LLB170 Lecture 1: Week 1 – Express Terms
Week 1 – Express Terms
Disputes arise over the terms of a contract
Five matters to consider when attempting to resolve disputes:
1. Identify the express terms agreed by the parties
2. The terms must be construed to determine their meaning and legal effect (whether
the terms apply)
3. Consider the admissibility of extrinsic evidence (parol evidence rule)
4. If the express terms are silent on an issue, it must be determined if silence is
intentional or whether there is a gap
5. Consider the effect of the statute on the party’s contractual rights and obligations
Objective Approach
The aim of the courts is to give effect to the “presumed intentions” of the parties
References to intention usually means “the intention which reasonable persons would have
had if placed in the same situation of the parties”
What are express terms?
• Terms which are an explicit declaration of a particular promise in the contract itself
• These terms must be oral or written
• This contrasts with implied terms where no declaration has been made
They may be:
1. Incorporated into the parties’ contract
- By a party signing a written document
- By notice – displaying or delivering a written document to the other party
- By a course of dealing between the parties
2. Found in statements made by the parties during their pre contractual negotiation
3. Combination of the above
Terms and the communications of the parties
Terms = those proposed by the offeror and accepted by the offeree
Challenge = where there has been a lengthy negotiation process and a formal contract has
not been written and signed
Written terms and the effect of signature
Rule in L’Estrange v Graucob
General rule – a person who signs a contractual document will be bound by the terms in
that document, regardless of whether he or she has read and understood those terms
(L’Estrange) and no matter whether the terms are unusual or onerous (Toll v Alphapharm)
The act of signing a document is seen as a willingness to be bound by those terms
L’Estrange v Graucob Ltd [1934] 2 KB 394
Facts
Ms L’Estrange purchased a cigarette vending machine from F Graucob Ltd. Ms L’Estrange signed a “Sales Agreement”
which contained the terms of sale. When the machine was delivered, it didn’t work satisfactorily. She bought action
for damages for breach of an implied warranty that the machine was reasonably fit for purposes for which it was
required. There was a clause in the sales agreement which stated that any express or implied condition, statement or
warranty not stated is excluded, which the defendant relied upon
Judgment
The trial judge had relied upon the ticket cases to argue that notice had to be given of the terms of the document
(here the exclusion clause). However, this is not a ticket case and the law applicable is not the same. Here the
document involved is signed. When the document is signed it is immaterial that a party has not read it and does not
know if its contents. He is bound unless there has been fraud or misrepresentation. As there was no fraud or
misrepresentation here the Plaintiff was bound by the exclusion clause.
Toll (FGCT) v Alphapharm Pty Ltd [2004] HCA 52
Facts
Toll entered into a contract with Richard Thomson (acting for Alphapharm) to store and transport goods being
imported for Alphapharm. It was alleged Finemores performed this contract negligently, causing loss to Alphapharm.
Finemores sought to escape liability by relying upon an exclusion clause in the contract with Richard Thomson
Issue: must the defendant do what is reasonably necessary to give notice to unusual terms
Held
When signing a document, you are making a representation that you have read and understand the contents of the
terms contained in the contract and that there was no reason to depart from the general rule. As a result, the terms
and conditions formed part of the contract for the storage of goods
“the general rule… a person who signs a document which is known by that person to contain contractual terms… is
bound by those terms, and it is immaterial that the person has not read the document”
“to sign a document known and intended to have legal relations… conveys a representation… that the person who
signs has read and approved the terms or is willing to take the chance to be bound by those contents”
Circumstances in which the effect of signature may be avoided (where signature won’t
presumptively apply to bind parties)
1. Misrepresentation
General rule won’t apply where the contents of the document signed have been
misrepresented, where the plea of non est factum would apply or where there are equitable
grounds for setting aside the contract
Non est factum
→
a plea that a written agreement is invalid because the defendant was
mistaken about its character when signing it.
Term in question is not binding on the parties
There must be some element of concealment
2. Non-contractual documents
The rule won’t apply where the document in question could not reasonably be considered a
contractual document e.g. a timesheet/receipt/voucher
Criticisms of the rule
The rule takes the objective fact of a party’s signature as indicating his or her acceptance of
the terms in the signed document, without considering whether the party understood the
terms
Everyday people may not have the skills necessary to understand all terms of a contract -
may be difficult to read or contain unfamiliar legal concepts
Incorporation of terms by notice
A business that doesn’t rely on signed contracts in its dealings may attempt to incorporate
the terms it wants to govern the transaction through the device of notice
Adequate notice before the contract is made makes those terms binding even though no
document has been signed
Whether terms are to be incorporated into a contract depends on two issues:
1. Whether the displayed or delivered terms were made available to the party to be
bound before the contract was formed (Thornton v Shoe Lane Parking)
2. Whether reasonable steps were taken to bring those terms to the notice of the party
to be bound (Thornton)
Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805
Facts
Curtis took a white satin wedding dress to the defendant for cleaning. The shop assistant gave Curtis a paper headed
“receipt” to sign. Curtis asked why her signature was required and was told it was because the defendant wouldn’t
accept liability for certain specified risks, including the risk of damage to the beads and sequins. Curtis signed the
receipt.
The paper contained a term excluding the defendant from liability for any damage “howsoever arising”. When the
dress was returned there was a stain on it. Curtis claimed damages.
Held
The English Court of Appeal held that the defendant couldn’t rely on the exemption clause to exclude liability as the
shop assistant misrepresented the breadth of the exemption clause
Document Summary
Disputes arise over the terms of a contract. The aim of the courts is to give effect to the presumed intentions of the parties. References to intention usually means the intention which reasonable persons would have had if placed in the same situation of the parties . What are express terms: terms which are an explicit declaration of a particular promise in the contract itself, these terms must be oral or written, this contrasts with implied terms where no declaration has been made. They may be: incorporated into the parties" contract. By a party signing a written document. By notice displaying or delivering a written document to the other party. By a course of dealing between the parties: found in statements made by the parties during their pre contractual negotiation, combination of the above. Terms = those proposed by the offeror and accepted by the offeree.
