- The defendant relied upon a clause in the sales agreement that excluded any express or implied condition, statement, or warranty, statutory or otherwise
... [Show More] not stated in the agreement
Issue
- Whether the party signing the contract is bound, if they have not read the contract?
- Whether the clause formed part of the contract?
Reasoning
➢ SCRUTTON LJ
- Distinguished this from a ticket case unsigned document
o In a ticket case, it is necessary to prove that an alleged part was aware, or ought to have been aware, of its terms and conditions
- Ticket cases do NOT apply where the contract has been signed
- In the absence of fraud or misrepresentation – where a contract has been signed – then it is wholly immaterial whether he has read the document or not
- No evidence to suggest fraud, inducement or misrepresentation
- Regardless of whether the plaintiff was or was not told that the document was an order form, it was in fact an order form, an order form is a contractual document
o It was headed “Sales Agreement”
o Plaintiff admitted it had to do with an intended purchase
- The order form was regarded as contractual because objectively
o Purposively the plaintiff intended to make a purchase
o The contractual terms were apparent – compare with Rinaldi where the cart notes had contractual terms but were not contractual documents
- Plaintiff is bound by the terms of the contract despite having not read them
➢ Maugham LJ
- It is impossible to pick out certain clauses from the document and ignore them as not binding on the plaintiff
- The document formed a part of the contract (in writing)
- Even if she was told that it was an order form, she never contended that it did not affect her because she did not know its contents
Ratio
- If a party records their agreement in a document which they sign, then they will be bound by the written terms even though they don’t know what they are
o This is because it indicates to the world that they agree to the terms contained therein
o Exceptions – fraud, misrepresentation, statutory exceptions (ACL)
- If the document is NOT signed, then the party is only bound by the terms that they were aware or should have been aware of
- Misrepresentation – is a misleading or untrue statement made during negotiations that
induces one party to enter a contract with another party
Due notice not required: Toll (FGCT) v Alphapharm [2004]
Facts
- Alphapharm (respondent) was a sub-distributor of a flu vaccine by EB
- EB’s Australian subsidiary, Richard Thomson, agreed with the respondent to collect, store and handle the regulatory approval of the vaccine
- Richard Thomson engaged Finemores (appellant) to collect the vaccine and transport it to Finemores’ warehouse and to store it
o Alphapharm consented to this
- EB was liable for the cost of transport to the warehouse
- Alphapharm was liable for the cost of delivery to its customers
- Finemores quotation to Richard Thomson was subject to the conditions on the back of a
consignment note – it was NOT attached
- The representative of Richard Thomson signed the document without reading the T&C’s, even though the document indicated to do so before signing
o Cl 5 provided that the customer entered into the contract on their own behalf and also as agent for any persons having an interest in the goods
o Cl 6 provided that in no circumstances would the carrier be responsible to the customer for loss and damage in relation to the goods
- On two separate occasions the vaccine was rejected for failure to be stored at the correct temperature
- Alphapharm sued Finemores for:
o Breach of duty as bailee
o Negligence
- Finemores relied on cl 5 and 6 to exempt them of liability
- Alphapharm accepted that there was a binding agreement between Finemores and Richard Thomson but that they were NOT bound by cl 5 or 6 because
o The conditions on the reverse side were not part of the contract
o Richard Thomson had not contracted as agent for Alphapharm
- Both arguments succeeded on the grounds that Finemores had NOT given RT sufficient note of the conditions of the agreement
Issue
- Whether the “Conditions of Contract” on the back of the Application for Credit formed part of the contract?
- Whether the defendant gave reasonably sufficient notice of the conditions to the plaintiff?
