What are the express terms? What have the parties promised?
(week 1)
What have the parties by their words (written and/or oral) promised one another
as part of their contract?
Express terms may be incorporated into the parties contract by signature, notice or
course of dealing, found in statements made by parties during pre-contractual
negotiations, or by a combination of these two
1) Terms incorporated by signature
o The general rule is that a party is bound by all the terms set out in a contractual
document if s/he has signed it, regardless of whether s/he read the document or not
(L’Estrange) and no matter whether the terms are unusual or onerous (Toll).
o …unless there has been:
● fraud or misrepresentation (L’Estrange; Curtis; Toll) or
● duress, mistake (eg non est factum) or
● other vitiating circumstance (L’Estrange; Toll)
Non est factum: this doctrine allows a signing party to escape performance of the agreement,
where the signature on the contract was signed by fraud, misrepresentation or mistake. It makes
it void ab intio. However this is hard to claim as it does not allow for negligence on the part of
the signatory.
2) Terms incorporated by notice
o P will be taken to have accepted those terms:
● Timing - Notice must be given before the contract was formed (Olley v
Marlborough Court; Thornton, Oceanic Sun Line).
● Knowledge - Where P knew of the term(s), or was aware the document
contained terms, at the time P entered into the contract (Thornton); or
● Reasonable Notice - Where D has done what was reasonable in the
circumstances to give P notice of the term; notice must be reasonable having
regard to the type of contract and nature of the term: (Thornton; Oceanic Sun
Line; Baltic Shipping).
3) Course of Dealings
Although notice of a term may come too late to be incorporated on the first occasion, it may be
incorporated if a party does repeat dealings with another and:
● The party knew/reasonably should have known that the other party contracted on
that term (Henry Kendall; Balmain New Ferry v Robertson)
, ● Dealings must be uniform (McCutcheon v MacBrayne) and regular (Henry
Kendall)
● Document containing the term must have been reasonably considered or treated
by the par es as a contractual document and not as a mere receipt (Hill v Wright ;
Rinaldi)
Are there any pre-contractual statements?
Does the parol evidence rule apply?
(weeks 2 and 3)
Can the pre-contractual statement be a term of the contract?
A pre-contractual statement is statements made during negotiations before the formal contract
has been formed. The question of this is whether or not the pre-contractual statement/s are
binding on the parties and whether or not the statement/s made during negotiations are
enforceable.
Step 1 - is evidence of the pre-contractual statement(s) admissible?
● admissible if the contract is oral or part oral/part written (SRA v Heath)
● …but if the contract is in writing… consider the effect of the parol evidence rule :
...where the contract is recorded wholly in writing. Courts assume all terms will be
included in writing and will be known to both parties (Codelfa ; Hoyts v Spencer)
Parol evidence rule - A rule which does not allow parties to vary or add to a contract that is
wholly in writing, so if there’s a finalised agreement in writing. For some statements, those pre-
contractual statements were made prior to the finalisation but they weren’t included in the
written document. Technically those statements under this rule are excluded from being part of
the contract. (no extrinsic evidence to apply where the contract is wholly in writing).
When does the parol evidence rule apply?
Only where court is satisfied the document (writing) was intended by parties to be the whole
contract:
● Traditional (strict) approach: where the document appears on its face to be a complete
record it will be taken to be a contract in writing and the parol evidence rule applies
(Thorne v Borthwick).
● More lenient approach – parol evidence rule has 'no operation until it is first
determined that the terms of the agreement are wholly in writing' - extrinsic
evidence admissible to determine this issue (SRA v Heath Outdoors; Masterton Homes
v Palm Assets).
If the more lenient approach is taken, the parol evidence rule has no application until it is first
determined that the parties intended the written document to contain all terms of their contract.
Extrinsic evidence will be admitted to establish whether or not the parties intended the written
, document to be supplemented by the promissory statements made during negotiations.The
lenient approach has more support in recent Australian cases, but the matter has not
been conclusively resolved by the high court.
How to get around the PER
a) The contract is not wholly in writing
Part oral/part written contract -
o Argue the contract is to be found in oral statements made in pre-contractual negotiations as
well as in the written document – part oral/written (SRA v Heath ; Masterton Homes)
● Distinguish facts from SRA – e.g. in SRA the person who made the
statement was in no position to do so, however in this case…
● You cannot have a part oral/part written contract when they contradict
each other (Hoyt’s).
● Establish whether the statement is promissory:
○ What would the intelligent bystander understand???
- Language: unequivocal statement? (JJ Savage)
- Time of statement? (Oscar Chess).
- Was the term important? Assessed objectively (Oscar Chess,
Hospital Products).
- Was lessor in position to make a promise? Relevant knowledge
or expertise of parties. (Oscar Chess; Dick Bentley).
b) Estoppel - the pre-contractual statement provides the foundations for an
estoppel (Saleh)
o Some agree pre-contractual statements made before a written contract can attract an
estoppel claim, in which case extrinsic evidence is admissible (Saleh v Romanous).
o The courts are reluctant to allow too much of this practice (Norco).
o Must have:
a. Assumption
b. Inducement
c. Reliance
d. Detriment
c) Collateral contract - the pre-contractual statement formed the basis for a
separate contract to the written contract - one party making a promise in
connection but independent from the main contract. (Hoyts).
o Where one party makes a promise connected to but independent of
contract – in exchange for which the other party enters the main
contract (Esso v Commissioners ; JJ Savage v Blankney) e.g. I
promise to give you a DVD player if you buy a TV before 1 st of August.
