Summary LPC Notes Advanced Commercial Litigation Revision (Distinction) 2022/2023

Summary LPC Notes Advanced Commercial Litigation Revision notes (Distinction) 2022/2023 Summary LPC Notes Advanced Commercial Litigation Revision notes (Distinction) 2022/2023 Contents Logic .............................................................................................................................. 8 Express Terms – Identification (1) ............................................................................ 8 By Signature ................................................................................................................. 8 I – THE EFFECT OF SIGNATURE .................................................................... 8 L‟Estrange v F Graucob Ltd [1934] 2 KB 394 .................................................... 8 II – EXCEPTIONS TO THE SIGNATURE RULE .......................................... 9 Curtis v Chemical Cleaning & Dyeing [1951] 1 KB 805 .............................. 10 Toll (FGCT) v Alphapharm (2004) 219 CLR 165 ..............................................11 III – CRITICISM OF THE RULE ................................................................... 13 By Notice ................................................................................................................. 13 I – TIMING.................................................................................................................... 14 Oceanic Sun Line Special Shipping Company v Fay (1988) 165 CLR 197. 14 II – KNOWLEDGE/NOTICE ..................................................................................16 Thornton v Shoe Lane Parking [1971] 2 QB 163 .............................................17 III – UNUSUAL TERMS .................................................................................... 19 Baltic Shipping Co v Dillon (“The Mikhail Lermontov”) (1991) 22 NSWLR 1 .......................................................................................................................... 20 By Course of Dealing ........................................................................................... 21 Rinaldi & Patroni v Precision Mouldings (1986) WAR 131 ............................22 Balmain New Ferry v Robertson (1906) 4 CLR 379 ........................................23 Express Terms – Identification (2) ...........................................................................24 Parol Evidence Rule ............................................................................................. 24 I – DETERMINING WHETHER A CONTRACT IS WHOLLY WRITTEN. 24 State Rail Authority of NSW v Heath Outdoor (1986) 7 NSWLR 170 .........25 II – EXCEPTIONS TO THE PAROL EVIDENCE RULE .............................. 27 Hoyt‟s v Spencer (1919) 27 CLR 133 ............................................................. 28 Saleh v Romanous [2010] NSWCA 274 ............................................................... 29 III – PRE-CONTRACTUAL STATEMENTS .................................................... 31 Equuscorp v Glengallan Investments (2004) 218 CLR 271 ...........................33 JJ Savage & Sons v Blakney (1970) 119 CLR 435 ............................................34 Oscar Chess v Williams [1957] 1 WLR 370 .......................................................35 Dick Bentley Productions v Harold Smith (Motors) [1965] 2 All ER 65 ......36  Express Terms – Construction ...................................................................................37 Principles of Construction ................................................................................. 37 Parol Evidence Rule ............................................................................................. 38 I – SURROUNDING CIRCUMSTANCES ....................................................... 38 Western Export Services v Jireh International [2011] HCA 45 .....................39 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 ..................................................................................................................41 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 ................................................................................................................................................. 41 II – APPLICATION OF PRINCIPLES ............................................................. 44 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45................................................................................................44 Pacific Carriers v BNP Paribas (2004) 218 CLR 451 ......................................46 Exemption Clauses .....................................................................................................48 III – CONTRA PREFERENTUM ...................................................................... 48 Darlington Futures v Delco Aust (1986) 161 CLR 500 ...................................48 IV – NEGLIGENCE .................................................................................................50 Davis v Pearce Parking Station (1954) 91 CLR 642 ........................................50 V – FOUR CORNERS ......................................................................................... 52 Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 ............................................................52 Implied Terms ................................................................................................................53 Implied In Fact ...................................................................................................... 54 Byrne v Australian Airlines; Frew v Australian Airlines (1995) 185 CLR 410 ...........................................................................................................................56 Codelfa Construction v State Rail Authority of NSW (1982) 149 CLR 337 59 Implied In Law ...................................................................................................... 61 University of Western Australia v Gray (2009) 179 FCR 346 ........................61 Implied From Custom .......................................................................................... 