LAWS203 W11

L1

Recap: Certainty and Completeness

  • Examination Context

    • The topic of Certainty and Completeness is examinable in the upcoming mid-year exam.

    • Information regarding examinable topics and previous exam papers (three available) can be found on Learn in the assessment folder in a file titled "mid year exam information."

  • Conceptual Overview

    • Certainty and completeness are often treated as part of the offer and acceptance analysis; specifically, whether there was offer and acceptance on sufficiently certain and complete terms.

    • In this course, they are kept separate to facilitate understanding of the stages of contract formation.

    • The core requirement is that terms agreed upon by parties must be sufficiently complete and certain.

  • Key Case: Fletcher Challenge Energy

    • This case is central to the second prerequisite for contract formation established by Justice Blanchard: sufficient certainty and completeness.

    • It requires that all essential terms are agreed upon and are clear.

    • A common example discussed is terms relating to price.

  • Specific Categories of Uncertainty

    • No agreement on a term: Occurs when a term that is important or essential to the parties is missing.

    • Vague terms: Occurs when a term is inherently vague and lacks sufficient actual meaning.

  • Contractual Machinery and Agreements to Agree

    • Contractual Machinery: Processes within a contract that allow parties to reach a certain outcome or term.

    • Agreements to Agree: Agreements that require future subjective agreement between parties. Generally, these are unenforceable due to uncertainty.

  • The Court's General Approach

    • If parties clearly intended to be bound, the court will make every effort to find a working contract and give it effect.

    • There is a judicial reluctance to declare a contract void for uncertainty or incompleteness if the parties intended it to function at the time of the agreement.

Promissory Estoppel: Requirements and New Zealand Law

  • Concept Definition

    • Promissory estoppel exists outside the strict rules of contract law.

    • It allows for the enforcement of a promise when parties expect a contractual result that does not occur under standard contract formation rules.

  • Leading Case: Wilson Parking v Fanshawe 01/1936

    • This is a New Zealand Court of Appeal decision and serves as the primary starting point for promissory estoppel arguments in New Zealand law.

    • Facts of the Case:

      • A property owned by a company called Viaduct (controlled by Mr. Haghi) was leased to Wilson Parking as a car park.

      • The lease contained a "right of first refusal," meaning if the owner sold the property, Wilson Parking had the first option to buy.

      • Mr. Haghi encountered financial difficulties during property development and planned a transaction involving selling the property to a third party, who would then sell it to another Haghi-controlled company (Fanshawe 136).

      • The right of first refusal applied to both intended sales.

      • Wilson Parking initially agreed to waive its right for both sales.

      • Later, Wilson Parking purported to exercise its right of first refusal on the second sale to Fanshawe 136.

      • The transaction price was $3,000,000 below market value, meaning Wilson Parking would gain a windfall of $3,000,000 if the right was enforced.

      • Wilson Parking had no contractual obligation to waive the right; hence, the argument was based on promissory estoppel.

  • The Four Requirements for Promissory Estoppel in NZ

    1. Belief or Expectation: There must be a belief or expectation encouraged by words or conduct.

    2. Clear Expression: If it is a representation, it must be clearly and unequivocally expressed.

    3. Reasonable Reliance to Detriment: The other party must reasonably rely upon the belief or expectation to their detriment.

    4. Unconscionability: It must be unconscionable (against conscience) to depart from the belief or expectation.

  • Application to Wilson Parking Facts

    • Encouraged Belief: Wilson Parking explicitly stated they would waive the right for the second transaction.

    • Clear Expression: The statement was clear and unequivocal.

    • Reliance/Detriment: Mr. Haghi continued development plans and borrowed money based on the waiver. If the promise were not fulfilled, he would suffer detriment.

    • Unconscionability: The court found it unconscionable for Wilson Parking to disregard the promise and claim the windfall.

Promissory Estoppel: Practicality and Remedies

  • Practical Caution

    • Promissory estoppel is successfully argued very seldom.

    • It should not be the primary mechanism for enforcing promises; as noted in the Cruxina case, contract law remains the principal mechanism.

    • Courts are wary of allowing estoppel to undermine established contract law rules.

  • Remedy for Promissory Estoppel

    • Traditional Approach: The remedy usually focuses on adjusting for or removing the detriment suffered.

    • Expanded Approach (Justice Randerson): In Wilson Parking, Justice Randerson suggested the focus has shifted from narrow detriment removal to a broader inquiry into what is necessary to satisfy the "equity" of the situation.

