Implied and Express Terms
Includes:
- Express Terms
- Implied Terms
- Exemption Clauses
Express Terms:
1. Parole Evidence Rule:
General rule = once the contracting parties have elected to enshrine their contract in
a written document, the parties cannot adduce extrinsic evidence to add to, vary, or
contradict the written document.
BUT – this is rebuttable.
2. Signature:
General rule = a person is bound by a document which he signs, whether he reads it
or not.
L’Estrange v Graucob – C bought an automatic slot machine from D.
“When a document containing contractual terms is signed, then, in
the absence of fraud or, I will add misrepresentation, the party
signing it is bound, and it is wholly immaterial whether he has read
the document or not.”
3. Incorporation:
Three hurdles must be overcome:
(1) Notice of the terms must be given at or before the time of concluding the
contract.
(2) The terms must be contained or referred to in a document which was intended to
have contractual effect.
(3) Reasonable steps must have been taken to bring the terms to the attention of the
other party.
a. Notice:
General rule = notice of the terms must be given at or before the time of concluding
the contract.
Therefore, it is crucial to determine the precise moment at which the contract
was concluded.
Olley v Marlborough Court Ltd –
A notice in the bedroom of a hotel, which purported to exempt the
hotel proprietors from any liability for articles lost or stolen from the
hotel, was held not to be incorporated into a contract with a guest,
whose furs were stolen from her bedroom, because the notice was not
seen by the guest until after the contract had been concluded at the
hotel reception desk.
b. Contained or referred to in a document:
General rule = the terms must be contained or referred to in a document which was
intended to have contractual effect.
Chapelton v Barry UDC –
C hired a deck chair from D. On paying his money, he was given a
ticket which, unknown to him, contained a number of conditions,
including an exclusion clause.
C was injured when he sat in the deck chair as it gave way beneath
him. He sued D who relied by way of defence on the exclusion
clause contained in the ticket.
Was held that they could not rely on the exclusion clause
because it was contained in a mere receipt which was not
intended to have contractual effect.
, c. Reasonable Steps:
General rule = reasonable steps must have been taken to bring the terms to the
attention of the other party.
Only requires reasonable steps, not whether the claimant actually read the
notice – Parker v South Eastern Railway Co
The more unusual or unreasonable the clause, the greater the degree of notice
required.
Thornton v Shoe Lane Parking –
Lord Denning: “it would need to be printed in red ink with a red hand
pointing to it – or something equally startling.”
Restrictive approach not just confined to exclusion clauses.
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd –
C sent D 47 photo transparencies along with a delivery note. The
delivery note contained several contract conditions. This included a
stipulation that the transparencies should be returned within 14 days.
If they were returned later, D would be liable for a fee of £5 a day
(plus VAT) per transparency. D returned them approximately a month
late.
Where a condition in a contract was particularly onerous or
unusual and would not be generally known to the other party,
the party seeking to enforce it had to show that it had been
fairly and reasonably brought to the other party’s attention.
Lord Bingham:
Question = “whether it would in all the circumstances be fair
(or reasonable) to hold a party bound by any conditions… of
an unusual and stringent nature.”
d. Incorporation by a Course of Dealing:
General rule = terms may also be incorporated into a contract by a course of dealing.
Courts have never defined course of dealing with any degree of precision, but
some useful guidance has been given.
McCutcheon v MacBrayne –
Must be regular and consistent.
What constitutes a ‘regular’ course of dealing depends upon the facts of the particular
case:
Hollier v Rambler Motors –
Three or four contracts over a period of five years was held not to be
a course of dealing.
Must be consistent:
McCutcheon v MacBrayne – ship carrying claimants car sank.
Lord Pearce:
There was no consistent course of dealing because the
previous transactions had always been in writing (by signing
the risk note) and in the present case, the transaction was
entirely oral.
Surely this takes the requirement of consistency too far – because the
only reason for D’s reliance upon the course of dealing requirement
was that they had forgotten to ensure that the risk note was signed.
MacDonald – if that forgetfulness, of itself, also had the
effect of precluding them from relying upon the course of
dealing argument, cases of incorporation by a course of
dealing will be very rare.
The better view of the case is that the evidence failed to establish a
consistent course of dealing because, although on some occasions the
brother-in-law had been asked to sign the risk note, there were other
occasions when he had not been asked to sign.
