Flashcards in Incorporation of Terms Deck (32):
Whether stipulation before/at time of contracting has become formal term of contract or not.
Incorp of written and oral statements. But distinction is really:
negative terms - i.e. diminishing one parties responsibilities, exclusion or limitation clauses.
positive terms - adding to obligations, assurances or guarantees.
L’Estrange v Graucob (1934)
FACTS: Pl owned café, agreed to buy cig vending machine from Defs. Signed Sales Agreement, didn't read - had general exclusion of all express or implied terms re machine. When delivered failed to work properly, jammed. Pl claimed damages for breach of implied term - fit for purpose.
HELD: incorporated terms, by signature. Action failed. TJ was mistaken re insufficient notice - signature conclusive of agreement to all terms.
She said was told was an order form, but no evidence - if was through fraud or "non est factum" (complete misapprehension as to nature of transaction) would be invalid. Were in small print,
Limitation to "ad idem" ideal - seems persuasive that Pl intended to make her purchase with benefit of law's usual protections - parties not in agreement? But value of certainty more important than "ad idem". Signature is assent, must be reliable.
Here shouldn't apply where should be obvious that assent given on a mistaken basis - snapping up case rationale. Canada law allows this.
Tilden Rent-A-Car Co v Clendinning (1978) Ontario Court of Appeal
FACTS: Def rented car at Vancouver Airport - asked whether wanted to buy insurance cover, did. Signed form without reading it - on back made him liable for damage done to car.
HELD: AC Ontario - signature didn't apply where was clear customer didn't read, wasn't aware of burdens. Only where reasonable.
Justifiable reliance is protected, but if not real assent is not protected. Informal and hurried transaction.
L Estrange is simple, widely known.
Grogan v Robin Meredith Plant Hire (1996)
FACTS: how to apportion damages between 2 companies for injuries to 3rd party. Oral contract for heavy machinery and rate of hire. No other terms. At weekly terms drive presented sheet to sign with "our terms, upon request" - if incorporated would require hirer to indemnify Meredith re losses to third parties.
HELD AC: not incorporated. Time sheet not regarded by reasonable person as a document likely to contain contractual terms - no, was a merely administrative device for recording performance under a pre-existing contract.
Curtis v Chemical Cleaning and Dyeing Co (1951)
FACTS: Pl took white satin dress to dry-cleaners, asked to sign document headed "Receipt". Signed, asked why needed - owner explained was to exempt liability from damage to beads. Pl signed. But was to exclude all liability. Dress returned stains, defs denied liability on basis of clause.
HELD: Denning LJ AC - defs not entitled to rely on clause. Operated to extent of representation.
Sig not usual effect if procured by misrep. But even an innocent misrep is a misrep. Creation of any false impression re existence or extent of exclusion falls within the ratio. Doesn't have to amount to misrep as ordinarily understood. Also Denning handles like a estoppel - usually would be either effective or not, not part.
Incorporation by notice: Timing
If reasonable notice of stipulation is given even if is not contained in doc signed may be validly incorporated.
Must be given before or at time contract is formed. If given after is invalid.
Olley v Marlborough Court Ltd (1949)
FACTS: Pl and husband wanted to stay at hotel for indeterminate period paid one weeks board before going to room. After 6monthes their stuff stolen. Sued hotel for negligence in contract and tort - hotel denied neg and in alternative relied on exclusion of liability.
HELD - AC - Singleton and Denning - notice not incorporated into contract made upon arrival at hotel, not seen until after contract concluded. Also insufficient to protect hotel from liability for negligence.
When incorporated? After pl and husband made 2nd payment at end of first week's stay? Singleton LJ rejected - was a single contract for an indeterminate stay, and periodic payments made on couple's arrival at hotel, rather than contract renewable at intervals.
Denning - "best way is written document to be signed. Or handing written notice specifying its terms, plain to see when makes contract or express oral stipulation."