63 Con-Stan Industries of Aust v Norwich Winterthur Ins (Aust) (1986) 160 CLR 226 ..................................................................................................................63 Australian Consumer Law (ACL).......................................................................... 64 Overview of ACL Provisions ....................................................................................64 INTRODUCTION TO ACL ................................................................................. 64 CHAPTER 2 – GENERAL PROTECTIONS ..................................................... 65 Part 2 – 1: Misleading or Deceptive Conduct (ss 18-19) .......................65 Part 2 – 2: Unconscionable Conduct (ss 20-22) ..................................... 65 Part 2 – 3: Unfair contract terms (ss 23-28) .......................................... 66 CHAPTER 3 – SPECIFIC PROTECTIONS ...................................................... 69 Part 3 – 1: Unfair practices (ss 29-38).........................................................69 Part 3 – 2: Consumer Transactions (ss 51-68) ....................................... 69 CHAPTER 5 – ENFORCEMENT AND REMEDIES (ss 218-287) .............. 71 Standard Form Contracting ............................................................................... 73 I – INTRODUCTION .................................................................................................. 73 II – COSTS AND BENEFITS OF STANDARD FORM CONTRACTS ........ 73 III – THE ROLE OF COMPETITION .............................................................. 74 IV – MARKET FAILURE AND SOCIAL FORCES ........................................ 75 Frustration .......................................................................................................................76 Introduction to Frustration ............................................................................... 76 I – THE TEST FOR FRUSTRATION ............................................................... 76 II – OTHER TESTS PROVIDED IN EARLIER THEORIES ........................ 77 Taylor v Caldwell [1863] EWHC QB J1 ..............................................................77 Krell v Henry [1903] 2 KB 740............................................................................79 Brisbane City Council v Group Projects (1979) 145 CLR 143 .......................81 Limitations and Consequences ......................................................................... 84 I – LIMITATIONS ....................................................................................................... 84 II – CONSEQUENCES............................................................................................85 Termination .....................................................................................................................85 By Agreement ..............................................................................................................85 I – ORIGINAL AGREEMENT ........................................................................... 85 II – SUBSEQUENT AGREEMENT .................................................................. 86 By Failure of Contingent Condition .............................................................. 87 I – FOUR CATEGORIES OF CC ..................................................................... 88 II – THE DUTY TO CO-OPERATE ................................................................... 89 III – CONSEQUENCES OF NON-FULFILMENT ......................................... 91 IV – RESTICTIONS ON RIGHT TO TERMINATE FOR NON- FULFILMENT OF CONDITION .................................................................... 95 By Breach .....................................................................................................................96 I – WHAT CONSTITUTES BREACH OF CONTRACT? ............................... 96 II – TERMINATION FOR BREACH OF A CONDITION ............................. 97 Tramways Advertising v Luna Park (1938) 61 CLR 286.................................98 Associated Newspapers v Bancks (1951) 83 CLR 322 .................................. 101 III – TERMINATION FOR BREACH OF AN INTERMEDIATE TERM ... 103 Hongkong Fir Shipping Co v Kawasaki Kisen Kaisha [1962] 2 QB 26 ...... 103 Ankar v National Westminster Finance (Aust) (1987) 162 CLR 549 .......... 105 Koompahtoo Local Aboriginal Land Council v Sanpine (2007) 233 CLR 115 ............................................................................................................................................... 106 By Repudiation ......................................................................................................... 107 I – THE ABSENCE OF WILLINGNESS OR ABILITY ............................... 110 II – ILLUSTRATIVE CASES ............................................................................. 111 Carr v JA Berriman (1953) 89 CLR 327 ............................................................. 111 Progressive Mailing House v Tabali (1985) 157 CLR 17 ............................ 112 Maple Flock v Universal Furniture Products (Wembley) [1934] 1 KB 148 ............................................................................................................................................... 114 DTR Nominees v Mona Homes (1978) 138 CLR 423 .................................... 114 By Delay ...................................................................................................................... 116 I – WHERE TIME IS OF THE ESSENCE ................................................... 116 II – WHERE TIME IS NOT OF THE ESSENCE ........................................ 117 Louinder v Leis (1982) 149 CLR 509 ............................................................... 119 Laurinda v Capalaba Park Shopping Centre (1989) 166 CLR 623 ............. 120 Restrictions on Termination ................................................................................ 121 Ready and Willing .................................................................................................... 121 Foran v Wight (1989) 168 CLR 385 ................................................................. 