CONTRACTUAL TERMS
CONTRACTUAL TERMS EXPRESS TERMS **PAROL EVIDENCE RULE – WHERE THERE IS A CONTRACT WHOLLY IN WRITING, YOU CAN ONLY LOOK AT THAT CONTRACT. • • •
The terms set out the rights and obligations of the parties under the contract. Express terms are anything that was specifically articulated by the parties. This can be written or oral.
HOW ARE THE EXPRESS TERMS INCORPORATED INTO THE CONTRACT? 1.
incorporation by notice: statements contained in signs or notices displayed on business premises, internet websites, tickets, etc;
2.
incorporation by course of dealings: terms from earlier contracts/dealings between the parties; and
3.
statements during negotiations: oral or written statements made at various stages of the negotiations leading up to the conclusion of the contract.
INCORPORATION BY SIGNATURE? Red flag: one party has signed a broad exclusion of liability clause without reading the document. NOTE: Australian Consumer Law RULE: Where the party has signed the document containing contractual terms they are bound by those terms (L’Estrange v Graucob, per Scrutton LJ; Toll v Alphapharm; Fitness First v Chong). This rule is applied in keeping with the objective standard applied in assessing the enforcement of contracts (Fitness First v Chong). Where contracts ‘signed’ by electronic means, apply eBay v Creative Festval Entertainment. •
The act of clicking “I accept” on a website will usually have the same effect as signature in incorporating the terms proposed by the trader into the contract between the parties: o s 9 ETA provides that where a law requires a person’s signature, that requirement is taken to have been met if an appropriately reliable method has been used to identify the person and show their intention in relation to the information communicated. o Apply: eBay v Creative Festval Entertainment
This applies even when the party has not read the document – ‘it is immaterial whether he had read the document or not’ (L’Estrange v Graucob, per Scrutton LJ). Reasonable notice of the terms is not needed (Toll v Alphapharm).
EXCEPTIONS TO THE RULE IN L’ESTRANGE: Can the signatory argue misrepresentation for highly unusual terms which have not been brought to his/her attention? (Toll v Alphapharm). In this case, the signatory may not be bound. Consider this where there is a document to be signed that isn’t commonly a contractual document.
Where the document could not reasonably be expected to be a contractual document, the signatory will not be bound by the express terms contained in that document, including EXCLUSION OF LIABILITY CLAUSES (Curtis v Chemical Cleaning, per Lord Denning) “If the party affected signs a written document, knowing it to be a contract which governs the relations between them, his signature is irrefragable evidence of his assent to the whole contract, including the exempting clauses, unless the signature was obtained by fraud or misrepresentation.” Therefore it must be established that: • •
There has been behaviour, by word or conduct, that mislead the signatory about the existence or extent of the express term (exemption clause); or There has been fraudulent or innocent misrepresentation sufficient to disentitle the creator to the benefit of the exemption clause.
Where yes, the document in question could not reasonably be considered a contractual document and the rule in L’Estrange will NOT apply (Curtis v Chemical Cleaning)
INCORPORATION BY NOTICE: ONEROUS, LIMITATIONS AND EXEMPTIONS. Red Flags: Onerous or broad exemption clauses contained in: • • • • •
Unsigned documents Ticket or receipt with printed conditions on the back that is given to and accepted by the customer without objection; Advertisements which state: “see website for terms and conditions” A docket delivered with goods order by the customer, containing conditions of the purchase; Signs or notices displayed on business premises such as listing “Conditions of Sale” or “Terms and Conditions”, “our return policy”;
FOR THE TERMS BY NOTICE TO BE INCORPORATED INTO THE CONTRACT, THE FOLLOWING MUST BE ETABLISHED:
(1) NOTICE MUST BE GIVEN BEFORE THE CONTRACT IS FORMED (Oceanic Sun Line v Fay; eBay v Creative Festival). When was the contract formed? TICKET SCENARIO: •
Where the conventional ticket analysis per MacRobertson Miller APPLIES, the ticket will be said to contain the terms and conditions of the contract and the ticket holder will be said to have accepted such terms and conditions by: either acting consistently with them; or failing to reject them after a reasonable opportunity to read the conditions and demand a refund.
•
Where the conventional ticket analysis does not apply – per Thorton, Oceanic Sun Line, eBay v Creative – the terms of the ticket will not be incorporated into the contract.
per Oceanic Sun Line v Fay, where the ticket is issued after the purchaser has been issued a “exchange order”, the contract will be formed at the time the “exchange order” were issued and the ticket cannot alter the parties’ contrauctal rights and obligations. o
This is because it cannot be said that it was parties’ intention that the passenger’s opportunity to accept or not accept the conditions could only be made after travelling to the place of acceptance (e.g. Greece).
o
However, where the seller has done all that was reasonably necessary to bring the new terms to the the purchaser’s notice, the terms can be incorporated.
o
Notice contained in a brochure will not be sufficient for reasonable notice because it is not a contractual document (Oceanic Sun Line v Fay).
