Problem Set 6
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Problem Set 6 1.
Sanjukta’s family had regularly employed Jim over the past five years for servicing and repair work for the family cars. When Sanjukta took the car
to the garage on 15 April
he entered an office. On the wall behind the reception desk a small notice was displayed stating: “
Customers are kindly invited to note that all vehicles are accepted only subject to the conditions on our receipt forms.” On the receipt form was Sanjukta’s family name
, a description of the car
and the work carried out, a statement of the amount owing and an acknowledgement of payment of that amount. The following words were also printed at the bottom of the receipt: "
We regret that we cannot accept any responsibility for damage or loss caused to customers' vehicles by fire, vandalism or otherwise howsoever occurring
.” That evening thieves entered the garage and stole the sound system (valued at $500)
that Peter had installed in the car. The thieves were able to enter the garage because Sam forgot to lock-up when he left for the night. On 16 April, having completed the repairs, Jim used the car to drive to his girlfriend's house. While the car was parked outside the house, someone (who has not been identified) crashed into the car causing $7,500 worth of damage. Advise Jim if he has any liability in these circumstances. Here the first issue is whether the exclusion clause is incorporated.
There is an issue here with reasonable notice of the exemption clause. The small notice at the reception desk was observed by Sanjukta only after he had already paid for the work being done. Using the authority of Thornton v Shoe Lane Parking
, much like the ticket that specified that ‘it is issued subject to the conditions of issue as displayed on the premises’, the notice at the reception desk does not reveal the conditions of the contract, nor does Jim make Sanjukta aware of such conditions. It is not
until after the work is paid for that these conditions are revealed on the receipt. Hence it can be said that Jim has not done what was reasonably necessary to bring this exclusion clause to the attention of Jim, considering Sanjukta is only noticing these conditions after having already entered into the contract.
Another issue here is that a receipt is not contractual in nature, where using Causer v Browne ‘A reasonable person would have thought that the ticket was just a receipt, not a contract with conditions,’ where typically a receipt comes after a purchase (and hence after a contract is entered) and simply provides evidence of purchase.
There could be an alternate view here though, where considering Sanjukta’s family had regularly employed Jim over the past five years, the term could be incorporated by course of dealings. However, using La Rosa v Nudrill despite the potential inclusion of an exclusion
of liability clause on previous receipts giving rise to a course of dealings argument. It must be shown that the clause was contractual and that Sanjukta understood they could only agree to enter into a contract on the basis of those
terms, which would not be established considering the receipt is not considered contractual nor was it a signed document. Moving onto issue 2: assuming that the terms could be incorporated, is Jim liable for damages to the sound system?
According to the Darlington Judgement
: Where the meaning is clear and not ambiguous courts will give the contract its simple and ordinary meaning. Here, the exclusion clause seems reasonably clear where the term ‘otherwise howsoever occurring’ is much like the term ‘howsoever caused’ in Sydney Corporation v West, which found that a broadly stated exclusion clause is not necessarily less potent than a more specific clause.
Additionally, using Davis v Pearce Parking Station: as it would be quite unlikely for damages to occur without some form of negligence on the part of Jim, this would justify the exemption clause as excluding liability for negligence.
Hence, as the damages due to theft were ultimately caused by Jim’s negligence
in leaving the garage unlocked, Jim would likely not be liable for damages to the sound system.
However, if an alternate view is taken that the term ‘otherwise howsoever occurring’ is ambiguous then the clause is to be interpreted contra proferentem (Darlington Futures v Delco Australia
). Here, the term ‘Otherwise’
may fairly be construed in the context to mean other things of similar nature to those already mentioned. As acts of vandalism were included in the exclusion clause, it can be inferred that other third-party damages including theft will also be covered under this clause. Hence, theft arising out of negligence would likely be covered by this exclusion clause if ambiguity was said to have arisen. Issue 3 was whether the exclusion clause excluded liability for the damages caused by the crash.
As discussed, the term ‘otherwise’ suggests that negligence as well as third party destruction will likely fall under this exclusion clause. However, here using Sydney Corporation v West,
the four corners
rule would apply as the exclusion clause can only exclude liability for something that is reasonably something you had to do under the contract. As, it is not reasonable under the contract for Jim to remove a car from the garage and use it for his own personal use. The damage that was caused whilst the car was not in the garage would not fall under the exclusion clause, making
Jim liable for damages. 2.
On one of his visits to Fitness Last, Peter (whom we met in Problem Set 5, problem 3 when he joined Fitness Last), Georgina attempted to entice Peter to continue training by telling him about a promotion: “Today happens to be the last day for a promotion we’re running. You can sign
up for six free 30-minute personal
training sessions with one of our highly qualified instructors.” Peter thought this might help him get a better fitness routine and asked how he can sign up for the free sessions.
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Georgina explained: “
Personal trainers can be found on our website, which also contains further information concerning trainer qualifications and their rates.” When Peter went to the Fitness Last website, in the section on “Personal training” he saw photos of the personal trainers with their qualifications and rates.
