Laws2111 Lecture7a 2011

Estoppel (cont)

Reliance by Promisee

  • Defendant must know or intend that the party act or abstain in reliance on their promise (Waltons)
  • Detrimental reliance probably necessary (remedy based on reversing detriment – unlikely to be available in the absence of some clear detriment)
  • Must be unconscionable – particularly needs to be “unfair” to allow the defendant to go back – generally requires damage/loss of some kind that will only occur if they don’t keep the promise to establish
  • Merely failing to fulfil a promise is not unconscionable (Waltons)
  • Promisee must be acting equitably was well – equity requires clean hands (D&C Builders)
  • Mere suspension of existing contractual rights CAN be terminated with ‘reasonable’ notice – but anything that would have accrued had those rights not been suspended will probably not be available (High Trees, Quaglia, Equitrust)
  • Promise may be such that the only remedy is to hold them to the promise (Verwayen, EK Nominees v Woolworths)
  • No existing contract required – can be a cause of action on its own (Waltons)

Remedies for Estoppel

  • Estopped from asserting their strict legal rights (High Trees, Waltons, Equitrust) - cannot forfeit lease, claim back rent, resist enforced lease, etc.
  • Specific performance, or damages in lieu
  • More flexible than common law – remedy required to be equitable, which can include conditions (Riches v Hogben)
  • The type of remedy can be:
    • What is necessary to fulfil all expectations; OR
    • An injunction restraining the exertion of strict legal rights; OR
    • A lien/charge on property; OR
    • The MINIMUM necessary to be equitable – not necessarily to keep the actual promise, merely obviate the detriment of it not being kept (Guimelli)
  • Consideration and Estoppel – effectively allows the enforcement of promises in the absence of consideration, but only if a different set of requirements are met, and generally to a lesser degree
  • Impact on negotiations – supports reliance induced assumptions during negotiations (Waltons, EK Nominees)
  • Can estoppel lead an earlier promise to override a later contract? Still open for debate, but entirely possible (Saleh)

Terms

  • Contents of a Contract (as opposed to the overused ‘terms and conditions’)
    • Condition: Technical legal word referring to a ‘very important’ term that cannot be severed
    • Warranty: less important term that CAN be severed
  • Express Terms: Terms specifically agreed to and set out as part of the contract. Can also be a reference to outside terms incorporated into the contract (eg. see the terms and conditions on our website)
  • Implied terms: inserted by statute or implied by the judges
  • Requirements for contract can also be inserted by statute (eg. Property Law Act requires sale of land be in writing)
  • Email is also valid for writing/signing (Electronic Transactions Act)
  • Effect of Signature – binding even if terms were never read (short of duress, fraud, non est factum, etc.) (Toll v Alphapharm)
  • Consumers protected from broad expansive exemption clauses (Competition and Consumer Act)
  • Misrepresenting the effect or extent of a document can prevent the signature from constituting unequivocal acceptance (Curtis v Chemical Cleaning)
  • The paper signed could also be for a non-contractual document (or reasonably believed to be) eg. delivery receipt (Hill v Wright) making the signature meaningless

Non Est Factum (Petellin v Cullin)

  • Protects a limited class (the illiterate, blind, or non-english speaking) from accepting the terms if they had no idea what they were.
  • Terms/Document must be substantially different from the one they intended to sign (Saunders v Anglia Building Soc.) or alternatively, they must be mentally incapable of comprehending the terms.
  • Plaintiff must have taken at least reasonable care – can’t just sign everything in sight at the slightest provocation (Ford v PTV)
  • Onus is on plaintiff to establish the difference in terms compared to perceived terms – can be very difficult, rarely used.

Terms vs Representations

  • a ‘mere’ representation is not intended to be binding
  • If misleading, deceptive, and capable of being proven (eg. written down somewhere) then it could be actionable
  • Could a representation create a collateral contract if it was strong enough?
    • Yes, but only if the plaintiff can establish and justify the term, and its lack of inclusion in the main contract (Shepperd v Municipality of Ryde)
  • Must satisfy the court that:
    • It was intended to induce
    • It was relied upon
    • It was precise (Savage v Blakney, Ross v Allis Chalmers)
  • A forecast can be held to be a term, but only to the extent that it was forecast with reasonable care and skill (and not negligently) (Esso v Mardon)

Key Factors/Indicia of Terms

  • Knowledge of Parties (Esso)
  • Time of Statement (Hospital Products)
  • Importance of the Statement (Esso)
  • Frequency of Statement
  • Content & Precision (Ross)
  • Reliance
  • Note: Courts generally reluctant to fashion collateral contracts out of representations

Learning Guide Cases

Electronic Transactions Act 2001 (Queensland) ss.8, 14
States That: Contracts can be ‘signed’ electronically as long as the party requesting a signature assents and the ‘signer’ indicates clear assent.

