Incorporation of Terms – Structure of Answer
Textbook: 217 (written), 234 (oral), Q & A: 69 (oral), Study Guide: 87
Incorporating written, signed document
1. General rule: Where a party signs a document, that party is generally bound by
its terms. The signature indicates agreement to the terms contained in it
(L’estrange v Graucob)
a. Can be displaced by:
i. Proving parties did not assent to the terms (Olley v Malborough)
ii. Person relying on clause misrepresented its effect (Curtis v Chemical)
iii. Document signed is thought o have no contractual effect (DJ Hill v
iv. Person signing can plead non est factum (Petelin v Cullen)
Incorporating written, unsigned document
1. General rule: The party may be bound by a clause on an unsigned document,
even if unaware of the existence of the term, if reasonable notice was given of
the existence of the term, and the notice was given on or before contract
formation (Parker v South Eastern Railway).
a. Relevant whether the document was one which is assumed by a reasonable
person to be contractual in nature (Causer v Browne)
b. Does not matter that party cannot read the term (Thompson v LMS Railway)
Incorporating by signs, websites, notices etc
1. General rule: The party may be bound by a clause on a sign, website or notice,
even if actually unaware of the existence of the term, if reasonable notice was
given to the class of whom the recipient belonged, of the existence of the term,
and the notice was given on or before contract formation (Balmain New Ferry v
Incorporating oral terms
1. “A statement made before a contract may be a puff, term, representation or form
the basis of a collateral contract.”
2. Puffery: There are no common law consequences that arise from such sales
talk, however the statement-maker may be in breach of the Trade Practices Act
1974 or the Fair Trading Act (Qld).
3. Representation or Term: Whether a statement is a term or representation
depends on the intention of the parties viewed objectively as to whether the
statement is promissory or merely an inducement to contract (Oscar Chess).
There are some developed subsidiary tests to assist in the determination of this
a. The words and conduct of the parties – if the statement is important in the
minds of the parties it is probably a term
b. If there is a long interval of time between the statement and the conclusion of
the contract – the statement is probably not a term
c. If it is an oral statement not reduced into writing, it is probably not a term
d. If one party is in a better position to ascertain the truth of the statement, it is
probably a term
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e. If the statement-maker has control of the information it is probably a term.
4. State that it is a qualitative not quantitative balance. Come to conclusion.
5. If it is a representation:
a. Breach can result in a remedy under legislation or the common law.
i. If common law misrepresentation is:
1. Innocent = rescission of the contract
2. Negligent = rescission and damages
3. Fraudulent = rescission and damages
6. If it is a term:
a. The statement is promissory.
b. Need to address parol evidence rule
i. Where there is a written document, it is presumed to contain all the
terms, and evidence of oral terms is inadmissible to add to, vary or
contradict the written document (Mercantile Bank of Sydney v Taylor)
ii. Rule does not apply where the parties intend a contract o be partly in
writing and partly oral (Couchman v Hill)