TERMS AND EXCLUSION CLAUSES WEEK 4 11/9/2013 1 LGST101/NSW/Week4
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![Page 1: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/1.jpg)
TERMS AND
EXCLUSION
CLAUSES
WEEK 4
1192013
1
LGST101NSWWeek4
SEMINAR OUTLINE
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
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LGST101NSWWeek4
WHAT ARE
TERMS
TERMS
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LGST101NSWWeek4
WHAT ARE TERMS
bull Content of the contract
bull Sets out the mutual obligations of the parties to a contract
bull May be express implied or imposed by law
bull Questions to ask yourself
bull Is ldquoXrdquo a term of the contract
bull If yes what does Term X say
bull What is the importance of Term X What are the
consequences of a breach of Term X
bull Are there any other terms of the contract which will limit or
restrict the liability imposed by a breach of Term X
1192013
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EXPRESS AND
IMPLIED TERMS
bull Express Terms
bull Implied Terms
bull Terms implied in fact
bull Officious bystander test
bull Business Efficacy test
bull Terms implied in law (Case law)
bull Terms implied by statute
bull Terms implied by custom
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PAROLE
EVIDENCE RULE
TERMS
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LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
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EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
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PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
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LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
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TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
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TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
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Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
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Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
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Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
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Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
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Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
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RELATIVE
IMPORTANCE OF
TERMS
TERMS
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23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
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WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
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WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
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WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
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WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
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WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
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IMPLIED TERMS
TERMS
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LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
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TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
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TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
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TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
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TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
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EXEMPTION
CLAUSES
EXEMPTION CLAUSES
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LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
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INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
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LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
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INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
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INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 2: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/2.jpg)
SEMINAR OUTLINE
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
2
LGST101NSWWeek4
WHAT ARE
TERMS
TERMS
1192013
3
LGST101NSWWeek4
WHAT ARE TERMS
bull Content of the contract
bull Sets out the mutual obligations of the parties to a contract
bull May be express implied or imposed by law
bull Questions to ask yourself
bull Is ldquoXrdquo a term of the contract
bull If yes what does Term X say
bull What is the importance of Term X What are the
consequences of a breach of Term X
bull Are there any other terms of the contract which will limit or
restrict the liability imposed by a breach of Term X
1192013
LGST101NSWWeek4 4
EXPRESS AND
IMPLIED TERMS
bull Express Terms
bull Implied Terms
bull Terms implied in fact
bull Officious bystander test
bull Business Efficacy test
bull Terms implied in law (Case law)
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 5
PAROLE
EVIDENCE RULE
TERMS
1192013
6
LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 3: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/3.jpg)
WHAT ARE
TERMS
TERMS
1192013
3
LGST101NSWWeek4
WHAT ARE TERMS
bull Content of the contract
bull Sets out the mutual obligations of the parties to a contract
bull May be express implied or imposed by law
bull Questions to ask yourself
bull Is ldquoXrdquo a term of the contract
bull If yes what does Term X say
bull What is the importance of Term X What are the
consequences of a breach of Term X
bull Are there any other terms of the contract which will limit or
restrict the liability imposed by a breach of Term X
1192013
LGST101NSWWeek4 4
EXPRESS AND
IMPLIED TERMS
bull Express Terms
