Incorporation of Terms - Structure or Answer PDF

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Incorporation of Terms – Structure of Answer...

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Nick Dowse

Incorporation of Terms – Structure of Answer Textbook: 217 (written), 234 (oral), Q & A: 69 (oral), Study Guide: 87 Incorporating written, signed document 1. General rule: Where a party signs a document, that party is generally bound by its terms. The signature indicates agreement to the terms contained in it (L’estrange v Graucob) a. Can be displaced by: i. Proving parties did not assent to the terms (Olley v Malborough) ii. Person relying on clause misrepresented its effect (Curtis v Chemical) iii. Document signed is thought o have no contractual effect (DJ Hill v Walter Wright) iv. Person signing can plead non est factum (Petelin v Cullen) Incorporating written, unsigned document 1. General rule: The party may be bound by a clause on an unsigned document, even if unaware of the existence of the term, if reasonable notice was given of the existence of the term, and the notice was given on or before contract formation (Parker v South Eastern Railway). a. Relevant whether the document was one which is assumed by a reasonable person to be contractual in nature (Causer v Browne) b. Does not matter that party cannot read the term (Thompson v LMS Railway)

Incorporating by signs, websites, notices etc 1. General rule: The party may be bound by a clause on a sign, website or notice, even if actually unaware of the existence of the term, if reasonable notice was given to the class of whom the recipient belonged, of the existence of the term, and the notice was given on or before contract formation (Balmain New Ferry v Robertson). Incorporating oral terms 1. “A statement made before a contract may be a puff, term, representation or form the basis of a collateral contract.” 2. Puffery: There are no common law consequences that arise from such sales talk, however the statement-maker may be in breach of the Trade Practices Act 1974 or the Fair Trading Act (Qld). 3. Representation or Term: Whether a statement is a term or representation depends on the intention of the parties viewed objectively as to whether the statement is promissory or merely an inducement to contract (Oscar Chess). There are some developed subsidiary tests to assist in the determination of this general test: a. The words and conduct of the parties – if the statement is important in the minds of the parties it is probably a term b. If there is a long interval of time between the statement and the conclusion of the contract – the statement is probably not a term c. If it is an oral statement not reduced into writing, it is probably not a term d. If one party is in a better position to ascertain the truth of the statement, it is probably a term Page 1 of 3

Nick Dowse

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e. If the statement-maker has control of the information it is probably a term. State that it is a qualitative not quantitative balance. Come to conclusion. If it is a representation: a. Breach can result in a remedy under legislation or the common law. i. If common law misrepresentation is: 1. Innocent = rescission of the contract 2. Negligent = rescission and damages 3. Fraudulent = rescission and damages If it is a term: a. The statement is promissory. b. Need to address parol evidence ru le i. Where there is a written document, it is presumed to contain all the terms, and evidence of oral terms is inadmissible to add to, vary or contradict the written document (Mercantile Bank of Sydney v Taylor) ii. Rule does not apply where the parties intend a contract o be partly in writing and partly oral (Couchman v Hill) iii. Exceptions: 1. Evidence of a collateral contract (De La Salle v Guildford) 2. Evidence that written contract is not yet in force (Pym v Campbell) 3. Evidence that written contract was later varied or discharged 4. Evidence to imply a term (Summers v The Commonwealth) 5. Evidence necessary for rectification (Maralinga v Major) c. Determine whether the term is a condition, intermediate term or a warranty. i. State that it is an objective test of the intention of the parties at the time the contract was made. (Associated Newspapers) ii. A condition is a term that goes to the root of the contract, a party would not have entered into the contract unless assured of strict or substantial performance of the term, and the other party knows or ought to know (Tramways). 1. Test of essentiality (Associated Newspapers) 2. The fact that a term is described in the K as a “condition” is persuasive not conclusive (Schuler v Wickman) 3. Significant if damages not an adequate remedy (Ankar v Westminster Finance) 4. A warranty or intermediate term may be elevated to status of condition (Schuler v Wickman) iii. An intermediate term is capable of a variety of breaches, some serious, some trifling (Bunge Corp). 1. Test is: did it deprive the innocent party of substantially the whole benefit of the K? (Hong Kong Fir) 2. Factors taken into account this test are: a. Degree of performance up to the breach compared to the performance required under the contract b. Whether damages would adequately compensate the lost expectation of the innocent party c. Whether the expectations of the party in breach would be unfairly prejudiced by terminating the contract d. Attitude and conduct of the party in breach including the likelihood of the breach persisting. (Hong Kong Fir v Kawasaki) Page 2 of 3

Nick Dowse

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iv. A warranty is merely collateral to the main purpose of the contract (Bettini v Gye). 1. Defined in Sale of Goods Act 1896 (Qld) s 3, pg 105 SG. v. Damages are available for breach of any type of term. (Bettini v Gye) Termination is only available if there is a breach of a condition or a serious breach of an intermediate term. (Schuler v Wickman) 1. Statutory breach of condition gives rise to same remedy as at common law (s 14(2) Sale of Goods Act 1896 (Qld)). If it forms the basis of a collateral contract: a. The statement is promissory, but does not form part of the main contract (De Lassalle v Guildford). b. The consideration for the collateral contract is the entry into the main contract (Beilbut Symons v Buckleton) c. Three elements must be established: i. A statement is made to induce entry into the main contract ii. That statement is relied upon iii. The statement relied upon was promissory in nature. 1. Statement-maker guarantees the truth (Savage v Blackney) d. No collateral contract where there is only past consideration (Hercules) e. Collateral contract must be consistent with the main contract (Hoyts) f. Estoppel may apply (Waltons)

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