The Law of Contract (Contents and Interpretation)

Two Questions

Incorporation: What are the legally enforceable promises in the contract? What are the terms in the contract?

Interpretation: What do those promises require us to do? How do we interpret the terms?

The terms of the contract

Highlights rights and obligations of the parties. We work this out by looking into what's contained in the offer and the acceptance.

Express terms: terms that the parties specifically agreed to (written contract/oral contracts/could be website t&c's)

Implied terms: terms not specifically agreed to, but which are still part of the contract because the law provides this result

Express Terms

How do we determine if a precontractual statement was a term (part of contract)?

The importance of the statement in the context of the contract

The time lapse between the time the statement was made and the time at which the contract was formed

The relative knowledge and expertise of the parties

Oscar Chess v Williams: not contractual term

Dick Bentley v Harold Smith: find contractual term

Ross v Allis Chalmers: statement is representation, not contractual term

Parol evidence rule= where parties intended their written contract to contain all the agreed terms, evidence of other terms will not be allowed (oral terms not allowed as written contract is controlling)

Exception

Collateral contracts: are an exception to the parol evidence rule, where a promise might not be a term of the main written contract, but might form part of a collateral contract: a second (purely oral) contract with only one term

  1. The statement must be a promise and must have been intended to have contractual effect
  1. The statement must not be inconsistent with the main contract
  1. The promise must have been given consideration for the collateral contract (usually be entering into main contract)

Express contractual terms: Important when reviewing remedies available when breach has been made

Conditions: very important. "without this term, I wouldn't have entered into the contract"

Warranties: less important, still legally binding

Innominate terms: neither, until the effect of their breach is known

Express terms can be incorporated via signature or reasonable notice; explored through exclusion clauses

Signature

Regardless of whether the party has read and understood the document, they are bound by terms contained within the contract

Toll v Alphapharm: exclusion clause was apart of contract

Le mans Grand Prix v IIlliadis: exclusion clause not binding

Exclusion clause= clause that purports to limit or exclude one party's liability for loss incurred by the other

Reasonable Notice; must show that clause was brought to the notice of the other party before or at the time contract was made

Causer v Browne; no reasonable notice

Olley v Malborough Court, Alameddine: no reasonable notice at required time

Thornton v Show Lane: reasonable notice

Interpretation; exclusion clauses

Contra Proferentem rule= when the parties do not have equal bargaining power (interpret clause against the party who drafted and now relies on it)

Insight Vacations v Young; exclusion clause doesn'y apply to particular situation

Exclusion clause protecting against negligence, but must have clear words to protect

Alameddine v Glenworth Valley Horse Riding; no clear words about injury clauses

Exclusion clause not interpreted by courts if outside of scope of contract, depending on words used

Council of the City of Sydney v West; outside of scope of contract

Meyer v Kalanick; inside scope as worded broadly

Terms in online contracting; click treated as signature

Click-wrap agreements (presented with agreement button): clicking 'accept' is equivalent to signing a written contract Toll v Alphapharm

Browse-wrap agreements (terms on a different page): question will be whether reasonable notice was given of the terms Olley v Marlborough Court

Specht v Netspace Communications; not incorporated click - settled through arbitration

Meyer v Lakanick; not incorporated t&c's - settled through arbitration

Implied Terms; not specifically agreed to, but still apart of contract because law provides this as a result

How?

Reasons why?

The court (common law)

Custom or trade usage (common law)

Parliament (statute)

May be impossible to include everything into contract

No real pre-contractual negotiations e.g. buying coffee

Some events may not be predicted or anticipated by parties e.g. flood destroys farmers crops

The law recognises that some groups of people are particularly vulnerable and need protection via additional terms e.g. consumer law

Terms implied by the court to give 'business efficacy' to a contract (terms that are considered as "going without saying")

BP Refinery v Hastings Shire Council