Z3459304David PanContracts Assignment1. What is the effect of Anns statements on air-conditioned floats?(a) Wholly written or party oral?Only statements of a promissory nature[footnoteRef:1], viewed objectively through its language[footnoteRef:2], timing and relevant expertise[footnoteRef:3] of each parties will be contractually enforceable. Before the parol evidence comes into effect, surrounding circumstances and extrinsic evidence are examined to determine if a contract is wholly written or partly oral.[footnoteRef:4] [1: Oscar Chess Ltd v Williams [1957] 1 WLR 370, 375.] [2: JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435, 442.] [3: Dick Bentley Production v Harold Smith (Motors) Ltd [1965] 2 AII ER 65, 67; Oscar Chess Ltd v Williams [1957] 1 WLR 370, 375.] [4: State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170.]

By John making [it] clear and essential to Ann that during summer horses are transported in air-conditioned floats prior to signing the agreement, and given the professional context the elements above are evidently satisfied. However the High Court remains indecisive of this test set by the State courts, and has yet to fully affirm it in case law.[footnoteRef:5] In this case of legal ambiguity, pursuing other recourses may be desirable for John. [5: Equuscorp v Glengallan Investments [2004] HCA 55, 438-4.]

(b) Course of dealingsThe terms may be incorporated by a past course of dealings and a continuance to provide the services in such a way shows that a party is willingly known to be bound by them.[footnoteRef:6] The burden of proof for John now would be to show that in the past two years, air-conditioned floats were the staple delivery vehicles in summer for his horses. Thus Ann must have been aware that such floats were significant to the delivery, and shouldve made prior arrangements once she knew they were going to be in maintenance. [6: Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379.]

(c) Collateral contract or estoppelAlternatively, their banter may be considered as a collateral contract for the written contract. The elements that arise are that the statement is promissory in nature, made with the intention to induce the other party, communicated before and consistent with the main contract.[footnoteRef:7] John decision here was clearly encouraged by Anns promise of air-conditioned floats and as a result proceeded to sign the contract. Estoppel, as it trumps over common law rights[footnoteRef:8], is also a viable approach here. [7: Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133, 147.] [8: Saleh v Romanous [2010] NSWCA 274.]

2. Is the exclusion clause applicable in the present case?(a) Application of exclusion clause if incorporatedA signature stipulates that a party has read and is willingly sbound by the terms, regardless of whether the party actually did so.[footnoteRef:9] From this, John is susceptible under the exclusion clause provided that the signed documents were contractual and no vitiating factors were present.[footnoteRef:10] In application, exclusion clauses are construed with the entirety of the contract in mind, and contra proferentem in the case of ambiguity.[footnoteRef:11] Here the clause is unambiguous, excluding liability for damage suffered by horses as on her transport vehicles, whether negligently caused or not. However even if incorporated, it would only suffice to preclude recovery from distressed and dehydrated horses; it may not prevent liability arising from Anns breach of terms, which would be an arbitrary and unreasonable construction of the clause. [9: LEstrange v F Graucob Ltd [1934] 2 KB 394; Toll (FGCT) Pty v Alphapharm Pty Ltd [2004] HCA 52.] [10: Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805.] [11: Darlington Futures Ltd v Delco Aust Pty Ltd (1986) 161 CLR 500, 501.]

(b) Contractual documentsFor documents to be incorporated via past course of dealings, they must have been regular and uniform, with the document relied upon to be reasonably contractual in nature, rather than having the appearance of a mere receipt or docket.[footnoteRef:12] The facts here are reminiscent of DJ Hill[footnoteRef:13] and Rinaldi, with the document containing the exclusion clause sent and signature required only after performance of contractual obligations, or once the horse[s] has been safely delivered. Coupled with the lack of a system for passing the duplicate on to John suggesting informality and triviality of the process, the document should be considered as nothing more than an acknowledgement of the delivery and therefore non-contractual. [12: Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd (1986) WAR 131.] [13: DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749.]

