LAWS104 Study Guide - Final Guide: State Rail Authority, Independent Contractor, Oral Contract
25 Jun 2018
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EXPRESS TERMS
Terms and Representations
Terms
-Binding parts of a contract indicating parties’ obligations
-Breach of term may give right to termination and damages for breach
Representations
-Intended to induce but not made to be binding
-Merely representational with no promissory intent
-Misrepresentation does not amount to a breach
-Legal action is limited to actions in negligence or fraud, or misleading or deceptive conduct
-Rescission may be available for misrepresentation
Terms and Representations Test (Ellul & Ellul v Oakes)
-The importance of the statement
-The time that has elapsed between the making of the statement and the making of the agreement
-Whether the party making the statement as, vis-à-vis the other party, in a better position to ascertain the
truth of the statement
-Whether the statement was subsequently omitted when the agreement was embodied in a more formal
written document
Ellul & Ellul v Oakes The Elluls purchased a house from Oakes. In doing so they relied on a statement
contained in a real estate agent’s listening form that the property was sewered. This form had been signed by
Oakes. The property, however, was not sewered, and the Elluls claimed damages for the breach of contract.
The court held that the statement on the form amounted to a warranty forming part of the contract. Breach of
warranty resulted in an award of damages representing the cost of connecting the house to the sewer.
Oscar Chess Ltd v Williams Williams traded in what he believed to be a 1948 model car for a newer car.
Months later, Oscar Chess Ltd found out that the car was actually a 1939 model and therefore worth much
less. They brought an action for breach of contract. The court held that the statement relating to the age of the
car was not a term but a representation and that the car dealer had the greater knowledge and would be in a
better position to know the age of the manufacture.
Dick Bentley Productions v Harold Smith Motors The plaintiff purchased a car from the defendant (a
dealer). The dealer stated that the car had only done 20,000 miles since it was last fitted with new parts. The
statement about mileage was untrue. The plaintiff sought damages for breach of contract. The court held that
the statement was a term as the defendant was a car dealer and had greater expertise and the claimant relied
upon that expertise.
J J Savage & Sons v Blakney Blakney entered into a contract with Savage to have a boat built. During the
negotiations Savage said that the boat would, when fitted with a particular engine, have an estimated speed of
15 mph. No reference was made to this speed in the subsequent written contract. The boat did not go 15 mph
and Blakney sued for breach. The issue raised was whether there was a promise that the boat would attain the
stated speed, as there would be a collateral contract only if the statement was promissory. The court held that
it did not amount to a collateral contract as it was an option, rather than a promise. This is in part due to the
fact that Blakney could have required the speed provision to be incorporated in the specifications (express
term), sought a promise that the speed would be attained (collateral contract), form his own judgement.
Signature Rule
-A signature has the legal effect of signifying that a party has read, understood and assents to the
contract
-Exceptions to the signature rule
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oWhen the signature has been obtained unfairly (misrepresentation, duress, or other vitiating
factors) (L’Estrange v F Graucob Ltd)
oWhen the document being signed cannot reasonably be considered a contractual document
(e.g. because it appears to have another function such as being a receipt)
oWhen the conditions are unusually onerous and there was no reasonable notice
L’Estrange v F Graucob The plaintiff, L’Estrange, entered into a contract to buy a cigarette vending machine.
The machine did not work and the plaintiff sued for breach of an implied warranty that the goods were fit for
purpose. The defendant relied on an exclusion clause in the contract which excluded such implied warranties
but the plaintiff did not know that the contract contained this clause. The court held that when a document is
signed, it is immaterial that a party has not read it or does not know. As there was no fraud or
misrepresentation here, the plaintiff was bound by the exclusion clause.
Toll (FGCT) v Alphapharm Finemores entered into a signed contract with Richard Thomson Pty (said to be
acting for Alphapharm) to store and transport goods being imported for Alphapharm. It was alleged that
Finemores performed this contract negligently, causing loss to Alphapharm. Finemores sought to escape
liability by relying upon an exclusion clause in its contract with Richard Thomson. The court held that it was
reasonable for Finemores to treat the signature as an assent to the conditions provided on the document
signed.
Curtis v Chemical Cleaning & Dyeing Curtis took a wedding dress to the defendant’s shop for cleaning. She
was handed a receipt which she was asked to sign and told that it included that the company would not accept
liability for certain risks, including damage to beads and sequins. The receipt also stated ‘this or these articles is
accepted on condition that the company is not liable for any damage howsoever arising, or delay.’ The dress
was returned with a stain and Curtis claimed damages, whilst the defendants sought to rely on the exclusion
clause in the receipt. The court held that there had been an innocent misrepresentation as to the scope of the
exclusion clause contained in the receipt and the company could therefore not rely on it.
Incorporation by Notice – Timing
-The notice of the term has to be given at or before the entering into of the contract (Baltic Shipping Co
v Dillon)
Olley v Marlborough Court The claimant book into a hotel. The contract was made at the reception desk
where there was no mention of an exclusion clause. In the hotel room, on the back of the door, a notice
sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. The claimant had
her fur coat stolen. The court held that the notice was ineffective as the contract had already been made by
the time the claimant had seen the notice. Therefore, it did not form part of the contract.
Thornton v Shoe Lane Parking The plaintiff drove to the entrance of defendant’s multistorey car park and
received a ticket from a machine. This ticket referred to certain ‘conditions of issue’ which could be found
inside the premises. The plaintiff proceeded into the car park and while there suffered personal injury due to
the defendant’s fault. However, the defendant denied liability because of the terms of an exclusion clause
displayed a pillar inside the car park. It argued that these terms formed part of its contract with the plaintiff.
The court held that the notice was ineffective as the contract had already been made by the time the claimant
had seen the notice. Therefore, it did not form part of the contract. If the terms written inside the car parking
were to be incorporated, it would be impractical (Megaw LJ)
Incorporation by Notice – Reasonableness
-If a party actually knows that the document or sign contains contractual terms, then he or she is bound
irrespective of whether the document or sign has been read (Parker v South Eastern Railway Co)
-In the absence of actual knowledge, the delivery of the document or the placing of the sign must be
done in such a way that the other party can be taken to have been given reasonable notice of the terms
(Parker v South Eastern Railway Co)
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Document Summary
Binding parts of a contract indicating parties" obligations. Breach of term may give right to termination and damages for breach. Intended to induce but not made to be binding. Misrepresentation does not amount to a breach. Legal action is limited to actions in negligence or fraud, or misleading or deceptive conduct. Terms and representations test (ellul & ellul v oakes) Whether the party making the statement as, vis- -vis the other party, in a better position to ascertain the. The time that has elapsed between the making of the statement and the making of the agreement truth of the statement. Whether the statement was subsequently omitted when the agreement was embodied in a more formal written document. Ellul & ellul v oakes the elluls purchased a house from oakes. In doing so they relied on a statement contained in a real estate agent"s listening form that the property was sewered.