Thornton v Shoe Lane Parking (1971) FACTS: at entrance - "all cars parked at owner's risk" lights change from red to green, machine provides ticket which Pl took before driving on - "issued subject to conditions as displayed on premises". Pl then returned to pay parking charge and collect his car. Accident occurred, Pl injured, partly neg. Defs disclaimed responsibility - referred to notice, tried to exempt liability for injury.
HELD - defs were liable, hadn't done what was necessary to bring exempting stipulation to Pl's attention at time contract was made. Notice couldn't help defs because made no ref to PI. Wording was insufficient on ticket to incorporate notice in carpark.
Denning - contract concluded before ticket issued. Megaw LJ - said words on ticket not adequate as reasonable notice of extremely broad exclusion of car park. Would have deprived pl of protection provided by Occupier's Liability Act 1957.
Must be in a document reasonably expected to contain contractual terms. Already seen in incorp by signature (Grogan).
Imposed on incorporation by notice - less secure way of introducing terms into a market.
Chapelton v Barry Urban District Council (1940)
FACTS: Council let out deck chairs on beach. Charge displayed on notice by pile of chairs, more infor from attendant. Pl sat, chair gave way, injury. Council sought to defend with ref to exclusionary words on ticket.
HELD: not incorporated - ticket wasn't a contractual document. Pl would be reasonably entitled to regard as a mere receipt to show he had paid, and for how long could use chair. Pile of chairs - offer, sitting down, acceptance. Ticket came after the contract was concluded.
Timing should be decisive, but not always clear-cut.
British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd (1975)
FACTS: Parties in same line of business and did business together twice before. Defs wanted crane (Ips). Agreed by phone, pl later sent on printed form by post. Normally signed by Ips, this time not - and crane sank, recovered at expense of Pl. Claimed indemnified by Ips against their outlay. Ips contended relevant clauses not incorporated into the contract which was made earlier by telephone.
HELD: AC - indemnity clause validly incorporated. Defs knew plant hire was carried out on conditions, both used versions of common form known as Contractors Plan Association form. Pl entitled to assume contract made on normal conditions, even though here was only specified post-contractually.
Past dealings not vital. Parties in same line of business, knew on which terms business usually conducted, and that urgency. Denning MR -
"Crane was needed urgently, supplied at once, before usual form received. Pl entitled to conclude the defs were accepting on terms of Pls own printed condition, to follow in 2 days. It's as if Pl said "we will supply on usual conditions" and Defs said "sure"."
Urgency displaced usual formality.
Reasonable notice of an unsigned stipulation?
Parker v The South Eastern Railway Company (1877)
FACTS: Pl deposited bag at cloakroom of train station. Received ticket "see reverse" - excluding liability after £10. Bag lost, clamed its value of £24. Co relied on limitation clause. Had company given reasonable notice of clause?
Mellish LJ - "if person didn't know there was writing on ticket, not bound by those conditions. if knew there was - that contained conditions, he is bound, or if reasonable notice that writing contained conditions and knew had writing.
Pl doesn't have to read the ticket, but takes the consequences.
Circumstances important - pl admitted knew there was writing on ticket, so Mellish could discuss it.
But Denning in Shoe Lane Parking - logical objection re timings within transaction yields to superior practical interest enabling service industry to run on its own terms.
Thompson v London, Midland and Scottish Railway Company (1930)
FACTS: Pl injured when train stopped at end of platform. Def denied liability - exemption clause for injury to ticket holders howsoever caused. Pl couldn't read - front read "see back" - back referred to conditions in timetables, etc. Relevant clause was in timetable, one copy at booking office, 6d to buy.
HELD - not reasonable steps to bring notice of clause to Pl by jury but AC held that Pl accepted terms, bound.
Company could insert clause in small print = but eventually prevented by Unfair Contract Terms Act 1977 - would have rendered clause in case of no effect.
Courts look not just at mechanic of incorporation, but with content and character of stipulation sought to be incorporated. Shoe Lane Parking - court noticed how completely clause shifts risk to Pl.
Cp British Crane Hire - Court was satisfied indemnity clause was usual in the type of contract.
