Determining Promissory Intent and Collateral Agreements in Contract Law, Schemes and Mind Maps of Consumer Law

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CONTRACT TERMS Express Terms: Terms v Mere representation: - Terms: pre-contractual statements which are sufficiently promissory in character - Mere representation: induce the representee to enter into the contract, but which are not guaranteed by the promisor, and hence have no contractual force - If a pre-contractual statement is a term, it is considered as an express term of the K, which means that breach of the term gives rise to claim for damages - If the statement is merely a representation, the P may have recourse to misrepresentation under the Australian Consumer Law ***To determine whether a pre-contractual statement is promissory in character: l The intention of the party The court will try to ascertain the objective intention of the parties, and ask whether a reasonable person would interpret the statement as being promissory in nature: Oscar Chess v Williams - Where the necessary intention is not established, the statement takes effect as a representation - If it was false, the representee is entitled to rescind the K for misrepresentation if it induced entry into the K. The representee may also be entitled to damages in tort or under statute, but cannot claim damages for breach of Ks - Where there are reasonable grounds to believe that the promisor believed that his statement was true, then his amounts to innocent representation and is not considered a term: Oscar Chess v Williams Oscar Chess v Williams [1957] The question whether a warranty was intended depends on the conduct of the parties, on their words and behavior, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice. - The D sold his mother’s car to a car dealer, - Evidenced by a registration book, the car was a 1948 model - It was subsequently disclosed that the car was actually a 1939 model - The car dealer sued the D for the difference of the payment Based on the facts, it must have been obvious to that seller had himself no personal knowledge of the year when the car was made. He must have been relying on the registration book. It is unlikely that such a person would warrant the year of manufacture. The most he would do would be to state his belief, and then produce the registration book in verification of it, in these circumstances the 1 of 53 intelligent bystander would, I suggest, say that the seller did not intend to bind himself so as to warrant that it was a 1948 model. l The time of the statement The proximity between when the statement was made and entry into the K may help to determine intention: Harling v Eddy l The content of the statement If the statement is of great significance to the K, this evidences a clear intention to be bound: Coucham v Hill {1947} There is no doubt that the P did make some attempt of the kind in order to protect himself from the risk of buying an animal that was not of the kind described. The real question is, what did the parties understand by the question addressed to and the answer received from both vendor and auctioneer. Thus, the court’s task is to try to ascertain the objective intention of the parties. The more important the content of the statement, the more likely it is that the parties intended it to be a term. - The P Couchman purchases at an auction sale a heifer belonging to the D which was described as “unserved” - The catalogue contained an exemption clause which exclude the liability of the sellers of any fault by stating that the lots were sold ‘with all faults, imperfections and errors of description”. - At the sale, the P asked both the D and the auctioneer whether they would confirm the heifer in question was unserved and received from both the answer ‘yes’ - Later the heifer was found to be in calf and died as a result of carrying a calf at to young an age. In the circumstances the answer of the D and the auctioneer to the P’s question amounted to an offer of a warranty overriding the conditions of sale; that such offer was accepted by the P’s bid for the heifer; and that the description amounted to a condition on the breach of which the P was entitled to treat it as a warranty and recover damages. l The knowledge and expertise of the parties - Where a party has expertise, they should be able to distinguish between mere statement of opinion and statements of fact accompanied by guarantee from its maker: Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd - However, where a party has no expertise in the matter, the statement might amount to an innocent representation, which does not constitute a guarantee: Oscar Chess v Williams Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] If a representation is made in the course of dealing for a K for the very purpose of inducing the other to act on it, and it actually induces him to act on it by 2 of 53