Tutorial 11 - Answer PDF

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Summary

TUTORIAL 11 Answer guide The purpose of this tutorial was to which are being raised particular questions, and not to develop fully worked out answers. Accordingly the following answer guides are not fully worked out answers, but the questions, with the relevant details highlighted, and a short note ...

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TUTORIAL 11 Answer guide The purpose of this tutorial was to “pick issues” which are being raised by particular questions, and not to develop fully worked out answers. Accordingly the following answer guides are not fully worked out answers, but the questions, with the relevant details highlighted, and a short note on the issues which need to be addressed to answer the particular issue raised by the question.

Question 1 Andy brought his bike into his favourite bike shop for a service and repairs. He was entering a special race the following week and was certain that he was likely to win the considerable prize for first place. He presented the bike to the assistant and received a docket with an identifying number and the words: Has a contract been formed between Andy and the bike shop? When? When he handed over the bike and received the docket? “All goods accepted only subject to the terms and conditions displayed.” Do the words on the docket form part of the contract between Andy and the bike shop? Why? Why not? Andy chatted to the shop assistant about the upcoming race and its importance to him and the need for his bike to be in top condition. He noticed the words on the docket and asked about the terms and was told not to worry about them as they were only concerned with the recent price changes for new bikes. What is the status of this conversation? What information has Andy given the bike shop about what damage he will suffer if

the bike is not ready? When was this information given? What information did Andy receive about the wording on the docket? There was a large sign behind the counter and in front of Andy but it had a bike hanging in front of it and so was not visible at this time. The sign read: “All care but no responsibility taken for goods left for repair or service or for any loss or damage howsoever caused.” Does this sign form part of the contract? Why? Why not? The day before the big race Andy went in to collect his bike and it could not be found. Someone had put the wrong tag on it and it was stored in the basement with the unclaimed bikes. Why was Andy’s bike lost? Negligence (carelessness)? Advise Andy.

WORK OUT WHAT THE QUESTION IS ABOUT: Andy wants to recover damages from the bike shop. Issue 1: Is the exclusion clause, on which the shop would like to rely, included in the contract? Issue 2: If yes, how will it be interpreted? Issue 3 - damages Issue 1: Is the exclusion clause included in the contract? (Note: You may need to go through all the ways in which a clause can be incorporated into a contract, but only some will need to be discussed in detail.) Incorporation of exclusion clause: - by signature (L’Estrange v Graucob)

Has Andy signed a document? - by notice ( unsigned document) When was the contract made? When Andy handed over the bike and received the docket? When was the clause brought to Andy’s attention? Is a receipt/ docket a contractual document? Would a reasonable person regard it as a document containing contractual terms or as a mere voucher to produce when collecting the goods? (Causer v Browne)  What do you think?  Does the docket contain the term or just give notice of a further term? Have reasonable steps been taken to bring to exclusion clause to Andy’s attention?  Sign on the wall is large  It is obscured  Where exactly is it, is it visible at the time the customer enters the contract or only after? (Olley v Marlborough Court) – when was the contract made?  Does the docket provide notice to Andy that there are further terms Has the exclusion clause been incorporated by a course of dealing? (Balmain Ferry v Robertson)  ‘favourite bike shop”  Andy has a keen interest in bike riding  What is the effect of the comments by the shop assistant? Do these override the clause as it is written? It is a question of reasonableness (Henry Kendall v Lillico) How many dealings have there been? Has the clause been incorporated?

If so then consider how it will be interpreted.

(If not, do not stop as you may be wrong. Consider the interpretation of the clause as if it is included in the contract. If you are given the clause you should always interpret it. If you are not given the actual clause you cannot interpret it.) Issue 2 – interpretation of the clause. Construe according to its ordinary meaning (Darlington Futures v Delco). Is the meaning clear and unambiguous? Why was the bike lost? How did the bike end up with the wrong tag? Negligence? Is the negligence in wrongly storing the bike covered by the clause? There is no express reference to negligence. Are the words “howsoever caused” wide enough to include negligence? (Rutter v Palmer) Do the words include negligence and other grounds? (Canada Steamship v The King) Are the words ambiguous? If yes, consider the contra proferentem rule. That is - construe it against the person seeking to rely on the clause – here the shop. Consider the four corners rule – does it apply here? Make a decision about each matter. Issue 3 - damages If the clause is not effective to exclude the damage suffered by Andy, what damages may Andy recover? Was it within the

reasonable contemplation of the parties that Andy would participate in an important bike race? (Hadley v Baxendale; Victoria Laundry case). Did he lose the prize in the bike race, or did he lose the chance to win the prize? (Howe v Teefy) QUESTION 2