3. Do Anns actions amount to a breach, and if so what is the effect of Johns following decisions?(a) Authority of head groom to send horses without air-conditioningAs per Pacific Carriers[footnoteRef:14] and also Toll[footnoteRef:15], it would be unreasonable to permit John to depart from the assumption that the decision was executed with his authority in a situation where he had specifically put his head groom in the position of dealing and delivering the horses. Thus the groom wouldve had the ostensible authority to give consent, and the terms of the original contract may be avoided for that particular transaction. However John may wish to distinguish it on the fact that the groom only agreed to send the horses under economic duress, as it was the sole method of punctually transporting the horses given such short notice. [14: Pacific Carriers Ltd v BNP Paribas [2004] HCA 5.] [15: Toll (FGCT) Pty v Alphapharm Pty Ltd [2004] HCA 52.]

(b) Termination by breachOnly breach of a condition will entitle John the option to terminate the contract. The relevant test here is whether the particular term is of such importance to the promisee that he would not have entered into the contract without assurance of its performance.[footnoteRef:16] Through Johns clear representation to Ann that the air-conditioned floats are essential, and signature of the agreement only after as a result that this [was] not a problem; it can be presumed that John considered the term to be of utmost importance and indeed was assured of its performance. Assuming a summer context from 39 degrees Celsius, Ann by not providing the air-conditioned floats is likely deemed to have breached this condition. [16: Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286.]

(c) ElectionWhere there is a breach of a condition, the aggrieved party has the option to terminate or affirm with the original contract. To affirm, John is required to have known about the factual situation which warranted termination[footnoteRef:17] and unequivocally constitute an intent to affirm[footnoteRef:18]. In the present case the conditions seem to be fulfilled from Anns plea for one more chance, which John agrees to; however Johns equivocal statement that any further problems will mean the end requires careful construction. Prima facie, the statements along with his conduct with Ann seem to be an affirmation when construed strictly and objectively[footnoteRef:19], with the phrase problems to be interpreted as further breaches of the original contract. [17: Immer (No 145) v Uniting Church in Australia Property Trust (NSW) (1992) 182 CLR 26, 30.] [18: Tropical Traders v Goonan (1964) 111 CLR 41.] [19: Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5, 74.]

One possible inference is that his statement represents a subsequent agreement which has modified the original contract, granting John the discretion to terminate at will following events he deems as problems. However, courts have been stringent on the process of modifying contracts, and would require John to have the subsequent contract in writing[footnoteRef:20] if he did seek to vary the original contract. [20: Suttor v Gundowda Pty Ltd (1950) CLR 418, 440.]

Another interpretation is that John merely delayed his election akin to Tropical Traders; though this is unlikely from his continued use of Anns services and 40% discount benefit.

4. Is time of the essence in the contracts?(a) Implied in factNeither time of delivery nor its essentiality is expressly stated in the original contract document, hence it can be implied in fact upon satisfying the BP refinery tests.[footnoteRef:21] Here, punctuality would be fairly reasonable to have been incorporated and certainly is capable of clear expression. However it fails to be so plainly obvious that it goes without saying, and the business efficacy of exclusive use/discount is certainly not hindered without the term. Hence while the time of delivery expressly provided by the grooms may prove to be essential in each individual transaction, it is relatively difficult to imply it in context of the originally drafted contract. [21: BP Refinery (Westernport) Pty Lyd v Shire of Hastings (1977) 180 CLR 266, 283.]

(b) Implied in customMoreover, John may propose that punctual delivery is implied through the custom and nature of the contracts in transportation industry.[footnoteRef:22] Given successful dealings where time and place of pick-up and delivery was specified, it should be so well known and acquiesced[footnoteRef:23] that punctuality was presumed to have been incorporated into a contract between a horse trainer and transport company. [22: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226.] [23: Ibid at 238.]

On the other hand Ann can argue that the original contract was not a contract for transportation but rather a discount agreement. Furthermore, delivery time may not satisfy the necessity test[footnoteRef:24] as a condition even as an implied term, only permitting John to claim damages. [24: Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286.]

