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party to the other, before or at the time of the contract, of some matter or circumstance relating to it Behn v Burness); - a mere representation lacks contractual force; - a false representation may constitute a misrepresentation and X may be able to rescind the contract. Factors to determine if terms or mere representations; none are conclusive, just determine intention objectively: 1. importance of statement – more important = term 2. time passed since statement and agreement = short time in between = term 3. position of one party to the other to ascertain truth; better position (ie business) = term 4. whether statement subsequently omitted when agreement made into formal contract = representation only *Ellul & Ellul v Oakes (1972) 3 SASR 377 Time of the Statement Harling v Eddy  2KB 739 Content of the statement *JJ Savage & Sons Pty Ltd v Blakeney (1970) 119 CLR 435 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Existence of Writing (see also parole evidence rule – next week) Knowledge and Expertise of Parties *Oscar Chess v Williams  1 WLR 370 : F: Williams sold his car as 1948 model; in fact it was a 1939 model; O sued for breach of contract claiming the statement of date was a term of contract; H: UK COA held statement was NOT a term; court must look objectively @ totality of evidence, what parties did; W simply looked @ registration paper, did not intend the statement to be term of contract, was innocent misrepresentation Dick Bentley v H S Motors  1 WLR 623 – F: DB bought 2nd hand Bentley from HS; HS stated car traveled 20,000 m since fixed; statement false, DB sued HS for breach of contract; H: UK COA held HS’s statement was a term and therefore liable for damages b/c if a representation is made in the course of dealing for contract for very purpose of inducing other party to act on it, and it actually DOES induce other party to act on it and enter into a contract, prima facie this is grounds for inferring that it was intended to be a term of contract; maker of representation can rebut this by showing innocence of fault; HS was car dealer in position to know, or at least ascertain, the history of cars it was selling; statement made had no foundation. Collateral Contract - a separate contract containing 1 express terms, (eg in textbook, the promise from P that drains on farm were in excellent condition), plus consideration from promisee (entering into the main contract satisfies this) (Heilbut Symons & Co v Buckleton). Elements: 1. the statement is promissory in nature, intended to be relied on to induce promisee to enter main contract (JJ Savage v Blakney) 2. the promisee relied on the statement (JJ Savage v Blakney) 3. there is no inconsistency b/w main contract and alleged contract (Hoyt’s pLtd v Spencer) 4. the collateral contract must contain all elements of a contract (consideration is entering into the main contract)
when letter was written. B4 expiry. the collateral agreement would be inconsistent with the main agreement since the collateral agreement added extra terms as to which circumstances H would terminate the sublease.To establish collateral contract. to exclude liability for breach of contract or misrepresentation re precontractual statements/ conversations. . S assured H that he would only terminate in certain. *JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 . to prevent operation of collateral contract!!! HOWEVER: In Australia. that he would not have entered into contract had the statement not been made. F: B bought boat from JJ. H claimed assurance was collateral contract and sought damages H: HC ruled against H b/c assurance was inconsistent w/ main contract permitting termination in ANY circumstances **NOTE: Sometimes the main contract contains an ‘entire agreement’ clause which is a binding agreement that seeks to limit liability of parties to each other by excluding liability based on pre-contractual statements and conversations unless these are expressly stated in the contract. Thus.statement must be promissory. the court will have to determine if the parties intention was that the contract be wholly in writing!!! In McMahon v National Foods Milk 2009 VCOA – if entire agreement clause expressly refers to exclusion of collateral contracts. Ie: estoppel would enable H to succeed where no collateral agreement established due to entire agreement clause. not representational to be a collateral contract. or sought promise from appellant that boat would reach 15 mph. representee must establish he entered into main contract in consideration of the statement made by representor. F: H subleased premises from S. courts more likely to permit collateral contract even if agreement clause inserted. negotiations for construction and delivery of boat not complete. H: HC held statement was only opinion. if no express reference. JJ stated in a letter that boat’s engine would go 15 mph. B shd have required speed of boat to be inserted in specification as condition of contract. which though was made w/ the calculation of B entering into contract. sublease stated S could terminate lease @ any time during its currency on giving 4 weeks notice in writing. B claimed the statement was a promise and consideration was entry into contract to purchase boat. it only went 12 mph. It may be the case that an ‘entire agreement’ clause does not allow estoppel to give force to a collateral contract because to do so in the case of Hoyt would prevent S from terminating the sublease whenever he wanted given 4 weeks notice. depending on entire agreement clause (DKB Investments PLtd v Belcote PLtd. Arnot v Hill-Douglas) If there is no such clause. .Rationale: Innterpreneur Pub Companty v East Crown 2000: To prevent a party after agreement made from finding any clause giving rise to a claim of collateral warranty (ie cannot argue that any promises or assurances made in course of negotiations have any contractual force if not in the contract). S subsequently terminated lease under none of those circumstances. what B should have done was sought a promise from the appellant to make the statement legally binding. then there’s no reason why a collateral contract shouldn’t be enforced for the reason that (given that it’s consistent w/ the main contract) one party would never have entered the agreement but for the collateral contract. then collateral contract will not include part of the contract. *Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 – terms in collateral contract cannot contradict term in the main contract. however. Heilbut v Buckleton – it is fundamental that there be an ‘intention on the part of either or both parties that there should be a contractual liability in respect of the statement’. specified circumstances.
