MCD2070 Business Law – Contract Terms Vocabulary

A comprehensive set of vocabulary flashcards covering key terminology, doctrines, and leading cases related to the incorporation and interpretation of express terms in contract law as presented in Week 5 of MCD2070 Business Law.

Contract

An agreement between parties that the courts will enforce if all four essential elements are present.

Contractual Term

A statement or promise that forms part of a contract and is legally binding.

Express Term

A clause specifically mentioned and agreed to by both parties at the time the contract is made.

Implied Term

A provision not expressly stated but inserted into a contract by courts or statute.

Exemption Clause

A contractual term that seeks to limit or exclude liability; includes exclusion and limitation clauses.

Exclusion Clause

An exemption clause that seeks to remove liability entirely.

Limitation Clause

An exemption clause that caps liability to a specified amount or circumstance.

Mere Representation

A statement made during negotiations that is not part of the contract; breach gives no contractual remedy.

Mere Puff

An obviously exaggerated advertising statement that no reasonable person would take literally (e.g., 'Red Bull gives you wings').

Incorporation (of terms)

The process of determining whether a statement has become an express contractual term.

Interpretation (of terms)

Judicial process of determining the meaning and effect of contractual words when disputes arise.

Signature Rule

Principle that a person is bound by a contract they sign, whether or not they have read or understood it (L’Estrange v Graucob).

Actual Notice

When a clause is specifically brought to a party’s attention before contract formation.

Constructive Notice

Notice deemed given when all reasonable steps have been taken to draw a clause to a reasonable person’s attention.

Reasonable Notice Test

Common-law test asking whether sufficient notice of an unsigned term was provided (timing & prominence).

Click-wrap Agreement

Online contract where users click an 'I agree' button; equated with signing under the signature rule.

Browse-wrap Agreement

Online contract where terms are accessible via hyperlink; enforceability depends on reasonable notice.

Reasonable Bystander Test

Assessment of whether an oral statement would be viewed as a promise (term) by an objective observer.

Contra Proferentem Rule

Doctrine that ambiguities in a term are interpreted against the party who drafted or relies on it.

Four Corners Rule

Exemption clauses apply only to events contemplated by the contract; acts outside its scope are not protected.

Timing (Notice)

Requirement that notice of terms be given before or at the moment of contract formation, not after.

Prominence (Notice)

Requirement that notice be sufficiently obvious to the party to be bound—through actual or constructive means.

Previous Dealings

Past consistent contractual behaviour that may allow automatic incorporation of a term into subsequent contracts.

Unusual Term

Clause out of the ordinary requiring extra notice to be effectively incorporated (Interfoto v Stiletto).

Misrepresentation

False statement of fact inducing a party to contract, giving rise to remedies outside breach of contract.

Negligence (Contract Context)

Tortious breach of duty of care that can coincide with contractual breach; may be excluded by clear wording.

Consumer-to-Business Contract

Agreement where bargaining power imbalance often leads courts to favour the consumer in interpretation.

Business-to-Business Contract

Commercial agreement typically interpreted strictly on the words used, with equal bargaining power assumed.

Oral Representation

Spoken statement made during negotiations; may become a term if it satisfies the reasonable bystander test.

Promissory Language

Words such as 'I promise' or 'I guarantee' signalling an intention to create a binding term.

Objective Intention

Courts’ focus on outward words and conduct rather than secret intentions when interpreting contracts.

Oceanic Sun Line v Fay

Case establishing need for actual notice when terms are in a non-contractual document (brochure).

Olley v Marlborough Court

Case demonstrating constructive notice requirements; hotel sign after check-in failed to incorporate clause.

Interfoto v Stiletto

Authority that unusual or onerous terms require special notice to be incorporated.

Specht v Netscape

US case where browse-wrap terms hidden below download button were not incorporated due to insufficient notice.

L’Estrange v Graucob

Leading case on the signature rule; signer bound regardless of unread terms.

Toll v Alphapharm

Australian High Court case affirming the signature rule in commercial context.

Causer v Browne

Case showing signature rule exception when document appears non-contractual (e.g., mere receipt).

Curtis v Chemical Cleaning

Case where misrepresentation of contract contents prevented reliance on a signed exemption clause.

Insight Vacations v Young

Case applying contra proferentem to limit scope of seat-belt injury exclusion clause.

Council of City of Sydney v West

Four corners rule case; parking station not protected by exclusion clause when staff acted outside authority.

MWH Australia v Wynton Stone

Authority that a broad exclusion clause can cover both contractual breach and negligence.

Alameddine v Glenworth Valley

Case where wording excluded liability for other participants’ negligence, not the service provider’s own negligence.

Oscar Chess v Williams

Reasonable bystander test case contrasting expertise of parties in determining term vs representation.

Van Den Eschert v Chappell

Case applying five guidelines to classify an oral statement about termites as a contractual term.

Course of Dealings

Series of previous transactions establishing standard terms between the same parties.

Contractual Document

A document that a reasonable person would expect to contain contractual terms.

Constructive Acceptance

When a party’s conduct (e.g., entering premises) is deemed acknowledgement of displayed terms.