122 Election ........................................................................................................................ 124 I – GENERAL PRINCIPLES OF ELECTION .............................................. 124 Tropical Traders v Goonan (1964) 111 CLR 41.............................................. 126 Immer (No 145) v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 .............................................................................................. 128 II – AFFIRMATION .................................................................................................. 129 Consequences for Aggrieved Party .......................................................... 129 Consequences for Breaching Party .......................................................... 130 Bowes v Chaleyer (1923) 32 CLR 159 ............................................................. 131 III – TERMINATION................................................................................................ 132 Consequences for Aggrieved Party .......................................................... 132 Consequences for Breaching Party .......................................................... 133 IV – RIGHT TO CURE A BREACH ................................................................. 133 Estoppel ....................................................................................................................... 133 Waiver .............................................................................................................................. 133 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570.134 Relief against Forfeiture ................................................................................... 134 I – UNCONSCIENTIOUS EXERCISE OF LEGAL RIGHTS ........................ 135 Legione v Hateley (1983) 152 CLR 406 ......................................................... 136 Stern v McArthur (1988) 165 CLR 489 .......................................................... 137 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 ........................ 138 Heads of Damage ......................................................................................................... 139 Compensation Principle ......................................................................................... 139 Expectation Damages .............................................................................................. 140 I – GENERAL PRINCIPLES .............................................................................. 140 II – DAMAGES FOR BREACH OF OBLIGATION TO RECTIFY/REPAIR ................................................................................................................................................... 141 Bellgrove v Eldridge (1954) 90 CLR 613 ........................................................ 141 Tabcorp Holdings v Bowen Investments (2009) 236 CLR 272 .................. 142 Reliance Damages .................................................................................................... 144 I – GENERAL PRINCIPLES .............................................................................. 144 Commonwealth v Amann Aviation (1991) 174 CLR 64 ............................... 145 Loss of Chance Damages ................................................................................... 146 Howe v Teefy (1927) 27 SR (NSW) 301 ......................................................... 147 Gains-Based Damages ............................................................................................. 148 Limits on Damages ................................................................................................ 148 Causation and Remoteness .............................................................................. 148 I – CAUSATION ............................................................................................................ 148 II – REMOTENESS ................................................................................................. 149 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 ............................................................................................................................................... 150 III – ILLUSTRATIVE CASES ............................................................................ 151 Alexander v Cambridge Credit Corp (1987) 9 NSWLR 310 ....................... 151 Stuart v Condor Commercial Insulation [2006] NSWCA 334 ........................ 152 Mitigation ................................................................................................................... 153 Burns v MAN Automotive (Aust) (1986) 161 CLR 653 ................................ 155 Simonious Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 ........... 156 Clark v Macourt (2013) 253 CLR 1 ............................................................... 157 Disappointment and Distress .......................................................................... 157 Baltic Shipping v Dillon (1993) 176 CLR 344 ............................................... 158 Contributory Negligence ................................................................................... 159 Termination under Express Term ................................................................. 159 Shevill v Builders Licensing Board (1982) 149 CLR 620 ............................. 160 Liquidated Damages ................................................................................................... 161 The Penalties Doctrine and Terms Providing for Payment (Breach) .... 161 I – LIQUIDATED DAMAGES AND PENALTIES .......................................... 161 II – ILLUSTRATIVE CASES ............................................................................. 162 Esanda Finance Corp v Plessnig (1989) 166 CLR 131 .................................. 162 Penalties and Terms Providing for Payment (Not Involving Breach) ... 163 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 ......................................................................................................................... 