bull Implied Terms
bull Terms implied in fact
bull Officious bystander test
bull Business Efficacy test
bull Terms implied in law (Case law)
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 5
PAROLE
EVIDENCE RULE
TERMS
1192013
6
LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 4: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/4.jpg)
WHAT ARE TERMS
bull Content of the contract
bull Sets out the mutual obligations of the parties to a contract
bull May be express implied or imposed by law
bull Questions to ask yourself
bull Is ldquoXrdquo a term of the contract
bull If yes what does Term X say
bull What is the importance of Term X What are the
consequences of a breach of Term X
bull Are there any other terms of the contract which will limit or
restrict the liability imposed by a breach of Term X
1192013
LGST101NSWWeek4 4
EXPRESS AND
IMPLIED TERMS
bull Express Terms
bull Implied Terms
bull Terms implied in fact
bull Officious bystander test
bull Business Efficacy test
bull Terms implied in law (Case law)
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 5
PAROLE
EVIDENCE RULE
TERMS
1192013
6
LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 5: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/5.jpg)
EXPRESS AND
IMPLIED TERMS
bull Express Terms
bull Implied Terms
bull Terms implied in fact
bull Officious bystander test
bull Business Efficacy test
bull Terms implied in law (Case law)
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 5
PAROLE
EVIDENCE RULE
TERMS
1192013
6
LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 6: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/6.jpg)
PAROLE
EVIDENCE RULE
TERMS
1192013
6
LGST101NSWWeek4
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 7: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/7.jpg)
PAROLE EVIDENCE
RULE
bull Understand the context of contract negotiation which leads to the final form of the agreed contract
bull Parole Evidence Rule
bull Limits the use of extrinsic evidence to change the terms of the contract where the contract is reduced in writing
bull Formerly based in common law (ie case law)
bull Found in Evidence Act (Chapter 97) of Singapore
bull See Sections 93 ndash 94
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
bull Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27
bull What is the purpose of such a rule
bull Balancing justice vs certainty bull Exceptions to the Parole Evidence Rule
1192013
LGST101NSWWeek4 7
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 8: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/8.jpg)
EVIDENCE ACT
Evidence of terms of contracts grants and other dispositions of
property reduced to form of document
93 When the terms of a contract or of a grant or of any other disposition
of property have been reduced by or by consent of the parties to the form
of a document and in all cases in which any matter is required by law to
be reduced to the form of a document no evidence shall be given in
proof of the terms of such contract grant or other disposition of property
or of such matter except the document itself or secondary evidence of its
contents in cases in which secondary evidence is admissible under the
provisions of this Act
Look at the Act for the details on the exceptions and the illustrations
1192013
LGST101NSWWeek4 8
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 9: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/9.jpg)
EVIDENCE ACT
Exclusion of evidence of oral agreement
94 When the terms of any such contract grant or other disposition of property or any matter required by law to be reduced to the form of a document have been proved according to section 93 no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms subject to the following provisions
bull (a) any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto such as fraud intimidation illegality want of due execution want of capacity in any contracting party the fact that it is wrongly dated want or failure of consideration or mistake in fact or law
bull (b) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved in considering whether or not this proviso applies the court shall have regard to the degree of formality of the document
1192013
LGST101NSWWeek4 9
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 10: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/10.jpg)
EVIDENCE ACT
Exclusion of evidence of oral agreement
(Section 94 ndash Continued)
bull (c) the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property may be proved
bull (d) the existence of any distinct subsequent oral agreement to rescind or modify any such contract grant or disposition of property may be proved except in cases in which such contract grant or disposition of property is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents
bull (e) any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved except that the annexing of such incident would not be repugnant to or inconsistent with the express terms of the contract
bull (f) any fact may be proved which shows in what manner the language of a document is related to existing facts
1192013
LGST101NSWWeek4 10
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 11: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/11.jpg)
EXCEPTIONS
When extrinsic evidence outside of the written contract may be allowed under English Common Law
bull Mistake misrepresentation or lack of consideration which challenges the validity of the contract
bull Mistake in the terms of the written contract
bull Proof that written contract has not yet come into existence or was no longer in existence
bull Extrinsic evidence to show custom of trade
bull Recall Collateral contracts
Do these exemptions still apply in Singapore
bull See Sections s2(2) Evidence Act
bull China Insurance Co (Singapore) Pte Ltd v Liberty Insurance Pte Ltd (2005)
1192013
LGST101NSWWeek4 11
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 12: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/12.jpg)
APPROACH TOWARDS
CONTRACTUAL
INTERPRETATION
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design amp
Construction Pte Ltd [2008] 3 SLR 1029 [2008] SGCA 27 See
