Week 4Identifying the Terms of the Contract: Oral and Written Contracts Flashcards
Express terms
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Express terms: Terms that the parties specifically agreed to
Implied terms: Terms not specifically agreed to, but which are still part of the contract because the law provides for this result
We focus on express terms for now, and return to implied terms at the end of this week’s lectures
Identifying express terms
dentifying express terms might be easy in some cases involving a written and signed contract: look at the document
Identifying express terms might have practical challenges where contracts are oral, or partly written and partly oral
Evidentiary issues: Proving what was said, and what was agreed, noting that not everything said during contractual negotiations will actually be considered by the law to be a term anyway
Identifying express terms is important, as it is only the terms that are the legally binding promises, that contract law can then enforce
Of course, other statements might trigger the application of other areas of law (such as the Australian Consumer Law)
Types of pre-contractual statements
Term or representation?
How do we work out if a pre-contractual statement is a term (and therefore part of the contract), or a representation?
Apply an objective approach, taking into account:
The importance of the statement; and
The time lapse between when the statement was made and when the contract was formed; and
Whether or not the agreement was subsequently reduced to writing; and
The relative knowledge and expertise of the parties; and
Whether the statement is one of opinion or intention
Beispiel: Oscar Chess v Williams:
Owner mistakenly believes car is newer than it is when selling it to a car dealer (innocent misrepresentation, not a term)
The ‘parol evidence rule’
Parol evidence means oral evidence (evidence of oral statements made during the negotiations) and cannot be given; the written contract is treated as being complete
But: there is an ‘exception’ for ‘collateral contracts’, which are separate contracts containing just one oral term
Collateral contracts
Criteria for a valid collateral contract:
The statement must be a promise and must have been intended to have contractual effect; and The statement must not be inconsistent with the main contract; and
The promisee must have given consideration for the collateral contract (usually satisfied by entering into the main contract)
Hoyt’s v Spencer: No collateral contract, inconsistent with main contract
The Incorporation and Interpretation Methodology
Incorporation
Once we have identified our express terms, there are two main ways in which they can be incorporated into a contract (ie. made part of the legally binding promises):
Incorporation
Once we have identified our express terms, there are two main ways in which they can be incorporated into a contract (ie. made part of the legally binding promises):
The signature rule
Where a party signs a contract, they will generally be bound by all of its terms, regardless of whether they have read and understood them
The reasonable notice rule
Alternatively, if a contract is not signed, terms will form part of the contract only if reasonable notice of the terms is given at or before the time the contract is formed
Baltic Shipping v Dillon: Ticket containing exclusion clause issued six weeks after cruise booked, not incorporated
Olley v Marlborough Court: Exclusion clause on a sign in hotel room, could only be seen after booking the room at reception, not incorporated
Alameddine v Glenworth Valley Horse Riding: Exclusion clause on a form signed on the day of a quad bike trail ride, ride had been booked by telephone after viewing the website earlier, not incorporated
Thornton v Shoe Lane Parking: Exclusion clause covering what actually happened displayed inside car park, after entering and taking ticket, not incorporated<—
Exceptions
For both signed and unsigned documents, if it is not apparent that the document is ‘contractual’ in nature, there can be no incorporation
Causer v Browne: Dry cleaning docket (unsigned), no evidence that the voucher would be reasonably understood as including terms of the contract, no incorporation of exclusion clause
Where terms are particularly harsh or unusual, the reasonable notice test is harder to satisfy
Note that even harsh terms are binding when they are signed
Interfoto Picture Library v Stiletto Visual Programs: Very onerous penalties for returning a library’s photo transparencies late, not incorporated, library had not done ‘what was necessary to draw this unreasonable and extortionate clause fairly to their attention’
Interpretation
ppt pg 24
