Monday, 1 July 2013

[Contract] Incorporation of terms, Express Terms

1. Incorporation of terms

1.1 Incorporation by signature

A party will be found by signing a contract even if they do not know the terms of the contract (L'Estrange v F Graucob Ltd) 

However, position will change if there has been a misrepresentation (Curtis v Chemical Cleaning and Dyeing Co). Somervell LJ (with whom Singleton LJ agreed) said that 'owing' to the misrepresentation the exclusion clause 'never became part of the contract'. 

The conclusion whether a document should be regarded as contractual will depend on the knowledge,  or assumed knowledge, or how people do business. 

1.2 Incorporation by notice 

Where no document is signed by the parties the usual way by which terms are incorporated is by one of the parties giving notice of the terms of the contract.

1.3 Incorporation by course of dealing

A course of dealing occurs when the contract at issue between the parties is preceded by a series of transactions over time. An oral contract may contained implied terms by the course of dealing.

In order to rely on a course of dealing one party need not show that the other party had actual knowledge of the term. In Henry Kendall & Sons v William Lillico & Sons Ltd, a long and consistent course of dealing, and the failure to object to the terms, was held to imply assent to the incorporation of the terms contained in 'sold' notes' as terms of the contract, even though these were received after an oral contract had been agreed between the parties.

1.3.1 Elements
  1. Regard must be had to the extent of dealing between the parties and the steps taken. 
  2. 'Many occasions' prior to the contract (Spurling v Bradshaw)
Example of element 2: However, inconsistent, numerous dealings will not be course of dealing (McCutcheon v David MacBrayne Ltd

Time at which the document is received is not crucial if a course of dealing is established. 

1.4 Incorporation by reference

1.4.1 Introduction

In commercial transaction, it is quite common for the parties to record the bare essentials of the contract in a document and for the document to refer to, and incorporate, a set of terms, such as the standard of a trade association (Bremer v Rayner), the standard terms of one of the parties (Smith v South Wales Switchgear) or the terms of another contract related to the transaction (Miramar v Holborn).

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