LAW2101 Lecture Notes - Lecture 11: Apparent Authority, Susan Kiefel, Master Franchise
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
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TOPIC'11:'CONSTRUCTION'OF'TERMS'
!"#$%&'()*#+'%,-.%/0%'*1+%'2*%,%/$3'$4%'13%'#5'%6$*-/3-0'%,-.%/0%'%60%2$'74%/'$4%*%')*%')89-:1-$;'
PROCESS'OF'CONSTRUCTION'
• </'#9=%0$-,%'$%3$'>'%,-.%/0%'#5'319=%0$-,%'-/$%/$-#/'/#$'*%+%,)/$''?'Pacific&Carriers&v&BNP&Paribas'
• @-,%'7#*.3'$4%-*'/)$1*)+')/.'#*.-/)*;'8%)/-/:'
• A5'7#*.3')*%'0+%)*'>'813$':-,%'%55%0$'$#'$4)$'8%)/-/:'%,%/'$4#1:4'-$'8);'2*#.10%')/'1/*%)3#/)9+%'#*'
1/5)-*'*%31+$'>'ABC&v&APRAB'Quirke&v&FCL;&WES&v&Jireh&International'
• A5'7#*.3')*%'0)2)9+%'#5'8#*%'$4)/'#/%'8%)/-/:'>'0#1*$3'5),#1*')/'-/$%*2*%$)$-#/'$4)$'2*#.10%3')'
*%)3#/)9+%'0#88%*0-)+'*%31+$'?'ABC&v&APRAB'EGC&v&Woodside'
'
CONSTRUCTION'OF'EXCLUSION'CLAUSES'
Construing'terms'–'Parol'Evidence'Rule'
• -.%/$-5;-/:'$4%'$%*83'?'2*%,%/$3'%6$*-/3-0'%,-.%/0%'9%-/:':-,%/'$#'add'to,'vary'or'contradict'$4%'$%*83'#5'
)'0#/$*)0$'74#++;'-/'7*-$-/:C'
• construing'the'terms'-'+-8-$3'%,-.%/0%'9%-/:':-,%/'9;'2)*$-%3'$#'explain'the'meaning'#5'$4%'$%*83'#5')'
0#/$*)0$'74#++;'-/'7*-$-/:C'
o “[I]f&there&be&a&contract&which&has&been&reduced&into&writing,&verbal&evidence&is¬&allowed&to&be&
given&of&what&passed&between&the&parties,&either&before&the&written&instrument&was&made,&or&during&
the&time&it&was&in&a&state&of&preparation,&so&as&to&add&to&or&subtract&from,&or&in&any&manner&vary&or&
qualify&the&written&contractCD''
– Per'E#*.'F%/8)/'-/'Goss&v&Lord&Nugent'GHIJJK'HHL'MN'OHJ')$'OHP'&'
Effect'of'the'Parol'Evidence'Rule'–'what'is'excluded:'
• %60+1.%3'%,-.%/0%'#5'$4%'2)*$-%3Q'/%:#$-)$-#/3')9#1$'$4%'$%*83R'74%$4%*'-$'9%'#*)+'#*'0#/$)-/%.'-/'3#8%'
#$4%*'2-%0%'#5'7*-$-/:R'3104')3'/#$%3'#*'%)*+-%*'G312%*3%.%.K'.*)5$3'
Exceptions'to'the'parol'evidence'rule'for'interpreting'terms:'
• S4%*%'$4%*%'-3')89-:1-$;'G%C:C'$#'-.%/$-5;'$4%'2)*$-%3'#*'319=%0$?8)$$%*K'
• TU4%'31**#1/.-/:'0-*0183$)/0%3D'8);'9%').8-33-9+%R'74%*%')22*#2*-)$%'>'3%%'/%6$'3+-.%'
