LAWS1072 – CONTRACTS II SEMESTER II 2012 NOTES SUMMARY

Greek courts would has already been made – the first real opportunity to give have full jurisdiction notice of this term is long after the contract has been made in in any action against Sydney the owner; however 2. The first step in determining whether the contract of carriage the exchange order contained the clause in question is to determine whether the contract had no such was entered into in Sydney when it was paid for, or in Greece when the condition. The ticket was issued. plaintiff received a. Oceanic argued that it was illusory because they reserved the serious injuries while “right to cancel any cruise” (MacRobertson). However this taking part in an exemption did not preclude the existence of any contractual activity on the ship obligation, it actually gave promises and sued in b. If it were intended that no contract should come into existence negligence in the before the issue of the ticket when “boarding”, no Supreme Court of consideration would have moved from Oceanic to support their NSW. Sun Line applied right to refuse to refund the passage money, as was the case. for a stay of the action The contract was made on payment and upon receipt of the based on that clause exchange order so that Oceanic was bound to issue the ticket limiting jurisdiction. with the terms as agreed upon. 3. The second step is to determine whether the contract made after was the contract, and whether it contained the exclusion clause a. The conventional analysis of the issue of the ticket as an offer as per MacRobertson could not be applied because it could not be seen as the parties’ intention to have the ticket be an offer of carriage, which would only be declined after travelling to Greece to see the conditions on the ticket. b. It was found that the payment of the fare could be regarded as the price of an option to acquire a ticket representing a certificate of entitlement to be carried on the terms already agreed. 4. Denis Analysis a. The issue is whether the term got into the contract of carriage. If the Greek company wants to hold Fay to that term, then they hold the onus of proof, even if they are the defendant! If the defence you put up is that the plaintiff was bound to the contract, then you must prove there was a contract with those terms. b. In the brochure advertising the cruise, there is a statement saying “terms of the cruise are available for inspection in the offices of our Sydney agent”. This tells where the terms are, but not what the terms are. The HCA said that this is still not reasonable notice of the terms, it does not bring the nature of the term to a reasonable person in the position of Fay, nor Fay himself. The carrier must bring the term to the attention of the person, not tell them to go look themselves. Knowledge or Notice If the timing requirement is satisfied, the party will be bound to the delivered terms if: 1. They have knowledge (Parker v South Eastern Railway Co) OR, in the absence of knowledge, if 2. The offeror was reasonable in giving the offeree notice of the condition (Thornton v Shoe Lane Parking; Baltic Shipping). Notice must come in a form that is likely to come to the attention of the party being bound (Causer v Brown; Thornton). Whether there is reasonable notice depends on: 1. The type of contract – how serious would consequences be if particular terms were enforced 2. The nature of terms – unusual terms require more detailed notice 3. The circumstances of the case a. This has regard to the above two factors as well as: i. Time and access ii. Legibility/ease of understanding iii. Characteristics of the people to whom notice is being given Note that this does not apply with signed contracts, as discussed in Toll v Alphapharm where the HCA rejected the need for special notice of unusual terms in a signed contract. Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 Facts Held Thornton parked his car 1. In a case with an automatic ticket machine, the terms of the offer are in a car park owned by contained in the notice placed on or near the machine stating what is Shoe Lane, which he offered for the money. The customer is bound by those terms as long was unfamiliar with. as they are sufficiently brought to his notice before hand, but not There was a notice on otherwise. He is not bound by the terms printed on the ticket if they the outside which gave differ from the notice. parking charges and a 2. “It is no use telling the customer that the ticket issued is subject to notice saying “all cars some ‘conditions’ or other, without more: for he may reasonable parked at owner’s risk”. regard ‘conditions’ in general…not as taking away his rights, unless Upon driving in he the exempting condition is drawn specifically to his attention’ received a ticket and 3. The conditions were not displayed in a manner giving Thornton then parked his car. The reasonable notice with which he could accept or reject the offer by ticket made reference his own choice. There was no evidence that Thornton knew of the to additional terms exempting condition. Therefore the term did not become part of the which were to be found contract. on a pillar near the 4. Where a term is so “wide and destructive of rights” they must be ticket office. Thornton explicitly noted. was severely injured 5. Denis Analysis upon coming to collect a. When you go to a parking station, you have a contractual his car and sued. Shoe licence to leave your property on their land. They are in effect Lane attempted to rely offering permission