Within the section there was a link on “Rules for good training”, which Peter did not click on. The link leads to a webpage with rules about carrying a personal towel when training, wiping down the equipment and being courteous to trainers. One of the rules stipulates that the trainers are not employees of Fitness Last but independent contractors
.
Peter chose Dana for his free personal training lessons, but was told that she is overbooked. Georgina arranged for Peter to be paired with Jose, one of the new trainers who was not listed on the website. Peter was not too happy with Jose, who spent the first and second sessions just chatting about Peter’s goals. During the third session, Peter started doing work-outs and using the equipment. Towards the end of the third session, Peter injured his back as he was trying to do push-ups under Jose’s direction. The injury was quite serious, involving significant medical expenses. Peter also discovered that Jose had no previous personal training experience
or qualifications. Can Peter sue either Fitness Last or Jose to recover for his injuries?
Clause 12: The client uses the gym’s equipment at his or her own risk. Fitness Last does not accept responsibility for any loss, damage or personal injury suffered. Fitness Last acts on behalf of its employees and contractors for the purposes of this agreement. The first issue here is whether the precontractual oral statement made by Georgia is an express term or not.
Georgia states that Peter can sign up for a session with ‘
one of our highly qualified instructors’. It needs to be determined if this is an express term or not.
Here, Georgia who is expected to have special knowledge of Fitness Last is making a representation that their personal trainers are ‘highly qualified instructors’ which can be found on their website with further information concerning qualifications. Georgia’s statement could be considered a warranty where according to Justice Denning in Chess v Williams
: ‘When the seller states a fact which should
be within their own knowledge and of which the buyer is ignorant, if it is intended that the buyer should act on it and he does so, it is easy to infer a warranty.’
Here, it could be argued that Georgia on behalf of FitnessLast was making a promise about the quality and qualifications of their trainers, thus making this representation sufficiently promissory.
If it is found that Georgia made this statement with the intent to induce Peter to sign the contract, and that Peter relied on the fact that trainers were highly qualified, then it could be recognised that FitnessLast established a warranty.
The second issue here is who the exemption of liability clause covers, and who proceedings should be made against?
Despite the personal training sessions requiring the formation of a new contract, Peter is still bound by the initial contract and its terms, as he is still a gym member. Hence, we observe clause 12 under the original contract which was incorporated considering it was already signed by Peter. The clause says that a client uses the gym’s equipment at his or her own risk
, and fitness last does not accept responsibility for any loss, damage or personal injury
. - if asked if a collateral contract could apply?
It could be argued that a collateral contract existed as Peter relied on this statement, that trainers were highly qualified. And it was this statement that induced him into signing the main contract and
the consideration would be entering into the main contract.
Promissory estoppel?
Would be difficult to establish unconscionability
The clause also states that fitness last acts on behalf of employees and contractors for the purposes of this agreement
. In this case, Peter enforced a contract with Fitness Last for 6 personal training sessions. As Jose who was Peter’s personal trainer is an independent contractor according to the ‘Rules for good training’, the question here is whether Jose has provided good consideration to be regarded as a party to the
contract and thus to have the benefit of the exclusion of liability clause.
Not only does Clause 12 expressly state that fitness last acts on behalf of contractors, but additionally by using New Zealand Shipping v Satterthwaite – in Jose performing the duties expected of him as a personal trainer, he had hence given good consideration for the agreement, meaning he would reap the benefit of the exclusion clause.
SO, the exclusion clause applies to Jose and Fitness Last will act on behalf of him.
I will also note: that the fact that Jose is unqualified does not mean that he did not do his duty, where he did perform three sessions for Peter (despite Peter not being happy with said sessions). Instead, this points towards Fitness Last being negligent in hiring Jose and allowing him to operate his services without qualifications.
The third issue is whether the exemption clause covered FitnessLast, for Peter’s injury.
According to the exclusion clause the fact that Fitness Last excludes liability for ‘any loss, damage or personal injury’, this is clear and not ambiguous as per the
Darlington Judgement
, where its simple and ordinary meaning would exclude Fitness Last’s liability for Peter’s injury.
However, if it was found that Georgia’s statement was a warranty: that all Fitness Last trainers are highly qualified, then considering Jose was both not qualified nor was his information contained on the website. Peter can argue that he was led to believe that the personal trainer was qualified and therefore relied on that warranty when agreeing to continue to use the gym and its equipment. As Peter injured himself under the supervision of Jose, using the authority of the case of TNT v May
, the employment of Jose as an unqualified trainer was arguably outside the scope of the agreement as contemplated by the parties, where trainers were expected to hold qualifications according to the warranty.
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Using Sydney Corporation v West as the negligence occurred in an unauthorised training session due to Jose being unqualified, this means the four corners rule applies where these conditions are only intended to protect a
party if they performed in the way contracted for. HENCE, if it was found that the warranty was breached Peter could recover damages for his injuries from Fitness Last and Fitness Last could not rely on the
exemption clause. 3. Jeremy Farmer consulted Caroline Hardsell, his local dealer in farm machinery, about the purchase of a new harvester.