163 t c ................................................................................................................................. 165 Requirements of an Action for Debt .............................................................. 165 I – ENTIRE OBLIGATIONS ............................................................................. 165 II – DIVISIBLE OBLIGATIONS ...................................................................... 165 Steele v Tardiani (1946) 72 CLR 386 ............................................................... 165 III – LEGISLATION .................................................................................................. 166 Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406 ................................ 166 IV – SUBSTANTIAL PERFORMANCE .......................................................... 167 Hoenig v Isaacs [1952] 2 All ER 176 ................................................................ 167 Bolton v Mahdeva [1972] 1 WLR 1009 ............................................................ 167 V – PAYMENT INDEPENDENT OF PERFORMANCE................................ 168 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 ................................. 168 Deposits ....................................................................................................................... 169 Bot v Ristevski [1981] VR 120 ........................................................................... 170 Misrepresentation and Rescission ..................................................................... 170 Misrepresentation .................................................................................................... 170 I – OVERVIEW ........................................................................................................... 170 II – MISREPRESENTATION OF FACT ......................................................... 171 Smith v Land & House Property Corp (1884) 28 Ch D 7 ............................. 171 Fitzpatrick v Michel (1928) 28 SR (NSW) 285 ............................................... 172 Public Trustee v Taylor [1978] VR 289 .............................................................. 173 III – POSITIVE MISREPRESENTATION ..................................................... 173 Davies v London & Provincial Marine Insurance Co (1878) 8 Ch D 469 .. 174 McKenzie v McDonald [1927] VLR 134 ........................................................... 174 IV – RELIANCE BY THE REPRESENTEE .................................................... 175 Rescission ................................................................................................................... 175 I – RESTITUTIO IN INTEGRUM ................................................................... 175 Alati v Kruger (1955) 94 CLR 216 ................................................................... 175 Brown v Smitt (1924) 34 CLR 160 .................................................................. 176 Vadasz v Pioneer Concrete (1995) 184 CLR 102 .......................................... 177 II – BARS TO RESCISSION .............................................................................. 178 Watt v Westhoven [1933] VLR 458 ................................................................ 178 Coastal Estates v Melevende [1965] VR 433 ................................................. 179 Misleading or Deceptive Conduct ........................................................................... 179 Overview .......................................................................................................................... 179 The Trade or Commerce Limitation .............................................................. 179 Concrete Constructions (NSW) v Nelson (1990) 169 CLR 594 .................. 180 O‟Brien v Smolonogov (1983) 53 ALR 107 .................................................... 181 Houghton v Arms (2006) 225 CLR 553 .............................................................. 181 The Relevant Audience ..................................................................................... 182 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 .................................... 182 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 ................... 182 Misleading Conduct ................................................................................................. 183 I – SILENCE ........................................................................................................ 183 Mistake ........................................................................................................................... 183 Overview .......................................................................................................................... 183 I – TERMINOLOGY: TYPES OF MISTAKES .................................................. 183 II – HOW THE LAW SHOULD RESPOND TO MISTAKE ....................... 184 III – REMEDY: RESCISSION V RECTIFICATION ......................................... 184 Common Mistake ..................................................................................................... 185 I – COMMON LAW: CONSTRUCTIONIST APPROACH .......................... 185 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 ....... 185 II – COMMON LAW RESPONSE: IS RELIEF PROVIDED? ..................... 186 Bell v Lever Brothers [1932] AC 161 ............................................................... 186 III – RESCISSION IN EQUITY ......................................................................... 188 Solle v Butcher [1950] 1 KB 671 ...................................................................... 188 Great Peace Shipping v Tsavliris Salvage (International) [2003] QB 679 189 Svanosio v McNamara (1956) 96 CLR 186 .................................................... 190 Rectification for Common Mistake................................................................. 190 Maralinga v Major Enterprises (1973) 128 CLR 336 ................................... 190 Pukallus v Cameron (1982) 180 CLR 447 ...................................................... 192 Mutual Mistake ......................................................................................................... 