A few visits was not
enough in Hollier v Rambler Motors, as it was unlikely the consumer knew of the exclusion.
But the frequent dealings in Spurling v Bradshaw made it likely the business did know of the exclusion and so it was incorporated
L’Estrange v Graucob makes it easy to tell the difference between a representation and a term
The rule from L’Estrange v Graucob makes it easy to tell the difference between a
representation and a term. This is because whenever something is signed, it is presumed to be binding which makes it very certain as to the content of a contract. However, this could
lead to injustice if the representee is bound by something they did not know existed (eg if the
contract was very lengthy, they may not read all of it) and could be to the detriment of
weaker bargaining parties if they cannot choose what goes into the signed. Therefore this way of distinguishing a term from a representation may be too rigid
There are exceptions to L’Estrange v Graucob
Thankfully, there are exceptions to the above rule that create flexibility. The exceptions from
Interfoto and Curtis which can lead to justice if someone was deceived into signing a
contract without fully understanding the consequences of this, which helps with inequality of bargaining power. However, this creates uncertainty because now not everything written in the contract is binding, and working out if someone made a verbal assurance, or what counts as ‘special attention’ may be challenging. Therefore the distinction between a term and a representation is much less clear as a result
Things not in the signed contract can be considered terms
Additionally, things not even in the signed contract itself can still be considered terms, eg
notices and tickets. On the one hand, this is sensible and respects freedom of contract
where parties wanted something to be in the contract and this was reasonably clear (i.e. in
Parker v SE Railways). But the fact that there are so many varying cases on this point
(Chapelton; Thornton, O’Brien etc.) shows that the law is not very clear on when exactly
‘reasonable steps’ have been taken and when something will count as a term. Therefore the
distinction is also creating uncertainty in this regard
Rules relating to a regular course of dealings
Lastly, the rules relating to a regular course of dealings can create uncertainty too. This is
because it is unclear when there is a ‘regular course of dealings’ (a few visits was not
enough in Hollier, for instance) and the terms of the contract are not necessarily just what is
written in the contract. However, the court try to use this rule to protect weaker parties (like in B2C contracts like Hollier) but respect freedom of contract and give effect to the parties’ intentions where bargaining power is more equal (eg. B2B contracts like Spurling). Therefore this rule has a lot of practical benefits, even though it does make the law less clear
