#17134 - Contracts - LAWS1075

Terms of a contract determine what the parties have agreed to do by way of performance to their contract
The objective approach in assessing parties’ intentions:
- “the intention which reasonable persons would have had if placed in the situations of the parties” (Reardon Smith Line v Hansen-Tangen)
What are the terms of a contract?
- The provisions and obligations of the contracts – find them
- The scope of the performance that is necessary
- What damage was caused by the breach of contract
Express terms may be incorporated:
- By signature
- By adequate notice
- By a course of dealing
- Under the principle established in the ticket cases
Statements made orally during negotiations may also be incorporated into a contract
Written terms and the effect of signature
- General rule (L’estrange v Graucob; Toll (FGCT) v Alphapharm)
  - A party will be bound by the terms contained in a contractual document which they have signed, irrelevant of if they’ve read the document
- The agency issues
  - A method of overcoming the requirements of privity in a commercial context
Circumstances in which the effect of signature may be avoided
- The rule in L’estrange v Graucob does not apply where the signature was induced by misrepresentations of the nature or scope of obligation, or fraud, or in some cases of mistake
- Also, where the document cannot reasonably be considered a contractual document, for instance if it appears to have another function, like a receipt (Curtis v Chemical Cleaning & Dyeing)
- Nonesfacto (latin: this is not my document) – it is clear that someone cannot read a document

Incorporation of terms by notice
- It is not uncommon for one party to allege that the contract contains terms which have been displayed or delivered before or at the time of the transaction
- Whether or not the party will be bound depends upon whether:
  - The terms were available to the party to be bound by those terms before the contract was made
  - Reasonable steps were taken to bring the terms to the notice of the party to be bound
Timing
- For delivered or displayed terms to form part of a contract they must be available to the party to be bound before the contract is made (Oceanic Sun Line Special Shipping Company v Fay)
Knowledge or Notice (Thornton v Shoe Lane Parking)
- If the timing requirement is satisfied, a party will be bound by delivered or displayed terms if they have either knowledge or reasonable notice of the terms
- If a party knows that the relevant document contains contractual terms, they will be bound by those terms
- In the absence of knowledge, a party will be bound by delivered or displayed terms if they had reasonable notice of the terms
- Reasonable notice depends on the type of contract
Was notice given? Was it adequate timing before formation?

Electronic Transaction Act 2000 (NSW)
- Signatures
  - A method is used to identify if a person and to indicate the persons intention in respect of the information communicated
  - The method used was either:
    - As reliable as appropriate for the purposes for which the electronic communication was generated or communicated
    - Proven to the fact to have fulfilled the functions described in paragraph A (above)
  - The person to whom the signature is required to be given consents to that requirement being met by the way of the use of the method mentioned in paragraph a

Identify the terms
- Express terms written document, displayed terms of use
- Implied terms
Written documents
- Consider the method of incorporation of terms?
  - By signature
    - Is it a contractual document?
  - By notice (if the document is not contractual)
    - Is the notice sufficient?
      - Timing - For delivered or displayed terms to form part of a contract they must be available to the party to be bound before the contract is made (Oceanic Sun Line Special Shipping Company v Fay)
      - Knowledge - a party will be bound by delivered or displayed terms if they have either knowledge or reasonable notice of the terms (Thornton v Shoe Lane Parking)
- Includes reference of other terms
  - Oral agreements, additional documents, advertising promises
- Is the contract conclusive?
  - No oral statements and extrinsic material is included

What is meant by parol evidence everything that is not the document
What is the rationale of the rule? to give effect to the intentions of the parties
What is the parole evidence rule? a circle statement
- If the contract is whole in writing, then extrinsic material cannot be used
- Therefore, the PER does not apply (State railway Authority)
Statements made during negotiations
- Parties negotiating a contract may make statements about matters relating to the contract
- If one of the statements is false, the party to whom it was made can seek legal remedy
- Promissory: and this a term of the contract, then there will be a remedy for breach of contract
- Representation: not part of the contract, relief must be sought under the law relating to misrepresentation
- To determine if a statement proves part of a contract:
  - Consider whether evidence of the purported term is admissible to the court
    - Parole evidence rule limits the extent to which extrinsic evidence is available to “add to or vary” the terms of a contract
  - Courts must determine if parties would have intended the statement to form part of the contract.
Entire agreement clauses
- Parties may expressly clarify their intention for a contract to be wholly in writing through a merger or entire contract clause
- Which states that the written contract contains the entire agreement of the parties
- Therefore, the PER does not apply because all the terms are in the contracts written document and cannot rely on extrinsic material
The parol evidence rules
- The evidence available to the court will be important in identifying the terms that form part of the contract and the construction given to those terms
- Common law: regards contracts that the parties have reduced to writing as being in a special category, and severely limits the kind of evidence outside the written document
- Consists of two parts:
  - It prevents extrinsic evidence being given to add to, vary or contradict the terms of the contract – the ambit of the contract
  - Limits the evidence that might be given to explain the meaning of those terms
Evidence included
- Any evidence extrinsic to the contract
- In writing
- Oral conversation
- Letters
- Early drafts
Can extrinsic evidence be used to determine whether a contract is wholly in writing? (Corbin on contracts; state railway authority of NSW v Health Outdoor)
- The parol evidence rule only applies to contracts wholly in writing
- Therefore, will not apply to exclude evidence of the oral terms of a contract that are only partly in writing
Exceptions to the parol evidence rule in identifying terms – Cases in which extrinsic material is admissible
- Collateral contracts
  - What is a collateral contract?
    - A collateral contract is a contact the consideration for which is entry into another contract (Mann v Nunn)
    - Specific type of contract that is the entry into another agreement
    - EG looking for an apartment but the oven is broken and the guy showing the apartment says that hell...

#17134 - Contracts - LAWS1075 - Contract Law

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