193 Unilateral Mistake as to Terms ....................................................................... 193 I – COMMON LAW VOID AND EQUITY (RESCISSION) ........................ 193 Smith v Hughes (1871) LR 6 QB 597 ............................................................... 193 Taylor v Johnson (1983) 151 CLR 422 ............................................................. 194 II – RECTIFICATION............................................................................................... 195 Leibler v Air New Zealand (No 2) [1991] 1 VR 1 ......................................... 195 Mistakenly Signed Documents: Non Est Factum ........................................ 196 Petelin v Cullen (1975) 132 CLR 355 ............................................................... 196 Mistake as to Identity ........................................................................................ 197 I – PARTIES NOT FACE TO FACE ................................................................. 197 II – PARTIES FACE TO FACE ......................................................................... 198 Lewis v Averay [1972] 1 QB 198 .................................................................... 198 Electronic Transactions .......................................................................................... 199 Duress ................................................................................................................................... 199 I – OVERVIEW ........................................................................................................... 199 II – BASIC ELEMENTS OF DURESS.......................................................... 199 Universe Tankships of Monrovia v International Transport Workers Federation [1983] 1 AC 366 ........................................................................... 199 III – DURESS AND COERCION OF THE PERSON .................................. 200 Barton v Armstrong [1976] AC 104.................................................................. 201 Undue Influence ........................................................................................................... 202 I – OVERVIEW ........................................................................................................... 202 II – CLASSES OF INFLUENCE ....................................................................... 202 Johnson v Buttress (1936) 56 CLR 113 ........................................................... 202 III – REBUTTING THE PRESUMPTION ...................................................... 204 Westmelton (Vic) v Archer and Schulman [1982] VR 305 ........................... 204 Unconscionable Dealing ............................................................................................ 205 I – OVERVIEW ........................................................................................................... 205 II – ELEMENTS OF THE DOCTRINE ........................................................ 205 III – MODERN APPLICATIONS ..................................................................... 206 Blomley v Ryan (1956) 99 CLR 362 ................................................................. 206 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 ................... 207 Louth v Diprose (1992) 175 CLR 621 .............................................................. 209 Third Party Impropriety ........................................................................................ 210 I – THREE PARTY SITUATIONS ...................................................................... 210 II – RULE IN YERKEY V JONES .................................................................... 211 Garcia v National Australia Bank (1998) 194 CLR 395 ................................ 211 Unconscionable conduct under statute ............................................................ 213 I – PART 2-2 OF THE ACL .............................................................................. 213 ACCC v CG Berbatis Holdings (2003) 214 CLR 51 ...................................... 214 II – NSW Contracts Review Act .................................................................... 215 Logic • Principles of Private Law is a bit of an introduction to Contracts. There is a lot of material to cover, we will inevitably skim over some material. • Contract law is the study of legal obligations voluntarily assumed by consenting parties in an agreement. o The course focusses on understanding the nature, significance and operation of legal agreements in different context. Express Terms – Identification (1) By Signature (Textbook, 12.05 – 12.30/Casebook, 12.05 – 12.40) I – THE EFFECT OF SIGNATURE • General Rule: Where a person signs a contractual document, they will be bound by the terms regardless of whether they have read or understood the terms (L‟Estrange v Graucob) o NB: Signature cases have nothing to do with notice, course of dealings, unusual terms or any other factors – these are usually a distraction. Affirming the importance of the rule in L‟Estrange, it doesn‟t matter what happens – if you have signed it, it is binding. | 264 L‟Estrange v F Graucob Ltd [1934] 2 KB 394 – Divisional Court (Appeal from the County Court) Facts: • L‟Estrange (plaintiff) purchased a vending machine from F Graucob Ltd (defendant). • The plaintiff signed an order form headed „Sales Agreement‟ which contained printed terms of sale and an entire agreement clause: o „The agreement contains all the terms and conditions under which I agree to purchase the machine specified above and any express or implied conditions, statement, or warranty, statutory or otherwise not stated herein is hereby excluded.