or contradicting the language of an entirely written contract (Codelfa Construction v State Rail Authority) ie express terms are only those recorded in the contract!!! . the court will NOT allow evidence to be given for purposes of establishing that an additional term has been omitted.H (Car dealer) made assurances to A about a car. subtract from or vary terms of a written contract (ii) the exclusion of extrinsic evidence that would otherwise have assisted the court in interpreting or construing the contract General – rule states that extrinsic evidence cannot be introduced that will have effect of adding to. for it to be enforced would mean that the main contract is unenforceable 3rd party collateral contract – the Hoyt’s rule doesn’t apply b/c there can be no inconsistency between the main agreement and the collateral agreement as they are with two different people.Ie if a party is trying to enforce terms of a contract using estoppel.The parol evidence rule states that extrinsic evidence will not be admissible to explain the meaning of written terms. reduces litigation time and costs (B & B Constructions PLtd v Cheeseman and Assoc) Thorne v Borthwick (1955) 56 SR(NSW) 81 – One view: If a written agreement contains prima facie a complete contract providing for all matters relevant to the tranaction. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). excludes oral evidence aimed at substantiating claims to prevent enforcement of contract according to its terms founded on alleged estoppel arising during the course of antecedent negotiations (Franklins PLtd v Metcash Trading Ltd) . . if elements of estoppel are established. finality in written instruments by not allowing alteration/ qualification by uncertain testimony of slippery memory. the other party can rely on PER which excludes any extrinsic oral evidence that will attempt to give force to the agreement. Chartbrook Ltd v Persimmon Homes Ltd S 52 TPA: Misleading or deceptive conduct (1) A corporation shall not. the court wont allow extrinsic evidence of prior conversations/ negotiations to establish that there is a missing term. then the 1st party may raise a claim in estoppel. A then went into main agreement with BF (finance company). contains to parts (i) exclusion of extrinsic evidence that would add to. in trade or commerce. Andrews v Hopkinson . . then the claim should succeed. Justification for PER: 1. if estoppel is not established s 52 of TPA may provide relief for the party unable to establish a collateral contract . varying.concerned only with WHOLLY WRITTEN contracts.what the PER does is then prevent any extrinsic evidence from supporting the claim of estoppel and preventing the contract from being enforced based on terms not stated in the agreement). in this case H sold the car. (ie there are two parties. engage in conduct that is misleading or deceptive or is likely to mislead or deceive. however. Parole Evidence Rule .If a promise doesn’t give rise to a collateral contract because it is inconsistent with the main agreement. requires that the person making assurances has benefits to promisor.to maintain intention of parties (Codelfa Constructions PLtd v SRA of NSW) 2. so that the agreement will not be enforced. and if the other one doesn’t want to. subtracting from. ie if it looks on the face of it that all the essential terms are stated in the contract. one of them wants to enforce the agreement. provides certainty (Hope v RCa Photophone of Australia PLtd) 3.relates to all forms of extrinsic evidence (most commonly oral evidence).