[125] ndash [132]
Two main issues
bull What extrinsic evidence is admissible in aid of contractual
interpretation
bull In what way is the task of interpretation to be carried out
bull Contextual approach [Section 94(f) of the Evidence Act]
Is ambiguity a pre-requisite for the courtrsquos consideration of
extrinsic materials See paragraph [132] for the summary of the
approach used by the Singapore courts to admit extrinsic evidence
1192013
LGST101NSWWeek4 12
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 13: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/13.jpg)
PRE-CONTRACTUAL
STATEMENTS
STATEMENTS MADE
DURING
NEGOTIATIONS
TERMS
1192013
13
LGST101NSWWeek4
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 14: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/14.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Contracts arise from negotiations Statements made by the
parties in the midst of negotiations may be
bull Mere puff
bull Representations
bull A false representation may give rise to liability for
misrepresentation
bull Terms of the contract
1192013
LGST101NSWWeek4 14
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 15: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/15.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
How do you determine whether something was term or a
representation
bull Depends on the intentions of the parties
bull Question of fact ndash which must be examined on the facts of
the situation
bull Objective determination ndash whether the parties intend the
statement in question to be a representation or a term
1192013
LGST101NSWWeek4 15
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 16: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/16.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 16
Event Representation
or Term Case
Requests for the other party to
make independent verification
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 17: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/17.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 17
Event Representation
or Term Case
Requests for the other party to
make independent verification
Likely
Representation
Ecay v Godfrey (1947) ndash
contrast with Schawel v
Reade (1913)
Is the statement so important that
the party would not have entered
into the contract but for the
statement having been made
Likely Term
Bannerman v White (1861)
Statement asserting a feature of
intrinsic significance in relation to
the subject matter
Likely Term Darwish M K F Al Gobaishi
v House of Hung Pte Ltd
(1995) SGHC
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 18: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/18.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 18
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 19: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/19.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Issues to Consider
1192013
LGST101NSWWeek4 19
Event Representation
or Term Case
Timing of the Statement
bull How recent was the statement
made
Shorter the
time frame ndash
the more likely
itrsquoll be held to
be a term
Routledge v McKay (1954)
Where parties have already put
their agreement in writing but there
were oral statements made during
the pre-contractual negotiations
Likely
representation
Normally such oral
statements would have
been inadmissible under
the Parole Evidence Rule ndash
However consider Zurich
Insurance
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 20: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/20.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 20
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 21: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/21.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
Common Situations
1192013
LGST101NSWWeek4 21
Event Representation
or Term Case
Statement made by or to a person
with special skills or knowledge
Depends on
who was
making the
statement and
to whom such
statement was
made
Oscar Chess Ltd v Williams
(1957)
Dick Bentley Productions
Ltd v Harold Smith (1965)
Contrast with Eian Tauber
Pritchard v Peter Cook
(1998) ndash Where parties
regard the statements
representations as
important to the contract
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 22: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/22.jpg)
TERMS REPRESENTATIONS
OR MERE PUFF
bull Ultimately the facts of each situation should be examined
bull It depends on the intentions of the parties as objectively
ascertained
bull Implications of finding a statement to be a term vs a
representation
bull Term Breach
bull Representation Remedies relating to misrepresentation
applies (Misrepresentation Act)
1192013
LGST101NSWWeek4 22
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 23: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/23.jpg)
RELATIVE
IMPORTANCE OF
TERMS
TERMS
1192013
23
LGST101NSWWeek4
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 24: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/24.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Varying degrees of importance attached to terms of a contract
bull Has implications on remedies available to the innocent party when the term is breached
bull Conditions bull Claims of damages for losses suffered
bull Choice of whether to terminate the contract
bull Warranties bull Claims of damages for losses suffered
bull No termination
bull Innominate Terms bull Remedy available depends on the nature and the
consequence of the breach
bull Has it deprived the innocent party of substantially the whole of the benefit he is intended to receive under the contract
bull Does it result in relatively trivial consequences
1192013
LGST101NSWWeek4 24
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 25: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/25.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull When would something be treated as a Condition
bull Parties are free to agree expressly that a particular term in
a contract ldquowill be regarded as a conditionrdquo
bull Note Courts may however hold that parties when
describing the term as a ldquoconditionrdquo did not intend its
