Revision

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• Revision

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• Acceptance
• Final Unqualified
• Communication of acceptance
• Postal Rule

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• Consideration
• What is it?
• Privity of Contract
• Value of consideration
• Past Consideration
• Part Payment of a debt
• Promise to perform an existing contract
• Certainty
• Courts will uphold a bargain if possible

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• Terms of the Contract

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• What are the Terms
• Terms can be
• Express
• In writing
• Oral
• Partly in writing and partly oral
• Implied
• By the Courts
• By legislation

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• Express Terms
• The terms of the contract are ascertained by
  examining the evidence
• Not all pre-contractual statements become terms
  of the contract

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• Express Terms (cont.)
• Meaning of the terms may not be clear
• Where the parties have used language that is
  incapable of any precise meaning the contract may
  be void for uncertainty
• It is not the role of the Court to make a bargain
  for people
• However, the Courts are reluctant to destroy a
  bargain

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• Pre-Contract Representations
• An oral statement can be a term
• Only promissory statements become terms
• All other statements are mere representations
• A statement does not have to be in the form of a
  promise to be promissory
• Remedies
• Term of contract Remedy for breach of contract
• Representation law of misrepresentation
• Mere puff no remedy

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• Reasonable Bystander Test
• Which statements and representations would a
  reasonable bystander, aware of the circumstances
  of the case, regard as promissory?
• The test is objective
• Parties actual intention is irrelevant

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• Reasonable Bystander Test (cont)
• Guidelines
• Was the representation included in a written
  document
• When, in the negotiations, was the representation
  made
• Did the representation sound promissory
• How objectively important is the representation
  to the whole deal
• Did either party have special knowledge about the
  subject matter of the representation

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• Was There a Written Document?
• If the statement was included in a document drawn
  up by the parties then this is good evidence that
  the parties regarded the statement as
  sufficiently important to be a term
• Alternatively, if it is left out, that indicates
  that the parties did not intend it to be a term.
• State Rail Authority of NSW v Heath Outdoor Pty
  Ltd (SOR p131)
• This is not conclusive of itself, it is merely
  one matter to be considered

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• When was the statement made?
• How much time elapsed between the representation
  and the making of the contract?
• Statements made only once early in negotiations
  are less likely to become terms.
• Van Den Esschert v Chappel (SOR p132)

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• How Important was the Statement
• Must be judged in the context of the negotiations
• Van Den Esschert v Chappel (SOR p132)
• Hospital Products v United States Surgical (SOR
  p134)
• What words were used
• The more precise the language, the more likely it
  is a term
• Ross v Allis-Chalmers Australia (SOR p133)

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• Did a Party have Special Knowledge?
• Did one party rely on the others expertise or
  special knowledge rather than form its own
  judgement
• Oscar Chess v William (SOR p130)
• Esso Petroleum v Mardon (SOR p134)

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• Parol Evidence Rule
• Courts presume that written formal contracts that
  appear to be a complete record of the agreement,
  contain the whole agreement
• Courts will not let a party subtract from, add
  to or contradict the language of the written
  agreement

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Implied Terms
Terms implied by the Courts
Terms implied by Statute
Implied as a matter of law
Implied as a matter of fact
Past Dealings
Business efficacy
Trade Custom
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• Terms Implied by the Courts
• Cannot conflict with express terms
• Must not be unreasonable or unjust in the
  circumstances
• Implied as a matter of law
• Common situations which are so settled that terms
  go without saying
• Implied as a matter of fact
• Arise out of the particular facts of the case

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• Terms Implied as a Matter of Law
• Professionals and Clients
• Professional must use reasonable care and skill
• Service Contracts
• Provider must take reasonable care and skill in
  providing the service
• Service must be reasonably fit for the purpose
  for which it was acquired
• Costa Vraca v Berrigan Weed Pest Control (SO
  p159)

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• Terms Implied as a Matter of Law (cont.)
• Work and Materials
• Contractor must use reasonable care
• Services must be fit for the purpose for which
  they were acquired
• Materials must be of good quality
• Reg Glass v Rivers Locking Systems (SO p158)
• Helicopter Sales v Rotor Work (SO p158)

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• Terms Implied as a Matter of Law (cont.)
• Hire Contracts
• Goods are reasonably fit for the purpose for
  which they are hired
• Landlord Tenant
• Landlord must give the tenant quiet enjoyment
  of the premise
• Tenant must
• Pay rent
• Act in tenant-like manner