*State Rail Authority NSW v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 – with reference to the 2 views stated in Thorne v Borthwick. Hope v RCA Photophone (1937) 59 CLR 348 . a collateral contract is not strictly speaking. 1) however such a clause does not. or whether the contract was meant to be part writing and part oral. ‘there mere production of a contractual document. F: P argued that despite written contract. however complete it may look. part oral) then no PER applies. but partly written. partly oral. ‘sample’ term may have amounted to collateral contract. then this is so). Eg: Hart v McDonald – a clause which said ‘there is no agreement or understanding between the parties not embodied in this tender’ did not preclude the implication of an implied term into the contract 2) nor does an entire agreement clause exclude introduction of evidence that would establish a claim or damages in tort of deceit – Commercial Banking Co of Sydney Ltd v RH Brown & Co Exceptions to the Rule .Second view: to establish intention of parties whether written document contains all the terms that were supposed to be included. 1st and 2nd views applied. the writing MUST be compared with negotiations received in evidence before it can be safely said that all the essential terms are contained and what both parties have agreed to be bound to. an exception to the PER. establish existence of prior collateral contract provided no ‘entire agreement clause’ contained in main contract – Thorne v Borthwick Collateral contract – as a separate contract.The PER only applies when it is FIRST determined by looking @ extrinsic evidence to establish that terms of the agreement are wholly contained in writing. the PER only applies to main contract. cannot as a matter of law exclude evidence of oral terms if the other party asserts that such terms were agreed’. . judges have subsequently preferred the 2nd view.PER is NOT absolute!!! Use of extrinsic evidence may be to: 1. 2nd view was to look @ extrinsic evidence to show not intended to be entire contract simply in what was written. operate to exclude use of extrinsic evidence to establish implied term. establish that written contract incorrectly records the agreements of parties ie error made when agreement recorded in writing – Ryledar PLtd v Euphoric PLtd 4. which wasn’t stated in written contract. . in this case oral evidence is admissible to determine if the parties intended for the agreement to be wholly in writing (if all essential terms are established after looking @ extrinsic evidence. if this is the case (part written. the sale of neatsfoot oil was to be by ‘sample’. establish the existence of implied term – Hart v McDonald 3.Whittet v State Bank of New South Wales (1991) 24 NSWLR 146 Written terms and the effect of signature . establish that operation of contract is not to occur until happening of certain event (ie subject to a condition precedent)– Pynn v Campbell 2. unless expressly stated.a written contract that contains an ‘entire agreement clause’ will generally mean that it is an entirely written contract to which PER will apply. (SEE ABOVE NOTES!!!) Estoppel – may be an exception to PER where DO-Estoppel applies – oral promise supplementing a written contract.
Where unusual / onerous terms incorporate. H: referred to L’Esrange case stating that failure to draw attention to existence or EXTENT of exemption clause may convey no exemption at all.*Toll (FGCT) Pty Limited v Alphapharm Pty Ltd (2004) 219 CLR 165. the same result would have occurred b/c the document was title ‘RECEIPT’ and no attention was brought to C about any exemption clause* Incorporation by Notice (UNSIGNED DOCUMENTS) – generally deals w/ tickets. the presentation . Oceanic Sun Line v Fay) . HC H: to sign a document gives representation that person who signs either read and approved of contents or is willing to take a chance to be bound by those contents. conditions contained exclusion clause seeking to exclude party relying on clause from some or any liability when D has committed a breach of his/ her contractual and or other obligations. dress was damaged. entry to premises/ use of facilities. and to affect legal relations. front stated above where it was signed “Please read conditions of contract prior to signing”. F: document headed ‘receipt’ required C’s signature. contract unenforceable! *If C had not asked and just signed. nor were they mentioned in any conversation b/w the relevant parties. and it is immaterial that document wasn’t read. if documents are of contractual nature. CCDC responded to exclude liability for damage to beads/ sequins.Question is: is the transaction where a reasonable person would expect to find contractual tersm?? . false impression could result from words/ conduct of D. the person to be bound by terms must have been given REASONABLE NOTICE of terms usually at the time or BEFORE entry into contract!! (Olley v Marlborough Court. deemed to have been given reasonable notice – Parker v SE Railway Co . regarding bill of lading. however because clause not incorporated on contract which was signed beforehand. or issue to whether document meant to affect legal relations. especially where signature is right below a written request to read all conditions prior to signing!!! L’Estrange v Gaucob  2 KB 394 – if there is