Table of Contents
1. Incorporation of Terms ... 2
Incorporation by signature ... 2
Incorporation by notice: unsigned documents ... 3
Incorporation through pre-contractual negotiation ... 4
2. Interpretation of Terms ... 5
3. Implied Terms ... 9
Duty to Cooperate ... 9
Terms implied in fact... 10
Terms implied in law ... 12
5. Consumer Protection ... 15
Unfair Contract Terms ... 15
Consumer Guarantees ... 21
6. Termination by frustration ... 24
7. Termination for non-fulfilment of a contingent condition ... 30
8. Termination for breach ... 33
9. Mistake ... 40
Common Mistake ... 40
Unilateral Mistake ... 44
10. Duress, undue influence, unconscionable dealing ... 46
Duress ... 46
Undue influence ... 47
Unconscionable dealing ... 49
11. Unconscionable conduct under statute and third-party propriety ... 50
Statutory unconscionability ... 50
Third-party misconduct ... 52
12. Illegality ... 55
Illegality under statute ... 55
Restraint of trade ... 56
PART 1 – TERMS
1. Incorporation of Terms
Incorporation by signature
The general rule is that a person that signs a contractual document will be bound by the terms in that document, regardless of whether they have read or understood those terms (L’estrange; Toll).
RULE: A person that signs a contractual document will be bound by the terms in that document, regardless of whether they have read or understood those terms (Scrutton LJ in L’estrange v Graucob; Toll v
Alphafarm)
A: Has the document been signed?
The facts state that both parties signed the document, therefore, the court is likely to find that the signature was objective intention that both parties intend to be bound to the contract and the terms included in it (Toll).
The
• Court looks for the objective intention to be bound, not the subjective intention (Toll v Alphafarm)
• Signature expresses that there is approval of the contracts or that they are taking the chance to be bound by the contract (Toll v Alphafarm)
B: Can the signature not bind the parties?
• Nature of the document: Abnormal terms or unusual documents which would make it unreasonable for the person manifesting their assent to expect to be bound. The document may have been
presented to mislead a person (Toll v Alphafarm)
• Misrepresentation: The document cannot reasonably be considered a contractual document (Curtis Cleaning)
• Other factors:
o Heading of document
o Receipt: prima facie cannot be expected (Curtis Cleaning)
o Placement and size of instructions. In Toll v Alphafarm, the instructions were placed right above the signature
o Verbal statements (Curtis)
Incorporation by notice: unsigned documents
RULE: Terms appearing on unsigned documents can only be incorporated if reasonable notice has been given prior to contract formation (Thornton).
2 tests:
1. Terms must be made available to the party intended to be bound before the Act 2. The party intended to be bound must have the knowledge or notice of the terms A: Knowledge or notice: Were the terms available before the contract was formed?
• Delivered or displayed terms must be made available prior to the contract being formed (Thornton) o In Thornton, the driver was unable to refuse the ticket or get their money once ticket is
released. Given the terms are on the ticket, the terms are provided too late
• Terms are available elsewhere and not readily available (Thornton; Oceanic)
o Ticket was issued in Greece, while contract was made in Melbourne (Oceanic) o Ticket was subject to display condition “hidden in the car-park (Thornton)
• A party cannot add terms unilaterally once the contract is formed (Oceanic; Thornton)
Electronic contracts
• Application of established principles
• Identifying terms of contract is important issue
• ETA s 9: where signature is required, requirement is considered met if an appropriately reliable method has been used to identify the person and show their intention in relation to the information communicated
• Clicking ‘I accept’ may not amount to signature and acceptance of terms where the purchaser would reasonably have understood that act to be performing a different function
B: Timing: Did the party intended to be bound have actual knowledge or have been given reasonable notice of the terms?
• RULE: The party to be bound myst have either actual knowledge of the terms or have been given reasonable notice of those terms (Thornton)
• The terms have to be in a form that they are likely to come to the attention of the party (Thornton)
• Reference to terms are not readily available is typically not sufficient to satisfy requirement of reasonable notice (Thornton; Oceanic)
• Unusual or unexpected terms must have extra efforts made to give them notice (Thornton)
12. Illegality
Illegality under statute
Law places limits on enforcing contracts that involve illegal conduct. Illegal conduct includes technical offences to major crimes, it can be the responsibility of one or both parties. Because illegality is so complex, the obscurity and technicality of the law is notoriously difficult.
A: Is there an express illegality under statute?
Statute can expressly prohibit the making of a specified contract. Creating this type of contract may be regarded as illegal and will be void unless the statute provides otherwise (Yango Pastoral).
B: Is there illegality on public policy grounds?
Statute can prohibit specific conduct without making references to contracts. A contract that involves unlawful conduct is prima facie contrary to public policy. It is also prohibited by common law.
A distinction is made between unlawful contract formation and unlawful contract performance. A contract is not illegal as formed but it may be illegal if the license is not obtained (Fitzgerald).
A court will generally not enforce a contract if it has been formed illegally, an act that is essential to performance is prohibited, or if the manner of performance contemplated by the contract is unlawful (Fitzgerald).
This is unless an exception arises: (Fitzgerald)
• Statute discloses an intention that contract rights should be unenforceable; or
• Refusing to enforce the contract is proportionate to the seriousness of the contract AND refusing to enforce the contract is necessary to protect the policy of the statute AND the statute does not disclose an intention that the legislative penalties are to be the only consequences of a breach of the statute
However, a court may still enforce a contract if (Fitzgerald)
• The claimant was ignorant or mistaken about the factual circumstances; or
• The statutory scheme was enacted for the benefit of a class that included the claimant; or
• The agreement was induced by the fraud, oppression or undue influence of the defendant; or
• The illegal purpose has not been carried into effect
