LAW2101 Lecture Notes - Lecture 10: Dick Bentley, Late Fee, Collateral Contract
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
!
TOPIC'10:'EXPRESS'TERMS'
Elements:'
• Identification+of+terms:+was+the+term+incorporated+in+the+contract?+
What+is+the+meaning+of+the+term?+
• Is+the+term+valid?+(i.e.+statute+may+render+an+express+term+invalid):+Exclusionary+terms+prevented+by+
statute+(i.e.+draconian+or+wide)+
+
Express'terms'could'be:''
• Wholly+written+
• Wholly+oral+
• Partly+written+and+partly+oral+
o Cannot+apply+Parol+Evidence+Rule+
+
IDENTIFYING'THE'EXPRESS'TERMS'
Written'terms'and'the'effect'of'signature''
Party'is'bound'by'the'terms'contained'in'a'contractual'document'that'he'or'she'has'signed'regardless'of'
whether'the'party'read'or'understood'the'terms'before'signing'(L’Estrange+v+Graucob;'affirmed'by'HCA'in+
Toll+(FGCT)+Pty+Ltd+v+Alphapharm+Pty+Ltd)'
*Note:+Clicking+“I+agree”+amounts+to+acceptance+(Electronic*Transactions*(Victoria)*Act*2000*(Vic),+s9)+
Exceptions'to'the'Rule'in'L’Estrange+v+Graucob:'
Ø Fraud+or+misrepresentation+
Ø Document+reasonably+expected+to+contain+contractual+terms+
Case'
Findings'
L’Estrange+v+Graucob+
• L+bought+cigarette+vending+machine+from+
Graucob+
• L+signed+‘Sales+Agreement’+containing+a+clause+
excluding+all+implied+conditions+and+warranties+
• Machine+supplied+did+not+work+satisfactorily+
• L+sued+for+breach+of+an+implied+warranty+that+the+
machine+was+reasonably+fit+for+the+purpose+for+
which+it+was+obtained+
Ø Court'of'Appeal'Findings:+L+was+bound+by+the+
signed+contract+and+exclusion+clause+availed+G,+
so+warranty+cannot+be+implied+
Ø Approach'(Scrutton'LJ)'(Court'of'Appeal):*
“When+a+document+containing+contractual+terms+
is+signed,+then,+in+the+absence+of+fraud,+or,+I+will+
add,+misrepresentation,+the+party+signing+it+is+
bound,+and+it+is+wholly+immaterial+whether+he+
has+read+the+document+or+not.”'
Curtis+v+Chemical+Cleaning+
• Curtis+took+a+white+satin+wedding+dress+to+CCD+
for+cleaning+
• Was+handed+a+paper+headed+‘receipt’+and+asked+
to+sign+
• Asked+why+signature+was+required,+and+was+told+
CCD+would+not+accept+liability+for+certain+specific+
risks+
• Paper+in+fact+excluded+CCD+from+liability+for+any+
damage+‘howsoever+arising’+
• Dress+was+returned+damaged+
Ø Court'of'Appeal'Findings:'Breadth+of+document+
was+misrepresented+so+would+not+avail+CCD+(i.e.+
Specific+risks+in+conversation+vs.+all+risks+in+
receipt)+
v Obiter:+Document+could+have+been+
understood+to+be+a+receipt+for+collection+(i.e.+
not+contractual)+
+
+
Incorporation'by'Notice''
Statements'contained'in'signs'or'notices'displayed'on'business'premises,'Internet'websites,'tickets,'etc.'
(i.e.'unsigned'documents)'
*Note:+Can+not+include+terms+after+contracts+has+been+concluded+
Elements:'
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
!
