Advanced Commercial Litigation LPC All Units Notes NEW 2023 (Distinction) NEW GUARANTEEED SUCCESS

P a g e 14 | 264 3. Non est factum („not my deed‟ ) – a very specific and limited exception, such as situations where the person is illiterate, blind or below standard intelligence. Curtis v Chemical Cleaning & Dyeing [1951] 1 KB 805 – Court of Appeal (Appeal from Judge Blagden, Westminster County Court) Facts: • Curtis (plaintiff) took a white satin wedding dress to Chemical Cleaning (defendant) for cleaning. • The defendant‟ s shop assistant handed the plaintiff a paper headed „receipt‟ which she was asked to sign. • The plaintiff asked the shop assistant why her signature was required – and was told that a term provided that the defendant would not accept liability for certain types of damage (e.g. sequins/beads). The plaintiff then signed the „receipt.‟ • However, the term in fact excluded the defendant from any liability whatsoever. • The dress was damaged and the plaintiff brought an action claiming damages. • The defendants denied negligence, seeking to rely upon the exemption from liability contained in the signed receipt. Issue: • Whether misrepresentation of the extent of the contractual terms may render those terms non-binding on the contracting parties. Outcome: • Appeal dismissed in favour of the plaintiff, i.e. Curtis wins. Reasoning: Denning LJ: • The issue of misrepresentation arose, given that the defendant‟ s shop assistant had misrepresented the breadth of the exclusion clause - since the defendant was protected from all liability, not just specific liabilities (e.g. sequins, beads). • The effect of signature can be negatived if induced by misrepresentation or fraud. o Misrepresentation can relate to both the existence and the extent of the exclusion clause. • Misrepresentation can be induced by words or conduct; and may arise either innocently or not (i.e. created „knowingly‟ or „unknowingly‟ ). • Misrepresentation may also arise in an implied sense, i.e. failure to draw attention to the existence of an exemption clause may amount P a g e 15 | 264 to a representation that there is no such clause in the contract. • In the present facts, failure to draw attention to the width of the exemption clause created a false impression that the exemption only related to beads and sequins, and did not extend to the material of which the dress was made. Although done innocently, a false impression was nevertheless made. • Therefore, there was a misrepresentation and the binding effect of the plaintiff‟ s signature is negatived. • Arguably, the issue of another exception to the rule in L‟ Estrange arose – i.e. whether the document could reasonably be considered contractual in nature. o Held that Curtis may well have reasonably understood the document only to be a receipt, to be presented when collecting the dress and did not contain contractual terms. Somervell and Singleton JJ: • Held that because of the misrepresentation the exception clause never became part of the contract. Obiter • Need express term to release yourself from contractual obligations (e.g. exemption from liability clause). Ratio: • The effect of signature can be negatived if it has been induced by misrepresentation or fraud – this can be created by words or conduct; and done knowingly or unknowingly. Toll (FGCT) v Alphapharm (2004) 219 CLR 165 – High Court of Australia (Appeal from NSW SC) Facts: • Alphapharm (respondent) was a sub-distributor of a vaccine and contracted Richard Thomson (RT), a subsidiary company, to collect, store, obtain regulatory approval and supply the vaccine for them to distribute. • Finemores (appellant) was then contracted by Richard Thomson to transport and deliver the vaccine to the respondent. • RT signed a credit application form supplied by the appellant which also included „Conditions of Contract‟ , but did not read the terms and conditions, despite being instructed to do so on the form. o Clause 5: Customer entered contract on its own behalf and as an P a g e 16 | 264 agent for its associates. o Clause 6: In no circumstances would the appellant be responsible for loss or damage to the goods. • During transportation, the vaccines were damaged due to temperature change. • Alphapharm (respondent) suing Finemores (appellant) for breach of duty as a bailee and in negligence. The appellant sought to rely upon clause 6 to exempt themselves from liability. Respondent contends that they are not bound by the terms – there were no direct dealings between appellant and respondent; only between RT (on behalf of respondent) and appellant. o NB: Toll is the guarantor for Finemores, i.e. acting as an insurer for damages. Issue: • Whether a party will be bound by terms contained in a contractual document, where they have signed but failed to read the document. Outcome: • Appeal allowed in favour of the appellant, i.e. Finemores wins Trial Judgment • At trial, the respondent sought to argue that the relevant term (clause 6) was unusual in this type of contract and should not be binding in the absence of notice of the term being given to it before signing. The HCA rejected this argument (see below). Reasoning (The Court – Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ): Whether reasonable notice was given to RT, in respect of the liability clause • Reaffirmed the objective approach to contract law and signature – such that signature manifests as a representation that the signing party has read and assented to the terms, from an objective point of view. o This representation will be even stronger, especially when the signature appears below a „perfectly legible request to read the document before signing it.‟ • Also noted the policy implications of undermining the rule in L‟ Estrange – this would weaken business transactions and cause significant „mischief‟ , since inquiry would then have to be made in each case as to whether the parties actually read the terms. • Held that reasonable notice of terms is not a requirement, even if P a g e 17 | 264 P a g e 18 | 264 the signing party has not read the terms. o If reasonable notice was required, it would undermine the rule in L‟ Estrange which states that you are bound if you sign, even if you have not read the terms. • However, there will be some circumstances where notice may be required: o Failure to bring unusual or exceptional terms to the other party‟ s attention by notice does not generally release them from their signed contractual obligations, unless the failure is of such gravity as to constitute fraud or misrepresentation. o In light of this decision, the scope for arguing that the signature rule does not apply in a particular case to bind a party signing a contract containing unusual terms, on the basis of misrepresentation, must be very narrow and viable only in extraordinary