Jeremy said, ‘
I have a harvester that does around 4 hectares/hour but I want to
upgrade to the most efficient tractor for my next harvest
.’
Caroline nodded her head and stated, ‘
Efficiency is very important for the farmer
.’ Jeremy said, ‘
I know. My existing machine is so slow and sometimes I’ve not been able to gather in the crop before the onset of the wet season. I also like to
get the day’s work done before the sun goes down.
’ Caroline told Jeremy about the Challenger harvester. She also handed him a brochure about it. On the front of the brochure, in large writing, are the words,
‘
Challenger. The leader in the field.’ The brochure also directs to the Challenger
website for further specifications. Carloline says, ‘
The Challenger can harvest at least 100 hectares a day.
’ Caroline based this information on her reading of the brochure when she glanced at it quickly three months ago. The brochure indicates the harvester’s maximum capacity was 7.3 hectares/hour when driven at 8 km/hour. Jeremy agreed to purchase the Challenger. Caroline said to Jeremy: ‘
I’ll just get
your details
.’ Caroline filled out a form titled “Order Form” with Jeremy’s name and address,
and the details and price of the machinery. Jeremy did not realise that on the back of the form there was text under the heading “
Terms and Conditions
”. One of the statements on the back read: “
We accept no responsibility for any deficiencies in the machinery sold
.”
After half of Jeremy’s crop had been gathered with the Challenger, the wet season arrived and a fierce hailstorm wiped out the remainder of the crop. If the Challenger had the capacity asserted by Caroline, the entire crop would have been harvested before the hailstorm. Advise Jeremy. The first issue here is whether Caroline’s precontractual; statement is an express term or not.
Caroline says that ‘the challenger can harvest at least 100 hectares a day’.
Here, using Dick Bentley
, considering Caroline is a local dealer in farm machinery she was thus in a better position to know the details of the harvesting machinery than Jeremy. Objectively, Jeremy was entitled to rely on Caroline’s statement given her job role and expertise relative to Jeremy.
As Caroline did base this information on her reading of the brochure which she
only glanced at quickly three months ago, she could argue that Chess v Williams applied, and that she had no special or personal knowledge as she was just passing information on from the supplier. However, in Chess v Williams
, Lord Justice Denning stated that ‘When the seller states a fact which is or should be within his own knowledge and of which the buyer is ignorant, intending that the buyer should act on it and he does so, it is easy to infer a warranty.”
Here, considering Caroline is a salesperson specialising in farm machinery and considering Jeremy’s stressed importance of efficient farm machinery
the harvesting rate should be within Caroline’s knowledge AND if it wasn’t in her knowledge, she should have expressed her doubt in the figure she provided, and cross-checked the numbers with the brochure before proceeding.
Considering she intended Jeremy to act on this fact, despite not having sufficient certainty of the statement’s validity
it would likely be found that Caroline’s statement was an express term. Alternatively, whilst Jeremy expressed the importance of the efficiency of harvesting equipment. There is a question of how important? As he makes no attempt to cross-check Caroline’s figure despite being given a
brochure. However, considering Caroline’s perceived expertise I would say that it was reasonable that Jeremy trusted and relied on her statement. This pre-contractual statement could be considered two things:
1.
Firstly, as the statement was sufficiently promissory it could be argued as a warranty that the machine would harvest at least 100 ha per day.
2.
Secondly, a collateral contract, as Jeremy relied on this statement where
once he got the assurance of the rate of harvesting, on this basis he signed the contract. This would make it a collateral contract where his consideration was entry into the main contract.
For promissory estoppel whilst some elements of estoppel as established in Walton Stores were met with Caroline making a promise to Jeremy about the rate of harvesting, Caroline allowing an assumption that a contract will be formed based on this promise and Jeremy relying on this to his detriment which is evident in the wipe out of his crop. However, it will be difficult to establish unconscionability on Caroline’s part.
Concept of unconciousability
one party making a change, knowing that the other party
is continuing as is
responsibility of changing party to make the other party aware of the change
The second issue here is whether the exclusion clause applies. Jeremy filled out the form and hence signed the contract, having not seen the terms and conditions. However, according to L’Estrange it is immaterial whether you have read the terms if you sign the contract, hence Jeremy is bound by the terms including the exclusion clause.
The exclusion clause specifies that Caroline will not accept responsibility for ‘any deficiencies in machinery sold’.
In this case, as there was no deficiency in the machine, as it harvested at the rate advertised on the brochure and website this means that the exclusion clause does not cover Caroline’s misrepresentation of the machines details.
Thus Jeremy can recover damages for the loss of his crop, either for a breach of a warranty or a collateral contract.
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IF NEED AN ALTERNATE POINT
Alternatively, it could be argued that the figure ‘at least 100 ha a day’ could be considered an estimate, where using JJ Savage v Blakney you must look at the plain language of words used, where the term ‘at least’ indicates a potential opinion as a result of approximation based on probability. On this interpretation, this statement would not be sufficiently promissory to be an express term. However, as ‘at least’ suggests that the number will be greater than this, it seems she is likely making a promise that the rate will be anywhere
from 100 ha per hour and above.
