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Contracts Notes

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EXPRESS&TERMS&
Written&Terms/Signatures&
Terms&by&Notice&
Unusual&Terms&
Course&of&Dealing&
Entire&Agreement&Clause&
Parol&Evidence&
Statements&
CONSTRUING&EXPRESS&TERMS&
Construction&
Ambiguity&
Exclusion&Clauses&
IMPLIED&TERMS&
In&Fact&
In&Law&
In&Custom&
FRUSTRATION&
Consequences&
TERMINATION&
By&Agreement&
Failure&of&Contingent&Condition&
Duty&to&Cooperate&CC&
NonLFulfilment&CC&
Termination&for&Breach&
Breach&of&Intermediate&Term&
Repudiation&
Anticipatory&Breach&
Termination&for&Delay&
Affirmation&
RESTRICTIONS&ON&
TERMINATION&
Relief&Against&Forfeiture&
MEASURE&OF&DAMAGES&
Expectation&
Reliance&
Loss&of&Chance&
Causation&
Remoteness&
Mitigation&
Disappointment&
LIQUIDATED&DAMAGES&
ACTIONS&FOR&DEBT&

1" 1" 1" 3" 3" 4" 4" 5" 7" 7" 8" 8" 9" 10" 11" 11" 12" 13" 13" 14" 15" 16" 16" 18" 20" 21" 21" 23" 25" 26" 27" 28" 29" 30" 31" 32" 33" 34" 35" 35" 36"

MISREPRESENTATION&
Fraudulent&
RESCISSION&
Bars&to&Rescission&
MISLEADING/DECEPTIVE&
MISTAKE&
DURESS&
UNDUE&INFLUENCE&
UNCONSCIONABLE&
"

37" 40" 40" 42" 43" 44" 51" 52" 54"

Contracts EXPRESS&TERMS&
&
In&a&simple&contract&the&terms&will&usually&be&identifiable&as&those&clearly&proposed&by&the&offeror&and&accepted&by&the&offeree.&
In&more&complex&contracts,&the&rule&of&offer&and&acceptance&might&not&identify&the&terms&to&which&the&parties&have&contracted.&
&
In&significant&transactions,&parties&will&normally&record&the&terms&of&their&agreement&in&a&formal,&written&contractual&document,&
which&is&then&signed&by&by&both&parties&-&however,&there&is&no&common&law&requirement&that&an&agreement&must&be&formed&
in&such&a&way.&Thus,&express&terms&of&a&contract&may&be&found&in&others&forms&of&correspondence&such&as:&
!! Emails,&correspondence,&letters&or&telephone&conversations.&
!! Incorporated&through&signs&displayed&on&premises&or&website.&
Further,&it&is&possible&to&have&a&contract&that&is&partly&written&and&partly&oral.&
&
Written'Terms'and'Signatures&
L'Estrange+v+Graucob+(1934):&&

When&a&document&containing&contractual&terms&is&signed,&then,&in&the&absence&of&fraud&
or&misrepresentation,&the&party&signing&it&is&bound&regardless&of&whether&they&have&read&
the&document.&&

Toll+v+Alphapharm+(2004):+

Affirms&L'Estrange+v+Graucob.&The&legally&binding&affect&of&a&signature&is&recognised&in&
the& general& community& and& well& established& in& the& business& community:& "the&
representation&[of&signing&a&document]&is&that&the&person&who&signs&either&has&read&and&
approved&the&conetents&of&the&document&or&is&willing&to&take&the&chance&of&being&bound&
by&those&contents…&whatever&they&might&be".&

Curtis+v+Chemical+Engineering+(1951):+ The&rule&in&L'Estrange+v+Graucob&will&not&apply&if&the&party&signing&the&contract&has&been&
misled&-&here&a&plea&of&non+factum&would&apply.&
+
!! The&rule&in&L'Estrange+v+Graucob&will&not&apply&if&the&document&could&not&be&reasonably&considered&a&contractual&
document.&
o! Timesheet&-&Grogan+v+Robin+Meredith+(1996).&
o! Receipt/Voucher&-&Chapleton+v+Barry+Urban+(1940).&
!! The& rule& takes& the& objective& fact& of& a& party's& signature& as& indicating& their& acceptance& of& the& terms& in& the& signed&
document,&without&considering&the&reality&of&whether&they&actually&understood&or&was&informed&of&the&terms.&
&
Terms'by'Notice' A&contracting&party&may&incorporate&its&standard&terms&into&a&contract&through&the&provision&of&a&document&containing&the&
terms&or&the&display&and&notice&of&the&terms&within&a&reasonable&amount&of&time&prior&to&the&contract&being&signed.&Normally,&
whether&these&terms&are&effective&are&based&on&two&issues:&
&