a claim of misrepresentation. is bound by those terms. or a receipt.NO? Party not bound – unless sufficient steps take to give notice – Causer v Browne. C asked why the signature. CCDC argued no liability b/c of exclusion clause.Yes? Party is bound. issue was whether exclusion clause was part of contract. signatory didn’t read relevant conditions. tickets upon entry. or whether tendered as memo of preexisting contract. Thorton v SL Parking . C sued. special notice MUST be given – Interfoto Picture Library PLtd v Stiletto Visual Programmes Ltd Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 – F: exclusion clauses printed on ticket for cruise. F: concerned signature to printed form w/ printing on front and back. it may be material to know if a person was given sufficient notice of contents of agreement prior to signing . however truth was to exclude liability for all damage to dress. *Parker v South Eastern Railway Co (1877) 2 CPD 416 – what is reasonable notice will depend on the type of sign or ticket (whether contractual or non-contractual in nature). a person who signs a document which is known by that person to contain contractual terms. or if there is claim for equitable or statutory relief. *Curtis v Chemical Cleaning and Dying Co  1 KB 805 – EXCEPTION TO SIGNATURE RULE signature rule doesn’t apply in situations where documents are signed as a result of fraud/ misrepresentation/ duress/ undue influence/ unconscionable conduct/ or non est factum (species of mistake). it wasn’t binding as not part of the original contract.general rule: where there is no suggested vitiating element and no claim for equitable or statutory relief.
the D wishes to rely on an exemption clause in contracts signed during previous course of dealings where parties have regularly contracted in the past on same terms. Whoever doesn’t bother to read has to suffer consequences of ignorance b/c it would be impossible for a shipowner to have to explain a bill of lading to every customer (no business efficacy) *Thornton v Shoe Lane Parking  2 QB 163 – regarding time of notice of terms. court held that terms in delivery docket handed over after each previous contract had been entered into was not incorporated into the latest contract even if Ptf knew of the existence. Terms included clause excluding parking station from liability of damage to vehicle and personal injuries to owner of vehicle. but not of the content of the documents. H: B must show that person receiving was aware that the docket was not merely a voucher/ receipt but that it contained contractual terms.and acceptance of document will amount to reasonable notice. receipts. . to bring the term to the attention of the other party *DJ Hill & Co Pty Ltd v Walter H Wright Pty Ltd  VR 749 – in same circumstances as Henry Kendall v William Lillico. B handed docket.In Hollier v Rambler Motors 3-4 contracts over 5 years is not sufficient to establish consistent course of dealings.non-contractual in nature. b/c no steps taken to draw C’s attn to exclusion clause. Incorporation by course of dealings – if there is no document signed. whereas in Henry Kendall v William Lillico. F: C brought dress to B t dry clean. they did not apply b/c ticket came too late – after contract already made. Where parties have previously dealt with each other on a regular basis so there is a course of dealing – terms may be incorporated into the contract (or displaced) – even where the documents are given during or at the end of performance of the contract Eggleston v Marley Engineering Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379 . If shipowner gives bill of landing to goods owner. dress damaged. whether the previous record of contracts leads to incorporation of those terms into later contracts is a question of reasonableness – Henry Kendall & Sons v William Lillico & Sons . H: reasonable notice NOT GIVEN b/c contract completed once ticket machine offered to take $ and T accepted by inserting $. he would have been bound by it . in the circumstances of the case. goods owner plainly bound to it even though didn’t read it because shipowner is entitled to assume person shipping goods has knowledge that bill of lading contains contractual terms. if P knew that document was a contractual document. however if any additional/ different terms were on ticket. So. 3-4 cntracts per month over 3 years is sufficient. vouchers). and B claimed protection by exclusion clause on docket. Construing the Terms . must occur BEFORE contract complete.The party seeking to rely upon the exclusion clause must show that he or she did all that was reasonable. it was not part of contract. Causer v Browne  VLR 1 . .Terms in a contract will have the meaning that the parties intended them to have. party relying on the clause must take reasonable steps to draw the recipient’s attention to this (tickets. They were therefore not expected to know of the terms and conditions.despite a course of dealings. the document was a delivery document and as such the party could not have expected that it was contractual in nature. F: ticket @ parking station issued stating contract was on terms and conditions set out on pillar opposite ticket machine (these were only in relation to exclusion of liability from damage to vehicle). only terms viewable near the machine were valid.