(week 1)
What have the parties by their words (written and/or oral) promised one another
as part of their contract?
Express terms may be incorporated into the parties contract by signature, notice or
course of dealing, found in statements made by parties during pre-contractual
negotiations, or by a combination of these two
1) Terms incorporated by signature
o The general rule is that a party is bound by all the terms set out in a contractual
document if s/he has signed it, regardless of whether s/he read the document or not
(L’Estrange) and no matter whether the terms are unusual or onerous (Toll).
o …unless there has been:
● fraud or misrepresentation (L’Estrange; Curtis; Toll) or
● duress, mistake (eg non est factum) or
● other vitiating circumstance (L’Estrange; Toll)
Non est factum: this doctrine allows a signing party to escape performance of the agreement,
where the signature on the contract was signed by fraud, misrepresentation or mistake. It makes
it void ab intio. However this is hard to claim as it does not allow for negligence on the part of
the signatory.
2) Terms incorporated by notice
o P will be taken to have accepted those terms:
● Timing - Notice must be given before the contract was formed (Olley v
Marlborough Court; Thornton, Oceanic Sun Line).
● Knowledge - Where P knew of the term(s), or was aware the document
contained terms, at the time P entered into the contract (Thornton); or
● Reasonable Notice - Where D has done what was reasonable in the
circumstances to give P notice of the term; notice must be reasonable having
regard to the type of contract and nature of the term: (Thornton; Oceanic Sun
Line; Baltic Shipping).
3) Course of Dealings
Although notice of a term may come too late to be incorporated on the first occasion, it may be
incorporated if a party does repeat dealings with another and:
● The party knew/reasonably should have known that the other party contracted on
that term (Henry Kendall; Balmain New Ferry v Robertson)
, ● Dealings must be uniform (McCutcheon v MacBrayne) and regular (Henry
Kendall)
● Document containing the term must have been reasonably considered or treated
by the par es as a contractual document and not as a mere receipt (Hill v Wright ;
Rinaldi)
Are there any pre-contractual statements?
Does the parol evidence rule apply?
(weeks 2 and 3)
Can the pre-contractual statement be a term of the contract?
A pre-contractual statement is statements made during negotiations before the formal contract
has been formed. The question of this is whether or not the pre-contractual statement/s are
binding on the parties and whether or not the statement/s made during negotiations are
enforceable.
Step 1 - is evidence of the pre-contractual statement(s) admissible?
● admissible if the contract is oral or part oral/part written (SRA v Heath)
● …but if the contract is in writing… consider the effect of the parol evidence rule :
...where the contract is recorded wholly in writing. Courts assume all terms will be
included in writing and will be known to both parties (Codelfa ; Hoyts v Spencer)
Parol evidence rule - A rule which does not allow parties to vary or add to a contract that is
wholly in writing, so if there’s a finalised agreement in writing. For some statements, those pre-
contractual statements were made prior to the finalisation but they weren’t included in the
written document. Technically those statements under this rule are excluded from being part of
the contract. (no extrinsic evidence to apply where the contract is wholly in writing).
When does the parol evidence rule apply?
Only where court is satisfied the document (writing) was intended by parties to be the whole
contract:
● Traditional (strict) approach: where the document appears on its face to be a complete
record it will be taken to be a contract in writing and the parol evidence rule applies
(Thorne v Borthwick).
● More lenient approach – parol evidence rule has 'no operation until it is first
determined that the terms of the agreement are wholly in writing' - extrinsic
evidence admissible to determine this issue (SRA v Heath Outdoors; Masterton Homes
v Palm Assets).
If the more lenient approach is taken, the parol evidence rule has no application until it is first
determined that the parties intended the written document to contain all terms of their contract.
Extrinsic evidence will be admitted to establish whether or not the parties intended the written
, document to be supplemented by the promissory statements made during negotiations.The
lenient approach has more support in recent Australian cases, but the matter has not
been conclusively resolved by the high court.
How to get around the PER
a) The contract is not wholly in writing
Part oral/part written contract -
o Argue the contract is to be found in oral statements made in pre-contractual negotiations as
well as in the written document – part oral/written (SRA v Heath ; Masterton Homes)
● Distinguish facts from SRA – e.g. in SRA the person who made the
statement was in no position to do so, however in this case…
● You cannot have a part oral/part written contract when they contradict
each other (Hoyt’s).
● Establish whether the statement is promissory:
○ What would the intelligent bystander understand???
- Language: unequivocal statement? (JJ Savage)
- Time of statement? (Oscar Chess).
- Was the term important? Assessed objectively (Oscar Chess,
Hospital Products).
- Was lessor in position to make a promise? Relevant knowledge
or expertise of parties. (Oscar Chess; Dick Bentley).
b) Estoppel - the pre-contractual statement provides the foundations for an
estoppel (Saleh)
o Some agree pre-contractual statements made before a written contract can attract an
estoppel claim, in which case extrinsic evidence is admissible (Saleh v Romanous).
o The courts are reluctant to allow too much of this practice (Norco).
o Must have:
a. Assumption
b. Inducement
c. Reliance
d. Detriment
c) Collateral contract - the pre-contractual statement formed the basis for a
separate contract to the written contract - one party making a promise in
connection but independent from the main contract. (Hoyts).
o Where one party makes a promise connected to but independent of
contract – in exchange for which the other party enters the main
contract (Esso v Commissioners ; JJ Savage v Blankney) e.g. I
promise to give you a DVD player if you buy a TV before 1 st of August.