1.! Whether&the&terms&were&available&to&the&party&to&be&bound&before&the&contract&was&made.&

1

Contracts
&
Oceanic+Sun+Line+v+Fay+(1988):&

Terms&must&be&made&available&to&the&party&to&be&bound&if&they&are&to&be&incorporated.&
"Where&a&passenger&signs&and&binds&themselves&to&terms&of&a&contract&of&carriage,&it&
does& not& matter& whether& or& not& they& have& read& the& contract& of& carriage& -& they& are&
bound.&But&when&an&exemption&clause&is&in&a&ticket&or&other&document&containing&the&
terms& of& carriage,& the& carrier& must& do& all& that& is& reasonably& necessary& to& bring& the&
exemption&clause&to&the&passenger's&attention"&U&Brennan&J.

Ebay+v+Creative+Festival+(2006):&&

A&ticket&that&is&issued&after&purchase&cannot&contain&terms&that&were&not&available&at&the&
time&of&actual&purchase.&I.e.&terms&must&be&provided&before&contract&is&formed.&&

&

2.! Whether&the&party&had&actual&knowledge&of&the&terms&or&whether&reasonable&steps&were&taken&to&bring&the&terms&to&
the&notice&of&the&party.&
&
Knowledge&
!! A&party&who&actually&knows&that&a&delivered&document&or&a&sign&before&or&at&the&time&the&contract&was&made&
contains&contractual&terms&will&be&bound&by&those&terms,&regardless&of&whether&they&have&read&them&or&not&-&
Parker+v+South+Eastern+Railway+(1877).+&
!! In&the&absence&of&actual&knowledge,&the&party&will&still&be&bound&if&the&terms&have&been&made&available&in&such&
a&form&that&the&party&being&bound&can&be&taken&to&have&been&given&reasonable&notice&of&them&-&Thornton+v+
Shoe+Lane+Parking+(1971);+Baltic+Shipping+v+Dillon+(1991).+&
&
Reasonable&Notice&
!! Courts&have&suggested&that&if&a&document&is&one&that&a&reasonable&person&in&the&circumstances&would&expect&
to&contain&the&terms&of&a&contract,&the&mere&presentation&of&the&document&will&be&sufficient.&
!! Where& delivered/displayed& terms& are& not& contained& in& what& is& an& obvious& contractual& document,& the& party&
seeking&incorporation&must&take&reasonable&steps&to&bring&those&terms&to&the&notice&of&the&other&party.&
&
Causer+v+Brown+(1952):++ +

A&docket&handed&to&a&customer&with&terms&incorporated&into&it&that&"one&might&reasonably&

&

&

&

&

understand&only&to&be&a&voucher&for&the&customer&to&produce&when&collecting&the&goods,&

&

&

&

&

and&not&understand&to&contain&conditions&exempting&liability"&cannot&be&relied&upon&by&the&

&

&

&

&

defendant.&&

Interfoto+v+Stiletto+(1989):++

The&reasonable&notice&required&to&incorporate&will&depend&on&the&circumstances&of&the&&

&

&

&

&

particular&case.&The&general&principle&is&that&the&notice&must&be&in&such&a&form&that&it&is&&

&

&

&

&

likely&to&come&to&the&attention&of&the&party&being&bound.&

Thornton+v+Shoe+Lane+(1971):+

An&automated&ticket&machine&at&a&car&park&provided&a&ticket&that&stated&"Issued&subject&to&

&

conditions&of&use&as&displayed&on&premises".&However,&the&conditions&of&use&were&displayed&

&

&

&

2

Contracts
&

&

&

&

inside&the&premises&and&not&visible&from&outside.&Thus&the&exclusion&clause&the&conditions&

&

&

&

&

sought&to&impose&limiting&liability&were&not&valid.&

Baltic+Shipping+v+Dillon+(1991):++

The&fact&that&terms&contained&on&a&ticket&were,&prior&to&the&issue&of&the&ticket&available&at&

