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Week 4: The Law of Contracts (Online Contracting (Non binding online terms…
Week 4: The Law of Contracts
Terms of the contract
Rights and obligations of the parties to a contract
"The Legally enforceable promises"
Generally worked out by looking at the agreement
What was contained in the offer and acceptance?
Two types
Express terms
Terms that the parties specifically agreed to
Infentified through the offer and acceptance
Harder to identified in oral contracts
Relevant case studies
Oscar Chess v Williams (CACL 9.50)
Dick Bentley v Harold Smith (CACL 9.60)
Ross v Allis Chalmers (CACL 9.70)
Differentiates from representations an puffs according to:
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
The parol evidence rule
When contract is in writing we assume that the written contract contains all the express terms.
Collateral contracts
Exceptions to the parol evidence rule.
Secondary oral contracts on top of the written contract
At least one term
Three conditions
Statement must be
a promise
and be i
ntended to have contractual effect
The statement must
not be inconsistent
with the main contract
The promise must have given
consideration
for the collateral contract.
Relevant case studies
Written contracts often include
entire agreement clauses
which express that all terms are only the ones written in the contract
Three types:
Conditions
Are terms that are of fundamental importance to the contract, going to the contract heart. (eg. Without this term I wouldn't have entered the contract) (Associated News v Bancks CACL 9.160)
Warranties
Are terms of lesser importance than conditions, but are still legally binding. (eg. Bettini v Gye (CACL 9.180)
Innominate
Terms are neither, until the effect of their breach is known. (eg Hong Kong Fir Shipping (CACL 9.200)
Immplied terms
Terms not specifically agreed but still part of the contract because the law provides for this result
May be implied by:
The courts (common law)
BP Refinery v Hastings Shire Council (CACL 9.570
Codelfa Construction v State Rail Authority of NSW (CACL 9.580)
Parliament (Statute Law)
Although we usually expect that parties will include important details about a contract in its express terms, the law implies terms into contracts as well.
It may be impossible to include everything in a contract
Often there are no pre contractual negotiations (eg. buying coffee or hamburger)
Some events may not be predicted or anticipated by the parties (eg. food destroys farmers crop)
The Law recognizes that some groups of people are particularly vulnerable
Pre contractual statements can be terms
Incorporation of express terms into contract
Two main ways in which terms are incorporated into a contact:
By signature
When signing a contract a party will be bound to all the terms in the contract. Wether or not the party has read and understood the terms
Toll v Alphapharm (CACL 9.250)
Exception is when it is not clear whether the document being signed is a contract. (Le Mans Grand Prix v Illiadis (CACL 9.270)
By reasonable notice
Where there is no signed document, an express term can be incorporated into a contract by
the giving a reasonable notice.
The party seeking to rely on the term must show that the clause was brought to the notice of the other party
before or at the time
the contract was made (Causer v Browne CACL 9.300)
Olley v Marlborough Court, Alameddine, Thornton v Shoe Lane Parking (CACL 9.320 – 9.340)
Interpretation of contractual terms
Understanding of the terms
Two steps:
Is the term part of the contract? ie. incorporation?
What does the term mean? ie. interpretation?
Exclusion clauses
Courts enforce exclusion clauses in consumers contracts more striclty than in consumer contracts. (Insight vacations V Young CACL 9.390)
Efficient way to allocate risks
Can protect against negligence claims is specific enough
Not effective if its done are outside the scope of the contract (Council of Sydney v West CACL 9.440) (Photo Production v Securicor CACL 9.460)
Online Contracting
Contract Law principles apply even tho the internet didnt existed
Gonzalez v Agoda (CACL 9.480)
Clicking "accept terms" is the same as signing (Click-wrap agreements)
Browse-wrap agreements are the same as reasonable notice rule (Olley v Marlborough Court)
Non binding online terms and conditions:
Specht v Netspace Communications (CACL 9.500)
Mayer v Kalanick (CACL 9.510)
In both cases the contract terms required disputes under agreements to be settled by arbitration, rather than through the courts
Pre contractual statements
Puffs
No legal consequences
Represenations
If wrong, consequences depend on the kind of misrepresentation
Not part of the contract
Terms
If breached there is a breach of contract