Understanding Express Terms and Contractual Obligations: A Focus on Signatures and Notice, Lecture notes of Negotiation

Download Understanding Express Terms and Contractual Obligations: A Focus on Signatures and Notice and more Lecture notes Negotiation in PDF only on Docsity! Week 1 & 2 – Express Terms Disputes arise over the terms of a contract Five matters to consider when attempting to resolve disputes: 1. Identify the express terms agreed by the parties 2. The terms must be construed to determine their meaning and legal effect (whether the terms apply) 3. Consider the admissibility of extrinsic evidence (parol evidence rule) 4. If the express terms are silent on an issue, it must be determined if silence is intentional or whether there is a gap 5. Consider the effect of the statute on the party’s contractual rights and obligations Objective Approach The aim of the courts is to give effect to the “presumed intentions” of the parties References to intention usually means “the intention which reasonable persons would have had if placed in the same situation of the parties” What are express terms? • Terms which are an explicit declaration of a particular promise in the contract itself • These terms must be oral or written • This contrasts with implied terms where no declaration has been made They may be: 1. Incorporated into the parties’ contract - By a party signing a written document - By notice – displaying or delivering a written document to the other party - By a course of dealing between the parties 2. Found in statements made by the parties during their pre contractual negotiation 3. Combination of the above Terms and the communications of the parties Terms = those proposed by the offeror and accepted by the offeree Challenge = where there has been a lengthy negotiation process and a formal contract has not been written and signed Written terms and the effect of signature Rule in L’Estrange v Graucob General rule – a person who signs a contractual document will be bound by the terms in that document, regardless of whether he or she has read and understood those terms (L’Estrange) and no matter whether the terms are unusual or onerous (Toll v Alphapharm) The act of signing a document is seen as a willingness to be bound by those terms L’Estrange v Graucob Ltd [1934] 2 KB 394 Facts Ms L’Estrange purchased a cigarette vending machine from F Graucob Ltd. Ms L’Estrange signed a “Sales Agreement” which contained the terms of sale. When the machine was delivered, it didn’t work satisfactorily. She bought action for damages for breach of an implied warranty that the machine was reasonably fit for purposes for which it was required. There was a clause in the sales agreement which stated that any express or implied condition, statement or warranty not stated is excluded, which the defendant relied upon Judgment The trial judge had relied upon the ticket cases to argue that notice had to be given of the terms of the document (here the exclusion clause). However, this is not a ticket case and the law applicable is not the same. Here the document involved is signed. When the document is signed it is immaterial that a party has not read it and does not know if its contents. He is bound unless there has been fraud or misrepresentation. As there was no fraud or misrepresentation here the Plaintiff was bound by the exclusion clause. Toll (FGCT) v Alphapharm Pty Ltd [2004] HCA 52 Facts Toll entered into a contract with Richard Thomson (acting for Alphapharm) to store and transport goods being imported for Alphapharm. It was alleged Finemores performed this contract negligently, causing loss to Alphapharm. Finemores sought to escape liability by relying upon an exclusion clause in the contract with Richard Thomson Issue: must the defendant do what is reasonably necessary to give notice to unusual terms Held When signing a document, you are making a representation that you have read and understand the contents of the terms contained in the contract and that there was no reason to depart from the general rule. As a result, the terms and conditions formed part of the contract for the storage of goods “the general rule... a person who signs a document which is known by that person to contain contractual terms... is bound by those terms, and it is immaterial that the person has not read the document”