technical meaning ndash L Schuler AG v Wickman Machine
Tool Sales Ltd (1974)
bull Does the term go to ldquothe root of the contractrdquo Does the
non-performance of the obligation impair the substance of
the bargain expected by the innocent party
bull Contrast Poussard v Spiers (1876) and
bull Bettini v Gye (1876)
1192013
LGST101NSWWeek4 25
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 26: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/26.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
bull Approaches to classification of terms
bull Traditional English ldquoConditions-Warrantyrdquo Approach
bull The Hong-Kong Fir Approach Focus on the nature and the consequences of the breach of the term
bull Conditions
bull Warranties
bull Innominate Terms
bull Parties had not explicitly characterized them as conditions
bull However it could result in both serious as well as trivial breaches some breaches of which would deprive one party of substantially the whole benefit contemplated by the parties to be derived from the performance of the contract but other breaches would not Could operate either as a condition or warranty depending on the nature and consequences of the breach
- Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Limited [1961] EWCA Civ
1192013
LGST101NSWWeek4 26
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 27: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/27.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull Attempts to reconcile the traditional Conditions-Warranty Distinction with the Hong Kong Fir Approach
bull (1) To give effect to the intentions of the parties ndash If parties have intended that a contractual obligation was to have the force of a condition
bull (2) If the term is however a warranty ndash it may not prevent a person from terminating the contract
bull Consequences of the breach should also be examined EVEN IF the term breached was only a ldquowarrantyrdquo
bull If the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit that it was intended that the innocent party should obtain from the contract then the innocent party would be entitled to terminate the contract not withstanding that it only constitutes a warranty
1192013
LGST101NSWWeek4 27
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 28: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/28.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Singaporersquos Position
bull RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) qualified by Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull This however only applies as an ldquoextremely limited exceptionrdquo
bull ldquoWhere the term itself states expressly (as well as clearly and unambiguously) that any breach of it regardless of the seriousness of the consequences that follow from the breach will never entitle the innocent party to terminate the contract then the court will give effect to this particular type of term (viz a warranty expressly intended by the parties)rdquo
bull Ultimately the inquiry is on ascertaining the intentions of the contracting parties in light of the surrounding circumstances ndash Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
bull Other facts which may be taken into account
1192013
LGST101NSWWeek4 28
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 29: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/29.jpg)
WARRANTIES CONDITIONS
AND INNOMINATE TERMS
Consider the facts of
bull Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
bull ldquoDeprived substantially the whole benefitrdquo
bull What exactly constituted the benefit it was intended that the innocent
party should obtain from the contract
bull The actual consequences of the breach that had occurred at the time
the innocent party purported to terminate the contract
bull Justification based on the facts
bull Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
1192013
LGST101NSWWeek4 29
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 30: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/30.jpg)
IMPLIED TERMS
TERMS
1192013
30
LGST101NSWWeek4
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 31: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/31.jpg)
INTRODUCTION
Parties may not have expressly stated some terms as part of the
contract but terms may nonetheless be implied in certain cases
bull Terms implied in fact
bull Business Efficacy Test
bull Officious Bystander Test
bull Terms implied in law
bull Terms implied by statute
bull Terms implied by custom
1192013
LGST101NSWWeek4 31
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 32: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/32.jpg)
TERMS IMPLIED IN FACT
bull It is a term that the parties would have agreed to
had they thought about it
bull The threshold is one of ldquonecessityrdquo and not just
ldquoreasonablenessrdquo
bull Fact dependent
1192013
LGST101NSWWeek4 32
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 33: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/33.jpg)
TERMS IMPLIED IN FACT
Tests for implying terms in fact
bull Officious bystander test ndash a term must be so
obvious that it would not admit possible
disagreement
bull Shirlaw v Southern Foundries (1926) Ltd
bull The Moorcock (1889)
bull Business efficacy test ndash a term must be
necessary to inject business efficacy to the contract
bull BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977)
1192013
LGST101NSWWeek4 33
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 34: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/34.jpg)
TERMS IMPLIED IN LAW
bull Terms which are implied because they are
necessarily incidental to that type of contract
bull ldquotaken for granted in all contracts of the class
without the necessity of formal expressionrdquo ndash
unlike terms implied in fact
bull Accordingly courts are highly cautious about
implying terms in law
bull ldquoDefault termsrdquo
bull Liverpool City Council v Irwin (1977)
bull Malik v Bank of Credit amp Commerce International SA
(1998)
1192013
LGST101NSWWeek4 34
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 35: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/35.jpg)
