Topic 6: Contract Law_ Terms of a Contract and Non-Contractual Representations
<Express terms>
# The term of the contract are the specific details of the agreement, including each party’s rights and obligations under a
contract (recognised by law, usually arrived at as a result of negotiations) #
May be implied either by the courts and/ or any relevant s3tatutory terms (parliament)
Representations and promises
Mere representation – the statement is not part of the content of a contract (term)
“A statement of fact, which is not true, stands outside the contract and induces someone to enter into a contract”
To determine whether a statement is promissory (a term) or mere representation, the court will look at all the
circumstances and factors:
The language used – certain expressions have a promissory quality (eg. “I guarantee”), others are merely
representational (eg. “I would think/ estimate”)
The relative knowledge and expertise if the parties – statements by an expert to an inexperienced party are more likely
to be promissory
The important of the statement – inquiries on specific matters suggest their important to the inquirer, such that the
other party’s response would indicate an intention to be bound
The time between making the statement concluding the contract – the longer the interval the more likely the statement
is a representation
The failure to include a statement in the written contract – some indication that it was not intended to be a term
# Oscar chess v Williams # Handbury v Nolan
There are 3 types of misrepresentation:
Innocent – recession only (balance justice) # Derry v Peek
Get an expert -> but they made mistake -> assume it’s real -> believe
Negligent – recession and damages # Esso Petroleum v Mardon
Truly believe it’s real, but not getting an art expert to check (trust the seller)
Fraudulent – recession plus damages # Derry v Peek
Make a claim that it’s real
,Parol evidence rule – if the contract is fully and completely in writing, no oral evidence will be allowed to add/ modify
Exceptions:
1) The contract is held to be partly written and partly oral
# Van Den Esschert v Chappell
2) The pre-contractual statement is a collateral contract + written
# De Lassalle v Guildford
If a court determines that the contract is partly written and partly oral, then that oral statement is considered to be a term
of the contract
Condition (essential): remedy – recession + damages # Associated Newspapers Ltd v Bancks
Warranty (non-essential): remedies – damages only # Bettini v Gye
# The difference between the two types of terms will determine the contractual damages and thus, remedy #
Collateral contract – the statement was intended to have contractual significance and one of the parties would not have
entered into the main contract without it
There are 3 prerequisites to the application of a collateral contract argument:
There must be no inconsistency with the main contract # Hoyt’s Ltd v Spencer
The statement made must be promissory in nature # JJ Savage & Sons v Blakney
There must be consideration given for the collateral promise made
# Apart from these alternative arguments at common law, there may also be grounds for breaching certain statutory
provisions of the ACL #
If the other party was tricked or deceived into entering a contract, they can commerce a legal action using the
statutory provisions in the ACL that prohibit misleading or deceptive conduct – s18 (false representation and
other unfair practices)
There are two ways by which a term becomes an express term of the contract:
Signed document
# A contract that has been signed by the parties, it is a binding and enforceable term of the contract, even if one of the
parties has no actually read and understood the written contract #
# L’Estrange v F Graucob Ltd
Unless – There is fraud or misrepresentation # Curtis v Chemical Cleaning & Dyeing Co
Situations where a signed contract may be unenforceable:
Cooling off periods – a period for a signatory to the contract in which a party may change his/ her mind and not
proceed with the contract
Usually 7 days to change mind
, Non est factum (It’s not my deed) – where a party is mistaken as to the nature of the document signed
eg. one of the parties was unware of the contract contents due to disability/ or disadvantages, not
knowing about the document that signed; but cannot be careless
# Petelin v Cullen
Unsigned document
# A statement is not contained in written and signed contract, will only be an express term of the contract if the other party
had reasonable notice of the statement #
Usually referred to “ticket” cases – given when goods are left in another cares (eg, dry cleaners, carpark)
General rules:
A term must be brought to the attention of the other party before the contract is formed
# Thomton v Shoe Lane Parking Ltd
It must be brought to that person’s attention in a reasonable way
# Causer v Browne
It must be clear that it is a term of the contract
# Thomson v London, Midland and Scottish Railway
Therefore, tickets are not view as contractual documents
If, however actual notice or reasonable notice is given of the existence of the exclusion clause, prior to the
completion of the contract, then the exclusion clause will form part of the contract
Whereby, a party is advised of the existence of the exclusion clause and given a choice as to whether or not wish to
proceed with the transaction
“An exclusion clause (disclaimer) brought to the attention of another after the contract has already been formed will not
be a term of the contract because reasonable notice was not given prior to the contract’s completion”
# Olley v Marlborough Court
Exemption clause (given term)
Exclusion clauses
Limitation clauses, ACL
# Where one party try to lower/ eliminate liability for breaching contract or being negligent (to protect themselves) #
Contra proferentum rule – against the party seeking its application (defendant)/ helping plaintiff
If the exclusion is considered to be part of the contract for either reason, then the wording of that exclusion will
be considered by a court in order to determine if the exclusion clause is appropriately worded to cover exclusion from the
liability
# White v John Warwick & Co
Fundamental breach – rule created by court to assist people to get around exemption clause