Denning LJ in Spurling v Bradshaw (1956) Some 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”.
Some clauses may be incorporated, others not.
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989)
Defs required photos on 1950s theme. Contacted pl with photo transparencies. They sent 47 transparencies same day with conditions. Defs said 2 were of interest. All returned within 14 days of date of delivery, holding fee of £5 p transparency pls VAT charged each day transparency retained. Defs forget, returned them 15 days late. Pl sent invoice for £3783.50.
HELD - AC - not incorporated. Although clause so unreasonable could be a disguised penalty (therefore unenforceable) Bingham LJ assumed would have been valid if fairly drawn to attention. But wasn't, given clause's unreasonable and punitive character.
Bingham LJ - no general law of good faith in English Law, but this required sufficient notice.
Would have been effectively incorporated if had been more regular. But this one so harsh as required more notice.
On average facts - Parker v SE Rail is reasonable notice with clause being ascertainable.
Interfoto - Chitty says a particularly onerous and unusual clause must be brought to attention.
But actual knowledge shown? No case for specific agreement. But if one was so bad wouldn't align with unfair contract terms..
AEG (UK) Ltd v Logic Resource Ltd (1996)
FACTS: Goods to export to Iran. Defective, Defs instructed customers to return goods (at expense) and deducted costs from price for tubes. Pls disputed deduction - conditions of sale placed cost of returning goods on buyers. Had been referred to in an order confirmation note, was a contractual doc.
HELD: AC pl couldn't rely. Majority - clause was onerous, deprives defs of usual rights of Sales of Goods Act. Not validly incorp. Hobhouse LJ agreed clause ineffective re Unfair Contract Terms Act 1977, but distinguished Interfoto as this clause wasn't unusual, not appropriate to take point on incorp. Solution by act.
Hobhouse LJ - should consider type of clause - is it exceptional? is brought to notice in standard terms. Interfoto - involved extortionate clause, didn't relate directly to rights and obligations of the parties. Shoe Lane Parking - related to personal injuries and state of premises, not subject matter of car parking contract.
Should limit Interfoto - otherwise uncertainty.
Incorporation by course of dealing:
may be able to conclude later deal not including stipulation is to be understood as if it were present.
On the facts. Most obvious where omission of stipulation is an oversight.
McCutcheon v David MacBrayne (1964)
FACTS: Def's ferry sank because of employee's neg. Carried Pl's car, lost. Defs relied on clause in conditions of carriage against Pl's action in neg. Shipping of car been arranged by Pl's brother-in-law who didn't ask to incorp terms. Pl shipped goods a few times with def, always required to sign risk note. HL - Defs couldn't rely on clause - not incorporated into oral contract here. Not consistency of dealing in past to justify the inference into the present.
McCutcheon v David MacBrayne (1964) Lord Reid?
referred to past dealings as an instance where the terms may be implied - not same as incorp.
Officious bystander test - is in implied terms. Devline went further - that implication was only means by which unexpressed term can come into a contract.
But usual rationale for incorp - one parties conduct/inaction entitles other to deduce assent to stipulations to govern the contract. So they can say the other side "must have known" explained by oversight or urgency. Whether leads to implication or incorporation..
Terms which supplement contract:
Representations (outside of contract) and warranties (contractual terms) and the distinction.
Timing re moment of contract is relevant -
If neg stipulation (ex clause) is not incorp, is ineffective. If positive guarantee is not incorp, may still take effect as a rep (mere rep). On assumption that rep has proved to be untrue may be remedy in Misrep. But before Misrep Act 1967 - no general remedy by way of damages for misrep unless fraudulently made (then rescission of contract to restore parties to original position had contract not been made, often impossible on facts). Used to be in their interests to argue positive assurance motivated them to enter the contract.
Distinguishing between terms and Reps
Intention with which statement made
Basic test - whether parties intended it should do so.
Heilbut, Symons & Co v Buckleton (1913)
FACTS: promotion of company - said were "bringing out a rubber company" yes, "we are bringing it out". Inquirer bought lots of shares in company. Soon dropped when Companies plantations inadequate. Action brought against fraudulent representation that company was a rubber co, or for breach of warranty.