4. Brad is a transporter of goods using his own truck. He contracts with Yung to
transport some valuable antiques to lend to her friend Didi in the Blue Mountains. Brad has obtained two insurance policies from SAXA Insurance and obtains two insurance policies. One is to cover any damage caused to his truck in case of an incident. The other insurance policy covers any damage caused to the property of third parties in case of an incident. During the delivery of the antiques, Brad makes a wrong three-point turn and hits Didi’s wall fence. The incident causes damage to his truck, to Didi’s fence and to the antiques. Can Brad, Yung and Didi recover under the insurance policies with SAXA? Consider the common law position and comment on the effect of the Insurance Contracts Act 1984 (Cth)
. The first question is whether Brad can recover damages under the insurance policies?
Brad should claim damages caused to his truck under his first insurance policy with SAXA as it covers any damage caused to his truck in case of an incident. Under s 54 of the Insurance Contracts Act 1984 (Cth)
, the insurer must pay the whole of the claim unless it can show that it has been “prejudiced” in some way, hence protecting Brad from his insurer avoiding paying the claim due to
some technical exclusion clauses. Additionally, s 13 mandates that that both parties to an insurance contract must act with “the utmost good faith” which includes an insurer not refusing to pay a claim without proper cause.
Hence, Brad would likely recover damages for his damaged truck under the insurance policies. The next question is whether Yung can recover damages under the insurance policies?
Yung can claim against Brad’s second insurance policy with SAXA as it covers any damage caused to the property of third parties in case of an incident. She could thus recover damages for her damaged antiques. Finally, can DIDI recover damages under the insurance policies? Whilst Didi is not a part of the contract between Brad and Yung, in Trident v McNiece
, chief justice Mason and Justice Wilson, found that if “the old rules” applied to insurance contracts, this would cause injustice because the likelihood of reliance on insurance policies by third parties is so great. Hence, where a contract is expressed to be an insurance contract, an exception
to the privity doctrine exists. Hence under the common law Didi could seek damages for her damaged fence under the second insurance policy from SAXA.
After Trident v McNiece occurred, the Insurance Contracts Act was passed by the commonwealth parliament which states under s 48 , that a third-party beneficiary can recover from the insurer the amount of any loss suffered even if they are not a party to the contract. Hence Didi could also recover damages under the insurance policy based on the statute.
provides that a person who is covered by a general insurance policy can recover from the insurer notwithstanding that he or she is not a party to the contract
INSURANCE CONTRACTS ACT 1984 - SECT 48
Contracts of general insurance--entitlements of third party beneficiaries
(1) A
third party beneficiary
under a contract of general insurance has a right to recover from the insurer, in accordance with the contract, the amount of any loss suffered by the
third party beneficiary
even though the
third party beneficiary
is not a party to the contract.
(2) Subject to the contract, the
third party beneficiary
:
(a) has, in relation to the
third party beneficiary
's claim, the same obligations to the insurer as the
third party beneficiary
would have if the
third party
beneficiary
were the insured; and
(b) may discharge the insured's obligations in relation to the loss.
(3) The insurer has the same defences to an action under this section as the
insurer would have in an action by the insured, including, but not limited to, defences relating to the conduct of the insured (whether the conduct occurred before or after the contract was entered into).
In this case, as Brad made a ‘wrong three-point turn’, the damage was in some way caused by his act BUT on the facts the extent to which this act contributed
to damage is unclear. However, it is likely that Brad could show that some of the loss was not caused by his act, which would mean under s 54 the insurer would have to pay out the
loss not caused by the act. Section 54 – Overview
(i) Operates as shield for insured parties to prevent Insurers from denying claims based on minor breaches of the insurance policy.
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(ii) Does not ordinarily grant a right of action to Third Parties – limited usefulness in recovery.
Previously, a breach of policy conditions would allow an Insurer to refuse payment of the claim.
Section 54 prevents the Insurer from refusing to pay the claim.
Good faith
Section 13 mandates that both parties to an insurance contract must act with “the utmost good faith”. This duty requires an insurer to:
assess claims promptly;
not delay paying a claim without proper cause;
not refuse to pay a claim without proper cause;
in some situations, advise a consumer of specific risks the policy covers.
If an insurer breaches the provision, it can be fined $1,110,000.
The duty requires the insured party to:
disclose all information pertinent to the insurer’s decision to accept the risk (duty of disclosure);
not make a false or exaggerated claim;
co-operate with the insurer when making a claim.
Section 54 of the Insurance Contracts Act 1984 protects an insured party whose acts or omissions entitle the insurer to avoid paying a claim. It prevents an insurer from denying a claim based on technical exclusion clauses by requiring the insurer to show the act or omission caused a loss.