circumstances. The High Court itself suggested that there would have to be some element of “concealment.” Issue of the „non-contractual‟ document exception • NSWCA – Read the exception down (i.e. provisions weren‟ t given full power). While they conceded that the document was contractual in nature, they held that it couldn‟ t be expected that contractual terms of this nature would appear in this sort of contract, i.e. the terms were unusual for this sort of contract and therefore required reasonable notice be given. • HCA – Rejected the NSWCA‟ s interpretation by construing the provision narrowly. They framed their response in order to uphold the importance of signature (and the rule in L‟ Estrange), arguing that if distinctions like this were made within this exception, it would undermine the general rule of signature in L‟ Estrange. • The rule in L‟ Estrange only applies where a person signs a „contractual document‟ , i.e. a document known to contain contract terms and intended to affect legal relations. The rule does not apply where the document in question could not reasonably be considered a contractual document. o If a document or the circumstances in which a document is presented for signature, are such as to mislead the person signing as to the significance of that conduct, the contractual effect of signature will be negated. o Accordingly, a person will not be bound by signing a document that reasonably appears to be merely a timesheet, or a receipt or voucher. Application to Facts • In this case, the court looked at the circumstances and held that the terms were not unusual in this sort of contract. Therefore, reasonable notice was not required (it would have to be extremely P a g e 19 | 264 unusual to even consider this). Ratio: • A person who signs a contractual document will be bound by the terms in that document, regardless of whether he or she has read, accepted or understood those terms. • Reasonable notice is not required where a party has signed a contract, but failed to read its terms – the rule in L‟ Estrange is paramount. • The effect of signature may be negatived, where the document cannot reasonably be considered as a contractual document, e.g. because it appears to have another function, such as being a receipt III – CRITICISM OF THE RULE • Spencer – English court‟ s approach to signature based on concern about parties escaping apparent assumption of contractual obligation by claiming to be unaware of the terms. • Criticism based on objective assumption that signature indicates acceptance of the terms. While certain, well-resourced parties may be expected to ensure they are adequately informed about obligations assumed under contract, other parties (e.g. consumers, small business owners) may lack the skills, legal knowledge and time to assess risks allocated to them under the contract. o Behavioural economics – individual contracting parties typically find it difficult to process large numbers of variables and tend to base decisions on a few salient factors, e.g. price/quality rather than fine print details of a contract. o Individuals also poor at assessing risks associated with future events. By Notice (Casebook, 12.45 – 12.80) • General Rule: Terms may be included by display or delivery (i.e. where terms are stated elsewhere from signed written contract), but they require reasonable notice to be brought to the attention of the party to be bound, e.g. the owner of a car park may seek to include in the contract with their customers, terms which are contained on a ticket provided on entry into the car park or which are displayed on a board at the entrance to the car park. • Whether delivered or displayed terms are incorporated into a contract will depend on two interrelated issues: P a g e 20 | 264 1. Timing – terms must be brought to the attention prior to formation of the contract (so that the party may be able to read and consider them before deciding to accept/reject) (Oceanic Sun Line Shipping v Fay) 2. Knowledge/Notice (Thornton v Shoe Lane) a. Where there is actual knowledge – there is no issue b. Where there is no knowledge – reasonable steps (determined in the circumstances) must be taken to bring the terms to the attention of the party to be bound. I – TIMING Oceanic Sun Line Special Shipping Company v Fay (1988) 165 CLR 197 – High Court of Australia (Appeal from the NSW SC). Facts: • Plaintiff (Dr Fay) made a booking in Sydney to ride a cruise to Greece, on a vessel owned by a Greek company – the defendant (Oceanic Sun Line). • Upon booking, the plaintiff received exchange order in Sydney (not a ticket) which stated that he would only receive the ticket when he boarded the cruise in Greece. • Plaintiff flew over to Greece and received the ticket when he boarded the cruise in Greece. o When he receives ticket, it has term saying if there were any legal actions, the court proceedings would be held in Greece. o Plaintiff was injured and sued defendant in NSW. • Defendant relied on exclusive foreign jurisdiction clause printed on ticket, applying for a stay of action. Issue: • Whether the contract was made in Sydney or Greece • Whether that contract contained the exclusive foreign jurisdiction clause • Whether reasonable notice of the exemption clause had been provided Outcome: • Appeal dismissed in favour of plaintiff, i.e. Dr Fay wins Reasoning (Brennan J): Whether the contract was made in Sydney or Greece • Defendant claimed that there was no contract in Sydney, when the booking was made and the exchange order received because it P a g e 21 | 264 P a g e 22 | 264 reserved the right to cancel cruises. • Oceanic drew analogy with MacRobertson Miller Airline v Commissioner of State Taxation where it was held that no contract was made because the sweeping nature of the exemptions therefore relieved the carrier from any contractual obligations, i.e. consideration was illusory since the carrier reserved the right to cancel the booking at any time. • However, the court rejected this analogy because the exemptions in the exchange order were not so wide as to preclude the existence of any contractual obligations. o Specifically, there was a promise to refund the fare if the ticket was cancelled; and to exchange the exchange order for a ticket upon boarding the cruise, if it was to proceed (i.e. it‟ s not a mere receipt), i.e. if the cruise proceeds, the passenger is contractually entitled, upon presentation of the exchange order, to a ticket entitling him to be carried. o „The defendant reserves no right to cancel any ticket or booking or to refuse to carry the passenger named in the exchange order if the booked cruise proceeds.‟ • Therefore, these contractual rights and obligations indicate that a contract had indeed been made in Sydney, through the exchange order. Whether that contract cont