Includes:
- Express Terms
- Implied Terms
- Exemption Clauses
Express Terms:
1. Parole Evidence Rule:
General rule = once the contracting parties have elected to enshrine their contract in
a written document, the parties cannot adduce extrinsic evidence to add to, vary, or
contradict the written document.
BUT – this is rebuttable.
2. Signature:
General rule = a person is bound by a document which he signs, whether he reads it
or not.
L’Estrange v Graucob – C bought an automatic slot machine from D.
“When a document containing contractual terms is signed, then, in
the absence of fraud or, I will add misrepresentation, the party
signing it is bound, and it is wholly immaterial whether he has read
the document or not.”
3. Incorporation:
Three hurdles must be overcome:
(1) Notice of the terms must be given at or before the time of concluding the
contract.
(2) The terms must be contained or referred to in a document which was intended to
have contractual effect.
(3) Reasonable steps must have been taken to bring the terms to the attention of the
other party.
a. Notice:
General rule = notice of the terms must be given at or before the time of concluding
the contract.
Therefore, it is crucial to determine the precise moment at which the contract
was concluded.
Olley v Marlborough Court Ltd –
A notice in the bedroom of a hotel, which purported to exempt the
hotel proprietors from any liability for articles lost or stolen from the
hotel, was held not to be incorporated into a contract with a guest,
whose furs were stolen from her bedroom, because the notice was not
seen by the guest until after the contract had been concluded at the
hotel reception desk.
b. Contained or referred to in a document:
General rule = the terms must be contained or referred to in a document which was
intended to have contractual effect.
Chapelton v Barry UDC –
C hired a deck chair from D. On paying his money, he was given a
ticket which, unknown to him, contained a number of conditions,
including an exclusion clause.
C was injured when he sat in the deck chair as it gave way beneath
him. He sued D who relied by way of defence on the exclusion
clause contained in the ticket.
Was held that they could not rely on the exclusion clause
because it was contained in a mere receipt which was not
intended to have contractual effect.
, c. Reasonable Steps:
General rule = reasonable steps must have been taken to bring the terms to the
attention of the other party.
Only requires reasonable steps, not whether the claimant actually read the
notice – Parker v South Eastern Railway Co
The more unusual or unreasonable the clause, the greater the degree of notice
required.
Thornton v Shoe Lane Parking –
Lord Denning: “it would need to be printed in red ink with a red hand
pointing to it – or something equally startling.”
Restrictive approach not just confined to exclusion clauses.
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd –
C sent D 47 photo transparencies along with a delivery note. The
delivery note contained several contract conditions. This included a
stipulation that the transparencies should be returned within 14 days.
If they were returned later, D would be liable for a fee of £5 a day
(plus VAT) per transparency. D returned them approximately a month
late.
Where a condition in a contract was particularly onerous or
unusual and would not be generally known to the other party,
the party seeking to enforce it had to show that it had been
fairly and reasonably brought to the other party’s attention.
Lord Bingham:
Question = “whether it would in all the circumstances be fair
(or reasonable) to hold a party bound by any conditions… of
an unusual and stringent nature.”
d. Incorporation by a Course of Dealing:
General rule = terms may also be incorporated into a contract by a course of dealing.
Courts have never defined course of dealing with any degree of precision, but
some useful guidance has been given.
McCutcheon v MacBrayne –
Must be regular and consistent.
What constitutes a ‘regular’ course of dealing depends upon the facts of the particular
case:
Hollier v Rambler Motors –
Three or four contracts over a period of five years was held not to be
a course of dealing.
Must be consistent:
McCutcheon v MacBrayne – ship carrying claimants car sank.
Lord Pearce:
There was no consistent course of dealing because the
previous transactions had always been in writing (by signing
the risk note) and in the present case, the transaction was
entirely oral.
Surely this takes the requirement of consistency too far – because the
only reason for D’s reliance upon the course of dealing requirement
was that they had forgotten to ensure that the risk note was signed.
MacDonald – if that forgetfulness, of itself, also had the
effect of precluding them from relying upon the course of
dealing argument, cases of incorporation by a course of
dealing will be very rare.
The better view of the case is that the evidence failed to establish a
consistent course of dealing because, although on some occasions the
brother-in-law had been asked to sign the risk note, there were other
occasions when he had not been asked to sign.