Toll v Alphapharm
Relevant To: Incorporation of Terms – effect of signature
Issue: Was the signature by an agent the plaintiff on a document that clearly identified itself as contract (please see conditions of contract overleaf) and contained no unusual terms sufficient to bind both the agent and the plaintiff, even though neither had read or subjectively accepted the terms?
Held: Yes it was – the signature was an objective indication of assent (which was the preferred approach as per Codelfa) and it had been relied on as indicating assent – however they mentioned the approach to incorporation of terms taken in ticket cases can still apply – it merely wasn’t relevant here, with no unusual terms, plenty of time to consider, etc.

Hill v Wright
Relevant To: Incorporation of Terms – effect of signature on non-contractual document
Issue: Were terms that only appeared on a consignment note, a non-contractual document indicating receipt of the goods, capable of being relied upon as part of the contract?
Held: No – the despite repetition of previous deliveries, the non-contractual nature of the document and its insertion into the process so far after the original oral contract prevent those terms from constituting part of the contract.

Petelin v Cullen
Relevant To: Defence of non est factum
Issue: Was signing a contract under the mistaken belief that it was a receipt for $50 sufficient to prevent it from being binding, given that the party signing only spoke very little English?
Held: Yes, it was, due to the doctrine of non est factum – but only because he believed it was materially different from the contract signed. If he had still thought it was a contract/option for that purpose, it would still have been binding even if he hadn’t fully understood it.

Savage v Blakney
Relevant To: Incorporation of Terms
Issue: Was a letter containing estimated speeds for a variety of different engine options a contractual warranty that the boat would actually reach those speeds?
Held: No – held that it was merely an opinion. Key aspects were the word ‘estimate’ being opposite a ‘promise’, the fact that it didn’t end up as a term of the main contract of sale, and the fact that it was a letter much earlier in the process – there was no evidence that the primary contract would not have occurred without it, so it couldn’t be a collateral contract for lack of consideration (collateral consideration being ‘signing the primary contract’)

Ross v Allis Chalmers
Relevant To: Incorporation of Terms
Issue: Was the statement ‘in my own experience, you should budget on 90 acres a day’ sufficiently definitive to be promissory?
Held: No, it was merely a statement of opinion designed to induce a purchase. It was not a promissory statement, which is the requirement for collateral contract, and there was no evidence of fraud.

Thorne v Borthwick
Relevant To: Incorporation of Terms
Issue: Did providing a sample of oil for testing prior to a contract of sale constitute a sale by sample, and if so, did it incorporate additional terms into the contract requiring that it react in the same manner to temperature?
Held: No – it was not a sale by sample. The contract was objectively clear and complete, and did not incorporate any implied terms such as matching the sample given for testing.

Esso v Mardon
Relevant To: Incorporation of Terms (knowledge of the parties)
Issue: Was an estimated throughput of 200,000 gallons by a petrol station sufficient to constitute a warranty?
Held: Partially – as the franchise owner was in a much more experienced and knowledgeable position, they were warranting that the estimate was made with due care and skill, but not the precise number.

Equuscorp v Glengallan Investments
Relevant To: Incorporation of Terms
Issue: Was a signed loan document a complete written contract, or merely a record of an earlier negotiated oral contract?
Held: The signed document was a binding agreement in and of itself as a result of those oral negotiations, and the parol evidence rule prevented the limitations discussed in earlier oral negotiations from being relevant. However the court identified various methods of circumventing the parol evidence rule, such as misrepresentation, collateral contracts, and legitimate partly oral/partly written contract.

Nemeth v Bayswater Road
Relevant To: Incorporation of Terms
Issue: Can the parol evidence rule be incorporated as a term of the contract to prevent any extrinsic negotiations from being relevant to constituting a collateral contract?
Held: No, it cannot – in order to determine the exact terms of the contract it is necessary to look at the factual matrix and determine if that written contract IS the entire agreement. But in this instance, it was held to be so, as the ‘promise’ was merely a statement of estimated business usage as per Savage.

County Securities v Challenger
Relevant To: Incorporation of Terms
Issue: For a partially written/partially oral contract, can the oral negotiations/terms be used as evidence of intention?
Held: As long as the oral agreements covered necessary terms such as price and subject matter, they could constitute terms of the contract.