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• Terms Implied as a Matter of Law (cont.)
• Employment Contracts
• Employer must
• Provide a safe system of work
• Not require employee to do an unlawful act
• Employee must
• Obey reasonable instructions
• Use reasonable level of skill and competence
• Act in good faith to employer
• Keep employers trade secrets confidential

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• Terms Implied as a Matter of Fact
• Past dealings
• Custom or trade usage
• To make the contract effective

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• Past Dealings
• Term is clearly identifiable
• Previous dealings are numerous and consistent
• Present dealing fits into the course of dealing
• No conflict between implied term and an express
  term
• Henry Kendall v William Lillico (SO p181)

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• Custom or Trade Usage
• Can state term with precision
• Custom is so well known widespread that all
  contracts can be said to have the term
• Custom is reasonable
• No conflict with an express term
• British Crane Hire v Ipswich Plant Hire (SO p161)

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• To Make a Contract Effective
• Term is capable of clear and precise expression
• The term is necessary to make the contract
  effective not just reasonable
• The term is obvious (officious bystander test)
• The term is fair equitable to both parties
• No conflict with an express term
• The Moorcock (SO p162)
• Codelfa Constructions v State Rail Authority (SO
  p163)

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• Exemption Clauses
• A clause that limits or excludes the consequences
  of a breach of a partys obligations
• Courts are biased against them
• Bias is less noticeable in commercial contracts
• Courts adopt a 2 step process
• Has the exemption clause become a term of the
  contract?
• If so, does it cover the breach in question?

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• Is It a term of the contract?
• Essentially the same test as for all terms
• An exclusion clause cannot be incorporated after
  the contract has been made (e.g. parking ticket)
• Past dealings may imply an exemption clause but
  the Courts are reluctant to do this
• Signed documents will usually be binding even if
  the party was unaware of the term unless
• Signed document could not reasonably be regarded
  as likely to contain contractual terms
• Estoppel exists
• Exemption clause has been misrepresented
• See Curtis v Chemical Cleaning Co (SOR p142)

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• Is It a term of the contract?
• Unsigned exemption clauses will be binding if
• The innocent party was aware of it or
• reasonable notice of it has been given to the
  innocent party
• before the contract is made.

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• What is reasonable notice (cont)
• What is reasonable notice depends on
• The nature of the document
• The nature of the transaction and
• The nature of the exemption clause.
• Would it be reasonable to expect the document to
  contain an exemption clause (e.g. a receipt)

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• What is reasonable notice
• Is the transaction one where you would expect an
  exemption clause to exist
• The wider the exemption the greater the steps to
  be taken to bring it to the attention of the
  other party
• Cases
• Thornton v Shoe Lane Parking (p144)
• Parker v South Eastern Railway (p126)
• Oceanic Sun Line Special Shipping v Fay (p127)
• DJ Hill Co v Walter H Wright Pty Ltd (p124)

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• Does the Clause Cover the Breach?
• Courts will examine the clause carefully to
  determine its effect and limit its scope where
  possible
• Generally, the Courts will give effect to the
  parties intentions as evidenced by the natural
  and ordinary meaning of the words
• There are 3 rules that courts use to limit
  exemption clauses
• The Contra Preferendum rule
• Negligence Clauses
• The Four Corners Presumption

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• Contra Preferendum Rule
• Any ambiguities in the exemption clause will be
  construed against the party seeking to rely on
  the clause
• Andrews Bros v Singer Car Co (SOR p145)
• Alex Kay v General Motors Acceptance Corp
  Hartford Fire Insurance (SOR p145)

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• The Negligence Rule
• Liability for negligence may be expressly or
  impliedly excluded but if the words could
  reasonably be applied to protect against some
  ground of liability other than negligence, then
  liability for negligence will not be excluded
• White v John Warick Co (SOR p146)
• To exclude liability for negligence, clear words
  are required
• Tech Pacific v Air Pacific (SOR p146)

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• The 4 Corners Presumption
• The exemption clause will only cover matters
  within the 4 corners of the contract
• Whether an event falls outside the contract
  depends on the reasonable person test would a
  reasonable person aware of the terms of the
  contract conclude that the parties must have had
  the relevant event in mind in drawing up the
  contract.
• Sydney Corporation v West (SOR p148)
• TNT v May Baker (SOR p149)
• Darlington Futures v Delco Australia (SOR p149)

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• Statutory Reforms
• In many cases, it is Illegal to attempt to
  exclude terms implied by statute e.g. Trade
  Practices Act
• Attempting to exclude statutory liability (where
  not permitted) may be misleading and deceptive
  conduct contrary to section 51 of the Trade
  Practices Act