TERMS IMPLIED BY
STATUTE
bull A statute may imply terms in a particular type of contract Rationale is often based in public policy
bull ie Sale of Goods Act
bull Section 12(1) SGA implies a condition that seller ahs a right to sell the goods
bull Section 12(2) SGA implies a warranty that goods are free from charges or encumbrances in favour of third parties
bull Section 13(3) SGA condition that goods sold by description will correspond with their description
bull Section 15(2) SGA condition that goods sold by sample will correspond with their sample
1192013
LGST101NSWWeek4 35
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 36: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/36.jpg)
TERMS IMPLIED BY
CUSTOM
bull In particular trade practices a party will be bound by
the usage in the trade if the usage is well-known
certain reasonable and legal
bull Uniformity of custom and acceptance by relevant
community is crucial
bull Such implications are rare Why
1192013
LGST101NSWWeek4 36
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 37: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/37.jpg)
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
37
LGST101NSWWeek4
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 38: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/38.jpg)
INTRODUCTION
bull What are exemption Clauses
bull Incorporation
bull For an exemption clause to be valid it must be properly incorporated into the contract
bull Construction
bull How is such a clause to be construed or interpreted
bull Statutory Limitations
bull Are there any statutes or reasons by which the operation of the clause may be restricted or excluded
bull Exception Clauses and Consumer Protection Legislation in Singapore
1192013
LGST101NSWWeek4 38
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 39: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/39.jpg)
WHAT ARE EXEMPTION
CLAUSES
bull Terms that seek to exclude or limit the liability of one
of the parties in the event of a breach of contract
bull Three common types
bull Exclude liability
bull Limit liability
bull Indemnity Clauses which seek to transfer liability
bull Freedom of Contract vs Interference by the Courts
bull Why and when do the courts interfere
1192013
LGST101NSWWeek4 39
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 40: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/40.jpg)
INCORPORATION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
40
LGST101NSWWeek4
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 41: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/41.jpg)
INCORPORATION
bull By Signature
bull By Notice
bull By Previous course of dealing
1192013
LGST101NSWWeek4 41
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 42: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/42.jpg)
INCORPORATION BY
SIGNATURE
General Position Person bound by signature deemed to have read and understood the terms - LrsquoEstrange v Graucob (1934)
Exceptions
bull Non est factum ndash vulnerable persons
bull Express overriding terms in the contract
bull Misrepresentation as to the nature of the document signed - Curtis v Chemical Cleaning amp Dyeing Co (1951)
bull Collateral Contract - Evans (J) amp Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
1192013
LGST101NSWWeek4 42
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 43: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/43.jpg)
INCORPORATION BY
NOTICE
General Position The exemption clause may be incorporated where
bull the other party knew or ought to have known that the document was one which could be expected to contain such terms and
bull he has done everything reasonable to give sufficient notice of the exemption clause to the other party ndash Parker v South Eastern Railway Co (1877)
1192013
LGST101NSWWeek4 43
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 44: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/44.jpg)
INCORPORATION BY
NOTICE
What is reasonably sufficient notice
bull Type of document bull Chapelton v Barry Urban Development Council (1940)
bull Time of notice bull Olley v Marlborough Court Hotel Ltd (1949) Thornton v
Shoe Lane Parking (1971)
bull Adequacy of notice bull Thomson v London Midland and Scottish Rly (1930)
Geier v Kujawa Weston amp Warne Bros (Transport) Ltd (1970)
bull Effect of the clause bull Interfoto Picture Library v Stiletto Visual Programmes Ltd
(1988)
1192013
LGST101NSWWeek4 44
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 45: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/45.jpg)
INCORPORATION BY
PRIOR DEALINGS
General Position Where there has been a consistent and sufficiently regular previous course of dealing and those prior contracts contained such exemption clauses
bull Spurling v Bradshaw (1956)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
1192013
LGST101NSWWeek4 45
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 46: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/46.jpg)
CONSTRUCTION OF
EXEMPTION
CLAUSES
EXEMPTION CLAUSES
1192013
46
LGST101NSWWeek4
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 47: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/47.jpg)
CONSTRUCTION
bull Different approaches may be used in
construction
bull Contra proferentum Rule
bull Rules in cases of negligence liability
bull Doctrine of fundamental breach
1192013
LGST101NSWWeek4 47
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 48: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/48.jpg)
CONTRA
PROFERENTUM RULE
bull ldquoContra Proferensrdquo ndash against the maker
bull Contra proferentum rule If there is ambiguity or doubt the
exemption clause would be interpreted in a manner least
favourable to the person who has inserted them into the
contract and who is now seeking to rely on it
bull Houghton v Trafalgar Insurance Co (1954)
bull Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and
Securicor (Scotland) Ltd (1983)
bull Is there a difference the application of the contra
proferentum rule where the clause is seeking to limit
liability rather than to provide for a total exclusion of
