Incorporation

Factors

Once it is decided that is is a term, it has to be decided if it is incorporated. If a term is not incorporated it cannot be relied upon. The courts look at a number of different factors to determine whether the term will be incorporated into the contact.

1. Has the document been signed ?

2. Is it actually a contractual document ?

3. Was there notice given ?

4. Is it clear ?

5. Was there prior dealings ?

Has the document been signed?

If a person signs a document it is presumed hat they agree to all of the terms, even though they may not have read them.

L’Estrange v Graucob (She was bound by the exclusion clause in her contract, even though she had not read it)

Neocleou s v Rees ( an electronic signature is legally binding)

Inter foot v Stiletto visual productions ( if it is a harsh or unusual term of the contract it has to be brought to the attention of the party.)

Similarly, if the meaning of the clause or its consequences have been quirked before signing the document, and the party has misrepresented what the term is, the clause may be taken to be what the oral statement suggests rather than as it was actually written. Curtis v Chemical cleaning company (Could not relay on the clause).

L’Estrange v Graucob

She was bound by the exclusion clause in her contract, even though she had not read it

Neocleou s v Rees

an electronic signature is legally binding

Inter foot v Stiletto visual productions

if it is a harsh or unusual term of the contract it has to be brought to the attention of the party.

Curtis v Chemical cleaning company

Could not relay on the clause

Is it actually a contractual document?

It is a broad approach. 

General rule: has to be a contractual document

Grogan v Robin Meredith (The C was not bound by the additional terms that were written on the time sheet even though he has signed the document, as the court decided that the time sheet was not a legally binding document)

It has further been challenged by tickets and receipts.

Tickets - Can incorporate terms if it is reasonable to expect, there is terms.

Thompson v LMSR (The claimant couldn’t read, The court found the railway company could not relay on the condition printed on the ticket to avoid liability as Thompson had not been given adequate notice of the condition)

Parker v SER (The judgement concluded that the terms printed on the ticket were binding on parker because he had accepted the ticket, which had the conditions clearly printed on it)

Grogan v Robin Meredith

The C was not bound by the additional terms that were written on the time sheet even though he has signed the document, as the court decided that the time sheet was not a legally binding document

Thompson v LMSR

The claimant couldn’t read, The court found the railway company could not relay on the condition printed on the ticket to avoid liability as Thompson had not been given adequate notice of the condition

Parker v SER

The judgement concluded that the terms printed on the ticket were binding on parker because he had accepted the ticket, which had the conditions clearly printed on it

Was there notice given?

Notice of the term to be incorporated must be given BEFORE the contract was made. For the terms to be incorporated into the contract they must normally be made available BEFORE the offer is accepted.

Thornton v Shoe Lane Parking (Notices inside the car park then listed the conditions of the contract including an exclusion clause covering both damage and personal injury)

Any attempt to introduce new terms after the acceptance will fail, unless the original agreement allows it. For example price variation in a mortgage.

Thornton v Shoe Lane Parking

Notices inside the car park then listed the conditions of the contract including an exclusion clause covering both damage and personal injury

Is it clear?

For a term to be incorporated into a contract it MUST be clear it cannot be vague.

Olley v Marlborough Court Hotel (The clause was not incorporated in the contract since the notice was on the door in the hotel bedroom)

If the term is unclear the ‘contra proferentem rule’ is applied. When using this rule the court will find against the person who provided the wording (drafted) the contract. This rule can also be used where there the term is both one-sided and ambiguous. (unequal bargaining power) Transocean drilling v Uk Providence resources plc

Olley v Marlborough Court Hotel

The clause was not incorporated in the contract since the notice was on the door in the hotel bedroom

Transocean drilling v Uk Providence resources plc

unequal bargaining power

Was there prior dealings?

Terms can be incorporated by prior dealings even if no notice has been given. There are 2 requirements:

• it must be sufficient - the parties must have contracted on a number of occasions.

• Must be consistency - they have always contracted in a similar way

McCutcheon v David MacBrayne Ltd (The court decided that there was no consistent course of action that allowed them to assume that the C knows that the exclusion clause was always present, so it was not incorporated)

Spurling v Bradshaw (The court held that sufficient notice has been given of the clause based on their previous dealings, it was incorporated into the contract)

The terms may be applied through a custom, as long as both parties are aware and that there was a common understanding of the terms to be used. British crane v Ipswich plant

McCutcheon v David MacBrayne Ltd

The court decided that there was no consistent course of action that allowed them to assume that the C knows that the exclusion clause was always present, so it was not incorporated

Spurling v Bradshaw

The court held that sufficient notice has been given of the clause based on their previous dealings, it was incorporated into the contract

British crane v Ipswich plant

The terms may be applied through a custom, as long as both parties are aware and that there was a common understanding of the terms to be used.