• V%*9)+'%,-.%/0%'0)//#$'9*-/:'$#'-/$%*2*%$'7*-$$%/'0#/$*)0$'
• A3'$4%*%')89-:1-$;'-/'74)$'$4%'0#1*$'$4-/W3X'
'
Y#/3$*1-/:'$%*83'>'T31**#1/.-/:'0-*0183$)/0%3D'
What'are'the'“surrounding'circumstances”'
o '$4%'21*2#3%'#5'$4%'0#/$*)0$R'$4%':%/%3-3'#5'$4%'$*)/3)0$-#/R'$4%'9)0W:*#1/.R'$4%'0#/$%6$R')/.'$4%'
8)*W%$'-/'74-04'$4%'2)*$-%3'#2%*)$%'
o U4-3'-3')'3193%$'#5')++'%6$*-/3-0'%,-.%/0%'
When'can'the'“surrounding'circumstances”'be'referred'to'-'U4%*%')*%'$7#')22*#)04%3&'
o Z*#).'<22*#)04:'always,'9%0)13%'7#*.3'0#/,%;'8%)/-/:')00#*.-/:'$#'$4%'0-*0183$)/0%3'-/'74-04'$4%;'
)*%'13%.C'[#'$4%'0#/$%6$'#*'31**#1/.-/:'0-*0183$)/0%3'34#1+.'9%'$)W%/'-/$#'0#/3-.%*)$-#/'
o ")**#7'<22*#)04:'ambiguity'is'a'“gateway”'requirement'?'M,-.%/0%')3'$#'$4%'31**#1/.-/:'0-*0183$)/0%'
34#1+.'9%'0#/3-.%*%.'#/+;'$#'*%3#+,%')89-:1-$;R'74-04'813$'9%'-.%/$-5-%.'7-$4#1$'*%:)*.'$#'$4#3%'
0-*0183$)/0%3'>'S)-$'1/$-+')89-:1-$;'
'
Construing'terms'–'surrounding'circumstances'–'principles'unsettled'–'UK'/'Aus'divergence'
The'“true'rule”'in'!"#$%&'((HCA'1982)'appeared'to'adopt'the'narrow'approach:'T\'$4%'$*1%'*1+%'-3'$4)$'
%,-.%/0%'#5'31**#1/.-/:'0-*0183$)/0%3'-3').8-33-9+%'$#')33-3$'-/'$4%'-/$%*2*%$)$-#/'#5')'0#/$*)0$'if&$4%'
+)/:1):%'-3')89-:1#13'#*'3130%2$-9+%'#5'8#*%'$4)/'#/%'8%)/-/:C'Z1$'-$'-3'/#$').8-33-9+%'$#'0#/$*).-0$'$4%'
+)/:1):%'#5'$4%'0#/$*)0$'74%/'-$'4)3')'2+)-/'8%)/-/:CD'
UK'subsequently'clearly'adopted'the'broad'approach'in'1998:'Investors&Compensation&Scheme&Ltd&v&West&
Bromwich&Building&Society&GH]]IK&–&2%*'E#*.'^#558)//'
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
!
TA/$%*2*%$)$-#/'-3'$4%')30%*$)-/8%/$'#5'$4%'8%)/-/:'74-04'$4%'.#018%/$'7#1+.'0#/,%;'$#')'*%)3#/)9+%'
2%*3#/'4),-/:')++'$4%'9)0W:*#1/.'W/#7+%.:%'74-04'7#1+.'*%)3#/)9+;'4),%'9%%/'),)-+)9+%'$#'$4%'2)*$-%3'-/'
$4%'3-$1)$-#/'-/'74-04'$4%;'7%*%')$'$4%'$-8%'#5'$4%'0#/$*)0$CD'
'
EXTRINSIC'EVIDENCE'IN'CONSTRUING'A'CONTRACT'
Case'
Findings'
)$*+$,-(./0",+(1$,234$*(2(53,$6(7-+$,-'+3"-'%((
[2011]'HCA'
• F-321$%')*#3%')3'$#'74%$4%*'#*'/#$'_A'4).'$#'2);'
$4%'`a'0#88-33-#/'#/'3)+%3'8).%'9;'-$3'*%+)$%.'