to leave your car there in return for your on an exclusion clause promise to pay their advertised charges for as long as your car present on the is left, and a promise to give them exemption from certain additional terms. liabilities. If they bring it to your attention before the contract is concluded, and you still park there, your conduct can be deemed as consent to the terms. b. Lord Denning – says that the contract is formed when the ticket is issued by the machine. IF that is the case, the only terms that can get in the contract are those which have been notified to the customer previous to that – i.e. on the notice near the machine. c. Megaw LJ – the contract is formed after the ticket is given, and the driver takes it and drives in. In this case, there is still not reasonable notice, since once you take the ticket you cannot just stop and read the terms while other cars wait behind you d. Sir Gordon Willmer – the ticket is an offer to do business on the terms according to the ticket. The contract is only formed once the party decides they will take the benefit of the service, by parking the car and leaving the car-park. The attempt to refer him to provisions set out elsewhere does not come too late, since he can go to the pillar and read the terms. However a reasonable person in his position would not look for pillars, and even if they did, they would wade through difficult language and still wouldn’t have had reasonable notice of the unusual term. Unusual Terms Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1991) 22 NSWLR 1 Facts Held Dillon made a booking for a cruise with 1. The conditions in the booking form were given with Baltic Shipping through a travel agent reasonable notice; however the additional conditions and then received a booking on the ticket were not and therefore did not form part acknowledgment. Later Dillon received of the contract since the availability of these terms a booking form asserting a contract of was not adequate. carriage would be made “only at the 2. Unusual terms require explicit attention to be drawn time of issuing of tickets” which to them. “At the very least, Baltic Shipping could have contained conditions. One month later drawn to attention, on its booking form, the fact of Dillon paid the balance of the fair and the limitation of liability for personal injury and then two weeks later received a ticket, damage to luggage…this was not done” which contained terms and conditions 3. The mere presentation of the passenger ticket with its limiting the liability of Baltic for injury terms and conditions would not fix Dillon with and damage to personal effects. On the acceptance of those terms simply because she went tenth day, the ship sank and Dillon on the cruise. “She was entitled, in law, to take the suffered physical and psychological view that she would be issued with a ticket which injury and the loss of her belongings. would contain no unusual provisions, specifically no Baltic admitted fault, but argued that provisions of which she was not on notice limiting the provisions limited liability. liability to her”. “The conventional analysis is to regard the ticket as an offer, the contract being made upon acceptance of that offer [acceptance of the ticket without objection] by the passenger...” (Stephen J in MacRobertson Miller) Case Facts Approach Significance Thornton v Shoe Lane Parking The plaintiff wished to park his car in the defendant’s car park. He drove his car into the driveway; a green light indicated that he should proceed. He paid money into a machine and then received a ticket. The offer is made when the proprietor of the machine holds it out as ready to receive the money. The acceptance takes place when the customer makes the payment. The ticket could not be considered an offer – the customer had already paid and could not receive his moneys back. The customer is bound only by those terms displayed prior to the payment of money. He is not bound to terms on the ticket which differ from these. Oceanic Sun Line Special Shipping Company v Fay The plaintiff made a booking for a cruise. The travel agency had supplied him with an "exchange order" which was exchanged for a ticket upon boarding the ship. He received this upon reaching Athens. It could not have been the party’s intention that the ticket, received upon boarding, was the offer. It would not allow sufficient opportunity for the passenger to consider the terms and accept/decline. As above, the ticket could not reasonably be considered an offer – the customer would not have sufficient time to consider the terms upon boarding. The customer is bound only to those terms presented to them in the exchange order. He is not bound to terms on the ticket which differ from these. Baltic Shipping Co v Dillon The plaintiff made a booking for a cruise. The travel agency provided an exchange form which stated that a contract would be formed upon the issuing of tickets. The provisions in the exchange form were accepted. The contract was formed upon the issuing of the ticket. Acceptance is not implied by the customer commencing the cruise, of terms other than those typical to such a contract. Normally, if A wants to hold B to the terms of the contract, A must take steps to bring B the attention of the term by producing a document, displaying a notice on the occasion in question before the contract is concluded, or handing the document containing the terms before the transaction is made even if B didn’t sign, or make some clear statement of the term to B. Sometimes A may not