Incorporating Written Terms

In determining whether written terms form part of the contract between the parties, the crucial issue is whether the parties can be regarded as having assented to the terms.

Incorporation by signature General Rule If the contractual arrangement of the parties is reduced to writing and the written document is signed by the parties, both parties will generally be bound by all of the terms contained in the agreement, regardless of whether the document was read or the parties were aware of the existence of the terms contained in the agreement (L’Estrange v F Graucob Ltd).

In L’Estrange v Graucob Ltd, the contract of purchase of a faulty slot machine included an exemption clause in small print which exempted the vendor from any implied warranty.

When the rule is displaced The general rule has been displaced in circumstances where the signature does not signify assent to the terms.

Misrepresentation on the effect of the clause The court will not allow a party who has misrepresented the effect of an exclusion clause to rely upon that clause in the event of a breach.

In Curtis v Chemical Cleaning Co, defendant misrepresented the clause in that it only applied to specific damage not general.

Document signed is not contractual in nature Where the signed document has not contractual effect, the party who signed the document may not be bound by its terms because it does not signify assent to the terms.

In DJ Hill and Co v Walter H Wright after delivery of equipment, the plaintiff signed what was thought to be a delivery docket, not a docket containing terms, after the contract had been performed, which contained exemption from damage. Therefore, the docket was not contractual in nature.

Defence of no est factum A person who signs a document may be able to plead non est factum, that is, he or she did not know that was being signed (Petelin v Cullen). To succeed in such an action, plaintiffs must show that there is a radical difference between what was signed and what they thought they were signing and that they were not just careless in signing.

Incorporation by notice: Unsigned Document

The other party may be bound by a clause on the ticket and have assented to the terms, even if unaware of the existence of the term, if:

(i) Reasonable steps taken by defendant Reasonable steps must be taken to give the class of person to which the recipient belonged, notice of the existence of the term (Parker v The South Eastern Railway Co). In determining whether reasonable steps were taken, it may be relevant whether the document was one which is assumed by a reasonable person to be contractual in nature. If at the time of contract formation, the plaintiff is given a document by the defendant that a reasonable person would regard as being a contractual document, the plaintiff will generally be bound by the terms in the document.

In Causer v Brown a dry-cleaning receipt was not held to be contractual in nature.

If the document is contractual, reasonable steps must be taken to give the class of person to which the recipient belonged, notice of the existence of the term (Parker v South Eastern Railway Co).

In Parker v South Eastern Railway Co after the deposit of his bag, the plaintiff received a ticket which said see back, on which an exclusion clause appeared. Rather than assessing whether the plaintiff had an obligation to read the terms, the question should be did the Railway do what was reasonably sufficient to give the plaintiff notice of the conditions.

If reasonable steps are taken, it does not matter that the recipient of the notice did not read the terms or that he or she was unable to read (Thompson v LM & S Railway Co).

(ii) Before or upon contract formation For the terms in a document to form part of the contract, the reasonable steps to bring them to the attention of the plaintiff must occur before or at the time of contract formation (Thornton v Shoe Land Parking).

In Thornton v Shoe Lane Parking the defendant sought to rely on conditions, referred to on the back of the ticket, which were not visible from the entry where the contract was formed therefore the defendant had not done what was necessary.

Incorporation by notice: signs The other party may be bound by a clause on a sign and have assented to the terms, even if unaware of the existence of the term, if:

(i) Reasonable Steps Reasonable steps must be taken to give the class of person to whom the recipient belonged, notice of existence of the term (Balmain New Ferry Co Ltd v Robertson).

In Balmain New Ferry v Robertson, a notice was exhibited over the entrance to the plaintiff’s wharf was sufficient.

It does not matter that the recipient of the notice did not read the terms or that he or she was unable to read provided the reasonable steps were taken to bring the terms to the attention of an ordinary person in the position of the plaintiff. (Thompson v LM & S Railway Co).

(ii) Before or upon contract formation For the terms in a document to form part of the contract, the reasonable steps to bring them to the attention of the plaintiff must occur before or at the time of contract formation (Thornton v Shoe Lane Parking).

Incorporation of Notice – Website It is likely that same test will apply as for incorporating terms on an unsigned document or a sign. Reasonable steps must be taken to give the class of person to whom the recipient belonged, notice of existence of term; and these steps must be taken before or when contract is made.

Incorporation of Notice – Reference Terms contained elsewhere can be incorporated into a contract by reference to those terms (Smith v South Wales Switchgear Co Ltd).

In Smith v South Wales Switchgear Co Ltd the general conditions had been incorporated into the contract via a letter from the defendant, accepted by the plaintiff that the defendants general conditions were available on request.