0#82)/;R'G_ASFK'$#'@_@Y'3$#*%3'
• SM[')/.'_-*%4'A/$%*/)$-#/)+'G_AK'%/$%*%.'-/$#')/'
):*%%8%/$'1/.%*'74-04'SM['/%:#$-)$%.'#/'
9%4)+5'#5')/.'#$4%*7-3%')33-3$%.'_A'$#')0b1-*%'$4%'
8)3$%*'5*)/04-3%'5#*'@+#*-)'_%)/3'5#*'<13$*)+-)R'-/'
%604)/:%'5#*'SM['9%-/:'2)-.')'0#88-33-#/'#/'
T3)+%3'9;'_-*%4'A/$%*/)$-#/)+D'#5'2*#.10$3'$#'
@+#*-)'_%)/3'3$#*%3'G0+)13%'JKC'
• _-*%4')+$%*%.'-$3'913-/%33'3$*10$1*%R')/.')**)/:%.'
5#*')++'#5'-$3'3122+-%3'$#'@+#*-)'_%)/3'$#'9%'8).%'
9;')'*%+)$%.'0#82)/;'_ASF'G4).'$4%'3)8%'
#7/%*3')3'_AK'
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• Y+)13%'J'#5')'E%$$%*'#5'<:*%%8%/$'9%$7%%/'
S%3$%*/'M62#*$'[%*,-0%3'GSM[K')/.'_-*%4'
A/$%*/)$-#/)+'G_AK&'c/%'#5'$4%'2*-8)*;':#)+3'#5'
/%:#$-)$-#/3'7-$4'@_@Y'YcN(C'-3'$#'%3$)9+-34'
_ANM^'A"UMN"<UAc"<E'(Ud'EUFCR'#*')/')33#0-)$%.'
%/$-$;R')3')'*#)3$%*e3122+-%*'#5'@+#*-)'_%)/f3R'#*'
#$4%*'9*)/.%.'0#55%%3R'$%)3')/.'#$4%*'2*#.10$3'
5#*'3)+%'-/'@_@Y'[UcNM['-/'<13$*)+-)')/.'$#'@_@Y'
g)3$%*'h*)/04-3%%3'#*'@_@Y'[UcNM['-/'#$4%*'
0#1/$*-%3C'h#*'3)+%3'9;'_ANM^'A"UMN"<UAc"<E'
(Ud'EUFC'$#'@_@Y'[UcNM['-/'<13$*)+-)')/.'$#'
#$4%*'0#1/$*-%3R'SM['34)++'*%0%-,%')'0#88-33-#/'
#5'`a'#5'$4%'%6?5)0$#*;'2*-0%'#5'$4%'0#55%%3R'$%)3'
)/.'#$4%*'2*#.10$38'
Ø Trial'judge'Findings:'Y#1*$'7)3'*%b1-*%.'$#':-,%')'
0#88%*0-)+')/.'3%/3-9+%'0#/3$*10$-#/'$#'0+)13%'
JR')/.'$4)$'0#88-33-#/'7)3'2);)9+%'#/'3)+%3'9;'
)33#0-)$%.'%/$-$;'_ASF'
Ø NSW'Court'of'Appeal:'c,%*$1*/%.'$4%'.%0-3-#/'
Ø 'High'Court'refused'to'grant'leave,'but'issued'a'
short'statement'of'reasons:'T<00%2$)/0%'#5'$4%'
)22+-0)/$Q3'3198-33-#/R'0+%)*+;'7#1+.'*%b1-*%'
*%0#/3-.%*)$-#/'9;'$4-3'0#1*$'#5'74)$'7)3'3)-.'-/'
Codelfa&Construction&Pty&Ltd&v&State&Rail&
Authority'#5'"[S'9;'g)3#/'_R'7-$4'$4%'
0#/01**%/0%'#5'[$%24%/'_')/.'S-+3#/'_R'$#'9%'$4%'
T$*1%'*1+%D')3'$#'$4%').8-33-#/'#5'%,-.%/0%'#5'
31**#1/.-/:'0-*0183$)/0%3C''i/$-+'$4-3'0#1*$'
%89)*W3'12#/'$4)$'%6%*0-3%')/.'.-3)22*#,%3'#*'
*%,-3%3'74)$'7)3'3)-.'-/'CodelfaR'-/$%*8%.-)$%'
)22%++)$%'0#1*$3')*%'9#1/.'$#'5#++#7'$4)$'
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3)-.'9;'-/$%*8%.-)$%')22%++)$%'0#1*$3C'
U4%'2#3-$-#/'#5'CodelfaR')3'9-/.-/:')1$4#*-$;R'7)3'
8).%'0+%)*'-/'$4%'=#-/$'*%)3#/3'#5'5-,%'=13$-0%3'-/'
Royal&Botanic&Gardens&and&Domain&Trust&v&South&
Sydney&City&Council')/.'-$'34#1+.'/#$'4),%'9%%/'
/%0%33)*;'$#'*%-$%*)$%'$4%'2#-/$'4%*%C'
S%'.#'/#$'*%).')/;$4-/:'3)-.'-/'$4-3'0#1*$'-/'
Pacific&Carriers&Ltd&v&BNP&ParibasB'Toll&(FCGT)&Pty&
Ltd&v&Alphapharm&Pty&Ltd;&Wilkie&v&Gordian&