by considering the words used and the surrounding circumstances. It is used to ascertain objectively what the parties intended.extrinsic evidence may be used to ID parties or subject matter (exception to PER) Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 The circumstances surrounding a contract or the ‘setting’ of the contract can be examined by reference to extrinsic evidence to assist in construing a contract – this is known as the “factual matrix”. .For the exception to apply there must be a genuine uncertainty in the meaning of the words. . unreasonable.Evidence of the parties subsequent conduct White v Australian and New Zealand Theatres Ltd . *Australian Broadcasting Commission v Australasian Performing Right Assoc (1973). Westpac Banking Corporation v Tanzone Pty Ltd & Ors Extrinsic Evidence in construing the contract White v ANZ Theatres (1943) 67 CLR 266 . the court will avoid constructions that lead to ‘capricious.May be admitted where the trade meaning is ‘well-known. Homestake Australia Ltd v Metana Minerals NL (1991) 11 WAR 435 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 IMPLIED TERMS: • Terms implied by statute: the Sale of Goods Act 1979. The parties’ subjective intention is not considered.Extrinsic evidence is allowed where the language used is ambiguous – ie is capable of more than one meaning. notes. White v ANZ Theatres Ltd . Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema)  AC 724 The court will ascertain the intended meaning objectively. the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. Hope v RCA Photophone of Aust Pty Ltd . inconvenient or unjust’ consequences.or other documents etc… Exceptions to PER in construing contract: Ambiguity . the background (factual matrix) and the purpose for which it was made. . correspondence.Evidence found in oral statements. the court will decide what the meaning is – by ascertaining the meaning intended by the parties.Evidence of trade usage .. ‘evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning.- - Where the parties dispute the meaning.To identify the parties or subject matter.Evidence of the parties prior negotiations – except where relevant to the factual matrix Codelfa Construction Pty Ltd v SRA of NSW . To the extent to which they have this tendency they are admissible Evidence excluded under PER in construing contract: . uniform and certain’. the meaning is unclear or inconsistent. Where there are two possible interpretations. Reardon Smith Line v Hansen-Tangen  1 WLR 989 Surrounding circumstances include the whole contract.Evidence of the parties’ subjective intentions. The key provisions are: o Section 12: the person selling the goods has to have the legal right to sell them.
Do note that any of these terms implied by the courts can be excluded with an express term. the following conditions must be met- 1. Something that’s so obviously included that it didn’t need to be mentioned in the contract. from a catalogue or newspaper advert. as a matter of law. “one dozen” means thirteen – they don’t have to include terms in every contract specifying that. If a bakers contract has a clear term in it that says “one dozen means twelve for the purposes of this contract”. e. the bulk will correspond with that sample: s72 * It is important to note that parties cannot contract out of these terms implied under the TPA – s68 Terms Implied by Fact BP Refinery Ltd v Shire of Hastings (1977) 180 CLR 266 – TEST APPLIES ONLY TO FORMAL CONTRACTS!!!! To imply a term in fact. • Terms implied by the courts… o As a matter of fact. o A term which is not reasonable or equitable could not give effect to the presumed intentions of the parties. This is about general considerations of public policy – the courts are laying down. in one case. That’s obvious to both of us. how the parties to certain types of contract ought to behave. . as opposed to any other sort of pound. or that the contract would have been more reasonable with the added term. * Implied condition that goods are reasonably fit for the purpose for which they were supplied: s71 (2). Also. o A term that would cause one party a significant detriment would not be reasonable or equitable. * Implied condition that if goods are sold by example. Some terms are generally known to be included in contracts in a particular trade or locality. the courts held that landlords of blocks of flats ought to keep the communal areas (lifts. there’s an implied term that the goods are fit for that purpose.) o As a matter of law. Amongst bakers. o Section 15: if you’re selling the goods by sample – you show the customer one bag of flour and they order 50 bags – then the bulk order has to be of the same quality as the sample. o Section 14: the goods must be of “satisfactory quality” – that is. then the courts can’t say that a dozen has to equal thirteen! o (i) Trade Practices Act 1974 (C’th) -Statute that implies terms in sale of goods contracts * Implied condition that goods will be of merchantable quality: s71 (1). 2. then the actual goods have to correspond to that description. stairs etc) in a reasonable state of repair – so that term was implied into the rental contract. it probably wouldn’t occur to us to write down that we mean fifty pounds sterling. if the buyer says they’re buying the goods for a particular purpose. For example.g. It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it. (Beware of this point – it has to have been obvious to both parties – it’s not enough to show that one party thought it was included. they should meet the standard that a reasonable person would regard as “satisfactory”. It must be reasonable and equitable. o Customary terms.Section 13: if you’re selling goods by description. If I agree to pay you £50 for a lawnmower.