Per eBay v Creative Festival, where the ticket is purchased in an online transaction the contract will be formed at the time of the online transaction and any new terms on a ticket that is later delivered will not be incorporated. Per eBay v Creative Festival, for over-the-counter purchases WITH NO NOTICE OF NEW TERMS AND CONDITIONS, the contract is formed at the time of the payment and terms of the ticket will not be incorporated because a reasonable person would not expect to be able to return the ticket for a refund (NORMAL TICKET ANALYSIS NOT APPLIED). Per eBay v Creative Festival, for over-the-counter purchases WITH NOTICE OF NEW TERMS AND CONDITIONS, the contract is still formed at the time of the payment but the terms will be incorporated because of the notice displayed in the shops.
(2) DOES THE PARTY HAVE ACTUAL KNOWLEDGE OR REASONABLE NOTICE/CONSTRUCTIVE KNOWLEDGE OF THE TERM? •
Per Parker v South Eastern Railway Co; Thorton v Shoe Lane Parking it must be established that, either, the person receiving the ticket has: (1) Actual knowledge that it contained the particular condition/s - he knew there was writing on the ticket and believed that the writing contained particular conditions (irrespective of whether he has read them); or (2) Reasonable notice that it contained the particular conditions - he did not actually know the writing contained the conditions, but the circumstances of the delivery of the ticket were such that he could see there was writing on it.
•
The onus is on the party arguing to have the terms incorporated to prove that the other party was aware or ought to be treated as being aware that the relevant document contained special contractual conditions (Causer v Browne)
•
ARGUMENTS AGAINST NOTICE: o An excemption clause will be ineffective where the document cannot be expected to contain contractual terms – e.g. a docket which one might reasonably be understood to be only a voucher (Causer v Browne). o Reasonable steps were not taken to bring the terms to the other party’ notice (Causer v Browne).
o
The particular terms and conditions are not readily available (Thornton v Shoe Lane Parking; Baltic Shipping; NSW Lottery v Kuzmanovski) • Where a ticket is issued by automatic machine the normal ticket analysis will not be applied because the purchaser cannot refuse it. Therefore, the contract is formed at the time of the issuing of the ticket (Thornton v Shoe Lane Parking). • If the above context applies, other terms and conditions written on signs that are not readily available for view will not be incorporated into the contract (Thornton v Shoe Lane Parking). • Where the burden is on the other party to take active steps of their own to gain knowledge of particular ticket terms, there will be insufficient notice of temrs at the time of the contract formation. The terms will not be reasonably available and not incorporated into the contract (Baltic Shipping) – In this case, it can be argued that the person retaining the ticket can be entitled to take the view they would be issued with a ticket which would contain no unusual provisions of which they were not given notice (Baltic Shipping).
The terms set out the rights and obligations of the parties under the contract. Express terms are anything that was specifically articulated by the parties. This can be written or oral.
HOW ARE THE EXPRESS TERMS INCORPORATED INTO THE CONTRACT? 1.
incorporation by notice: statements contained in signs or notices displayed on business premises, internet websites, tickets, etc;
2.
incorporation by course of dealings: terms from earlier contracts/dealings between the parties; and
3.
statements during negotiations: oral or written statements made at various stages of the negotiations leading up to the conclusion of the contract.
INCORPORATION BY SIGNATURE? Red flag: one party has signed a broad exclusion of liability clause without reading the document. NOTE: Australian Consumer Law RULE: Where the party has signed the document containing contractual terms they are bound by those terms (L’Estrange v Graucob, per Scrutton LJ; Toll v Alphapharm; Fitness First v Chong). This rule is applied in keeping with the objective standard applied in assessing the enforcement of contracts (Fitness First v Chong). Where contracts ‘signed’ by electronic means, apply eBay v Creative Festval Entertainment. •
The act of clicking “I accept” on a website will usually have the same effect as signature in incorporating the terms proposed by the trader into the contract between the parties: o s 9 ETA provides that where a law requires a person’s signature, that requirement is taken to have been met if an appropriately reliable method has been used to identify the person and show their intention in relation to the information communicated. o Apply: eBay v Creative Festval Entertainment
This applies even when the party has not read the document – ‘it is immaterial whether he had read the document or not’ (L’Estrange v Graucob, per Scrutton LJ). Reasonable notice of the terms is not needed (Toll v Alphapharm).
EXCEPTIONS TO THE RULE IN L’ESTRANGE: Can the signatory argue misrepresentation for highly unusual terms which have not been brought to his/her attention? (Toll v Alphapharm). In this case, the signatory may not be bound. Consider this where there is a document to be signed that isn’t commonly a contractual document.
Where the document could not reasonably be expected to be a contractual document, the signatory will not be bound by the express terms contained in that document, including EXCLUSION OF LIABILITY CLAUSES (Curtis v Chemical Cleaning, per Lord Denning) “If the party affected signs a written document, knowing it to be a contract which governs the relations between them, his signature is irrefragable evidence of his assent to the whole contract, including the exempting clauses, unless the signature was obtained by fraud or misrepresentation.” Therefore it must be established that: • •
There has been behaviour, by word or conduct, that mislead the signatory about the existence or extent of the express term (exemption clause); or There has been fraudulent or innocent misrepresentation sufficient to disentitle the creator to the benefit of the exemption clause.