An insurer must pay the whole of a claim unless it can show the claim has been “prejudiced”, in which case the insurer can reduce its indemnity by a
percentage corresponding to the prejudice. An insurer can completely deny a claim where it can show the act or omission caused the entire loss.
Yung
Yung can claim against Brad’s second insurance policy with SAXA as it covers any damage caused to the property of third parties in case of an incident.
48. (1) Where a person who is not a party to a contract of general insurance
is specified or referred to in the contract, whether by name or otherwise, as
a person to whom the insurance cover provided by the contract extends, that
person has a right to recover the amount of his loss from the insurer
in
accordance with the contract notwithstanding that he is not a party to the
contract.
However, under section 54 an insurer can still completely deny a claim where it can show that the insured’s act or omission caused the entire loss suffered. On the facts, whilst it is stated that Brad made a ‘wrong three point turn’ it is not clear what extent this act contributed to the damage. Section 54 also allows an insured to respond to this claim by showing that if any part
of the loss was not caused by its act or omission, then the insurer must pay out the loss not caused by the act or omission.
Yung can also claim against Brad’s second insurance policy with SAXA as it covers any damage caused to the property of third parties in case of an incident.
However, Didi may not be able to claim under Brad’s second insurance policy as she may be considered to be a party to the contract between Brad and Yung, rather than a third party. This is because Brad was transporting the antiques to lend to Didi, which suggests that she had some form of contractual relationship with Brad.
Under the Insurance Contracts Act 1984 (Cth), there are certain provisions that protect the rights of consumers in relation to insurance contracts. For example, section 54 provides that an insurer cannot refuse to pay a claim solely based on a breach of a policy condition if the breach did not contribute to the loss. This means that if Brad breached a policy condition but it did not contribute to the damage caused to his truck, Yung and Didi may still be able to recover under his insurance policies with SAXA.
Overall, Brad and Yung may be able to recover under the insurance policies with SAXA, but Didi’s ability to recover will depend on the specific terms of the policies and whether she is considered a third party under the Insurance Contracts Act 1984 (Cth).
Section 51 provides that a third party who is not a party to an insurance contract but has a claim against the insured person under the insurance contract can instead, direct that claim against the insurer if the insured person under the policy is dead or cannot be found.
section 54 says that the insurer must pay the whole of the claim unless it can show that it has been “prejudiced” in some way
. Any prejudice must be specified and if accepted, will allow the insurer to reduce its indemnity by a percentage corresponding to the prejudice suffered.
Can an insurer deny a claim?
Section 54 does still allow an insurer to completely deny a claim where it can show that the insured’s act or omission caused the entire loss suffered. Section 54 also allows an insured to respond to this claim by showing that if any part
of the loss was not caused by its act or omission, then the insurer must pay out the loss not caused by the act or omission.
If you have made an insurance claim, which has been completely denied, make sure that you read the letter of denial to see why the claim has been denied. If the insurer
claims that you did something or failed to do something required by the policy and denies your claim, then you may have grounds to contest the denial.
Insurance Recoveries Under Section 54
Section 54 prevents an insurer from refusing to pay a claim following an insured’s non-compliance with certain terms of an insurance policy, instead only allowing it to reduce its liability if the insured’s conduct has caused its interests to be prejudiced.
It operates as a shield for insured parties to prevent Insurers from denying claims based on minor breaches of the insurance policy. Previous to this part of the act, a breach of policy conditions would allow an Insurer to refuse payment of the claim. Section 54 prevents the Insurer from refusing to pay the claim.
Requesting the Insurer to pay under Section 54
If you are attempting to recover from a third party insurer, who is saying their insured has not paid their excess, you can request an Insurer to pay under Section 54. The Insurer will simply pay less their insured’s excess. There is no harm is doing so, although there is no legal recourse if they refuse. The beauty of the Act is that anyone can apply and it’s free to do so. The disadvantage is that many insurers do not understand or acknowledge this part of the Act, or choose to ignore it, knowing there is no legal recourse.
Trident General Insurance Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
•
The insurance policy identified ‘all contractors and sub-contactors and/or suppliers’ as
among the ‘assured’, and gave an indemnity (protectin them) of the assured against liability in respect of personal injury of persons not employed by the assured
•
McNiece was Blue Circle’s contractor and was liable to pay damages to an injured crane driver who was employed by another firm.
•
McNiece sought an indemnity under the insurance policy and the question was whether it was entitled to do so, given that it was not a party to the contract.
•
The court held that McNiece could seek the indemnity.
•
•
Therefore, where a contract is expressed to be an insurance contract, an exception to the privity doctrine can exist.
•
Why, because in insurance contracts 3
rd
parties are also to benefit from the contract
on an objective view this is what should prevail
•
In 1979, Hammond, a crane driver working under the direction of McNiece but employed by another company, sued McNiece for damages in respect of personal injuries.
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where a contract is expressed to be an insurance contract, an exception to the privity doctrine can exist.