&

&

&

&

the&offices&of&the&provider&of&the&cruise&"scarcely&amounted&to&sufficient&compliance&with&

&

&

&

&

the&responsibility&to&bring&unusual&conditions&at&least&to&the&notice&of&the&passengers…&&

&

&

&

&

before&they&would&be&bound&by&them".&

NSW+Lotto+v+Kuzmanovski+(2011):++ When&a&statement&'unambiguously&seeks&to&incorporate&a&statutory&requirement&or&&
&

&

&

&

legislation&into&the&contract"&said&statute&is&validly&incorporated.&
!! For&example,&"This&ticket&is&governed&by&the&Public&Lotteries&Act&1996,&the&regulations&
and&the&rules".&

&
Unusual'Terms' Where&the&terms&to&be&incorporated&into&a&contract&are&unusual,&special&notice&-&such&as&will&fairly&and&reasonably&bring&the&
terms&to&the&attention&of&the&party&to&be&bound&must&be&given&-&Thornton+v+Shoe+Lane+(1971);+Interfoto+v+Stiletto+(1989);+Baltic+
Shipping+v+Dillon+(1991).+
+
Interfoto+v+Stiletto+(1989):++
&

When&carrying&out&contracts,&parties&should&act&in&"good&faith".&Interfoto&was&under&a&"duty&
in&all&fairness&to&draw&attention&to&the&high&price&payable"&under&the&terms.&&

Baltic+Shipping+v+Dillon+(1991):++

The&provision&of&the&full&conditions&at&a&later&stage&following&an&earlier&booking&will&not&&

&

&

&

&

incorporate&terms,&particularly&when&they&are&wide&and&onerous&exclusion&clauses.&Nor&can&

&

&

&

&

the&mere&availability&of&terms&of&such&a&nature&be&sufficient&-&they&must&be&brought&to&the&

&

&

&

&

attention&of&the&party.&&

&
Course'of'Dealing' Where&parties&have&had&a&history&of&dealing,&contractual&terms&introduced&in&earlier&transactions&may&be&incorporated&into&a&
subsequent&contract.&
!! The&justification&for&this&principle&is&that&the&party&to&be&bound,&by&continuing&to&deal&with&the&party&seeking&to&impose&
terms,&has&evinced&a&willingness&to&be&bound&by&the&terms&-&Hardwick+Game+v+Suffolk+Agricultural+(1969).+
!! The&course&of&dealing&must&have&been:+
o! Uniform&-&Henry+Kendall+v+William+Lillico+(1969).+
o! Regular&-&McCutcheon+v+MacBrayne+(1964).+
!! The&past&course&of&dealings&must&have&also&had&a&contractual&basis,&meeting&the&aforementioned&rules&of&incorporation&
-&DJ+Hill+v+Walter+(1971).+
+
Balmain+Ferry+v+Robertson+(1906):++ A&term&is&incorporated&if&it&can&be&shown&that&the&term&had&been&incorporated&through&the&
&

&

&

&

course&of&dealings&on&at&least&one&previous&occasion,&but&also&to&have&been&uniform&and&&

&

&

&

&

regular.&

3

Contracts
!! Having&used&the&ferries&many&times&and&paid&his&fare,&Robertson&must&have&known&
the&terms&upon&which&the&ferry&company&conducted&its&business.&+
Rinaldi+v+Patroni+(1986):++ +

For&documents&to&be&considered&'a&course&of&dealing',&they&needs&to&be&reasonably&&

&

considered&as&contractual&in&nature.&

&

&

&

&
Statements&During&Negotiations&
Statements&made&during&the&course&of&a&negotiation&can&form&the&basis&of&a&wholly&oral&contract,&or&alternatively&they&can&
supplement&a&written&contractual&agreement.&&
&
If&a&statement&is&purported&to&be&a&term&of&the&contract,&this&is&sometimes&called&a&warranty,&and&if&the&statement&proves&false&
there&can&be&a&breach&of&contract.&&
&
If& the& statement& is& not& purported& to& be& part& of& the& contract,& it& is& termed& a& mere& representation,& and& if& it& proves& false& a&
contractual&remedy&for&breach&will&not&be&available&-&rather&one&would&need&to&turn&to&law&relating&to&misrepresentation&(ACL).&
&
Entire'Agreement'Clauses' Parties&might&seek&to&ensure&that&the&contract&is&treated&as&wholly&in&writing&and&that&any&extrinsic&material&or&statements&are&
not&treated&as&terms.&
&
Anntrepreneur+v+East+(2000):++