have taken specific steps to bring the term to the attention of B before the transaction. Sometimes they don’t rely on the specific term but on the past practice of the two parties. If A can show that he and B had a large number of previous dealings, always on the same nature, then sometimes that will be enough to show the regularity means that A always wanted to do business on particular terms. If the previous dealings can lead a reasonable person to believe a particular form of dealing, they would believe B knows the terms or methods that A wants from previous dealings. A has to show that B or a reasonable person in B’s position would by now have known that a term of a particular kind is one that A invariably wants to be the basis of goods and services. It is not enough that the dealings give the “gist” of the dealings, it must give wariness of the nature of the particular term sought to be enforced. This is determined by the type of documents produced; how they have been given, the time of opportunity to read them etc. Naturally you would expect the person who wants to hold another to the term to draw the attention of the person to the particular term on the particular occasion. Incorporation of express terms by a course of dealings Where parties have had a history of dealings, contractual terms introduced and kept by in earlier contracts may be incorporated into a subsequent contract, even if the ordinary requirements of incorporation of such a term has not be met. This issue typically arises where: 1. There is no actual knowledge of the term 2. Incorporation by notice cannot be used because of the timing condition 3. There is no signed document, or there is not a ticket Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379 Facts Held Balmain New Ferry placed over the entrance to their 1. Contract formation can be appreciated private wharf a notice stating that a fare of one penny with regard to the circumstances of the must be paid by all persons entering or leaving the case. There need not be the ordinary wharf, whether they had travelled by the company’s requirements of actual knowledge or boats or not. Robertson was aware of these adequate notice. In this case, having conditions “having travelled on many occasions travelled many times on the company’s backward and forward by the company’s boats”. He ferries, Robertson was likely to have paid the one penny and was admitted to the wharf; been aware of Balmain New Ferry’s way however he had missed his boat and attempted to of conducting business. The contract leave the wharf via another turnstile. He refused to was thus implied from this. pay the second penny and squeezed through the gap 2. The HCA said that Robertson had so while the guards attempted to forcibly detain him. He many previous dealings with the sued for assault and false imprisonment. company that he must have had at least constructive (in fact actual) knowledge of the nature of the term that Balmain Ferry sought to enforce. Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd (1986) WAR 131 Facts Held Precision Mouldings constructed fishing 1. General Rule – “If it should appear that the parties boats, and Rinaldi carted these to buyers had over a period of time been conducting business of the boats for Precision. On one occasion upon terms excluding liability, then it should be due to the negligence of Rinaldi’s driver, a held on the occasion in question that they 42 foot fishing boat was severely contracted upon that basis” - if they had at least damaged. At this point, the boat was not constructive knowledge that the particular term in the ownership of the consignee, it was was always aimed at being enforced, it will be still owned by Precision. Very similar established by course of dealings. contracts to cart boats had been made 2. To contend that the conditions in question ought between the parties on “nine or ten to be implied according to the rule begs the previous occasions” and the practice was question...[to] find an earlier contract or contracts as follows: containing that term 1. The parties would agree orally on 3. The ‘cart notes’ were held not to be contractual the telephone about the cartage of documents, which would take the form of a the boat, the day, the route, all the request to carry the goods “subject to terms and minor details etc. This involved the conditions” which would be signed after each formation of the contract event (as per Wright v Hill). Rather, they were held 2. The cost was worked out and to be mere requests to accept delivery, Thus the entered by Rinaldi’s driver into a terms printed on the back could not lead to them book of “cart notes” which were being included in the contract by course of dealing. carbonised in triplicate for 4. Burt CJ – It is easy if in all the previous dealings, signature by the buyer of the boat the term is introduced each time. However this to formalise the details of the cannot be said here as the term comes too late in Statements made during negotiations When is a statement a term of a contract? If the parol evidence rule is overcome, a party can then attempt to show that an oral statement made in negotiations forms a term of contract. Determining whether a statement is promissory and thus a term of contract As mentioned, for a statement to be a term, it must be promissory and have been intended to be binding – to be judged objectively (would a reasonable person in the situation of the parties believe that statement-maker was willing to be bound?). Significance of the written contract