• Timing:'Notice+of+the+term+must+be+given+before+the+contract+is+formed+(Oceanic*Sun*Line*v*Fay;*Ebay*
International*v*Creative*Festival;+Thornton*v*Shoe*Lane*Parking)+
• Knowledge+or+reasonable+notice+of+the+term:+“A+customer+is+bound+by+the+exempting+condition+if+he+
knows+that+the+ticket+is+issued+subject+to+it+(actual+knowledge);+or,+the+company+did+what+was+
reasonably+sufficient+to+give+him+notice+of+it*(constructive+knowledge)”+(Denning+LJ,+Thornton*v*Shoe*
Lane*Parking)+
v Whether+the+document/sign+is+one+which+might+reasonably+be+expected+to+contain+contractual+
terms+(Causer*v*Brown)+
v Whether+terms+referred+to+are+readily+available+(Thornton*v*Shoe*Lane*Parking;*Baltic*Shipping;*NSW*
Lottery*v*Kuzmanovski)+
v Whether+the+term+is+onerous+or+unusual:'For+particularly+onerous+or+unusual+terms,+special+steps+
must+be+taken+to+bring+them+to+the+other+party’s+attention+(Interphoto*v*Stiletto;*Baltic*Shipping*v*
Dillon;+Thornton*v*Shoe*Lane*Parking)+
'
Timing:'Notice'must'be'given'BEFORE'the'contract'is'concluded'
Case'
Findings'
Oceanic+Sun+Line+v+Fay+1988'HCA'
• 1983+–+Dr+Fay+booked,+through+a+Sydney+travel+
agent,+a+Greek+Island+cruise+on+the+Stella+Oceanis+
owned+by+Oceanic+Sun+Line+(a+Greek+company).++
• Brochure+stated:++“the+transportation+of+
passengers+was+governed+by+the+terms+and+
conditions+printed+on+the+passenger+ticket+which+
could+be+inspected+at+any+Sun+Line+Office”.++
However+no+such+conditions+were+available.+
• “Exchange+order”'was+issued+by+travel+agent+at+
time+of+payment+of+fare+
o Stated+that+it+was+to+be+exchanged+for+
tickets+when+boarding+the+vessel+in+Athens++
o Fay+exchanged+the+exchange+order+for+their+
tickets+on+boarding+the+vessel+
• Clause+13+of+the+ticket+conditions:+Courts+of+
Greece+shall+have+exclusive+jurisdiction+in+any+
action+brought+against+Oceanic+
• Fay+sustained+serious+injuries+on+the+cruise+while+
trap+shooting++
• He+sued+Oceanic+for+negligence+in+NSW+
• Oceanic+applied+for+stay+of+proceedings+(i.e.+halt+
the+proceedings)+on+the+ground+that+such+
proceedings+can+only+be+brought+in+Greek+courts+
(i.e.+tickets+received+in+Greece)+
Ø Approach'(Brennan'J)'(High'Court):'
Conventional+“ticket”+analysis+of+contract+
formation+not+applicable+with+reference+
MacRobertson*Miller+and+confirmation+that+
contract+formed+in+NSW'(i.e.+terms+on+ticket+not+
incorporated+because+provided+after+contract+
formed+–+no+constructive+notice+of+the+terms)'
v Barwick+CJ:+Ticket+is+a+receipt+of+payment+
(i.e.+passenger+makes+the+offer+by+presenting+
at+the+airport+and+airline+accepts+by+carrying+
passenger)++
v Stephens+J:+Ticket+is+an+offer+by+the+airline+to+
the+passenger+on+the+terms+and+conditions+
printed+or+referred+to+on+the+ticket+and+
passenger+accepts+by+either:++
(1) Acting+consistently+with+the+offer+(i.e.,+
presenting+at+the+airport+for+travel)+
(2) Failing+to+reject+offer+after+a+reasonable+
opportunity+to+read+the+conditions+and+
demand+a+refund+(i.e.+analysis+of+
contract+formation)+
v Conventional+analysis+cannot+be+applied+
where+ticket+is+issued+at+point+of+boarding+
vessel+in+Greece+in+exchange+for+an+exchange+
order+and+exchange+order+had+been+issued+
and+paid+for+in+Sydney+(i.e.+can+hardly+have+
been+the+parties’+intention+that+the+‘offer’+
(ticket)+would+only+be+made+to+him+after+he+
had+already+undergone+the+expense+of+
travelling+to+Greece+–not+parties’+intention+
that+the+passenger’s+decision+to+accept+or+
not+accept+conditions+could+only+be+made+
after+travelling+to+Greece)+–+Inconvenient+for+
contract+to+be+in+Greece/terms+came+too+late+
§ Contract+made+in+Sydney+when+
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
!
