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Contract Law - Terms 1 (3-4) - Coggle Diagram
Contract Law - Terms 1 (3-4)
I. Terms and Representations
A statement made by the parties during negotiations might amount to (i) a representation; (ii) a term of the main contract; (iii) a collateral warranty
1. Why does it matter?
Main difference concerns the remedy that is available if the statement turns out to be false.
Mere misrep: statement is not intended to have contractual effect, no damages claim bc :red_cross: breach (see remedy misrep)
Term: intented to have contractual effect = term, so breach = damages
2. How do we determine which one it is?
(a) Test
Intention of the parties, objectively assessed
Heilbut, Symons & Co v Buckleton [1913]
(evidence of intention should = ct liability) :warning:
(b) Relevant (but not conclusive) considerations
Importance of the statement's truth
So important to the person -> not made -> not have entered the ct
Couchman v Hill 1947
:warning:
(2) Relative position and knowledge of party making the statement regarding the ascertainment of the statement’s truth
if knowledge equal or person receiving has greater knowledge =# mere rep
if spe/skill =# term
Oscar Chess Ltd v Williams 1957 (car dealer, true age of car = term) :warning:
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] (// spe knowledge car dealer = term) :warning:
Verification of statement's truth
Unlikely term if the maker of the statement asks the other party to verify its truth
Ecay v Godfrey [1947], advised to verify the boat = representation
Omission of the statement in the more formal written contract
Time that has elapsed between making the statement and final manifestation of consensus :question:
II. Parol Evidence Rule
1. The rule
Bank of Australasia v Palmer [1897] :warning:
‘Parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract.’
Application only where contract entirely in writing
2. Justifications
(i) Safeguards the primacy of the agreed text and promotes certainty
(ii) Eliminates inconvenience and troublesome litigation in many cases
Shogun Finance Ltd v Hudson [2004] :warning: " the certainty of the contract depends on it / strenght of English ccial law/success"
3. Exceptions
Extrinsic evidence is admissible
to prove terms which must be implied into the agreement.
to show that the contract is invalid because of misrepresentation, fraud etc
to show that the document should be rectified.
to prove the existence of a collateral agreement.
4. Current position
Law Commission No 154, Law of Contract: The Parol Evidence Rule (1986): Rule should not be abolished as the many exceptions mean it does not create injustice.
III. Incorporation of Terms
1. Incorporation by Signature
(a) Rule
Sign = usually intend to be bound -> acceptance of terms, irrespective of reading/understanding
L'Estrange v F Graucob Ltd [1934] :red_flag:
(b) Exceptions
Non est factum (not my deed): signer is unable, no fault of their own, to understand the document without explanation (e.g., due to mental incapacity).
Inducement to sign by fraud or misrepresentation.
Signed document does not purport to have contractual effect
Grogan v Robin Meredith Plan Hire [1996] (time sheet) :warning:
(c) Assessment
Justification: signature certainty = widely recognised as formal device
Harshness of the rule (UCTA/CRA)
Alternative analysis on objective theory of contract (J Spencer :closed_book:)
party allowed to reasonably rely on the other’s signature as evidence of that party’s consent to the terms
not apply (i) where D knows or should have known that the other party does :red_cross: consent, or (ii) where D is resp for the mistaken signification of consent (making it diff to read eg
Support in Canada (1978) but not in English law (Peekay Intermark Ltd v Australia and NZ Banking Group [2006] :warning:)
(d) Scope of the rule
see below
2. Incorporation by Notice
(a) Requirements
(i) Notice must be given before or at the time of contracting
Olley v Marlborough Court Ltd [1949] (too late to be effective) :warning:
Thornton v Shoe Lane Parking Ltd [1971] (entry in parking, not after) :warning:
(ii) Notice must be in a document intended to have contractual effect
Chapelton v Barry UDC [1940] (ticket here :red_cross:)
(iii) Notice must be reasonable
Gen rule: reasonable steps to bring the term to the other party’s attention. If :check: bound by it even if does not read of understand it
Parker v South Eastern Railway (1877) (know of writing or not, reasonable notice :red_flag:)
Onerous or unusual terms: The more onerous or unusual the term, the greater the steps that must be taken to bring the term to the other party’s attention.
J Spurling Ltd v Bradshaw [1956] (“red hand rule” for some unreasonable clauses to be sufficient) :warning:
Interfoto Picture Library v Stiletto Visual Programmes [1989] :red_flag:
Practical difficulties: determining onerous or unusual term: # judicial opinions : importance of context
AEG (UK) Ltd v Logic Resource Ltd [1996] :warning:
Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] (exclusion of liability fire system non onerous, reasonable notice given)
(b) Scope of the reasonable notice requirement
(i) Does the reasonable notice requirement apply to terms in a signed contract?
a. Term contained in the signed contract
Blu-Sky Solutions Ltd v Be Caring Ltd [2021] :red_flag::: suggest that no, rule of L'Estrange
b. Term not contained in the signed contract
Same decision: interfoto principle for T&C eg
(ii) ‘Click-wrap’ contracts
Green v Petfre (Gibraltar) Ltd (t/a Betfred) [2021] :red_flag:
suggests that reasonable notice requirement applies to electronic clicks of ‘I accept’ etc
3. Incorporation by Course of Dealing or Custom of Trade
(a) Previous dealing
term may be incorporated into a contract by a consistent course of previous dealing between the parties
McCutcheon v David MacBrayne Ltd [1964] :warning: (regular/constant needed)
(b) Custom of relevant trade
A term may be incorporated into a contract by the custom of the relevant trade.
British Crane Hire Corp v Ipswich Plant Hire [1975] :warning: