week twelve

Question 1

how did the judges describe Hoffman’s Belize Telecom approach in Dysart Timbers v Nielson 2009

Answer 1

two said illuminating.

one accepted explicitly.

final two didn’t mention it.

• positive response from NZ’s highest court

Question 2

what was the reaction to Hoffman’s Belize Telecom approach in Hickman v Turn and Wave Ltd 2011 by Randerson J

Answer 2

seemingly an adoption, or at least a positive approval, of that English approach of Lord Hoffman.

Question 3

what happened in Marks and Spencer & BNP Paribas

Answer 3

leases contained break clayses, which M&S exercised the right to and they paid rent in December for the following three months. Because it was paid quarterly in advance, but the leases ended only one month later, they said a term should be implied into the contract that entitles them to recover the other two months.

Question 4

what did Lord Newburger say about Hoffman’s Belize Telecom approach in Marks and Spencer & BNP Paribas and what does this say about NZ’s approach?

Answer 4

said Lord Hoffman’s approach has been misunderstood and that he was not intending to change the traditional tests. he described them as alternatives rather than both being necessary. rejected the idea that Lord Hoffman was subordinating those two tests into one overarching test.

This rejected Lord Hoffman’s approach and we don’t know where this leaves New Zealand, though we do know on either approach that the two traditional tests are relevant and useful to apply, though they may not be necessary in the same way they used to be if NZ still follows Lord Hoffman’s approach

Question 5

what is an exemption clause and what types are there

Answer 5

clauses which purport to limit or remove the liability of one of the parties with respect to some kind of loss - exclusion and limitation clauses

Question 6

what was the issue with exclusion clauses when they came about in the mid-20th century

Answer 6

one party was escaping from what would otherwise be liability for breach of contract

Question 7

what kind of laws resolved issues with exclusion contracts

Answer 7

consumer protection statutes

Question 8

what is the NZ position on exclusion clauses today

Answer 8

they will be enforced if they are expressed clearly, except for some consumer transactions

Question 9

what is the strict construction (interpretation) approach for exclusion clauses called

Answer 9

contra proferentem - the traditional approach to interpret exclusion clauses

Question 10

what is the idea of contra proferentem?

Answer 10

if a clause is ambiguous, you interpret it against the person who stuck it in the contract

Question 11

what happened in DHL International (NZ) v Richmond Ltd

Answer 11

Richmond contracted DHL to shop some animal hides and they released them to a person who was not authorised to receive them and they disappeared.

there was a limitation of liability and exclusion of consequential damages in place

Question 12

what are consequential damages

Answer 12

the consequential loss - by loosing that thing, what other loss will it cause

Question 13

what was Richardon J’s approach in DHL International (NZ) v Richmond Ltd

Answer 13

• economic interpretation

the parties have chosen to allocate risk in this way so the carrier is not liable for non-delivery or loss of the goods, which was built into the contract by a cheaper price.

The court was unwilling to upset the bargain the parties have reached and the clauses were given their full, apparent effect

Question 14

what was the approach used by Asher J in Dorchester FInance v Deloitte 2012

Answer 14

gave the similar idea that the court will interpret exclusion clauses strictly (need to be clear and effective), but expressed it here in a much more consistent way to the modern contractual interpretation approach, requiring clear language to be effective

Question 15

what does ‘degrees of strict construction’ refer to (DHL International (NZ) Ltd v Richmond Ltd 1993) with regards to exception clauses

Answer 15

the more limiting an exemption clause, the more strictly it should be construed

Question 16

what happened in Milverton International Investment Ltd v Watpat Nominees Ltd (illustrating the idea that where there is uncertainty, the court will tend to go against the party who is attempting to rely upon the exclusion)

Answer 16

an air conditioning plant in the building of a commercial lease worked but not as well as it should have over a significant period of time.

the tenant claimed the lessor had breached the ‘best endeavours’ term in the contract. the court said the exclusion clause did not exclude liability in the circumstances because the words used in the exclusion clause were ‘inoperative’ and ‘fail to function’ and this didn’t cover this situation.

Question 17

what happened in Pearson & Son Ltd v Dublin Corporation 1097 (describing fraud)

Answer 17

Council company contracted with Pearson for sewage works and gave plans. There was an error in the plan, which made the works much more costly than they otherwise would’ve been.

the contract included a term saying that the contractor should satisfy itself as to the existing works and that the corporation was not responsible for the accuracy of the information. But, the Council had supplied the information knowing it was wrong.

The Earl of Halsbury said you cannot exclude liability in relation to fraud (where there is deliberate deceit involved)

Question 18

what does liability for negligence refer to (as a general issue)

Answer 18

often there can be concurrent liability in contract and tort. exclusion clauses have the primary role to exclude contractual liability, do they also exclude tortious liability?

generally, they also exclude liability in tort. it used to be that you had to expressly include negligence in the term but not anymore.