Runoff&Ltd&and&International&Air&Transport&
Association&v&Ansett&Australia&Holdings&Ltd&)3'
#2%*)$-/:'-/0#/3-3$%/$+;'7-$4'74)$'7)3'3)-.'9;'
g)3#/'_'-/'$4%'2)33):%'-/'Y#.%+5)'$#'74-04'7%'
4),%'*%5%**%.C'
^#7%,%*R'$4%'*%31+$'*%)04%.'9;'$4%'Y#1*$'#5'
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0#/3$*1%.')3'1/.%*3$##.'9;')'*%)3#/)9+%'2%*3#/'
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v <*:18%/$'7#1+.'0#/$*).-0$'$4%'0#/$*)0$'
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• M@Y'G$*).%.')3'V%*,%'M/%*:;K'7)3')'S<'
Ø High'Court'Findings:'
v S##.3-.%'7)3/Q$'-/'9*%)04'#5'0+'JCJ'G-C%C'
):*%%.'7-$4'S##.3-.%Q3'0#/3$*10$-#/K'
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
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%+%0$*-0-$;':%/%*)$#*')/.'3122+-%*''
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7-2$*+",*(!"D0$-*'+3"-(146$D$(E+#(2()$*+(
F,"DG346(FH3%#3-;(1"43$+9'[1998]'1'WLR'896'
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$4%8'$#'*%0#,%*'#1$3$)/.-/:'+#)/'.%9$3R'$4%'
Ø House'of'Lords'Findings:'[-:/-5-0)/0%'#5')'3-:/%.'
.#018%/$'>'9-/.-/:'1/+%33'%3$)9+-34%.'%60%2$-#/'
)22+-%3'
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+#)/'):*%%8%/$R'%)04'-3'9#1/.'9;'-$C'^),-/:'
%6%01$%.'$4%'.#018%/$R')/.'/#$'4),-/:'
9%%/'-/.10%.'$#'.#'3#'9;'5*)1.R'8-3$)W%R'#*'
8-3*%2*%3%/$)$-#/R'$4%'*%32#/.%/$3'0)//#$'
/#7'9%'4%)*.'$#'3);'$4)$'$4%;')*%'/#$'9#1/.'
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Document Summary
*note: parol evidence rule prevents the use of extrinsic evidence except when there are ambiguity. Process of construction: an objective test evidence of subjective intention not relevant - pacific carriers v bnp paribas, give words their natural and ordinary meaning. If words are capable of more than one meaning courts favour an interpretation that produces a reasonable commercial result - abc v apra; egc v woodside. Per lord denman in goss v lord nugent (1833) 110 er 713 at 716. Effect of the parol evidence rule what is excluded: excludes evidence of the parties" negotiations about the terms, whether it be oral or contained in some other piece of writing, such as notes or earlier (superseded) drafts. Exceptions to the parol evidence rule for interpreting terms: where there is ambiguity (e. g. to identify the parties or subject-matter) The surrounding circumstances may be admissible, where appropriate see next slide: verbal evidence cannot bring to interpret written contract.