HELD: Failed, HL held breach of warranty shouldn't have been put to jury at all, no evidence to maintain it at law.
L Moulton: usually people try to extend warranty to make someone liable for an innocent misrep. This case is this.
An affirmation at the time of the sale is a warranty, provided it appears to be on evidence to be so intended Holt LJ.
Otherwise judge must direct jury that if vendor states fact of which buyer is ignorant, must as a matter of law find existence of a warranty, whether or not totality of evidence shows the parties intended toe affirmation to form part of the contract. Intention of parties can only be deduced from totality of evidence, no universal test.
Bannerman v White (1861)
FACTS: Pl sold hops, offered to produce 300 acres of hops for sale to def, provided a sample. Def asked for Pl's assurance that no sulphur used in cultivation of the crop, made clear wouldn't initiate discussions over price until that assurance. Pl provide indemnity note
HELD - pl's indemnity was term of contract, negotiations wouldn't have proceeded otherwise.
Oscar Chess Ltd v Williams (1957)
FACTS: Def acquired new car from Pl on hire purchase terms. Pl took def's old car in part exchange. Later transpired that car was much older than seemed - Pls sued for damages for breach of warranty - had paid more than would have done.
HELD AC - majority, def's statement of age of car was a rep, not a warranty. Pl knew the def had no more knowledge of car's date of manufacture than they themselves. Morries LJ dissented - considered age of car vitally important, was a condition.
Denning - "intended as a warranty or not? intended to bind himself? Intention depends on conduct of parties, words and behaviour, not their thoughts. If an intelligent bystander would reasonably infer a warranty was intended that will suffice. OBJECTIVE TEST.
Here is "I believe it is 1948 Morris - here is the Reg book to prove it." - no warranty. "I guarantee it is a M. It is in the Reg book and I also guarantee it." - Warranty, contractually responsible even if Reg book may be wrong.
Importance is relevant if increases likelihood that parties should be taken to have intended a remedy in damages if statement were untrue - shown by emphasis placed on statement, not examination of its relation to main object of contract.
Also - either penalise expert buyers who should have checked, or the innocent seller, no expertise. Denning chose former.
Dick Bentley Productions Ltd v Harold Smith Motors (1965)
FACTS: Actor DB wanted a good Bentley. Def told Pl car had done only 20,000 miles since being fitted with replacement engine and gearbox - showed on speedometer. Put info forward as true to his best belief, didn't warrant it as a term of contract, not represented it (statement of fact).
AC - Denning dismissed appeal - found statement to mileage false, was a term of the contract.
Distinguished Oscar Chess:
If rep is made in course of dealings for purpose of inducing the other to act on it, and successfully enters contract - can infer it is a warranty. Can rebut if was an innocent misrep. Oscar Chess was that.
Here inference not rebutted - dealer, in a position to know or find out car's history. But done later, his statement was wrong. No reasonable foundation.
Here Denning equates reps with statement of belief(but is of fact) and a rep must be an inducement to enter into a contract - so strange here that rep makes statement go beyond rep. Oscar Chess/Dick Bentley - don't sit well together.
Fault is not good contractual analysis and no caselaw to use between contractual terms and extra cont reps.
A statement found to be a term of the contract if is made by someone who, to knowledge of both parties, is well-placed to guarantee its accuracy. I.e. an expert.
Measuring the importance of a statement in question helps to judge intention with which was ostensibly made.
Assumption of responsibility/advice to verify.
Schawel v Reade (1913)
Ecay v Godfrey (1947)
Where the prospective buyer of a horse was told by the seller that he need not continue to examine the animal because if anything were wrong the seller would have informed him, HELD Lord Moulton that was term of the contract. The seller was taking responsibility for the soundness of the horse.
Where, by contrast, the seller of a motor cruiser appeared concerned to know whether the buyer would have a survey done or not, Lord Goddard CJ HELD that the seller’s statements as to the boat’s condition would not be interpreted as a contractual guarantee. It was not clear in this context that the seller was prepared to take responsibility for its condition.