5. Can John rightfully terminate the principal contract, or did he repudiate it?(a) Termination by repudiationIf the above recourses of termination are all exhausted, John may wish to terminate on repudiation, following Anns defective deliveries in respect of one or more instalments similar to Maple Flock[footnoteRef:25]. The relevant test would be the objective test of the default to the whole purpose of the contract, not the subjective thoughts of Anns driver. Here Anns repeated failures in fair delivery suggest another high chance of default and John may be entitled to terminate. [25: Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB 148.]

(b) Australian Consumer Law provisionsS63 of Australian Competition and Consumer Act prevents recovery by statute, barring the application of consumer guarantees for services[footnoteRef:26] involving transportation of goods for businesses.[footnoteRef:27] [26: Australian Competition and Consumer Act 2010 (Cth) pt 3 div 2 sub-div B.] [27: Ibid s 63.]

(c) Repudiation by JohnIf there was no fundamental breach of the principal contract by Ann, then John did not possess the lawful right to terminate it and thus remains subject to all his obligations under the contract.[footnoteRef:28] At common law, repudiation may be either indicated by an express statement or inferred from conduct.[footnoteRef:29] Here John has personally conveyed to Ann that he is tearing up their agreement and hires another transport firm to send his horses, signifying his unwillingness to abide with the original contract. Thus Ann would have the right to terminate. [28: Bowes v Chaleyer (1923) 32 CLR 159.] [29: Carr v JA Berriman Pty Ltd (1953) 89 CLR 327.]

6. Is there frustration of the principal contract due to the suspension of Johns license?A contract may be frustrated when circumstances beyond the control of either party renders contractual obligations radically different from that which the parties had originally agreed to.[footnoteRef:30] By the suspension of Johns license and the confiscation of his horses, Ann is deprived of all her commercial interest[footnoteRef:31] in the contract with John as there will be no further deliveries. [30: Davis Contractors Ltd v Fareham Urban District Council [1956] AC, 696, 731; Codelfa Construction v State Rail Authority of New South Wales (1982) 149 CLR 337.] [31: Brisbane City Council v Group Project Pty Ltd (1979) 145 CLR 143.]

Furthermore, it must be also shown that the event was neither foreseeable, nor specified for in the contract and without the fault of the parties.[footnoteRef:32] The contract is only frustrated if John is able to prove that he is not liable for the drugs his horses tested positive for. This is rather difficult, as he was found guilty at the subsequent hearing which led to his suspension, alluding to his responsibility for the doping of his horses. [32: Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 452.]

BibliographyCase LawBalmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379Bank Line Ltd v Arthur Capel & Co [1919] AC 435Bowes v Chaleyer (1923) 32 CLR 159BP Refinery (Westernport) Pty Lyd v Shire of Hastings (1977) 180 CLR 266Brisbane City Council v Group Project Pty Ltd (1979) 145 CLR 143Carr v JA Berriman Pty Ltd (1953) 89 CLR 327Codelfa Construction v State Rail Authority of New South Wales (1982) 149 CLR 337Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805.Darlington Futures Ltd v Delco Aust Pty Ltd (1986) 161 CLR 500Davis Contractors Ltd v Fareham Urban District Council [1956] AC, 696Dick Bentley Production v Harold Smith (Motors) Ltd [1965] 2 AII ER 65DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749Equuscorp v Glengallan Investments [2004] HCA 55Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133Immer (No 145) v Uniting Church in Australia Property Trust (NSW) (1992) 182 CLR 26JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435LEstrange v F Graucob Ltd [1934] 2 KB 394Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB 148

Oscar Chess Ltd v Williams [1957] 1 WLR 370Pacific Carriers Ltd v BNP Paribas [2004] HCA 5Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd (1986) WAR 131Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5Saleh v Romanous [2010] NSWCA 274State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170Suttor v Gundowda Pty Ltd (1950) CLR 418Toll (FGCT) Pty v Alphapharm Pty Ltd [2004] HCA 52Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286Tropical Traders v Goonan (1964) 111 CLR 41LegislationAustralian Competition and Consumer Act 2010 (Cth)

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