Liverpool City Council v Irwin  AC 239 TEST OF NECESSITY o Must be able to ascertain that the contract belongs to a particular class of contracts AND that the term is applicable (and necessary) to all contracts of that class. This is because the law’s view is that. precise manner. ‘The requirement of necessity reflects the concern of the courts that. be seriously undermined. of course!”. • Consistency: The implied term may not contradict an express term (same as for formal contracts). they would testily suppress him with a common “Oh. • Obvious: McHugh and Gummow JJ have stated that it must also be obvious. o The term to be implied must be capable of being expressed in a clear. (p 406) It must not contradict any express term of the contract. o ‘Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying. the enjoyment of the rights conferred by the contract would or could be rendered nugatory. worthless. one of the reasons the term was not able to be implied was because it was not possible to state clearly what the term should be. without the term. the term will be implied into the contract. in a business sense. while the parties were making their bargain. Re Ronim Pty Ltd  2 Qd R 172.’ per McHugh and Gummow JJ Byrne v Australian Airlines Ltd at 450 See also University of Western Australia v Gray o . o Brennan J also found the term to be inconsistent with the requirements in the contract regarding payment and time for completion. . *Attorney General of Belize v Belize Telecom Ltd  2 All ER 1127 The Moorcock (1889) 14 PD 64 *Codelfa Construction v State Rail (1982) 149 CLR 337 Sanders v Snell (1998) 196 CLR 329 Terms Implied in Law o In these situations a term is implied into all contracts of a particular class. 4. so that if. *Byrne v Australian Airlines Ltd (1995) 131 ALR 422 – TEST IMPLIES TO INFORMAL CONTRACTS: • Necessity: The term must be necessary to ensure reasonable or effective operation of a contract of the nature before the court. or perhaps. o To determine whether a term should be implied at law the courts use the test of necessity. an officious bystander were to suggest some express provision for it in their agreement.o 3. Attorney General of Belize v Belize Telecom Ltd It must be so obvious that it “goes without saying”. If the contract is unworkable. on policy grounds. such terms should be implied o So for example: conditions of reasonable fitness re sale of goods contracts for the provision of professional services tenancy and building contracts – house fit for habitation. unless such a term be implied. 5.’ Mackinnon LJ in Shirlaw v Southern Foundaries  2 KB 206 It must be capable of clear expression. o In Codelfa. • Clear expression: The term must be capable of clear expression (same as for formal contracts). “The Moorcock” (1889) 14 PD 64.