‟ | 264 • Machine arrived but did not work satisfactorily. • Plaintiff brought an action for breach of implied warranty that machine would be reasonably fit for purpose. • Defendant sought to rely on the clause excluding them from liability. Issue: • Whether a party will be bound by signature, where they have not read the relevant terms contained in the contract. Outcome: • Appeal by defendant from trial judgment allowed, i.e. F Graucob Ltd (defendant) wins. Reasoning: Scrutton LJ: • Signature generally indicates an intention to be bound. It is irrelevant that the party has not read it, because signature is an objective affirmation of having read and assented to the terms. • On a policy basis, if we did not uphold this principle, the whole system of signature would be undermined as it would need to be ascertained whether parties have actually read the terms before signing them in each case. Maugham LJ • There is a presumption that the parties intended that the document contain all of the terms (i.e. parol evidence rule – if there is a written document, it is presumed that all of the terms are there). • Agreed with Scrutton LJ re: signature. Ratio: • Where a person signs a contractual document, they will be bound by the terms regardless of whether they have read or understood the terms. II – EXCEPTIONS TO THE SIGNATURE RULE • There are a number of circumstances in which the general rule in L‟Estrange will not apply, such that signature will not presumptively bind parties to a written document containing terms: 1. Where the signature was induced by misrepresentation or fraud, or in some cases of mistake (Curtis v Chemical Cleaning) 2. 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 (Toll v Alphapharm) 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 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 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 LAWS1075 – Contracts   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 LAWS1075 – Contracts 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: 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 LAWS1075 – Contracts   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 contained the exclusive foreign jurisdiction clause • Given that the contract was made in Sydney, while the terms on the ticket were presented in Greece, therefore the exclusive foreign jurisdiction clause could not be incorporated because notice of them came after the formation of the contract. • Even if the contract had been formed in Greece, the court held that the terms could not be incorporated because there was no reasonable opportunity to reject them, i.e. having received the ticket in Greece, the passenger could not be reasonably expected to return all the way to Sydney to seek a refund. • Furthermore, the ticket was more than a mere offer of carriage that could be accepted/rejected by the plaintiff‟s conduct as in MacRobertson. Rather, it was an option to acquire a ticket based on agreed contractual terms outlined in the exchange order. • This was held in response to the contention that the payment of a fare in return for an exchange order in Sydney, was merely a contract to provide a later „offer of a contract‟ in Greece (by presentation of a ticket): o It appeared highly unlikely that the plaintiff expected to be provided only with a mere offer of carriage by receiving the ticket (and not an already formed contract), having paid a fare in Australia. o It appeared even less possible, that such an offer through the ticket, might contain exemption clauses unknown to the passenger when the original contract was made (fare paid in Sydney, in return for exchange order). • In other words: o „The better analysis of the transaction is that the defendant was bound to issue a ticket in exchange for the exchange order in performance of a contract of carriage already made, but the defendant was given no right to introduce new conditions of carriage by printing them on the ticket.‟ o „The payment of the fare may rightly be regarded as the price of an option to acquire a ticket, but the option was not to acquire a mere piece of paper. It was an option to acquire a voucher or certificate of entitlement to be carried on terms already agreed – not on terms which the parties had yet to agree on.‟ Whether reasonable notice of the exemption clause had been provided • Given that the exemption clause appeared on a ticket and not in a signed written document, reasonable notice was required. • In the present case, the only step taken by the defendant to provide reasonable notice of the exclusive foreign jurisdiction clause, was the note in the brochure that the conditions of carriage would be printed on the (as yet, unavailable) Passenger Ticket Contract o In Hollingworth v Southern Ferries Ltd, it was held that a mere statement in a carrier‟s brochure that the carrier contracted on its conditions of carriage, was not enough to make those conditions terms of a contract of carriage subsequently made with an intending passenger who had read the brochure. • Therefore, the defendant did not provide reasonable notice of the exemption clause to the plaintiff. Ratio: • For delivered or displayed terms to form part of a contract, they must be made available to the party to be bound before the contract is made. Only terms that have been made available in a timely manner can be incorporated into the contract. • Reasonable steps must also be taken to bring the term to the notice of the party to be bound. II – KNOWLEDGE/NOTICE • The second requirement for delivered or displayed terms to be incorporated into a contract is that the party to be bound must either have actual knowledge of the terms or have been given reasonable notice of those terms. o Knowledge: A party who knows that the relevant document (e.g. delivered document or displayed sign) contains contractual terms, before or at the time the contract was made, will be bound by those terms. This is so regardless of whether or not the party to be bound has actually read the terms. o Notice: In the absence of knowledge, a party will be bound by delivered or displayed terms if he or she had reasonable notice of the terms. What will amount to „reasonable notice‟ will depend on the type of contract, the nature of the terms and the circumstances of the case. The more unusual the terms, the more action needs to be taken. • In respect of contractual vs. non-contractual documents: o Contractual documents: courts have suggested that where delivered/displayed terms are on a document that a reasonable person would expect to contain the terms of a contract, the mere presentation of the document will be sufficient notice of the terms in that document