John was very proud of his shiny red sports car!! He had it serviced Regularly and had great confidence in his mechanic, Jane. Does this suggest a regular course of dealing? However one day he took the car to Jane for its 80, 000 km service and to have some improvements made. He had to leave the car at the garage for several days. John had a docket that stated his name and registration number and his contact details. When was the contract made? What is the status of this docket? Does it have contractual status? On the back of the docket was written, ‘All care taken but we assume no responsibility for any damage or loss incurred whilst the vehicle is in our custody, howsoever caused.’ During that time the garage was broken into and John’s valuable stereo system and some sporting equipment he had left in the car was taken. How did John’s loss occur? Jane employed an apprentice to help her at her garage, but one afternoon after Jane had left the apprentice, Harry, decided to borrow John’s car for a quick drive around the block, just to see how fast it would go and how smoothly it changed gears. Did this “quick drive around the block” by Jane’s apprentice form part of the services which John was expecting to receive as part of his contract with Jane?

Unfortunately that afternoon there were road works begun at the end of the street and Harry drove into a substantial ditch at great speed causing irreparable damage to the car’s fine undercarriage. How did John’s loss occur? At the counter of the garage to the side of the office, there is a notice clearly displayed stating, ‘Please be advised that all vehicles are accepted only on the terms as set out on the docket given’

Advise John. WORK OUT WHAT THE QUESTION IS ABOUT: Is the exclusion clause, on which Jane would like to rely, included in the contract? If yes, how will it be interpreted? Two events have happened – the loss of the stereo etc, and the damage. Deal with them separately when looking at the interpretation of the clause, though you can consider them together, when discussing the issue of whether or not the exclusion clause forms part of the contract.

Issue 1: (The same for both the loss and the damage). Is the exclusion clause included in the contract? How is a clause included into a contract? (Note: You may need to go through all the ways in which a clause can be incorporated into a contract, but only some will need to be discussed in detail.) Incorporation of exclusion clause:  by signature (L’Estrange v Graucob) Has John signed a document? There is no mention of a signed document, so assume not.  by notice ( unsigned document)  Has a receipt/ docket been given to John? Is the receipt/ docket a contractual document. Would a reasonable person regard it as a document containing contractual terms or as a

mere voucher to produce when collecting the goods? (Causer v Browne)  What do you think?  Does the docket contain the term or just give notice of a further term?

Have reasonable steps been taken to bring the exclusion clause to John’s attention?  Is the sign on the wall sufficiently large?  It is ‘clearly displayed’  Where exactly is it, is it visible at the time the customer enters the contract or only after? (Olley v Marlborough Court) – when was the contract made? Did John make the contract in the office, and if so was it visible from there? Has the exclusion clause been incorporated by a course of dealing? (Balmain Ferry v Robertson)  John has the car serviced regularly and has confidence in Jane – does this show sufficient dealings?  It is the 80,000 km check, so there have probably been several previous services.

Has the clause been incorporated? What do you think? Even if you find that the clause has not been incorporated into the contract, do not stop, but deal with its interpretation. Issue 2: Interpretation Consider each incident separately. First look at the loss of the stereo and sporting equipment:What are the principles of interpretation? Construe the clause according to its ordinary meaning (Darlington Futures v Delco). Is the meaning clear and unambiguous? Are the circumstances covered by the matters excluded?

Why was the stereo and sporting equipment lost? Negligence? Theft? Theft because of negligence? Is this covered by the clause? (You do not need to consider the issue of negligence in this question, just raise it as part of the interpretation.) There is no express reference to negligence in the exclusion clause. Are the words wide enough to include negligence? Is ‘howsoever caused’ wide enough to include negligence? (Rutter v Palmer) Do the words include negligence and other grounds? (Canada Steamship v The King) Are the words of the clause ambiguous? If yes, consider the contra proferentem rule. That is - construe it against the person seeking to rely on the clause – here the garage.

Second look at the damage from the joy ride:Construe according to the ordinary meaning. Does the clause cover what happened? In this case look at the four corners’ rule. Was the “quick drive” by the apprentice authorised or contemplated by the contract? Was Harry acting within the terms of the contract? Consider was he driving it to check the brakes or some other legitimate purpose? (City of Sydney v West) Make a decision about each matter and provide a conclusion....