exchange. that the buyer will have a reasonable opportunity of comparing the bulk with the sample. which would not be apparent on reasonable examination of the sample: s18 Clear words are required to exclude implied terms (Wallis v Pratt and Haynes). it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description): s16 • Where they buyer. lease. an implied condition that the goods are of merchantable quality: s17 (c) • In a contract for sale by sample. or will have title at the time property in the goods is to pass: s15(a) • Implied warranty that the buyer will have quiet possession of the goods: s15(b) • Implied warranty that the goods are free from any charge or encumbrance: s15(c) • In a contract for the sale of goods by description. rendering them unmerchantable. Trade Practices Act 1974 (Cth) The Trade Practices Act will only operate where the supplier is a corporation and the acquirer is a consumer within the statutory definition (ss4 and 4b) or if the transaction falls within one of the categories of extended application of the legislation for example. an implied condition that the goods correspond with the description (and if the sale is by sample. if the tranaction occurred as part of the supplier engaging in trade or commerce internationally. The Trade Practices Act implies in a contract for supply of service. expressly or by implication. Supply is defined to include sale. Terms implied by the Trade Practices Act are not limited to contract for the sale of goods but also extend to their supply. and the goods are of a description that it is in the course of the seller’s business to supply. The implied term must be consistent with the express terms of the contract. and that the goods are free from any defect. a warranty that the service will be rendered with due care and skill and that any materials supplied will be . interstate or between a state and territory (s6(2)(c)).has similar provisions to SGA but includes provisions for ‘supply of goods’ Sale of Goods Act 1896 (Qld) • Implied condition that the seler has title to the goods bing sold. as well as by description. makes known to the seller that particular purpose for which the goods are required. implied condition that the bulk corresponds with the sample in quality. hire or hire purchase (s4). Renard Construction v Minister for Public Works (1992) 26 NSWLR 234 *Byrne v Australian Airlines Ltd (1995) 131 ALR 422 *University of Western Australia v Gray (2009) 259 ALR 224 Terms Implied By Statute Sales of Goods Act 1896 (Qld) the goods are fit for purpose. so as to show that the buyer relies on the sellers skill or judgment. the goods are of merchantable quality the bulk corresponds with the sample the seller has title to the goods being sold Trade Practices Act 1974 (Cth) . an implied condition that the goods are reasonably fit for the purpose: s17(a) • When goods are bought by description from a seller who deals in goods of that description.
See Kirby J in Royal Botanic Gardens v South Sydney Council (2002) 186 ALR 289 at 312: ‘[In] Australia. Will not be implied if the alleged implied term is inconsistent with the express terms of the contract. *Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 Implied Duty of Good Faith Duty to cooperate – ‘It is a general rule applicable to every contract that each party agrees. *Burger King Corporation v Hungry Jacks Pty Ltd  NSWSC 197 5 Rules of Construction Developed by the Courts EXCLUSION CLAUSES: . Onus of proof On the party seeking to argue for the implied term. Terms Implied by Custom or Usage Term to be implied by custom must be ‘notorious. • Contracts of employment: duty to proved a safe work place (McLean v Tedman). Butt v McDonald (1896) 7 QLJ 68 Such a duty has been held to extend to a general duty in all contracts to act in good faith. • Contracts for the provision of professional services: reasonable care will be taken by professional in provided services (Greaves Y Co v Baynham). Some examples are: • Contract for the provision of goods and services: goods or services will be reasonably fit for the purpose supplied or rendered (Samuels v Davis). A further warranty will be implied that the services and materials supplied in connection with them will be reasonably fit for the purpose for which those services are required – or of such a nature and quality that they might reasonably be expected to achieve the result (s74(2)). by implication.’ Per Griffiths CJ . reasonable and certain. • Building contracts: the completed house will be fit for habitation and the work done will be carried out in a proper and workman like fashion (Perry v Haron Developments). A term may be implied as a matter of law in contracts of a particular class (Liverpool City Council v Irwin). Renard Constructions v Minister for Public Works (1992) 26 NSWLR 234 Burger King v Hungry Jacks  NSWCA 187 Currently the notion of an implied duty of good faith in all commercial contracts does not have full judicial support. to do all such things as are necessary on his [or her] part to enable the other party to have the benefit of the contract. Support for an implied term to act in good faith in .’ Con-Stan Industries v Norwich Winterthur Insurance (1986) 160 CLR 226 Requirements are strictly applied. It also appears to be inconsistent with the law as it has developed in this country in respect of the introduction of implied terms into written contracts which the parties have omitted to include’.. uniform. such an implied term appears to conflict with fundamental notions of caveat emptor that are inherent (statute and equitable intervention apart) in common law conceptions of economic freedom.reasonably fit for the purpose for which they are supplied.