Where yes, the document in question could not reasonably be considered a contractual document and the rule in L’Estrange will NOT apply (Curtis v Chemical Cleaning)
INCORPORATION BY NOTICE: ONEROUS, LIMITATIONS AND EXEMPTIONS. Red Flags: Onerous or broad exemption clauses contained in: • • • • •
Unsigned documents Ticket or receipt with printed conditions on the back that is given to and accepted by the customer without objection; Advertisements which state: “see website for terms and conditions” A docket delivered with goods order by the customer, containing conditions of the purchase; Signs or notices displayed on business premises such as listing “Conditions of Sale” or “Terms and Conditions”, “our return policy”;
FOR THE TERMS BY NOTICE TO BE INCORPORATED INTO THE CONTRACT, THE FOLLOWING MUST BE ETABLISHED:
(1) NOTICE MUST BE GIVEN BEFORE THE CONTRACT IS FORMED (Oceanic Sun Line v Fay; eBay v Creative Festival). When was the contract formed? TICKET SCENARIO: •
Where the conventional ticket analysis per MacRobertson Miller APPLIES, the ticket will be said to contain the terms and conditions of the contract and the ticket holder will be said to have accepted such terms and conditions by: either acting consistently with them; or failing to reject them after a reasonable opportunity to read the conditions and demand a refund.
•
Where the conventional ticket analysis does not apply – per Thorton, Oceanic Sun Line, eBay v Creative – the terms of the ticket will not be incorporated into the contract.
per Oceanic Sun Line v Fay, where the ticket is issued after the purchaser has been issued a “exchange order”, the contract will be formed at the time the “exchange order” were issued and the ticket cannot alter the parties’ contrauctal rights and obligations. o
This is because it cannot be said that it was parties’ intention that the passenger’s opportunity to accept or not accept the conditions could only be made after travelling to the place of acceptance (e.g. Greece).
o
However, where the seller has done all that was reasonably necessary to bring the new terms to the the purchaser’s notice, the terms can be incorporated.
o
Notice contained in a brochure will not be sufficient for reasonable notice because it is not a contractual document (Oceanic Sun Line v Fay).
Per eBay v Creative Festival, where the ticket is purchased in an online transaction the contract will be formed at the time of the online transaction and any new terms on a ticket that is later delivered will not be incorporated. Per eBay v Creative Festival, for over-the-counter purchases WITH NO NOTICE OF NEW TERMS AND CONDITIONS, the contract is formed at the time of the payment and terms of the ticket will not be incorporated because a reasonable person would not expect to be able to return the ticket for a refund (NORMAL TICKET ANALYSIS NOT APPLIED). Per eBay v Creative Festival, for over-the-counter purchases WITH NOTICE OF NEW TERMS AND CONDITIONS, the contract is still formed at the time of the payment but the terms will be incorporated because of the notice displayed in the shops.
(2) DOES THE PARTY HAVE ACTUAL KNOWLEDGE OR REASONABLE NOTICE/CONSTRUCTIVE KNOWLEDGE OF THE TERM? •
Per Parker v South Eastern Railway Co; Thorton v Shoe Lane Parking it must be established that, either, the person receiving the ticket has: (1) Actual knowledge that it contained the particular condition/s - he knew there was writing on the ticket and believed that the writing contained particular conditions (irrespective of whether he has read them); or (2) Reasonable notice that it contained the particular conditions - he did not actually know the writing contained the conditions, but the circumstances of the delivery of the ticket were such that he could see there was writing on it.
•
The onus is on the party arguing to have the terms incorporated to prove that the other party was aware or ought to be treated as being aware that the relevant document contained special contractual conditions (Causer v Browne)
•
ARGUMENTS AGAINST NOTICE: o An excemption clause will be ineffective where the document cannot be expected to contain contractual terms – e.g. a docket which one might reasonably be understood to be only a voucher (Causer v Browne). o Reasonable steps were not taken to bring the terms to the other party’ notice (Causer v Browne).
o
The particular terms and conditions are not readily available (Thornton v Shoe Lane Parking; Baltic Shipping; NSW Lottery v Kuzmanovski) • Where a ticket is issued by automatic machine the normal ticket analysis will not be applied because the purchaser cannot refuse it. Therefore, the contract is formed at the time of the issuing of the ticket (Thornton v Shoe Lane Parking). • If the above context applies, other terms and conditions written on signs that are not readily available for view will not be incorporated into the contract (Thornton v Shoe Lane Parking). • Where the burden is on the other party to take active steps of their own to gain knowledge of particular ticket terms, there will be insufficient notice of temrs at the time of the contract formation. The terms will not be reasonably available and not incorporated into the contract (Baltic Shipping) – In this case, it can be argued that the person retaining the ticket can be entitled to take the view they would be issued with a ticket which would contain no unusual provisions of which they were not given notice (Baltic Shipping).
