5 EXPRESS TERMS
1. Representations vs terms:
o Term: a binding constituent part of a contract
(
written, oral agreements, express or implied) o Representation: a non-binding statement in relation to the matter• No promissory intent (objective test)
• Misrepresentation (false representation) does not amount to breach because it is not a term o Other:
• Irrelevant statements
• Puffs (statements that no reasonable person would take seriously)
o Factors used to ascertain whether statements are representations or terms: Ellul & Ellul v Oakes:
• Importance of the statement
• Time elapsed between making of statement and making of agreement
• Whether the party making the statement was in a better position to ascertain truth of it (any special skill or knowledge on part of maker - more likely to be a term)
• Whether it was included in any subsequent formal agreement
o Court needs to ascertain 'whether there is evidence of an intention by one or both parties that there should be a contractual liability in respect of the accuracy of the statement' (Ellul & Ellul v Oakes) o Oscar Chess v Williams [1957] 1 All ER 325:
• Statement that the car was a 1948 model (based on registration papers) was found to not be a term, as Williams did not intend the statement to be a term, only an innocent
misinterpretation
o Dick Bentley Productions v Harold Smith Motors [1965] 2 All ER 65:
• Statement that car had travelled only 20 000 miles was considered a term ('representation made for the very purpose of inducing the other party to act upon it')
o J J Savage and Sons v Blakney (1970) 119 CLR 435:
• The fact that a contract to purchase a property would never have been entered into had a statement not been made was insufficient to establish that it was a term
2. Incorporation by signature:
o 'Signature rule’: when a contract is signed, a court is entitled to presume that it has been read, understood and terms agreed to (subject to duress or misrepresentation)
• Terms are incorporated into the contract, and the signatory will be bound to those terms
• Signing a document that refers to the terms contained in a separate document will generally result in those terms being incorporated into contract
o L'Estrange v F Graucob Ltd [1934] 2 KB 394
• Leading English authority for the rule that a party will be bound by the terms of a contract even if they don’t read the document
o Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 79 ALJR 129 (confirmed L'Estrange v Graucib):
• Involved a signature on a printed form with printing on both the front and back, and contained an exclusion clause
• A person who signs a document, which is known by that person to contain contractual terms, is bound by those terms, and it is immaterial that the person has not read the document
o Exception: Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
• Plaintiff signed a document headed 'Receipt' after being told by the drycleaner that it excluded liability for damage to beads and sequins
• Signature rule did not apply and the exclusion clause was not incorporated into the contract because of misrepresentation by the drycleaner - the exclusion clause excluded liability for any damage
• 'Failure to draw attention to the existence or extent of the exemption clause may in some circumstances convey the impression that there is no exemption at all’
3. Incorporation by notice (for unsigned documents):
o A person will have notice of the term if they are aware of the existence of the term, even if they are unaware of the content
o Timing of notice:
• Notice of a term must be given at or before entry into the contract (Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 25)
• Olley v Marlborough Court [1949] 1 KB 532:
§ Exclusion clause was on the door of the hotel room, however the contract had been formed before Olley reached the room
• Thornton v Shoe Lane Parking [1971] 2 QB 163:
§ A car park machine issued a ticked upon activation by customer
§ The court held that the customer accepts the offer when money is inserted, and so is only bound by terms on notice place on or near machine, not on ticket
o Reasonableness of notice:
• Appears to be a contractual document:
§ The presentation and acceptance of document that reasonably appears to be contractual will amount to reasonable notice upon delivery
§ Parker v South Eastern Railway Co (1877) 2 CPD 416:
• Involved a party signing a lading, a contract for shipping of goods by sea
• If a party knows that the document or sign contains contractual terms, then they are bound (irrespective of whether read)
• Appears to be a non-contractual document (e.g. tickets and signs):
§ Party relying on the clause must take reasonable steps to draw the recipient's attention to it
§ Notice must be clear and unambiguous
§ Causer v Browne [1952] VLR 1:
• Causer had her dress dry-cleaned and was given a docket which contained an exclusion clause at the bottom
• The dress was damaged and Browne was held liable for damages as the docket would not be seen by a reasonable person as contractual in nature (and no steps were taken to draw Causer's attention to the clause, 'reasonably efficient')
4. Incorporation by prior dealings:
o A term of a past contract (where parties have regularly contracted) may be incorporated into a later contract without express inclusion
o Reasonableness: whether it is incorporated depends on the number and consistency of past dealings
o Henry Kendall & Sons v William Lillico & Sons Pty Ltd [1969] 2 AC 31:
• 3-4 contracts per month over a 3-year period were sufficient to establish a consistent course of dealings
• Terms for which notice was given in earlier contracts became part of subsequent contracts o Frequent use of a document which may reasonably be considered contractual should be
incorporated into the terms
o Hays Personnel v Motorline Pty Ltd [2008] QCA 375:
• A recruitment company found staff for a car sales company 9 times in 2003, and sent a letter each time including a document titled 'Terms of Business'
• The court found that it was reasonable to assume that this formed part of that contract o La Rosa v Nudrill Pty Ltd [2013] WASCA 18:
• A number of cartage contracts had been formed in the past, with the agreements reached orally without an exclusion clause
• After performance of each contract, the carrier sent an invoice for payment with an exclusion clause on the back
• After damage occurred to the client's goods, the Court said that sufficient notice was not provided and so the past dealings did not mean that the exclusion clause was an express term
• Carrier was liable for damage to client's goods
5. Parol evidence rule:
o External evidence cannot be introduced that purports to add to, subtract from or vary the terms of a written contract (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347)
o Usually applies to oral evidence extraneous to the document, which does not form part of a wholly written contract
o Does not apply to contracts that are partly written and partly oral:
• Per Herron J in L G Thorne & Co v Thomas Borthwick & Sons (1955) 56 SR (NSW) 81, that is to be determined by the intention of the parties
