Private Law 7 Flashcards
(35 cards)
What are the 2 key considerations to look at when adding express terms into the formation of a contract?
- Reasonable Notice: The party must have been given reasonable notice of the term.
- Transparency: The term should not be hidden or obscured in a way that the party could not reasonably be expected to notice it.
What is an express term?
Specific provisions, clearly stated either in the contract document or referenced in it, become part of the legally binding agreement between the parties
What are the 3 ways express terms can be incorporated into a contract?
- Signature.
- Reference at the time of contracting
(Notice). - By course of dealing between the parties.
How can a signature incorporate express terms into a contract?
- Signature binds the parties to the contract.
- Signature must be legible and accessible.
- Signature must not be misleading.
- Signature indicates agreement to all terms, including those not explicitly discussed.
Can an original signature within a contract be used to sign off express terms being incorporated into the contract later?
By signing a contract, the signing party acknowledges their acceptance of all the terms contained within it. This includes standard clauses and any express terms that were not individually negotiated.
What case is an example of express terms being incorporated into a contract by a signature?
Sundilott v Addison (restrictive covenant).
Sundilott employed Addison as a sales manager. At the start of his employment, Addison signed a restrictive covenant, limiting his ability to work for competitors after employment. Although Addison did not fully negotiate every individual term of the restrictive covenant, he still signed it. Therefore, the court held the restrictive covenant was enforceable to protect confidential information.
What are the 4 requirements for express terms being incorporated into a contract by reference to terms and conditions?
- The main contract must clearly and explicitly refer to the terms and conditions document e.g. “This contract includes and incorporates by reference the Terms and Conditions available at [URL].”
- The reference should be unambiguous, specifying the exact document or set of terms being incorporated.
- The document referred to must be contractual (ticket for a bus).
- Reasonable timing (clarity of term must be understood).
Are both a ticket and voucher contractual documents?
A ticket is contractual.
A voucher (receipt, delivery note etc.) are not contractual as they may be received after the contract has been concluded.
What case establishes a voucher being used to incorporate terms into the contract?
Taylor v Glasgow Corporation (voucher invalid).
Taylor bought a ticket for a local hot bath which expected her to read the other side of the ticket for conditions. These conditions stated Glasgow Corporation would not be found liable for any damages or injuries.
However, these terms were not included in the contract as this document was deemed a voucher, not a ticket, as the corporation had not given reasonable acknowledgement to these terms before the contract was formed.
What is the Red Hand Rule and who established it?
The rule was created by Lord Denning.
- Highlighting Unfair Terms: The rule suggests that unfair or particularly burdensome terms should be printed in red ink or otherwise prominently displayed to ensure the other party is fully aware of them.
- Reasonable Notice: The idea is to provide clear and conspicuous notice to prevent one party from being unfairly surprised by the term.
What case establishes a ticket being used to incorporate terms into the contract?
Chapelton v Barry Urban District Council (ticket invalid).
Chapelton purchased a ticket in return the hire of a deck chair. The ticket included an exclusion clause stating Barry UDC was not liable for any damages. When Chapelton sat down the canvas of the chair ripped.
The court held the exclusion clause was not incorporated into the contract as it was too late and the contract had already been formed.
What case establishes a notice being used to incorporate terms into the contract?
Olley v Malborough Court Ltd (notice invalid).
Olley paid for her booked hotel room a week in advance. When Olley entered the room she discovered a notice with an exclusion clause stating the hotel was not responsible for any lost or stolen items.
The court held the exclusion clause was not incorporated into the contract as the contract was already formed when the booking was established (too late).
What case establishes the difficulty in bringing incorporation of terms by referencing terms and conditions to the ordinary person’s attention?
Parker v South Eastern Railway (ticket valid at first, then invalid).
Parker paid to leave his bag in the cloakroom at the railway station. After he paid the fee he received a ticket with a notice stating the railway station would not be liable for items worth more than £10. However, Parker did not read this ticket as he assumed it was a receipt.
The court held Parker was not bound by the terms on the ticket as he was not aware these terms existed. The exclusion clause was not incorporated as it was too late and not enough notice was given.
What is required for the incorporation of express terms by previous course of dealing?
- The series of transactions must be similar to the previous one.
- The parties must know of the conditions of the transactions.
- The parties must have assented to the transactions.
What case is an example of incorporation of express terms by previous course of dealing?
McCutcheon v MacBrayne (exclusion clause invalid).
McCutcheon delivered his car from the Hebrides to the Mainland. The company usually included a risk note to customers to exclude them from losses. However, no risk note was supplied on this occasion and McCutcheon’s car sank while being transported.
The court held the exclusion clause could not be incorporated into the contract via previous course of dealing as no actual or constructive knowledge of the terms was established, and McCutcheon had not assented to them. (requirements not reached).
How do courts work out what a term of contract means?
- Objective Test.
- “Interpretation is the ascertainment of the
meaning which the document would convey to a
reasonable person…” per Lord Hoffman. - Courts must consider construction not reconstruction (not a repairs facility).
What are the two approaches to Interpretation?
- Literal Approach (what the contract states).
- Factual Matrix (the purpose of the contract - the facts known to the parties at the time of contracting).
What is an example of a case which shows the literal approach to interpretation?
Bank of Scotland v Dunedin properties (debenture loan).
Bank provided a £10 million loan which included a clause for early redemption. Dunedin decided to redeem the loan early which led to breakage costs due to the termination of the interest swap agreement.
The court interpreted this contract in favour of the Bank as the court held the Bank should be reimbursed for these costs.
What 2 requirements are needed for the factual matrix approach to interpretation?
- Commercial Sensibility
- Ambiguity
What is an example of a case which shows the factual matrix approach to interpretation?
Arnold v Britton (landlord + service charge).
Landlord claimed Britton should pay a 10% service charge increase each year.
The court held the service charge clause should be interpreted into the contract as it was clear and unambiguous.
What are the 2 “additional” approaches to interpretation?
- The Iterative Approach (used when the meaning of terms is not immediately clear).
- Contra Proferentum (ambiguity in a contract should be interpreted against the party that drafted the document).
What case is an example of the iterative approach to interpretation?
Wood v Capita Insurance Services (complaints and misled customers).
Capita purchased Sureterm Direct from Wood. The sale included an indemnity clause stating Capita would be required to pay for any compensation resulting from complaints. However, it was then discovered that Sureterm had misled customers.
The court held the indemnity clause did not cover compensation.
What case is an example of Contra Proferentem approach to interpretation?
Life Association of Scotland v Foster (life insurance).
Mrs Foster applied for life insurance claiming her health remained in good condition. Not long after, she died of a condition she had not disclosed. The Life Association of Scotland refused to pay out the policy.
The court held the insurance contract was based on good faith on both sides.
What is rectification?
An equitable remedy used by courts to correct a written contract so that it accurately reflects the true intentions of the parties.
