Contracts Notes
I. Express terms
a. Methods of incorporation i. Signature
ii. Notice
iii. Course of dealings iv. Oral terms
b. Parol Evidence Rule
i. Exceptions to the PER:
1. Collateral contracts 2. Estoppel
3. Conditions precedent 4. Consumer law
5. In cases ofL’Estrangeexceptions c. Construction of express terms
i. Process of construction ii. Considerations in ‘defence’
1. Construing terms against the other party 2. Exclusion clauses
3. Contra proferentem
II. Implied terms
a. Terms implied in fact b. Terms implied in law c. Terms implied by custom
III. Consumer guarantees (ACL) IV. Termination
a. Termination by agreement i. Under original contract ii. Subsequent agreement iii. Abandonment
b. Termination for breach i. Breach of a condition
ii. Breach of an intermediate term iii. Breach of a warranty
c. Termination for repudiation
d. Termination for failure of a contingent condition e. Termination for delay
f. Election, affirmation and termination
V. Frustration
VI. Unfair terms (ACL) VII. Damages
a. General principles and onus b. Expectation damages
i. Loss of profit ii. Loss of a chance iii. Cost of rectification c. Reliance damages
d. Non-pecuniary loss
e. Limitations and considerations i. Date of assessing damages ii. Causation
iii. Remoteness iv. Mitigation
f. Agreed remedies and penalties g. Actions for debt
VIII. Vitiating factors
a. Remedy of rescission
b. Misrepresentation (common law) c. Mistake (common law)
d. Undue influence e. Duress
f. Misleading or deceptive conduct under statute (ACL) g. Unconscionable conduct (common law)
h. Unconscionable conduct under statute (ACL)
Express terms
Methods of incorporation Incorporation by signature
- A person is bound by a written agreement they have signed, even if they do not read the agreement (L’Estrange v Graucob)
- Exceptions:
1. Misrepresentation(Curtis; Toll v Alphapharm)
a. Conduct that misleads the other party about the existence or extent of an exemption is misrepresentation (Curtis)
- Facts: customer received a stained dress, expecting their dress to be white & cleaned
- Held to be misleading:
1. Had signed a ‘receipt’(stating that the company would not be liable for damages) → could be understood simply as a voucher rather than a contract containing terms 2. The shop assistant’s response when asked why the
signature was required was misleading about the extent of the exclusion clause (had said to avoid liability in relation to beads falling off etc.)
b. The presence of unusual terms COULD amount to misrepresentation (Toll v Alphapharm)*see terms incorporated by notice for more about unusual terms
2. Fraud
3. Non-contractual document
- TheL’Estrangerule does not apply if the document is not contractual in nature (Curtis)
- A receipt of the acknowledgement of goods is not a contract (Curtis) - CONTRAST:Toll→ a credit application form with ‘Please read ‘Condition
of Contract’ (overleaf) prior to signing’ WAS a contract
- Held that parties are bound by words and conduct which would have led a reasonable person in the position of the other party to believe were contractual
4. Mistake
Incorporation by notice
1. The terms must be made available to the party to be bound before the contract was made (timing)
- Terms must be available to the party to be bound before the contract is made (Oceanic Sun Line Special Shipping v Fay)
- Cannot add terms in the contract unless you have done all that was reasonably necessary to bring the terms to the party’s notice at the time of the contract
2. Reasonable steps must have been taken to bring the terms to the notice of the party to be bound
a. ACTUAL KNOWLEDGE
- A party who actually knows that a delivered document or a sign displayed before or at the time the contract was made contains contractual terms will be bound by those terms (Parker v South Eastern Railway Co) b. REASONABLE NOTICE OF TERMS
- In absence of actual knowledge, a party will be bound by delivered or displayed terms if the terms have been made available in such a form that the party to be bound can be taken to have been given reasonable notice of them (Thornton v Shoe Lane Parking Ltd)
- The form of the notice must be one that is likely to come to the attention of the party to be bound before the contract is formed (Thornton) c. UNUSUAL TERMS
- If a term is unusual or unexpected, extra effort must be made to give notice of the term (Baltic Shipping Co)
Incorporation by a course of dealings
- If parties have dealings together, and they have contract on certain terms in the past, those terms may be incorporated in a later contract even if the terms have not been expressly mentioned or pointed out on this occasion
- Requirements:
1. Uniform (similarity/consistency)
- There must be a uniform (consistent) course of conduct (McCutcheon v David MacBrayne)
2. Regular course of conduct (frequency)
- Used often enough that parties must have been intended (objectively) to contract on that basis (Balmain New Ferry Co Ltd v Robertson)
3. Contractual document from previous transactions
- Must have previously have had a document which is contractual in nature, rather than having a mere invoice or receipt (Rinaldi)
Incorporation of an oral term
- If there is a reason that the PER does not apply (*SEE BELOW), oral statements can form terms of a contract
- Was the oral statement intended as a promise?
- Assessed objectively
- The court will assess whether or not the statement would reasonably be considered a binding contractual promise by a person placed in the situation of the parties (Oscar Chess Ltd v Williams)
- Consider: significance of a written contract, language used, relevant expertise of the parties, the importance of the statement, the timing of the statement, the form of the written contract
- Look at the nature of the words(JJ Savage)