Reasoning
➢ Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ
1. Terms of Contract Issue
- RT’s representative, Mr Gardiner-Garden, signed a document which invited him to read the T&C’s on the reverse before signing
o He was not mislead or discouraged from reading them
o Nor did Finemores attempt to conceal them from him
- The rights and liabilities of the parties to a contract are determined by the principle of objectivity (Pacific Carriers v BNP Paribas)
o Meaning that the language is understood relative to what a reasonable person would have understood it to mean
- To sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document that
o The person has read & approved the contents of the document; or
o The person is willing to take the chance of being bound
- The representation is even stronger when the signature appears below a perfectly legible written request to read the document before signing it
- Signatures are:
o Conclusive evidence of an agreement (bar exceptions)
o Criterion of agreement
- Legal instruments of various kind take their efficacy from signature or execution
- Signatures demonstrate commitment, which enables 3rd parties to assume the legal efficacy of the instrument
o To undermine this assumption would cause havoc
2. Reasonably sufficient notice
- Major Premise – reasonably necessary for Finemores to establish that it had done what was reasonably sufficient to give RT notice of the T&C’s
- Minor Premise – Finemores had NOT done what was reasonably sufficient to give RT notice
- HC rejected the both the Court of Appeal and primary judge’s erroneous view that the major premise was the critical question
o This incorrectly imports the reasoning of ticket case’s, the very thing that L’Estrange
held should not be done
- There may be cases in which a document presented for signature could involve a misrepresentation – no such problem exists here
- It was reasonable for Finemores’ to treat Mr Garden’s signature as a manifestation of assent to the conditions he had been invited to read before signing
3. Application for Credit
- There was no evidence to suggest that it was unusual to contain general terms of contract in a credit application within the transport industry
- Furthermore, this concern was not addressed under the rubric of misrepresentation, as it should have been
- The printed conditions thus formed part of the contract of storage and transportation
4. Policy Issue
- Any weakening of these principles would make chaos of every-day business transactions
(Latham CJ in Wilton v Farnworth)
5. Agency Issue
- Alphapharm was bound by cl 6 so long as the terms and conditions to which RT agreed were Finemores’ standard terms and conditions then RT was acting within its authority
- Therefore, RT had contracted as agent for Alphapharm
Held
- Upheld the ruling of L’Estrange that a party is bound by the terms of a document which he or she has signed
Ratio
- Other party (responsible for writing the document) does NOT have to show due notice given of the terms
Circumstances in which the effect of signature may be avoided
Misrepresentation voiding the effect of a signature: Curtis v Chemical Cleaning & Dyeing
[1951]
Facts
- Mrs Curtis (plaintiff) took her wedding dress to the cleaning shop (defendants)
- The plaintiff was asked to sign the receipt and told it was for the purpose of voiding liability for certain specified risks
- The dress was returned with a stain
- This (arguably) did not fall within the misrepresentation of the conditions conveyed by the shop assistant and so they could NOT rely on the receipt
- The cleaner appealed
Reasoning
➢ Denning LJ
- The shop assistant failed to draw attention to the “width of the exemption clause” creating a false impression that the exemption only related to the beads and sequins
- It disentitled the cleaners from relying on the exemption
Held
- Upheld the ruling of L’Estrange that a party will not be bound where the signature was induced by:
o Misrepresentation or fraud
o Some cases of mistake
o Document cannot be reasonably considered a contractual document, i.e. appears to have another function, e.g. receipt
Ratio
- Where one party has been misled by another party about the nature or extent of contractual terms the consequence is that the rule in L’Estrange does not apply and the term in question is not binding
3. Incorporation of Terms by Notice (unsigned contract)
Whether terms will bind a party depends on whether:
1. The terms were available to the party to be bound by those terms before the contract was made; and
2. Reasonable steps were taken to bring the terms to the notice of the party to be bound
Timing
- For delivered or displayed terms to form part of a contract they must be available to the party to be bound before the contract is made
Timing: Oceanic Sun Line Special Shipping Company v Fay (1988)
Facts
- Dr Fay (plaintiff) made booking in NSW for a cruise of the Greek Islands on a vessel owned by a Greek company (defendant)
- On payment he was given an exchange order which would be exchanged for a ticket on boarding the vessel
- In Athens, he obtained the ticket with the condition that the courts of Greece should have exclusive jurisdiction in any action against the owner
- Plaintiff sued for negligence for injuries caused in a trap shoot activity
Issue
- Whether the contract includes the exclusive foreign jurisdiction set out in cl 13?
Reasoning
➢ Brennan J
- Reasonable notice of terms required before contract formation to be incorporated
o It was too late after the original contract was made to add conditions which were not incorporated in it
o The inclusion of cl 13 on the ticket could not alter the terms of a contract already made
- The exemption on exchange order was not wide enough to exclude the existence of any contractual obligation
o If the cruise proceeded, the passenger was contractually entitled on presentation of the exchange order to a ticket entitling him to be carried
- Conventional ticketing rules, where the ticket is the offer and payment is acceptance, do NOT apply here as it would require the plaintiff to first travel to Greece and obtain the ticket and if they declined the offer then they would forfeit the fare already paid
- If it had been intended that no contract should come into existence before the issue of the ticket “when boarding the vessel”, then no consideration would move from the defendant to support the defendant’s right to refuse to refund the passage money in the event of passenger cancelling his passage – therefore, the proposition that no contract was made when the exchange order was issued in Sydney must be rejected
- Olley v Marlborough it was found that a clause on a ticket is ineffective to alter a contract if issued after the contract is made
Held
- The contract was made in NSW and the conditions of the ticket did NOT form part of the contract
Ratio
- Once a contract is complete, a party cannot add extra binding terms, unless the other party provides “new” consideration, e.g. signature, conduct – quid pro quo
Knowledge or Notice
- If timing is satisfied, a party will be bound by delivered or displayed terms if he or she has:
o Knowledge
▪ If a party knows that the relevant document contains contractual terms, he or she will be bound by those terms regardless of whether he or she has read them
o Reasonable notice of the terms
▪ In the absence of knowledge, a party will be bound by delivered or displayed terms if he or she has reasonable notice of the terms. Reasonability depends on the:
i. Type of contract
ii. Nature of the terms
iii. Circumstances of the case
Reasonable Notice: Thornton v Shoe Lane Parking [1971]
Facts
- Thornton (plaintiff) parked in defendant’s garage
- On the automated ticket read, “this ticket is issued subject to the conditions of use as displayed on the premises”
- This sign was displayed in the premises and not visible until the user was within the car park
Issue
- Whether the defendant is exempted, by the conditions displayed on the premises, from liability for damage to the defendant’s car and himself?
