Contracts Notes

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¬&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®ardless&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¬&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¬&apply&if&the&document&could¬&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¬ice&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¬&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¬ice&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,®ardless&of&whether&they&have&read&them&or¬&-& 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¬ice&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¬ice&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¬&understand&to&contain&conditions&exempting&liability"&cannot&be&relied&upon&by&the& & & & & defendant.&& Interfoto+v+Stiletto+(1989):++ The&reasonable¬ice&required&to&incorporate&will&depend&on&the&circumstances&of&the&& & & & & particular&case.&The&general&principle&is&that&the¬ice&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¬&visible&from&outside.&Thus&the&exclusion&clause&the&conditions& & & & & sought&to&impose&limiting&liability&were¬&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¬ice&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®ulations& and&the&rules".& & Unusual'Terms' Where&the&terms&to&be&incorporated&into&a&contract&are&unusual,&special¬ice&-&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¬&& & & & & 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×&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¬&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¬&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¬&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¬&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¬&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¬&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¬&included&were¬&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¬&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®arded&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¬hing& & & & & & about&drains&after&the&seller&makes&a&verbal&promise&that&the&drains&in&the&property& & & & & & are&in&good&condition.&If&the&drains&are¬&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¬&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

Buy the full version of these notes or essay plans and more in our Contracts (JURD7175/LAWS1075) Notes.