•
because in insurance contracts 3
rd
parties are also to benefit from the contract
on an
objective view this is what should prevail
provides that a person who is covered by a general insurance policy can recover from the insurer notwithstanding that he or she is not a party to the contract
When an insurance company gives a policy to someone, they might also agree to protect other people that the insured person hires for their job. If that's the case and the hired person knows about the policy, they can sue the insurance company if something goes wrong, even if they didn't directly pay for the policy.
an
exception to the privity rule should be
recognised in the case of insurance contracts.
After these events occurred, the Insurance Contracts Act 1984 (Cth
) was passed by the Commonwealth Parliament.: provides that a person who is covered by a general insurance policy can recover from the insurer notwithstanding that he or she is not a party to the contract
–
T
rident argued that McNiece had no right to sue on that contract since it was not a party to it and gave no consideration. –
If “
the old rules” did apply to insurance contracts, Mason CJ and Wilson J said, they would cause injustice because the likelihood of reliance on insurance policies
by third parties is so great. S 51 Right of third party to recover against insurer
(c) the contract provides insurance cover in respect of the liability, the
third party
may recover from the insurer
an amount equal to the
insurer
's liability under the contract in respect of the insured
's
liability in damages.
Davis v Pearce Parking Station
Held: –
The exclusion clause must have intended to cover negligence, since negligence was the only reason the car park could become liable at all.
.g. exclusion from liability ‘howsoever caused’ may exclude negligence
A clause expressed generally, but expansive in language (e.g. exclusion from liability ‘howsoever caused’) may be sufficient to exclude negligence Hence, he sees this notice after he has already entered into the contract. Firstly, considering Sankukta was given a receipt which verified that he had already paid 3.
When Sanjukta took the car to the garage on 15 April
he entered an office. On the wall behind the reception desk a small notice was displayed stating: “
Customers are kindly invited to note that all vehicles are accepted only subject to the conditions on our receipt forms.”
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GYM case
Incorporation
Unless the exclusion or limitation clause is incorporated into the relevant contract, it will be unenforceable. There are five main methods of incorporation:
Signature
Reasonable notice
Course of dealing
The acceptance of an offer made in a ticket
By Reference
The simplest way of incorporating an exclusion clause is to have the
other party sign that contract containing the clause. A person who signs a contract containing an exclusion clause will be bound by it as an express term of the contract, even if they have not read it.
When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
L’Estrange v Graucob Ltd has been approved in Australia in Wilton v Farnworth and considered by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd.
a condition absolving a party from liability, in particular exonerating a bailee from liability for the loss of the goods in his care, is construed as referring only to a loss which occurs when the party is dealing with the goods in a way that can be regarded as an intended performance of his contractual obligations. He is not relieved of liability if, having obtained possession of the goods; he deals with them in a way that is quite alien to his contract’
his rule was accepted by the Australian High Court in Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty
Ltd (1966) 115 CLR 353 at 377. The rule applies when there is a
grave breach of the contract. An exclusion clause will not cover an act that is neither authorised nor permitted by the main object of the contract.
– conditions which were only intended to protect a party if they performed in the way contracted for
Using the four corners rule as in Sydney Corporation v West, by allowing a trainer without qualifications to train a member, this was not negligence in the performance of an authorised act (which would have been the case if Peter injured himself under supervision of a qualified trainer) but instead this was an
unauthorised training session. The four corners rule
– conditions which were only intended to protect a party if they performed in the way contracted for, do not protect the party if they had failed to perform in that way.
You can only exclude liability if you are excluding liability for something that is reasonably something you had to do under the contract. The exlusion clause states that ‘the client uses the gym’s equipment at his or her own risk’ Whereas here, Peter is not using gym equipment, but is doing a pushup.
Whilst the contract to enter into the 24-month membership had an entire agreement clause. This agreement for the 6 free personal training sessions is a new contract. Hence, on the facts there is no entire agreement clause meaning
the parole evidence rule does not apply.
Oscar Chess Ltd v Williams [1957] 1 All ER 325
•
Denning LJ: “When the seller states a fact which is or should be within his own knowledge and of which the buyer is ignorant, intending that the buyer should act on it and he does so, it is easy to infer a warranty.”
can get damages for loss you suffered due to reliance on statement
•
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623
•
Lord Denning MR: “it seems to me that if a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act upon it, and actually inducing him to act upon it, by entering into the contract, that is prima facie ground for inferring that it was intended as a warranty. •
It is not necessary to speak of it as being collateral. Suffice it that it was intended to be acted upon and was in fact acted on. But the maker of the representation can rebut this inference if he can show that it really was an innocent misrepresentation, in that he was in fact innocent of fault in making it, and that it would not be reasonable in the
circumstances for him to be bound by it. … Georgina's statement could be considered sufficiently promissory as by offering the free training sessions with a highly qualified instructor, it could be argued that FitnessLast was making a promise about the quality and qualifications of their trainers. If it is found that Georgina made this statement with the intent to induce Peter to sign the contract, and that Peter relied on this statement in doing so, then it could be established that FitnessLast breached a warranty or a collateral contract. Fitness Last could potentially be held liable for negligence in their hiring and training of Jose,
as well as for promoting the free personal training sessions without adequately vetting the qualifications of the trainers. The fact that Jose was not listed on the website could also be seen as misleading advertising. 1.
a subsidiary contract which
induces
a person to enter into a main contract or which depends upon the main contract for its existence.