liability
1192013
LGST101NSWWeek4 48
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 49: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/49.jpg)
NEGLIGENCE
LIABILITY
bull Where a party seeks to rely on an exemption clause to
escape from the liability arising out of his own negligence
bull Clear words showing that the clause fully cover the facts
are needed Where words do not clearly cover negligence
ndash courts may hold that exemption clause inapplicable
bull White v John Warrick amp Co Ltd (1953)
bull Hollier v Rambler Motors (AMC) Ltd (1972)
bull See the guidelines set out in Canada Steamship Lines Ltd
v R
bull See also the Unfair Contract Terms Act (ldquoUCTArdquo) on
attempts to exclude or limit liability for negligence
1192013
LGST101NSWWeek4 49
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 50: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/50.jpg)
DOCTRINE OF
FUNDAMENTAL BREACH
bull Can an exemption clause defeat the main purpose for which
the contract was entered into
bull Rule of Law vs Rule of Construction
bull A matter of construction ndash it should always be a question of
facts involving the interpretation of the contract
bull Suisse Atlantique case Confirmed by Photo Production Ltd v
Securicor Transport Ltd (1980)
1192013
LGST101NSWWeek4 50
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 51: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/51.jpg)
STATUTORY
LIMITATIONS
EXEMPTION CLAUSES
1192013
51
LGST101NSWWeek4
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 52: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/52.jpg)
STATUTORY LIMITATIONS ON
USE OF EXEMPTION
CLAUSES
bull Unfair Contract Terms Act (Chapter 396)
bull Deals with unfair exemption clauses with seek to
limitexclude liabilities ndash ldquoAn Act to impose further limits on
the extent to which civil liability for breach of contract or
for negligence or other breach of duty can be avoided by
means of contract terms and otherwiserdquo
bull Applies to consumer contracts and certain tort situations
(non contractual)
bull Categories of excluded contracts First Schedule Section
26 of the UCTA
bull Consumer Protection (Fair Trading) Act
1192013
LGST101NSWWeek4 52
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 53: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/53.jpg)
UNFAIR CONTRACT
TERMS ACT
bull Negligence Liability (s2 of UCTA)
bull Cannot exclude or restrict liability for death or injury resulting from negligence (s2(1))
bull Other losses of damages ndash term or notice must satisfy requirement of reasonableness (s2(2))
bull Standard Term Contracts Contracts with consumers (s3 of UCTA)
bull Test of reasonableness
bull Imposing upon a customer a duty to indemnify the other party for liability arising out of the partyrsquos negligence or breach of contract (s4 of UCTA)
bull Test of reasonableness
bull Sale of consumer Goods (s5 of UCTA)
bull Hire purchase (s6 of UCTA)
1192013
LGST101NSWWeek4 53
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 54: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/54.jpg)
UNFAIR CONTRACT
TERMS ACT
bull See Section 11 of UCTA on test of reasonableness Read with Second Schedule
11mdash(1) In relation to a contract term the requirement of reasonableness for the purposes of this Part and section 3 of the Misrepresentation Act [Cap 390] is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
bull See Section 12 of UCTA on when a party deals as a consumer in relation to another party
(Note Print a copy of the UCTA)
1192013
LGST101NSWWeek4 54
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 55: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/55.jpg)
SECOND SCHEDULE
UCTA
GUIDELINES FOR APPLICATION OF REASONABLENESS TEST
The matters to which regard is to be had in particular for the purposes of sections 6(3) and 7(3) and (4)are any of the following which appear to be relevant
bull (a) the strength of the bargaining positions of the parties relative to each other taking into account (among other things) alternative means by which the customerrsquos requirements could have been met
bull (b) whether the customer received an inducement to agree to the term or in accepting it had an opportunity of entering into a similar contract with other persons but without having to accept a similar term
bull (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)
bull (d) where the term excludes or restricts any relevant liability if some condition is not complied with whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable
bull (e) whether the goods were manufactured processed or adapted to the special order of the customer
1192013
LGST101NSWWeek4 55
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 56: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/56.jpg)
CONSUMER PROTECTION
(FAIR TRADING) ACT
bull Applies to ldquoconsumer transactionsrdquo ndash protects consumers against unfair practices of suppliers of goods and services
bull Definitions of ldquoconsumerrdquo and ldquoconsumer transactionsrdquo in s2 of the CPFTA
bull What are the relevant unfair practices s4 of the CPFTA
bull Remedies available
bull S6(1) Right to sue the supplier bull Common law remedies of damages specific performance
cancellation etc as limited or prescribed by the statute
bull S11(1) Right to cancel certain contracts within a cancellation period
bull S12 Limitation period for consumers bringing court actions
bull S13 Suppliers cannot contract out of the contract
bull S15(1) Rights are in addition to any other rights or remedies that the consumer may have apart from the Act
1192013
LGST101NSWWeek4 56
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
![Page 57: [Week4] Slides - Terms of the Contract](https://reader030.cupdf.com/reader030/viewer/2022012315/577cc0091a28aba7118ea13a/html5/thumbnails/57.jpg)
END - WEEK 4
SUMMARY
bull What are terms
bull Express or Implied Terms
bull Terms vs Representation
bull Incorporation
bull Parole Evidence Rules
bull Relative Importance of Terms
bull How are terms implied in contracts
bull Exemption Clauses
bull Statutory Limitations
1192013
LGST101NSWWeek4 57
Related Documents
