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What is in the contract?

Express: Those agreed to by the parties. The terms and their agreement being objectively determined

Implied: Those implied by contract law OR by statute

Express Terms

Term or representation?

Statements made to induce entry into the contract (representations) and

Statements meant to be obligations under the contract (Terms)

Tort: negligent or fraudulent misrepresentation

Statute: misleading or deceptive conduct

Statute: unconscionable conduct

Statute: False representations about goods or services

Importance of statement: for example is it an opinion or a solid undertaking

Time between statement and contract

Special knowledge/skill or access to truth of one party

Inclusion of statement in any subsequent document

W sold his car described as 1948 Morris Minor to car dealer

Log book indicated car was registered in 1948 BUT car dealer later discovered it was a 1939 model (little differences in the models) and W honestly believed statement was true

Car dealer sued

Innocent misrepresentation NOT a term:

W had no specialist knowledge or expertise to determine year/model of car

Statement of his belief was not a promise that the year was true

Plaintiff buys a luxury car from defendant car dealer

During negotiations before the contract of sale, car dealer states that car had done 20,000 miles since new engine and gearbox fitted

Plaintiff later discovers that car had done over 100,000 miles

Is the statement a term?

Dealer has special knowledge + buyer relies on the statement

Statement = term

Parol evidence rule + exceptions + collateral contracts

Issues with written contracts: parol evidence rule

Mercentile Bank of Sydney v Taylor (1891) 12 LR (NSW) 252 at 262 per Innes J

Written contracts: parol evidence rule - the exceptions

Where ambiguity or uncertainty of meaning of words used

Whether or not terms can be implied into the contract (e.g. based on custom/trade use)

Evidence of common mistake made when reducing the contract into writing

Evidence of oral agreement to vary or suspend the written agreement

Evidence that the contract is not "entire" (i.e. partly written and partly oral)

Evidence of a prior collateral contract

Partly oral/partly written contract

Agreement for the sale of a house: Immediately before signing, purchaser specifically asks about 'white ants'. Seller gives verbal assurance. Purchaser signs. Statement proves to be incorrect

Nothing in the written document about white ants

Is the seller's statement a term of the contract?

Note: Specific request + important subject matter + before the written contract signed

Statement about white ants = collateral oral contract

Parol Evidence Rule does not exclude statement

Collateral contract

An oral contract subsidiary to the main written contract (the consideration for which is entry into the main contract)

Really just a way for court to give contractual effect to pre-contractual oral statements when main contract is in writing - subject to the court finding a collateral contract

Amounts to a warranty (breach = damages only)

Collateral promise must not be inconsistent with main contract - promise of termination of sub-lease only on termination of head-lease was inconsistent with sub-lease terms providing for termination with 4 weeks notice: Hoyts Pty Ltd v Spencer (1919) 27 CLR 133

Case example of the collateral warranty that goods be shipped in a special place: J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)

A written contract may contain an 'entire agreement' clause that seeks to displace the relevance of anything said outside the document: Inntrepreneur Pub Co (GL) v East Crown Ltd (2000). But anything said could attract the misleading and deceptive conduct prohibition in the Australian Consumer Law

Implied terms

Hillas & Co Ltd v Arcos Ltd [1932] All ER 494

The Moorcock (1886)

Goodman Fielder Consumer Foods Ltd v Cospak International Pty Ltd (2004) term implied regarding correction of initial installation faults

Sale of Goods Act 1923 (NSW)

Australian Consumer Law (Cth)

Completeness and certainty: past dealings between the parties

Issue about size of timber etc. in 1931 contract

But could relate 1931 contract to 1930 contract that was completed without problem

Previous dealings give rise to expectation that the same terms should be included in the subsequent contract

Implied terms: custom or trade usage

Existence of custom is question of fact

Custom is well known and generally acquiesced in (reasonable presumption term part of contract)

Custom must not contradict express term

Party may be bound by a custom even if they had no knowledge of it (notoriety sufficient - actual knowledge not required)

Implied terms: business efficiency

Be reasonable and equitable

Be necessary in order to give business efficiency to the contract so that no term will be implied if the contract is effective without it

Be so obvious that "it goes without saying"

Be capable of clear expression

Not contradict any express term of the contract

Implied term: of Good Faith

Contract provided for new stores based on Burger King giving approval

No approvals were given

The approvals were withheld with the intent to stifle the expansion of Hungry Jack's and not based on the conditions set in the contract

The withholding constituted a breach of duty of IMPLIED good faith in the contract