Using the four corners rule, if Georgina’s statement was a warranty of the qualifications of Fitness Last’s personal trainers, then by allowing a trainer without qualifications to train a member this was not negligence in the performance of an authorised act (which would be if Peter injured himself under supervision of a qualified trainer) but instead this was an unauthorised training session. The four corners rule
– conditions which were only intended to protect a party if they performed in the way contracted for, do not protect the party if they had failed to perform in that way.
You can only exclude liability if you are excluding liability for something that is reasonably something you had to do under the contract.
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The exlusion clause states that ‘the client uses the gym’s equipment at his or her own risk’ Whereas here, Peter is not using gym equipment, but is doing a pushup.
Towards the end of the third session, Peter injured his back as he was trying to do push-ups under Jose’s direction. The injury was quite serious, involving significant medical expenses. Peter also discovered that Jose had no previous personal training experience
or qualifications.
Sufficiently promissory to infer collateral contract
Can you get a collateral contract out of this?
indicates reliance on his statement
Once she got the assurance about the milage then on that basis he signed (collateral contract = consideration for entering into main contract)
No, the pre-contractual oral statement made by Georgina was not an express term of the contract to enter into 6 personal training sessions. The clause in the contract that the client uses the gym's equipment at their own risk and that Fitness Last does not accept responsibility for any loss, damage or personal injury suffered would take precedence over any pre-contractual oral statement made by Georgina. Georgina's statement was a promotional offer and not a term of the contract.
It is unlikely that Peter could claim equitable estoppel in this situation. Equitable estoppel requires that one party has made a clear and unequivocal representation that is relied upon by the other party, resulting in detriment to the relying party.
While Georgina did entice Peter with the promotion, there is no clear representation that Peter relied upon that would give rise to equitable estoppel. Additionally, the clause in the contract that the gym is not responsible for any personal injury would likely be a defense against any such claim.
Furthermore, even if there was a misrepresentation or omission of information by the gym, equitable estoppel may not be available given that Peter did not click on the link that contained the information about the trainers being independent contractors. This could be seen as a failure on Peter's part to exercise reasonable diligence in his decision-making.
Overall, it would be difficult for Peter to successfully claim equitable estoppel in this situation.
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Georgina's statement about the promotion was not a contractual term, but rather a sales pitch. However, it may be considered as a misrepresentation if Georgina knew or should have known that Jose was not qualified to provide personal training services. Additionally, if Peter relied on the information provided about the personal trainers on the website and it turned out
to be false, he may have a claim against FitnessLast for breach of contract or misrepresentation. However, the clause in the contract regarding the use of equipment at the client's own risk may limit FitnessLast's liability for Peter's injury. No, Georgina's statement about the promotion did not establish a warranty or collateral contract. She simply provided information about the promotion and where to find personal trainers on the website. The clause in the contract also explicitly states that Fitness Last does not accept responsibility for any personal injury suffered, so there is no basis for a warranty or collateral contract.
It is possible that Georgina's statement about the free personal training sessions could be considered a promissory warranty or a collateral contract. By offering six free personal training sessions with a highly qualified instructor, it could be argued that FitnessLast was making a promise about the quality and qualifications of their trainers. If it is found that Georgina made this statement with the intent to induce Peter to sign the contract, and that Peter relied on this statement in doing so, then it could be established that FitnessLast breached a warranty or a collateral contract. However, it would ultimately be up to a court to determine whether or not Georgina's statement could be considered a legally binding promise.
A representation is a term of the contract if it objectively appears as if the parties intended it to be a term of the contract.
Factors indicating the parties intended representation to be part of the contract:
1.
Party making representation makes it clear they have greater expertise about the subject while the other party does not VS makes it clear they obtained knowledge elsewhere and they are just passing it on.
2.
Party making representation assures other party they can rely on statement e.g ‘I guarantee
’ VS ‘
I think’ which suggest it’s a belief and not a guarantee
A mere representation that turns out to be false becomes a misrepresentation in law
.
If it is successfully proven in a court of law that misrepresentation has occurred, the party which has been lied to obtains rights against the party which made the misrepresentation.
Curtis v Chemical Cleaning and Dyeing
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•
“In my opinion any behaviour, by words or conduct, is sufficient to be a misrepresentation if it is such as to mislead the other party about the existence or extent of the exemption. •
If it conveys a false impression, that is enough. If the false impression is created knowingly, it is a fraudulent misrepresentation; if it is created unwittingly, it is an innocent misrepresentation; but either is sufficient to disentitle the creator of it to the benefit of the exemption.”
