Question 1 Alan is the owner of a retail shopping centre in Sydney.

Bill, a florist, negotiated a lease of one of the shops for his business for a period of five years. A comprehensive written document containing the negotiated terms of the lease was prepared by Alan and forwarded to Bill for signature. Prior to signing the written document Bill obtained a verbal assurance from Alan that Alan would not, during the currency of the lease, permit any of the other shops in the shopping centre to be leased as a florist shop. Upon receiving Alans assurance, Bill signed the lease. However there was no term in the lease placing any limitations on Alan in relation to the leasing of other shops in the shopping centre. In relation to the above facts: (a) If, two years later, Alan leased one of the shops in the shopping centre to Charlie, who opened up a florist shop, could Bill sue Alan for damages for breach of contract?

Collateral Contracts: A separate contact is referred to as a collateral contract. In: De Lassale v Guildford a collateral contract was found to exist. In Heilbut Symons & Co v Buckleton Lord Moulton said, it is evident, both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. The elements of a collateral contract are: 1. That the statement is promissory in nature; and 2. That there is no inconsistency between the main contract and the alleged collateral contract.

Promissory Nature of the Statement: To establish a collateral contract a person must establish

that he or she entered into the main contract in consideration of the statement made by the representee. This means that the statement must be made in the form of a promise or assurance which was intended to be relied upon and was in fact relied upon by the representee. That the representee would not have entered into the contract had the statement not been made is not enough to establish a collateral contract. In J J Savage & Sons v Blakney the High Court said that a statement, to be a collateral contract must be promissory and not merely representational.
Inconsistency: The alleged collateral contract cannot contradict the main contract: Hoyts Pty

Ltd v Spencer Isaacs J said, a collateral contract, being supplementary only to the main contract, cannot impinge on it, or alter its provisions or the rights created by it. Inconsistency will also arise in cases where the main contract contains an express term stating that the contract contains the entire agreement between the parties. An entire agreement clause states that the written contract expresses the entirety of the parties agreement and that the parties were not influenced or induced to enter into the contract by any pre-contractual statements.

(b) How, if at all, would you advice in (a) differ, if the written lease had included a clause that stipulated that the lease expressed the entirety of the agreement between Alan and Bill and that neither of them had been influenced or induced to enter into the lease by any statements or assurances given by either of them before the lease was signed?

Parol evidence rule: This rule contains two parts, namely, (i) the exclusion of extrinsic evidence that would add to, subtract from or vary the terms of a written contract; and (ii) the exclusion of extrinsic evidence that would otherwise have assisted the court in interpreting or construing the contract. In Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd Higgins J stated that the justification for the rule was the desirability of preserving finality in written instruments meant to be final and not allowing written words to be altered or qualified by the uncertain testimony of slippery memory. The parol evidence rule only applies if the contract is intended to be an entirely written one. In L G Thorne & Co Pty Ltd v Thomas Borthwick & Sons Street CJ suggested that if a written agreement, contains on its face a complete contract with provision for all matters relevant to the transaction involved, then the court will not allow evidence to be given for the purpose of establishing that some additional term has been omitted. However, oral evidence can be used to determine whether an entirely written contract or a partly written and partly oral contract was intended by the parties.

Question 2 Gara is a professional photographer who travels the world taking scenic photographs that she sells. As part of her business she maintains a library of her photographs for hire. Garas sister, Sybil, is a tourism promoter focusing on tourism in the Balkans. Recently Sybil visited Garas library and arranged to hire photographs of Montenegros rugged hinterland which Sybil wanted to use for a promotional campaign she was doing on behalf of the Montenegrin government to encourage Australian tourism to Montenegro. Gara said she would make an appropriate selection of photographs and forward them to Sybil in plenty of time for Sybils presentation. A few days later Sybil received a packet of 20 photographs. A covering letter indicated that the hiring fee for the photographs was $10 per day, that they had to be returned to Gara within 10 days and that an attached closely typed sheet of conditions otherwise governed the contract between Sybil and Gara. Sybils presentation was very successful. However, she was 5 days late in returning the photographs to Gara. Gara referred Sybil to a sheet of conditions and claimed that Sybil had to pay a late return fee of $5,000 in accordance with Clause 17 which stipulated that a late return fee was payable if photographs were returned after the due date at the rate of $50 per day, per photograph. Sybil, who had not previously read the sheet of conditions, seeks your advice as to whether clause 17 is part of the contract.

Incorporation of terms by notice: Notice is a crucial factor in cases of unsigned documents or writing on signs which are alleged to be part of a contract. Such documents include tickets issued for transport by bus, ferry or aeroplane; tickets issued upon entry to a car park; and tickets issued for entry into amusement parks or something similar. In such cases the clauses contained set out in the unsigned document or on the sign will not be terms of the contract unless notice of them has been given to the party alleged to be bound by them.
Timing of the Notice: In terms of timing, notice of the term has to be given at or before the

entering into of the contract: Baltic Shipping Co v Dillon. In Thornton v Shoe Lane Parking Ltd Lord Denning said of a ticket machine that, acceptance takes place when the customer puts money into the slot. The terms of the offer are contained in notice place on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice before-hand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late. The contract has already been made. The ticket is no more a voucher or receipt for the money that has been paid.
Reasonableness of the Notice: If the party actually knows that the document or sign contains

