1. Express Terms Implied Terms
Lecture 5
Express Terms
Implied Terms

2. Introduction to Terms

3. Puff Sales talk Not intended to be taken seriously
No contractual force

4. ‘Mere’ Representation
Factual statements
Induce entry into contract
Not guaranteed by the maker
No contractual force
May be remedy in tort if fraudulent
May be common law damages if negligent
May be statutory remedy for misrepresentation of misleading/deceptive conduct

5. Term The maker of the statement intends to guarantee its truth
If found to be a term, a pre-contractual statement takes effect as an express term
Breach gives rise to damages

6. Objective test
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 61:
‘the conclusion a reasonable person in the position of the person to whom the statement was made would have reached’

7. Deciding the intention of the parties
Time of statement
Content of statement
Existence of written memorandum
Relative knowledge and expertise of the parties

8. Time of Statement Only an indication, not conclusive
Shorter the period between the making of the statement and entry into the contract, the more likely the statement will be found to be promissory in nature
Implication being that a reliance on the truth of the statement induces entry into the contract

9. Content of statement
The more significant the content, the more likely it is a term
Couchman v Hill

10. Existence of Written Memorandum
Where there is a written memorandum of the contract:
Included – good indication it is a term
Not included – good indication it is not a term

11. Relative knowledge and expertise of the parties
Oscar Chess Ltd v Williams
Dick Bentley Productions v Harold Smith (Motors)

12. Collateral Contracts Two party collateral contract:
A enters into the main contract with B because of a promise made by B in relation to the subject matter of the main contract, or some other inducement.

13. Collateral Contracts Three-party collateral contract:
A enters into a contract with C after a statement by B – that statement takes effect as a collateral contract between A and B, the consideration for which is A’s entry into the main contract with C.

14. The uses of collateral contract
where the main contract is illegal, the collateral contract may be enforceable even if the main contract isn’t;
where the contract is required to be evidenced in writing, the collateral contract may not need to be, and thus may be enforceable;
if it’s a three-party collateral contract, the privity rule of contract is avoided.

15. Elements JJ Savage & Sons v Blakney (1970) 119 CLR 435:
Must establish three elements:
That the statement was intended to be relied on;
That there was reliance by the party alleging the existence of the contract;
That the maker of the statement intended to guarantee its truth.

16. Introduction to Terms

17. Incorporation by signature
L’Estrange v Graucob: by signing a document the party indicates an intention to be legally bound by the terms therein, regardless of whether they know what they are.
Toll v Alphapharm: if the party knows the document contains contractual terms and signs, they are bound.
Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805: rule in L’Estrange will not apply where the effect of signing is misrepresented by the other party.
Non est factum: ‘this is not my act’ (eg Petelin v Cullen (1975) 132 CLR 355 at ).

18. Incorporation by notice
Balmain New Ferry Co v Robertson (1906) 4 CLR 379 per Griffith CJ:
(approving Parker v SE Railway)
‘…sufficient for the defendants to prove that they had done what was reasonably sufficient to give the plaintiff notice of the conditions of admittance …’

19. Tickets
1. Did the person who received the ticket know that there was writing on it?
2. Did that person know that the ticket referred to terms?
3. Did the party relying on the terms do what was reasonable to bring notice of the existence of the terms?

20. Incorporation by Course of Dealing
Course of dealing between the parties must have been:
Consistent
Sufficiently long
Cases
Henry Kendall v William Lillico [1969] 2 AC 31.
J Spurling v Bradshaw [1956] 1 WLR 461.

21. Recap

22. Implied Terms

23. BP Test
From BP Refinery v Shire of Hastings (1977) 180 CLR 266 at 283:
For a term to be implied, the following conditions must be satisfied:
1. it must be reasonable and equitable;
2. it must be necessary to give business efficacy to the contract;
3. it must be so obvious that it ‘goes without saying’;
4. it must be capable of clear expression;
5. it must not contradict any express term of the contract.

24. Implied by Law Common Law 2 step process: Category of contract?
Is the term necessary for this type of contract?

25. Implied by Custom and Usage
Must be:
Notorious
Certain
Legal
Reasonable