to ensure that they are binding. ▪ E.g. parties entering into contract for carriage of goods by sea normally bound by conditions outlined in bill of lading even if unaware that the document contained contractual terms, see Parker v South Eastern Railway. o Non-contractual documents: where delivered or displayed terms are not contained in a document that is an obvious or well- understood contractual document, the party seeking to incorporate the terms must take reasonable steps to bring those terms to the notice of the party to be bound. ▪ See Causer v Brown – owners of a dry cleaning shop could not rely on exclusion printed on a docket handed to plaintiff, since it would not have been reasonable for the plaintiff to expect that it contained conditions exempting the defendants from their common law liability. ▪ Accordingly, the defendants should have drawn the plaintiff‟s attention (i.e. provided reasonable notice) to the existence of the exemption clause. Thornton v Shoe Lane Parking [1971] 2 QB 163 – Court of Appeal (Appeal from Mocatta J) Facts: • Mr Thornton (plaintiff) parked his car at a parking garage owned by Shoe Lane Parking (defendant). The plaintiff had never been there before. • There was a notice on the outside listing the charges and other terms, including „All Cars Parked at Owner‟s Risk.‟ • Once inside, the ticket machine provided him with a ticket on which was written in fine print: o „This ticket is issued subject to the conditions of issue as displayed on the premises.‟ • Inside the car park was a sign (which was only visible from inside the car park). o One of the conditions exempted the defendant from liability from „injury to the customer however caused.‟ • The plaintiff was severely injured in an accident upon returning to collect his car. • The trial judge found in favour of the plaintiff. The defendants now appeal that decision. Issue: • Whether the plaintiff had been given reasonable notice of the terms, for them to constitute binding terms of the contract. Outcome: • Appeal dismissed in favour of the plaintiff, i.e. Mr Thornton wins. Reasoning (Lord Denning MR): Timing • The offer was made when the proprietor of the machine held itself out as being ready to receive the money. Acceptance was manifested when the customer put their money into the slot. • The terms of the offer were contained in the notice placed on or near the machine stating what was offered in exchange for the money. • However, given that the terms placed on the ticket came after the formation of the contract, they were therefore not incorporated as they failed to satisfy the timing requirement. • Only the terms displayed outside the parking garage were incorporated, as they came before the formation of the contract. • The court also distinguished normal ticket cases from those involving automated machines (as in the present case). o In ordinary ticket cases, the offer is made when the ticket is issued and the customer may accept or reject the offer. However, even this is unrealistic as people are usually in a rush and do not have sufficient opportunity to read, consider and assent to all the terms. o This may be distinguished from automated machines where the customer pays the money and receives the ticket – they cannot refuse and are therefore committed beyond recall when they place the money in the slot (which amounts to the „offer.‟) Knowledge/Notice • Court held that the defendant had failed to provide reasonable notice of the terms – the plaintiff would have to get out of his car, leaving it outside the garage at the entrance and go inside the car park in order to find the sign containing the terms. Megaw LJ: • If the terms written on the notice inside are to be incorporated, the defendant would have had to intend that customers would park their car in the entrance, leave it (blocking traffic) and go and read the terms and conditions, deep inside the parking lot. • Since that is clearly not the expectation of the defendant, the plaintiff was not given reasonable notice of the terms or a fair opportunity to discover the conditions of the contract. Sir Gordon Willmer: • Agreed with Denning LJ and Megaw LJ. • Noted that the key distinguishing feature of the case, was the presence of the automated ticket machines cf. tickets proffered by human hands. Ratio: • Whether delivered or displayed terms are incorporated into a contract will depend on two interrelated issues: o Timing – the displayed/delivered terms must be made available before the contract was formed. o Knowledge – reasonable steps must be taken to bring those terms to the notice of the party to be bound. • In some cases, one party seeking to incorporate terms might advise the other party that the contract is made subject to terms contained in another document, in circumstances where that document is not immediately available to the party to be bound. • Typically, this approach has not been sufficient to satisfy the requirement of reasonable notice, so as to incorporate the terms into the contract. o In Thornton, the notice relied on by a car operator referred to terms that customers could not read without getting out of their cars and going into the car park to find the sign containing the terms. These terms were unsurprisingly, not binding on the customers. No adequate notice of the terms was provided before the contract was made. o In Baltic Shipping, the fact that terms contained in a ticket were, prior to the issue of the ticket, available to passengers at the offices of the provider of the cruise “scarcely amounted to a sufficient compliance with the appellant‟s responsibility to bring unusual conditions at least to the notice of passengers … before they would be bound by them.” III – UNUSUAL TERMS • The degree of reasonable notice required will depend on the circumstances of the particular case – the more onerous or unusual the term, the more that must be done by way of notice. o In Interfoto Picture Library Ltd v Stiletto Visual Programs Ltd, Bingham LJ summarised the effect of the English decisions as having a tendency to look at the nature of the transaction in question and the character of the parties to it; to consider what notice the party alleged to be bound was given of the particular condition said to bind him; and to resolve whether in all the circumstances it is fair to hold him bound by the condition in question. • The notice must be such as to ‘fairly and reasonably’ bring the terms to the attention of the party to be bound. o In J Spurling Ltd v Bradshaw, Denning LJ commented – „Clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.