passenger+paid+fare+and+travel+agent+
issued+the+exchange+order+(i.e.+Oceanic+
was+bound+to+issue+ticket+in+exchange+for+
exchange+order+in+Athens,+and+take+
passenger+on+cruise+on+terms+agreed+at+
the+time+the+exchange+order+was+issued+
and+paid+for)+–+Ticket+cannot+alter+the+
parties’+contractual+rights+and+
obligations+(i.e.+too+late+to+introduce+
new+conditions)+
§ “…+where+an+exemption+clause+is+
contained+in+a+ticket+or+other+document+
intended+by+the+carrier+to+contain+the+
terms+of+carriage,+yet+the+other+party+is+
not+aware+when+the+contract+is+made+
that+an+exemption+clause+is+intended+to+
be+a+term+of+the+contract,+the+carrier+
cannot+rely+on+that+clause+unless,+at+the+
time+of+the+contract,+the+carrier+had+
done+all+that+was+reasonably+necessary+
to+bring+the+exemption+clause+to+the+
passenger's+notice”+–+Clause+was+not+
brought+to+the+attention+of+Fay+before+
contracting+(i.e.+brochure+was+not+a+
contractual+document)+
eBay+v+Creative+Festival+2006+'
• Creative+was+the+promoter+of+the+Big+Day+Out.+
• Tickets+were+sold+4+different+ways:++
o Big+Day+Out+website+
o Ticketmaster+website+
o Over+the+counter+from+Ticketmaster+offices+
o Other+retail+outlets+
• Printed+tickets+included+condition+6:+Ticket+
would+be+cancelled+if+resold+for+profit+(new+
condition).+
• Tickets+sold+out+quickly+and+scalpers+became+
active+on+eBay+
• Creative+started+cancelling+tickets+for+sale+on+
eBay+++
• eBay+sued+Creative+for+engaging+in+misleading+
and+deceptive+conduct+under+s52+of+the+Trade*
Practices*Act+(now+s18+of+the+Australian*
Consumer*Law+–+Contract+B)+for+including+the+
term+on+the+tickets+and+representing+that+it+was+
enforceable+
• Sales+via+Big+Day+Out+website:+++
o Purchasers+required+to+click:+“I+have+read+
and+agree+to+the+following+terms+and+
conditions”.++
o Terms+and+conditions+listed+on+the+website+
included+that+should+the+ticket+be+resold+for+
Ø Federal'Court'Findings'(Tickets'sold'over'Big'
Day'Out'website):''
v Parties+were+contracting+over+the+internet+
online+in+writing+
v Terms+of+the+contract+were+signed+
electronically+and+the+contract+formed+when+
the+buyer+clicked+on+the+relevant+buttons+
(i.e.+before+the+ticket+was+received+–+new+
term+cannot+be+part+of+contract)+
v New+condition+is+different+to+the+old+
condition+in+that+it+suggests+that+a+ticket+will+
automatically+be+cancelled+(i.e.+misleading)+
Ø Federal'Court'Findings'(Tickets'sold'over'
Ticketmaster'website):''
v Contract+was+formed+at+the+time+of+finalising+
the+purchase+online+(i.e.+If+Creative+wanted+
to+impose+the+new+condition,+it+needed+to+
bring+notice+of+the+condition+to+the+attention+
of+the+purchaser+at+the+time+of+purchase+–+
Not+done)+
v Conventional+Ticket+Case+Analysis:+Rejected+
argument+that+that+ticket+was+offer+and+
acceptance+was+retention+without+objection+
–+Unrealistic+to+expect+that+a+reasonable+
person+would+believe+they+had+a+right+to+
return+the+ticket+(i.e.+ticket+specifically+stated+
Document Summary
Is the term valid? (i. e. statute may render an express term invalid): exclusionary terms prevented by statute (i. e. draconian or wide) Express terms could be: wholly written, wholly oral, partly written and partly oral, cannot apply parol evidence rule. Party is bound by the terms contained in a contractual document that he or she has signed regardless of whether the party read or understood the terms before signing (l"estrange v graucob; affirmed by hca in. *note: clicking i agree amounts to acceptance (electronic transactions (victoria) act 2000 (vic), s9) Toll (fgct) pty ltd v alphapharm pty ltd) Exceptions to the rule in l"estrange v graucob: Document reasonably expected to contain contractual terms. Court of appeal findings: l was bound by the. L signed sales agreement" containing a clause excluding all implied conditions and warranties: machine supplied did not work satisfactorily.