contractual terms then he or she is bound, irrespective of whether the document or sign has been read: Parker v South Eastern Railway Co. In the absence of knowledge, the delivery of the document or the placing of the sign must be done in such a way that the other party can be taken to have been given reasonable notice of the terms. There is a distinction drawn between contractual documents and non-contractual documents. With contractual documents the presentation and acceptance of the document will amount to reasonable notice: Parker v South Eastern Railway Co. If however, the document is non-contractual in nature, merely handing it over to the other party is not enough. The party relying on the clause must take responsible steps to draw the recipients attention to it. Typical examples on non-contractual documents include tickets, receipts and vouchers: Causer v Browne, the High Court held that the docket handed over was merely a voucher for Causer to produce when collecting the goods and not a contractual document, and because no steps were taken to draw Causers attention to the exclusion clause, it was not held to be part of the contract. Other cases include Thornton v Shoe Land Parking and Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd.

Question 3 Jenny, an evening student studying contract law at the University of Sydney, parked her car in the Universitys car park nearest to the lecture theatre in which lectures in contract law were held. This was the first time she had ever parked her car within the campus. She approached the automatic ticket machine in the middle of the car park and placed $6 in coins into the machine for an evening ticket to park on the campus.

Jenny noticed that there was writing on the back of the ticket. She read part of the writing which specified the time period during which she could park her car on campus. Because of her hurry to get to the lecture she did not read all the writing on the ticket. Whilst she was at the lecture, an employee of the University engaged to do maintenance work accidentally backed his truck into Jenny's car, causing considerable damage to it. When Jenny contacted the University seeking monetary compensation to cover the costs of repairing her car, it denied it was liable to Jenny for any compensation, stating that it was protected from liability by the terms of the exclusion clause which, you can assume, excluded the University from liability to Jenny. Jenny claimed that, on her understanding of the law, she was not bound by the exclusion clause printed on the ticket. The University seeks your advice as to whether Jenny is bound by the terms of the exclusion clause printed on the ticket. Would you advice be different if Jenny had received the ticket from an attendant at the entrance to the Universitys grounds? Reasonableness of the Notice: If the party actually knows that the document or sign

contains contractual terms then he or she is bound, irrespective of whether the document or sign has been read: Parker v South Eastern Railway Co. In the absence of knowledge, the delivery of the document or the placing of the sign must be done in such a way that the other party can be taken to have been given reasonable notice of the terms. There is a distinction drawn between contractual documents and non-contractual documents. With contractual documents the presentation and acceptance of the document will amount to reasonable notice: Parker v South Eastern Railway Co. If however, the document is noncontractual in nature, merely handing it over to the other party is not enough. The party relying on the clause must take responsible steps to draw the recipients attention to it. Typical examples on non-contractual documents include tickets, receipts and vouchers: Causer v Browne, the High Court held that the docket handed over was merely a voucher for Causer to produce when collecting the goods and not a contractual document, and because no steps were taken to draw Causers attention to the exclusion clause, it was not held to be part of the contract. Other cases include Thornton v Shoe Land Parking and Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd.

Question 4 Bill took his computer to Joe, a computer repairman, for repair. Joe gave Bill a receipt and asked him to sign it. Bill did not read the document, but signed it as requested. The receipt contained a clause excluding Joe from liability for any damage to the computer arising during its repair. A few days later Bill came back to Joes shop and gave his receipt to Joe. Joe retrieved the computer and then said to Bill: Oh yeah, I remember this one. It was damaged beyond repair when I accidentally dropped it. Im afraid that this is bad luck for you, as I am not liable for the damage because of the exclusion clause on the receipt that you signed. Bill seeks your advice as to whether he is bound by the exclusion clause.

Incorporation of terms by signature: Where someone signs a document containing terms of a contract it is one of the most obvious ways in which terms are incorporated into a contract. Many of these cases dealing with this principle involve situations where and exclusion clause is contained in the contract and the question is whether the exclusion clause is incorporated into a contract. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd Bryson J said that whether an exclusion clause forms part of a contract where the document is signed depends upon whether the party relying on the exclusion clause has done what can be considered sufficient to give notice of the exclusion clause to the other party. The signature rule however, means that when a document is signed it carries considerable force in indicating an intention to be bound by a contract and the High Court said: it should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs has either read and approved the contents of the document or is willing to take a chance to be bound by those contents. When a person signs a document, which is intended to create legal relations, and there is no question of misrepresentation, duress, mistake or any other vitiating element, the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms.
Exceptions to the Signature Rule: In LEstrange v F Graucob Ltd it was held that the

signature rule did not apply to situations where documents signed are the result of fraud or misrepresentation. The exception also extends to signatures obtained as the result of duress, unconscionable conduct, and undue influence. One of the more significant exceptions to the signature rule is where the signature has been induced as a result of misrepresentation: Curtis v Chemical Cleaning & Dyeing Co Ltd. In LEstrange v F Graucob Ltd Denning LJ said, when one party puts forward a printed form for signature, failure by him to draw attention to the existence or extent of the exemption clause may in some circumstances convey the impression that there is no exemption at all.