"accordingly,&any&promises&or&assurances&made&in&the&course&of&the&negotiations&(which&in&

&

the&absence&of&such&a&clause&might&have&a&binding&effect&as&a&warranty)&shall&have&no&force".&&

&

&

&

&
Entire&agreement&clauses&in&standard&form&consumer&contracts&might&be&deemed&void&as&unfair&terms&under&the&ACL.&
&
Parol'Evidence'Rule' This& rule& limits& the& use& of& extrinsic& material& that& may& be& brought& to& add& or& vary& the& terms& of& a& written& contract.& Where& a&
contract&is&wholly&oral&a&court&can&consider&all&the&relevant&evidence,&however&when&recorded&in&writing,&the&evidence&is&limited&
by&the&parol&evidence&rule&-&Goss+v+Lord+Nugent+(1833).&
!! This&rule&only&strictly&applies&to&contracts&that&are&wholly&in&writing&-&Hoyts+v+Spencer+(1919).&
&

1.! The&rule&prevents&extrinsic&evidence&being&given&to&add&or&vary&or&contradict&the&terms&of&a&contract&as&they&appear&in&
a&written&document.&

2.! The&rule&limits&the&evidence&that&can&be&given&to&explain&the&meaning&of&the&terms&of&a&written&contract.&
&
Evidence& that& may& be& excluded& includes& oral& statements& as& well& as& written& material& such& as& letters& or& memoranda,& earlier&
contractual&drafts&etc.&-&Harris+v+Sydney+Glass+(1904).+
+

4

Contracts This&rule&inevitably&runs&into&situations&where&on&party&argues&that&the&written&contract&was&only&part&of&the&agreement,&where&
the&other&argues&it&was&the&whole&agreement.&In&such&a&case,&the&courts&must&turn&to&the&extrinsic&evidence&in&order&to&establish&
which&statement&holds&true.&&There&are&two&approaches&to&addressing&this&dilemma:&

1.! The&strict&approach:&accords&primacy&to&the&written&document&that&appears&on&its&face&to&be&complete&-&L+G+Thorne+v+
Thomas+(1956).&

2.! Looks&at&ascertaining&the&parties&presumed&intention&at&the&time&of&formation.&As&such&the&parol&rule&has&no&impact&
unless/until&it&is&determined&that&the&contract&was&wholly&in&writing.&&
!! The&High&Court&has&not&technically&endorsed&either&view.&
&
Exceptions:&
a.! Collateral&Contracts:&

Where&one&party&makes&a&promise,&connected&to,&but&independent,&of&a&main&&

&

&

&

contract&and,&as&consideration&for&that&promise,&the&other&party&agrees&to&enter&

&

&

&

into&the&main&contract&-&Heilbut+v+Buckleton+(1913).&
"A& buyer& buys& a& property,& signing& a& formal& written& contract& of& sale& that& says&
nothing&about&drains&after&the&seller&makes&a&verbal&promise&that&the&drains&in&the&
property&are&in&good&condition.&If&the&drains&are&not&in&good&condition,&and&the&
buyer&wishes&to&sue&to&seller&for&breach&of&the&oral&promise,&they&may&avoid&the&
parol&rule&if&they&show&that&the&written&contract&was&not&intended&to&comprise&of&
all&the&terms.&Alternatively,&the&buyer&might&avoid&the&rule&by&showing&that&there&
were&two&contracts.&The&main&one&being&for&the&sale&of&the&property,&the&other&a&
collateral&contract&consisting&of&the&seller's&promise&that&the&drains&are&in&good&
condition&in&return&for&the&buyer's&entry&into&the&main&contract"&-&De+Lassalle+v+
Guildford+(1901).+

b.! Estoppel:&
&

&

&

Although&disputed,&it&is&said&that&extrinsic&evidence&can&sometimes&be&utilised&for&

&

the&purpose&of&establishing&an&estoppel.&&

c.! Condition&Precedent:&

Extrinsic&evidence&will&be&admitted&for&the&purpose&of&establishing&that&a&written&

&

&

&

contract&is&subject&to&a&contingent&condition&that&must&be&satisfied&before&the&&