Go back and re-read the requirements to imply a term

A relational contract where Foxtel was distributing Overlook's content

There was an initial expectation of what Foxtel would charge and this price was greatly reduced following poor take up of Overlook's content

Accepted there was an implied term of good faith

The price reduction impacted Overlook's earnings from its contract with a rival distributer: Optus

No breach because Foxtel operated in its legitimate commercial interest as expressly provided for in the contract

Good faith could not extend to protect Overlook's commercial interests at the expense of Foxtel

Go back and re-read the requirements to imply a term

Exclusion clauses

A particular type of term in a contract

Terms in a contract used to limit or exclude a party's liability for breach of contract or negligence

The clause must be a term in the contract, and

The clause must cover the breach or liability that has occurred

Is the clause incorporated into the contract?

What does the clause mean?

Does it apply to the facts to exclude liability?

How does the clause interact with legislation?

Exclusion clauses: incorporation into the contract

By signature

By notice

By prior dealings

Exclusion clauses: incorporation into the contract - signature

Please read 'conditions of contract' (overleaf) prior to signing

The document was not one that would be expected to contain contractual terms

The contract is of no effect

Fraud

Misrepresentation

Duress

Undue influence

Unconscionable conduct

Non est factum

C took dress to dry cleaner and was asked to sign a receipt stating dry cleaners not liable for damage whatever the cause

C asked why she had to sign and was told that cleaner not accepting liability for damage to beads and sequins. C signed. Dress was returned stained

Signature obtained by misrepresentation as to the effect of the document - signature rule not applicable

Could dry cleaners rely on the exclusion clause? No

Did dry cleaners have to pay for damage? Yes

Exclusion clauses: unsigned documents

Is the document 'contractual'?

Has reasonable and sufficient notice of the exclusion clause been given before or at the time the contract is made? You can't add clauses after the contract has been formed

Whether notice is reasonable and sufficient is proportional to the unusualness and/or onerousness of the clause

Exclusion clauses: unsigned documents - notice

Is a dry cleaning receipt a contractual document? OR

Is a dry cleaning receipt a mere voucher to produce when collecting goods?

Dry cleaner had to prove customer had notice of exclusion clause that was on the receipt

Failed

The document was a mere receipt to produce when collecting the dress and not notice of the contract or exclusion clause

Exclusion of clauses: timing of notice

Hotel guests paid for room in advance. Notice on back of door of their room excluded liability for safety of articles left in room

Guests property stolen because of negligence of hotel

Is the exclusion clause part of the contract?

When was the contract made? The reception desk

When did guests have notice of the exclusion clause? After contract formed

Exclusion clause is ineffective

Maybe different if the people had stayed at the hotel multiple times

Exclusion clauses: timing + reasonableness of notice

T goes to car park for first time. Sign outside states: "All cars parked at owners risk". T takes ticket from machine at entry. Small print on notice: "subject to conditions as displayed on the premises"

T injured as he returned to his car

Can car park rely on exclusion clauses? No.

Contract formed when he took the ticket

Notices were after that point

Don't try being an aware consumer in an expensive car

May have been different if he used the car park regularly

Applied this rule to internet sales where the site needed to bring attention to the clause on the ticket they were selling and in face to face sales the ticket contained insufficient notice of a harsh term

Exclusion clauses: timing of notice

Notice stated that there was a price to enter and leave the wharf

Notice was not clearly available to those entering the wharf

The term was incorporated by reference to the fact Robertson had travelled on the ferry before

Note the LONG extract that puts into context how these matters are extremely expensive to pursue

Exclusion clauses: interpretation by the courts

Photo Production v Securicor [1980] All ER 556

Nissho Iwai Australia Ltd v Malaysian International Shipping Corp. Berhad (1989)

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500

Council of the City of Sydney v West (1965) 114 CLR 481

Nissho Iwai Australia Ltd v Malaysian International Shipping Corp. Berhad (1989)

Exclusion clauses + Limitation clauses: interpretation by the court: EXAMPLE

The Client…acknowledges that the Agent will not be responsible for any loss arising in any way out of any trading activity undertaken on behalf of the Client whether pursuant to this Agreement or not

Held: clause was not effective to protect the broker because when properly interpreted it related only to transactions undertaken with the client's authority. Transactions in issue were expressly forbidden - 'four corners' rule applies

…liability not to exceed $100 in relation to claims arising out of or in connection with the relationship established by this agreement

Held: clause was effective to limit the extent of the broker's liability. Broker's dealings were unauthorised but still could be said to be 'in connection with' their agreement