Reduction of the contract to writing
Inntrepreneur Pub Co v East Crown Ltd (2000)
A statement made just at conclusion of contract more likely to be intended as a term = decisive effect on recipients willingness to contract.
Also said that where parties have drawn up a written contract, making no ref in an earlier statement, presumption not to have contractual effect.
Incorporation of conflicting terms -
evidence of pre-contractual statements important. Where whole contract is ral no difficult - court reviews everything passed between parties to determine contract.
Parol Evidence rule.
But when written - looking outside is more objectionable. Parol Evidence Rule (Jacobs v Batavia) 1924. Prevents "add, vary or contract" terms of a written contract.
Because of certainty, finality, respect for parties objectively recorded contractual intentions.
Lots of exceptions - can adduce extrinsic evidence to rebut presumption that contract is entire, showing parties actually intended it to be in 2 parts = shows contract exists in two places.
Law Com 1986 thinks doesn't need amendment, never prevented adduction of relevant evidence. Treital -more cautious, in McKendrick.
a) pre contractual statement might be said to enter the contract, despite inconsistent terms within it, as an express oral assurance which overrides the inconsistent terms,
b) may be regarded as a collateral contract.
Couchman v Hill (1947)
FACTS: Pl attended auction to buy heifer for his bull. Described as "unserved" in catalogue, but accuracy for descriptions not guaranteed. Lots sold with errors. Pl asked def before auction and auctioneer for confirmation was unserved before auction. Assured it was - but it wasn't and died from carrying a calf too young.
HELD: express oral assurance amounted to a contractual term, overrode the disclaimer in the catalogue.
Scott LJ - "no contract until the hammer fell. Offer was defined, auctioneer's authority defined, not in law open to would-be purchaser to say in advance that was not willing to bid for lot unless def modified terms of sale. Pl tried to do this. Did the parties understand to be bound? Clean warranty is the condition on which I will bid? Then accepted by Pl when he bid, contract made on that basis when lot was knocked down to him.
Can one bidder at an auction have a private warranty and others not? Cp C19 case, went other way but not cited by court.
But assurance comes later in time, is taken to represent the actual bargain between the parties. Therefore overrides.
Collateral contracts -
Express oral assurance can stand with a contract appearing to deprive it of any effect. But can reinterpret with 2 contracts:
main agreement, and oral assurance as collateral contract to first -
has same structure as a unilat contract - offer is accepted by doing the act (entering into the main contract, constituting C.)
City and Westminster Properties Ltd v Mudd (1958)
FACTS: Def took tenancy of shop. Slept, no issue, 1941. 1947 new lease being negotiated - with covenant hat def didn't sleep there, to prevent tenancy coming within Rent Restriction Acts. Def wouldn't sign, LL agent told him no objection made to him sleeping there,. Lease signed, 1956, Pl sought forfeiture of lease because he was in breach of covenant by sleeping on the premises.
Harman J HELD - promise to not object to zzz with entry into lease constituted collat contract. Promissory estoppel not applicable, LL promise related to rights under a future contract, not an existing one.
Collat contract evade Parol evidence rule - to meet the objection there is a clear contract which assurance is attempting to contradict. Because main agreement wouldn't have been concluded but for collateral contract, main agreement must be read subject to collateral one. Even if main agreement were unaffected by collat contract, might be possible to claim damages for breach of the latter.
J Evans & Son (Portsmouth) v Andrea Merzario Ltd (1976)
FACTS: Until 1967 shipment carried out by Def beneath decks, otherwise rust. 1967 - Def proposed should be carried in containers, Pl concerned about rust, Def gave oral assurance they would be shipped below, Pl agreed to switch to containers. Written contract gave Def discretion in matter. Oversight, Pl goods on daeck, lost overboard.
AC - oral assurance amounted to collateral contract - i.e. "if we continue to give you biz, you will arrange out goods are shipped below deck" - which was breached.