LAW 101 Seminar Handout

Week 8
Terms of the Contract
Implied Terms

Ash agrees to buy Stephen’s car. She meets Stephen at his house where she hands over a bank cheque
in exchange for the transfer papers and the keys to the car. When she gets into the car she discovers
that there is no fuel in the fuel tank. When she asks Stephen about this he explains that he only agreed
to sell her the car, not fuel as well.

Has Stephen breached the contract?

Disclaimers and Notice Requirements

Ash has purchased a first class ticket for her flight to Sydney entitling her to use of the Kwantus Club
lounge at the airport while waiting for a flight. While Ash is getting a drink from the bar, a waiter
carelessly spills a tray of drinks onto Ash’s expensive laptop, which she left on her seat. When she
complains to the club manager, he directs Ash’s attention to a sign on the wall that states ‘The airline
takes no responsibility whatsoever for goods lost, damaged or stolen while using these facilities’.

Does the sign prevent Ash from suing the airline for compensation?

Disclaimers and Signature Rule

George’s car had broken down. Attempts were made to fix it on the side of the road, but eventually it
became obvious that it was going to have to be towed to a garage for repairs. George arranged for AMC
Motors to get the vehicle towed to its premises for repairs. When the vehicle was picked up by the tow
truck, the driver asked George to sign an authorisation to pick up the car, deliver it to AMC Motors and
carry out the repairs. One of the terms of the contract stated: ‘The company is not responsible for
damage caused by fire to customers’ cars on the premises’. While at the garage, George’s car was
extensively damaged by fire as a result of the negligence of one of AMC Motors’ mechanics.

AMC Motors relied on the exclusion clause to provide a defence. Explain whether you think it would be
successful.

Non-Contractual Representations

Pontus leased a shop from Westminster Properties, and he also lived on the premises. When the time
came for the lease to be renewed, Westminster Properties wanted to include a new clause in the
tenancy agreement that the shop could only be used for business premises. Pontus made it clear that he
wished to continue to live above the shop and that he would not sign the new lease. Westminster
Properties stated that if Pontus signed the new lease, with the new term, there would be no objection
to him continuing to live on the premises. Pontus signed for a three-year period. If Pontus assumed that

1
he would not have been able to continue to live above the shop, he would not have signed the new
lease and would have gone to live at new premises that were available at the time and where he could
have lived in the shop.

After six months, Westminster Properties received an offer from a developer who wished to buy the
premises, but on the condition that they were empty. Accordingly, Westminster Properties sought
forfeiture of the lease on the basis that Pontus was in breach of its terms by residing on the premises.

Advise Pontus.