you lose the effect of the EC TNT v May and Baker . Security guard destroyed the plaintiff’s factory through a fire. 4 .Carrier deviates from the agreed voyage or route. * Because the clause was clear and unambiguous.The Four Corners Rule If the defendant’s act that causes loss to the plaintiff is an act that hasn’t been authorized or contemplated by the contract then an EC cannot protect the defendant from liability of . the condition printed on the ticket!!! 3 . was unable to store them in TNT storage depot as they were closed for the night. * Storage in subcontractors home was an unauthorized deviation which rendered the EC inapplicable. * A TNT subcontractor was to transport May and baker’s goods from Mel to Sydney. fire went loose and destroyed goods. * TNT tried to rely on their exclusion clause to protect them. * Defendant relied on EC in the contract that stated ‘under no circumstance shall (Securicor) be responsible for any injurious act or default by any employee of Securicor…’ * Although Securicor was found to have breached an implied term requiring to provide the service with due and proper regard to the safety and security of Photo’s premises. but did not read. however HC ruled against them on the basis that the contract stipulated that the goods be stored in TNT depot.’ Court was not entitled to reject EC ‘however unreasonable the court itself may think it is. the defendant could rely on it given the facts Bellart v African Lion Safari Park – in Qld. * Subcontractor went and stored them in his home garage.Fundamental Breach Rule: An EC can prevent liability for a fundamental breach of contract where the clause is clear and unambiguous and where the court in viewing the circumstances of the particular case determine that the intention of the parties was to agree to an EC covering the particular breach alleged. Therefore there couldn’t be an EC to cover a fundamental breach. its limited to exercising due diligence in its capacity as an EMPLOYER of the staff/security. * Defendant contracted to supply plaintiff with security patrol for their factory.(ii)) 2 . Court held that the question of reliance on an exclusion clause and the fundamental breach is ‘one of construction that there is no principle of law that a fundamental breach will automatically invalidate an EC. Suisse Atlantic Societe v NV Rotterdam  .House of Lords rejected the doctrine of fundamental breach adopted in Suisse (above).1 .Upjohn J stated that a fundamental breach ‘goes to the root’ of an agreement’. it was held that an exclusion clause on a ticket to an entertainment park and a large sign @ the entrance to the park absolved the defendant from liability for personal injury. their primary obligation is modified by the Exclusion Clause – where Securicor’s obligation isn’t absolute. if the words are clear and fairly susceptible of one meaning only.Deviation Cases If you deviate from the contract. When subcontractor collected good. (Overruled see below) Photo Production Ltd v Securicor Transport . there was evidence that the P was aware of. therefore loses the benefit of an EC.Contra Proferentum Rule: (Explained above . which suggested that termination for fundamental breach necessarily prevents the enforcement of an exclusion clause.
or four corners. If the EC explicitly excludes liability for negligence it ill be effective…words such as ‘howsoever caused’ and ‘under no circumstances’ will generally be said to incorporate negligence: Rutter v Palmer ii) Where there is no express reference to negligence. . Such an act is said to be outside the scope.Exclusion Clauses and Negligence For negligence by a contract breaker to be within the scope of an EC it is clear that it must be clearly intended that the clause covers negligence: Davis v Pearce Parking Station 3 rules that apply to Exclusion Clauses and how they are construed in the event that the plaintiff’s loss is due to negligence of the defendant. of the contract.damages flowing from the act. have been summarized in Canada Steamship Lines Ltd v The King: i) An express exemption of liability for negligence will effectively exclude liability on the part of the defendant. with any doubts on this to be resolved by applying the contra proferentum principle. If the only way in which the defendant could be liable for breach of contract is by acting negligently then a clause that makes no mention of negligence will usually be sufficient to exclude liability for the defendant Alderslade v Hendon Laundry Ltd iii) If the words used are wide enough to cover negligence but also encompass other grounds of liability other than negligence. the clause will be read as applying only to the ground of liability and will not operate to exclude the claim for negligence. 5 . the court needs to determine if the words used are wide enough to exclude negligence. as seen in Council of the City Sydney v West.
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