&

&

&

contract&will&become&effective&-&Pym+v+Campbell+(1856).+&

d.! Implied&Terms:& &

The&parol&rule&has&two&aspects,&one&relating&to&identifying&the&terms&of&a&contract&

&

&

&

and&the&second&to&construing&a&contract.&Neither&aspect&is&infringed&by&the&&

&

&

&

implication&of&a&term&-&Codelfa+v+State+Rail+(1982).&

&

Justifies&recourse&to&extrinsic&material&when&a&word&does&not&have&a&readily&&

&

ascertainable&meaning&or&is&used&inconsistently&-&MacDonal+v+Longbottom+(1860).&

e.! Ambiguity:&
&

&

&
Statements' For&an&oral&statement&to&constitute&a&term&of&the&contract&as&opposed&to&a&mere&representation,&the&statement&must&have&been&
intended&by&the&party&making&it&to&be&a&promise&and&to&form&part&of&the&written&contract.&

5

Contracts
!! This&intention&is&judged&objectively.&The&court&assessing&whether&or&not&a&person&in&the&circumstances&of&the&parties&
would&have&considered&the&statement&to&be&a&contractual&promise&-&Oscar+Chess+v+Williams+(1957).&
&
Often&when&there&is&the&existence&of&a&formal&written&contract,&this&will&suggest&that&any&statements&made&by&the&parties&during&
negotiations&and&that&were&not&included&were&not&intended&to&be&part&of&the&agreement.&&
!! This& is& particularly& so& in& relation& to& statement& made& before& the& execution& of& a& written& document,& as& it& would& be&
assumed&in&such&a&case&that&the&terms&would&be&included&U&Equuscorp+v+Glengallan+(2004).&
&
State+Rail+v+Heath+(1986):+&&

&

A&written&contract&that&provides&an&unfettered&discretion&to&terminate&can&&

&

&

generally&not&be&qualified&by&earlier&statements.&

Van+den+Esschert+v+Chappell+(1960):++

A&statement&that&the&circumstances&show&was&highly&significant&to&the&transaction&

&

&

is&more&likely&to&be&regarded&as&a&promise.&

JJ+Savage+v+Blakney+(1970):&

&

A&statement&is&more&likely&to&be&a&promise&where&the&words&used&suggest&a&&

&

&

promise.&Words&such&as:&promise,&agree,&guarantee,&warrant.&&
A&statement&that&indicates&a&mere&expression&of&opinion&is&likely&to&be&considered&
a&mere&representation&-&such&as&"estimated&speed".&&

Oscar+Chess+v+Williams+(1957):++

+

The&relative&knowledge&or&expertise&of&the&parties&may&be&relevant&in&assessing&&

&

&

&

&

&

whether&a&statement&is&a&promise.&A&statement&made&by&a&person&of&expertise&to&

&

&

&

&

&

someone&of&inexperience&is&more&likely&to&be&a&promise.&&

De+Lassalle+v+Guildford+(1901):++

+

A&buyer&buys&a&property,&signing&a&formal&written&contract&of&sale&that&says&nothing&

&

&

&

&

&

about&drains&after&the&seller&makes&a&verbal&promise&that&the&drains&in&the&property&

&

&

&

&

&

are&in&good&condition.&If&the&drains&are&not&in&good&condition,&and&the&buyer&wishes&

&

&

&

&

&

to&sue&to&seller&for&breach&of&the&oral&promise,&they&may&avoid&the&parol&rule&if&they&

&

&

&

&

&

show&that&the&written&contract&was&not&intended&to&comprise&of&all&the&terms.&&

&

&

&

&

&

Alternatively,&the&buyer&might&avoid&the&rule&by&showing&that&there&were&two&&

&

&

&

&

&

contracts.&The&main&one&being&for&the&sale&of&the&property,&the&other&a&collateral&

&

&

&

&

&

contract&consisting&of&the&seller's&promise&that&the&drains&are&in&good&condition&in&

&

&

&

&

&

return&for&the&buyer's&entry&into&the&main&contract.&

&
Collateral&Contracts:&

&
!! For&a&preUcontractual&oral&statement&to&take&effect&as&a&collateral&contract,&the&statement&must&be&made&a&promise,&it&
must&be&intended&to&induce&entry&into&the&contract&and&must&be&consistent&with&the&terms&of&the&main&contract&U&JJ+
Savage+v+Blakney+(1970);+Hoyts+v+Spender+(1919).+
+
+
+

6

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