Question 19

what happened in Kaniere Gold Dredging v The Dunedin Engineering and Steel Co 1985 (exclusion clause in relation to tortious negligence)

Answer 19

DESC manufactured 9 2.5tonne metal buckets for the KGD’s operations. Some of the buckets broke and fell into a pond because of defective pins.

there was a limitation clause which limited liability to the cost of the defective materials only but the claim here was for consequential loss.

Holland J said the paragraph refers to no liability of any kind whatsoever and it cannot be more clearly expressed so this was an effective limitation

Question 20

is there the same legal ability for the business to exclude liability in business to consumer sales as there are in business to business sales

Answer 20

no

Question 21

a person may be bound by an exclusion clause independently of the question where it is ?

Answer 21

a term of a contract to which that person is a party

Question 22

where there is no contract between disputing parties, and once again subject to statute, a potential liability in tort for negligence may ?

Answer 22

be excluded by a non-contractual notice

Question 23

in a notice case, as with a contractual exclusion, ___ ____ must be taken to bring the exclusion to the plaintiff’s attention

Answer 23

adequate steps

Question 24

subject to the provisions of any relevant statute, and applying ordinary principles of offer and acceptance, an excluding or limiting term will not avail the party seeking its protection unless?

Answer 24

it has been brought adequately to the attention of the other party before the contract is made. a belated notice is valueless.

Question 25

if a notice is unsigned, the question will be ?

Answer 25

whether reasonable notice of the term has been given, based on an examination of the circumstances of each case

Question 26

an exclusion clause may be incorporated by reference to?

Answer 26

another document

Question 27

if an exclusion clause is unusual, unexpected or of especially far-reaching effect, what may be required?

Answer 27

a higher degree of notice

Question 28

what could the court infer notice from?

Answer 28

previous dealings between the parties of a consistent course of dealings

Question 29

determining the express terms of a contract is exclusively within the jurisdiction of ?

Answer 29

the court

Question 30

in exercising the function of determining the express terms of a contract, judges have been bound by ?

Answer 30

the parole evidence rule

Question 31

exclusion of oral evidence is inappropriate where the written document was never intended to be ?

Answer 31

the whole contract

Question 32

what is the parole evidence rule

Answer 32

evidence could not vary the document

Question 33

can the court correct linguistic mistakes by interpretation?

Answer 33

yes

Question 34

which meaning of words carries considerable weight in a courts interpretation of a contract

Answer 34

the plain meaning

Question 35

Tipping J said that the plain meaning of a a provision is provisional and is …

Answer 35

“always susceptible to being altered by context”

Question 36

the use of background materials needs particular care in cases where the contract is of a kind which is ?

Answer 36

likely to be relied on by third parties, such as financiers or creditors, who may be unaware of the surrounding circumstances and will usually rely on the words of the contract alone

Question 37

the clearer the wording used by the parties in a contract, the less likely it is that ?

Answer 37

the court will find that something else was meant

Question 38

a court cannot rewrite an agreement so as to make it more ?

Answer 38

sensible or reasonable

Question 39

Tipping J regarded relevance as critical, unlike lord hoffman, and would allow evidence of pre-contractual negotiations which showed … ?

Answer 39

“how the parties were thinking, their individual intentions and the stance they were taking at different staged of the negotiating process”

Question 40

subsequent conduct has been examined in many cases since Gibbons Holdings to what effect?

Answer 40

in some it has been of assistance and in others inconclusive or of little weight

Question 41

which approach to contractual interpretation is desirable where possible

Answer 41

purposive approach - though some contracts may not have a purpose in the sense that acts do

Question 42

the mere fact that a contract may appear to be unduly favourable to one of the parties is not a sufficient reason for ?

Answer 42

departing from its plain meaning

Question 43

what did Lord Hoffman say about using precedent to aid interpretation

Answer 43

“if interpretation is the quest to discover what a reasonable man would have understood specific parties to have meant by the use of specific language in a specific situation at a specific time and place, how can that be affected by authority?

Question 44

in what circumstances are prior decisions (precedent) helpful

Answer 44

where there are similarities in transactions, purposes and terms

Question 45

are changes to a standard form agreement part of the relevant context for interpretation

Answer 45

yes - they may be taken to indicate an intention to negate or change the understood meaning or effect

Question 46

is the concept of good faith in contract useful

Answer 46

some believe it is too uncertain to be useful

Question 47

what did Lord Bingham say about why the law imposes strict constraints on the exercise of an extraordinary power

Answer 47

“it is because the implication of terms is so potentially intrusive that the law imposes strict constraints on the exercise of this extraordinary power”

Question 48

for a term to be implied into a contract under the BP refinery 5 point test, what must be satisfied

Answer 48

it must be reasonable and equitable, necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it, so obvious that “it goes without saying,” capable of clear expression, must not contradict any express terms of the contract