<Express terms>
# The term of the contract are the specific details of the agreement, including each party’s rights and obligations under a
contract (recognised by law, usually arrived at as a result of negotiations) #
May be implied either by the courts and/ or any relevant s3tatutory terms (parliament)
Representations and promises
Mere representation – the statement is not part of the content of a contract (term)
“A statement of fact, which is not true, stands outside the contract and induces someone to enter into a contract”
To determine whether a statement is promissory (a term) or mere representation, the court will look at all the
circumstances and factors:
The language used – certain expressions have a promissory quality (eg. “I guarantee”), others are merely
representational (eg. “I would think/ estimate”)
The relative knowledge and expertise if the parties – statements by an expert to an inexperienced party are more likely
to be promissory
The important of the statement – inquiries on specific matters suggest their important to the inquirer, such that the
other party’s response would indicate an intention to be bound
The time between making the statement concluding the contract – the longer the interval the more likely the statement
is a representation
The failure to include a statement in the written contract – some indication that it was not intended to be a term
# Oscar chess v Williams # Handbury v Nolan
There are 3 types of misrepresentation:
Innocent – recession only (balance justice) # Derry v Peek
Get an expert -> but they made mistake -> assume it’s real -> believe
Negligent – recession and damages # Esso Petroleum v Mardon
Truly believe it’s real, but not getting an art expert to check (trust the seller)
Fraudulent – recession plus damages # Derry v Peek
Make a claim that it’s real
,Parol evidence rule – if the contract is fully and completely in writing, no oral evidence will be allowed to add/ modify
Exceptions:
1) The contract is held to be partly written and partly oral
# Van Den Esschert v Chappell
2) The pre-contractual statement is a collateral contract + written
# De Lassalle v Guildford
If a court determines that the contract is partly written and partly oral, then that oral statement is considered to be a term
of the contract
Condition (essential): remedy – recession + damages # Associated Newspapers Ltd v Bancks
Warranty (non-essential): remedies – damages only # Bettini v Gye
# The difference between the two types of terms will determine the contractual damages and thus, remedy #
Collateral contract – the statement was intended to have contractual significance and one of the parties would not have
entered into the main contract without it
There are 3 prerequisites to the application of a collateral contract argument:
There must be no inconsistency with the main contract # Hoyt’s Ltd v Spencer
The statement made must be promissory in nature # JJ Savage & Sons v Blakney
There must be consideration given for the collateral promise made
# Apart from these alternative arguments at common law, there may also be grounds for breaching certain statutory
provisions of the ACL #
If the other party was tricked or deceived into entering a contract, they can commerce a legal action using the
statutory provisions in the ACL that prohibit misleading or deceptive conduct – s18 (false representation and
other unfair practices)
There are two ways by which a term becomes an express term of the contract:
Signed document
# A contract that has been signed by the parties, it is a binding and enforceable term of the contract, even if one of the
parties has no actually read and understood the written contract #
# L’Estrange v F Graucob Ltd
Unless – There is fraud or misrepresentation # Curtis v Chemical Cleaning & Dyeing Co
Situations where a signed contract may be unenforceable:
Cooling off periods – a period for a signatory to the contract in which a party may change his/ her mind and not
proceed with the contract
Usually 7 days to change mind
, Non est factum (It’s not my deed) – where a party is mistaken as to the nature of the document signed
eg. one of the parties was unware of the contract contents due to disability/ or disadvantages, not
knowing about the document that signed; but cannot be careless
# Petelin v Cullen
Unsigned document
# A statement is not contained in written and signed contract, will only be an express term of the contract if the other party
had reasonable notice of the statement #
Usually referred to “ticket” cases – given when goods are left in another cares (eg, dry cleaners, carpark)
General rules:
A term must be brought to the attention of the other party before the contract is formed
# Thomton v Shoe Lane Parking Ltd
It must be brought to that person’s attention in a reasonable way
# Causer v Browne
It must be clear that it is a term of the contract
# Thomson v London, Midland and Scottish Railway
Therefore, tickets are not view as contractual documents
If, however actual notice or reasonable notice is given of the existence of the exclusion clause, prior to the
completion of the contract, then the exclusion clause will form part of the contract
Whereby, a party is advised of the existence of the exclusion clause and given a choice as to whether or not wish to
proceed with the transaction
“An exclusion clause (disclaimer) brought to the attention of another after the contract has already been formed will not
be a term of the contract because reasonable notice was not given prior to the contract’s completion”
# Olley v Marlborough Court
Exemption clause (given term)
Exclusion clauses
Limitation clauses, ACL
# Where one party try to lower/ eliminate liability for breaching contract or being negligent (to protect themselves) #
Contra proferentum rule – against the party seeking its application (defendant)/ helping plaintiff
If the exclusion is considered to be part of the contract for either reason, then the wording of that exclusion will
be considered by a court in order to determine if the exclusion clause is appropriately worded to cover exclusion from the
liability
# White v John Warwick & Co
Fundamental breach – rule created by court to assist people to get around exemption clause