‟ o In other words, the prominence of the notice of displayed or delivered items must be proportionate to the unusual nature of the term. • In Interfoto Picture Library Ltd v Stiletto Visual Programs Ltd, Interfoto (which ran a library of photographic transparencies) sent to Stiletto, on request, 47 transparencies. o Included in the bag with the transparencies was a delivery note setting out the date of dispatch and of return. At the bottom of the note was the heading “Conditions”, printed in fairly prominent capitals, followed by nine conditions. o One of these conditions provided that the transparencies must be returned within 14 days and that a certain holding fee would be charged for each transparency retained for longer than the 14-day period. Stiletto retained these transparencies for an additional two weeks and were charged a fee substantially larger than was usual. o The English Court of Appeal held that Stiletto was not liable to pay the fee. Bingham LJ referred to the civil law principle that in carrying out contracts, parties should act in good faith. He stated that good faith did not simply mean that the parties should not deceive one another – the effect of the duty was „perhaps more aptly conveyed by such metaphorical colloquialisms as “playing fair”, “coming clean” or “putting one‟s cards face upwards on the table.” o He considered that in the present case, it might have been held that Interfoto was under a „duty in all fairness to draw Stiletto‟s attention to the high price payable if the transparencies were not returned in time.‟ However, Bingham LJ noted that English law had not committed itself to such an overriding principle as good faith, responding to issues of unfairness in a more piecemeal fashion. o Analysing the case in terms of traditional doctrine, Bingham LJ and Dillon LJ held that the contract was not made out until Stiletto opened the bag containing the photographs. o Once the delivery note was taken out, Stiletto would have recognised it as a document reasonably likely to contain contractual terms and would have seen the terms printed on the document. o While those terms which were commonly encountered in the business of the parties would have been incorporated into the contract, their Lordships considered that Interfoto did not do what was reasonably necessary to draw the clause in question, which was „unreasonable and extortionate‟ to the attention of Stiletto. • Concern with sufficiency of the notice of unusual terms was also considered by the New South Wales Court of Appeal in Baltic Shipping Co v Dillon (The Mikhail Lermnotov): LAWS1075 – Contracts Baltic Shipping Co v Dillon (“The Mikhail Lermontov”) (1991) 22 NSWLR 1 – New South Wales Court of Appeal (Appeal from Carruthers J) Facts: • Dillon (respondent) made a booking for a cruise with Baltic (appellant), through a travel agent and received a booking confirmation which stated that the contract only came into effect once the ticket was issued. • She receives the ticket two weeks before the cruise and it contained unusual terms such as an exemption from liability clause re: personal injury and personal effects.   • The ship sank and the respondent suffered injury and lost her belongings. She claimed damages. • The appellant sought protection through the limitation of liability clause. Issue: • Whether sufficient notice of the unusual terms (limitation of liability clause) was provided for it to be binding upon both parties. Outcome: o Appeal dismissed in favour of the respondent, i.e. Dillon wins. Reasoning (Kirby P and Gleeson J): Whether there was reasonable notice of terms • The appellant was required to provide the respondent with reasonable notice of the unusual conditions, which had not been previously mentioned in the booking form. Until the plaintiff received the ticket, the only information she had about the conditions of the contract were contained in the booking form. • While the booking confirmation stated that the terms were available at their company office, the unusual nature of the terms meant that the appellant was required to make a special effort to bring it to the attention of the respondent. • In other words, the mere availability of the terms at the company’s office was not sufficient notice, especially when such terms were unusual and unexpected in nature, such as those significantly limiting the company‟s liability: o „Unless the passenger took certain initiatives of her own, she would have had no knowledge of…the terms and conditions printed on the tickets. The fact that they were available to passengers at CTC Cruise Offices scarcely amounted to a sufficient compliance with the appellant‟s responsibility to bring unusual conditions at least to the notice of passengers such as the respondent before they would be bound by them.‟ o „I would say that there was more, before the time fixed, that the carrier could have done to bring the unusual provisions at least to the notice of the passenger. At the very least it could have drawn to attention, on its booking form, the fact of the limitation of liability for personal injury and damage to luggage.‟ • Since the respondent was not notified of the new terms, the respondent‟s acceptance of the ticket that was issued only signified acceptance of the terms set by the booking form and did not include the exemption from liability clause. o „Thus the mere presentation by the appellant to the respondent of the passenger ticket with its terms and conditions would not fix the respondent with acceptance of those terms and conditions…she was entitled, in law, to take the view that she should be issued with a ticket which would contain no unusual provisions, specifically no provisions of which she was not on notice limiting the appellant‟s liability to her.‟ • Kirby P also