Reasoning
➢ Lord Denning
- Traditional ticket cases were rejected due to the automatic nature of the machine
1. The customer cannot refuse the ticket
2. The customer cannot get his money back
- The offer was made by the initial sign that stated “at owners’ risk” – only pertaining to damage to the car NOT to personal injury
- The contract was concluded when the plaintiff purchased the ticket (accepted the offer) and it could NOT be altered by words printed on the ticket or signs displayed within the premises
- Accepting traditional ticket cases –
o Parker v South Eastern Railway Co established that the customer is bound by the exempting condition if –
▪ He knows that the ticket is issued subject to it; or
▪ If the company did what was reasonably sufficient to give him notice of it
o Neither of those conditions were proved here
- As soon as the ticket was dispensed the contract was concluded
o Once the ticket is dispensed you are locked into the contract, with T&C’s that you did NOT get to read
- The notice needs to be drawn to the attention of the customer in the most explicit way
- The duty vests on the vendor to inform the customer
➢ Megaw LJ
- He could only see the terms when it would be practically impossible for him to withdraw his car
- Impractical to also block entrance to search for terms prior to entering money
Held
- Upheld the exempting condition of “reasonable notice” in Parker
- Upheld Scrutton’s decision in L’Estrange about sufficient notice
Ratio
- The exclusion clause was not binding because the plaintiff did not have reasonably sufficient notice of the exclusion clause
- In order to view the exclusion clause, it would require the plaintiff to give irrevocable acceptance without reasonable notice
Unusual Terms
Mere availability not sufficient for unusual terms: Baltic Shipping Co v Dillon (1991)
- Unusual terms are those whose:
o Exclusions are particularly broad; or
o Unbalanced
- The unusual term in this case is that the exemption from liability is only made known after the ticket is purchased
o A general reference to T&C’s in some other document or place do NOT satisfy sufficient notice
▪ They have be explicit or reasonably imputed in trade or custom
- If term is unusual, special notice, to fairly and reasonably bring the term/s to attention must be given
- Essentially for onerous or unusual terms – mere availability is not enough – specific/explicit attention is required
4. Incorporation by Course of Dealing
Where parties have had a history of dealings, contractual terms introduced in earlier contracts may be incorporated into a subsequent contract.
To be codelf by course of dealings:
- The course of dealings must have been regular and uniform (Henry Kendall & Sons v William Lillico & Sons 1992)
- The document relied upon (in previous transactions) must also be reasonably considered a
contractual document (Rinaldi & Patroni v Precision Mouldings 1986)
Incorporation by course of dealings: Balmain New Ferry v Robertson (1906)
Facts
- Ferry from Sydney to Balmain fees were collected on Sydney Wharf
- Entrance sign stated that all those leaving or entering the wharf regardless of which boat they travelled on were required to pay one penny
- He missed his boat, attempted to leave through the turnstile but refused to pay another penny
- They tried to detain him, and he brought action for assault and false imprisonment
Issue
- Was the condition he had to use a penny to leave a term?
Reasoning
- Wharf is not a public place, it was private
- They could impose any terms they saw fit
- The defendant was aware that only on payment could he enter or exit, he had done it on numerous occasions
- It was their right to maintain the turnstile to protect their interests and they were entitled to prevent him from squeezing through the space
Ratio
Constant Course of Dealing & documents that are not considered contractual: Rinaldi & Patroni v Precision Mouldings (1986)
Facts
- Respondent constructed fishing boats
- It agreed with the appellants that the appellants would transport a vessel to Melbourne for
$3,200
- The vehicle on which the boat was being transported, drove under a low bridge, causing extensive damage to the vessel
- Similar contracts had been entered into 9 or 10 times previously
o The appellant would issue a “cart note”, stapled to an invoice, which included the T&C’s
o On the face of each note were the words “all goods accepted subject to conditions on reverse”
o Condition 5 – exempted the appellants from any claim made the respondents for damaged done to the boat by negligence of the appellants
Issue
- Whether the terms excluding liability should be held upon the basis that the parties had been conducting business upon those terms for some time?
- Whether it should be agreed that the carrier would carry the plaintiff’s car form the Hebrides to the mainland on the terms of the earlier contracts in writing which contained the protective term?
Reasoning
➢ Burt CJ
- The contract first entered into did not contain cl 5, as the contract first entered into was oral in nature
- Without the respondent being fixed with actual knowledge of that term, how can it be implied in subsequent contracts?
o Simply speaking, there were no earlier contract or contracts containing that term, as the contract sued upon was the oral contract
- Applied McCutcheon v MacBraye [1964] as Lord Reid held without a “constant course of dealing” made on the implied condition then the conditions cannot be held
- Applied Walter H Wright v Hill & Co [1971] that there was no evidence of any course of prior dealing in which the parties mutually regarded the terms and conditions endorsed on the back of the form as part of the contract between them [Show Less]