Dick Bentley
•
Lord Denning MR: “it seems to me that if a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act upon it, and actually inducing him to act upon it, by entering into the contract, that is prima facie ground for inferring that it was intended as a warranty. •
It is not necessary to speak of it as being collateral. Suffice it that it was intended to be acted upon and was in fact acted on. But the maker of the representation can rebut this inference if he can show that it really was an innocent misrepresentation, in that he was in fact innocent of fault in making it, and that it would not be reasonable in the
circumstances for him to be bound by it. … •
Here we have a dealer, Mr. Smith, who was in a position to know, or at least to find out, the history of the car. •
He could get it by writing to the makers. He did not do so. Indeed, it was done later. When the history of this car was examined, his statement turned out to be quite wrong. He ought to have known better. There was no reasonable foundation for it.”
A warranty is
a term of the contract, a breach of which gives the innocent party the right to claim damages but not to treat the contract as repudiated
.
When Georgia is sharing information about the six free 30-minute personal training sessions, this could be considered an invitation to treat. Peter enters into the contract when he signs up online for the free training sessions. Peter makes an offer by choosing Dana as his trainer however, as Dana is fully booked his offer is met with a counteroffer to have Jose as his trainer. Despite him not explicitly agreeing to this he accepts this offer by conduct as he attends three personal training session (case for acceptance by conduct).
Peter injured his back as he was trying to do push-ups under Jose’s direction. The injury was quite serious, involving significant medical expenses.
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Peter also discovered that Jose had no previous personal training experience or qualifications. Whilst the contract to enter into the 24-month membership had an entire agreement clause. This agreement for the 6 free personal training sessions is a new contract. Hence, on the facts there is no entire agreement clause meaning
the parol evidence rule does not apply. –
Jose is not listed on the website as one of their ‘highly qualified trainers’
–
As the pre-contractual statement Mere supply of information ? Harvey v Facey [1893] AC 552
Invitations to treat ?
The second issue here, is whether Georgia’s statement that their trainers are ‘highly qualified instructors’, was sufficiently promissory to be considered a term of the contract.
Dick v Harold
innocent misrepresentation, rebutting idea that he ought to have known
Question of, is the conversation grounds to infer a warranty
Specifically is the statement ‘im sure it will’ sufficiently promissory
Secondly, can Stella rely on Allaistair’s expertise
Dick Bentley
could rely on Smith’s statement because he has of greater expertise
Allaistair’s expertise
‘I’m sure it will’
language of representation, is asserting certainity
getting into realm of being promissory
JJ Savage
look at plain language of words used, argued that it is a promise, could
be construed as an opinion as was construed in JJ savage
Promissory
as this will be the condition in which Stela buys the car
Sufficiently promissory to infer collateral contract
Can you get a collateral contract out of this?
indicates reliance on his statement
Once she got the assurance about the milage then on that basis he signed (collateral contract = consideration for entering into main contract)
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Representation that is insufficiently precise may rely on promissory estoppel as a source of remedy
To be a term
language upon which the person is prepared to be bound by.
Comments made by someone who could be considered to have special knowledge of the place sees what has happened
Entire contract clause in clause 1
brings in parole evidence rule
This is where estoppel can be used to trump an entire contract clause
SALEH
Parol evidence rule severely restricts Peter’s ability to rely on Georgina saying
If you apply Hoyts v Spencer as there was a contradiction between what Georgina said and the contract, then it will not be a sufficient collateral contract.
must not be inconsistent
You should raise collateral contract
even if it doesn’t turn out to be a collateral contract (as in Hoyts)
Estoppel claim
detrimental reliance + unconciousnability
Day before
pre contractual negotiations
To become a term: must be promissory In the alternative, what would be the effect of a clause in the contract declaring “This document embodies the whole of the agreement between the parties”?
Then pre-contractual statement = nothing
Estoppel could defeat this then if entire contract clause
Not likely
but point is to raise it.
Was the injury really the fault of Jose?
perhaps due to him not having trained regularly maybe even if there was a highly qualified trainer this excerise would have injured him
particularly considering a push up is not a
particularly advanced movement
On the other hand, if Peter had injured himself under the supervision of a qualified trainer, this would have been negligence in the performance of an authorised act and hence would have been covered by the exemption clause.
Advise Jeremy.
Issues: precontractual oral statement
Needs to be determined whether they are express terms or not
Made in good faith apparently
does not have expert knowledge (Chess v Williams), should not be expected to know
hence he didn’t need to bring it to light considering he wasn’t an expert in the field.
JJ Savage
court must consider the actual words used
Does have some extent of promissory language to it
Innocent misrepresentation?
Relative expertise of caroline
The fact that heis asking these questions
because this will impact whether he will buy the machine
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These issues are of some importance
but how important?
Does she keep pressing for something that is more precise? Does she want it included in contract in writing? (relative importance)
Are they promissory?
this is the only way they can be incorpated, if they are opinion/ statements/ thinking aloud = not promissory
detrimental reliance
despite being given a brochure he trusts her judgement
Dick v Harold
innocent misrepresentation, rebutting idea that he ought to have known
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