    • Outcome in Wilson Parking: Because removing narrow detriment would not prevent the $3,000,000windfall,theCourtofAppealrequiredthepartiestocompletethetransaction(sellingtoFanshawe)aspromised.</p></li></ul></li></ul><h3id="97172608−6e7b−4e6d−8ff0−5f2105a07cb3"data−toc−id="97172608−6e7b−4e6d−8ff0−5f2105a07cb3"collapsed="false"seolevelmigrated="true">PromissoryEstoppelandPartPaymentofDebt</h3><ul><li><p><strong>TheRuleinFoakesvBeer</strong></p><ul><li><p>Partpaymentofadebtinsatisfactionofthewholeisnotgoodconsideration.ThisremainsthelawintheUKandNewZealand.</p></li></ul></li><li><p><strong>HomeGuardProductsandtheNZStance</strong></p><ul><li><p>JusticeManninHomeGuardProductsaddressedwhetherpromissoryestoppelcouldcircumventtheruleinFoakesvBeer.</p></li><li><p>Thedecisionwasthatpromissoryestoppeldoesnotfitthissituationandcannotbeusedtoextinguishadebtuponpartpayment.ThislikelyrepresentscurrentNewZealandlaw.</p></li></ul></li><li><p><strong>InternationalPerspective:CollierPvMJWright</strong></p><ul><li><p>AnEnglishCourtofAppealjudgesuggestedpromissoryestoppelshouldbeapplicabletopartpaymentsofdebt.</p></li><li><p>ThissuggestionhasbeenfirmlycriticizedasitwouldeffectivelydestroytheruleinFoakesvBeerandhasnotbeenfullyacceptedintheUKorNewZealand.</p></li></ul></li></ul><h3id="2c9503cf−3485−4d5b−8c7e−0a42c31fb1f5"data−toc−id="2c9503cf−3485−4d5b−8c7e−0a42c31fb1f5"collapsed="false"seolevelmigrated="true">TermsoftheContract:IntroductionandIncorporation</h3><ul><li><p><strong>ShiftinTopic</strong></p><ul><li><p>Thecourseisnowfinishedwiththerequirementsforcontractformation.</p></li><li><p>Currentcontentrelatingto"TermsoftheContract"willbeexaminableinthefinalyear−endexam,notthemid−yearexam.</p></li></ul></li><li><p><strong>TypesofContractTerms</strong></p><ul><li><p><strong>ExpressTerms:</strong>Termsexplicitlyexpressedandagreeduponbytheparties.</p></li><li><p><strong>ImpliedTerms:</strong>Termsnotexplicitlyexpressedbutimpliedintothecontract.</p></li></ul></li><li><p><strong>ExpressTermsandIncorporation</strong></p><ul><li><p>Expresstermsincludeoralagreements.Determiningoraltermsinvolvesreviewingnegotiationsandstatementsmadeupuntiltheagreement.</p></li><li><p>Forwrittenterms,therearethreeprimarymethodsofincorporation.Thefirstisthrough<strong>SignedDocuments</strong>.</p></li></ul></li><li><p><strong>IncorporationbySignedDocuments:L′EstrangevGraucob</strong></p><ul><li><p><strong>Facts:</strong>L′Estrange(cafeowner)purchasedacigarettevendingmachineandsignedastandardsalesagreement.Thecontractincludedaclausestatingthatthewrittenagreementcontainedalltermsandexcludedallotherexpress/impliedconditionsorwarranties.</p></li><li><p><strong>Issue:</strong>Themachinewasdefective.L′Estrangesuedfordamagesbasedonanimpliedtermoffitnessforpurpose.Thecontractexcludedsuchterms.</p></li><li><p><strong>TheScruttonLJRule:</strong>"Whenadocumentcontainingcontractualtermsissigned,thenintheabsenceoffraudor…misrepresentation,thepartysigningitisbound,anditiswhollyimmaterialwhetherhehasreadthedocumentornot."</p></li><li><p><strong>Outcome:</strong>Theexclusionclausewasvalidlyincorporatedbecausethedocumentwassigned.L′Estrangehadnoremedyforthedefectivemachine.</p></li></ul></li><li><p><strong>ModernContextandConsumerProtection</strong></p><ul><li><p>Inmodernbusiness−to−business(B2B)transactions,partiescanstillcontractoutofstatutoryimpliedtermslikefitnessforpurpose.</p></li><li><p>Inbusiness−to−consumer(B2C)transactions,consumerprotectionlawsnowpreventpartiesfromoptingoutofcertainstatutoryrequirements,providingmoreprotectionthanwasavailableintheL′Estrangeera.</p></li></ul></li></ul><p></p><h2id="ab8b7270−2781−483e−9f45−1db51673a3c5"data−toc−id="ab8b7270−2781−483e−9f45−1db51673a3c5"collapsed="false"seolevelmigrated="true">L2</h2><h3id="0fac2b94−ebb5−4178−a0cb−df6bda6471d7"data−toc−id="0fac2b94−ebb5−4178−a0cb−df6bda6471d7"collapsed="false"seolevelmigrated="true">IncorporationbySignature:ModernDevelopments</h3><ul><li><p>Thefundamentalprincipleofincorporationbysignature,establishedincaseslike<strong>L′EstrangevGraucob</strong>,holdsthatwhenapartysignsadocumentknowntocontaincontractualterms,theyareboundbythosetermsregardlessofwhethertheyhaveactuallyreadthedocument.</p></li><li><p><strong>Toll(FCPT)PtyLtdvAlphapharmPtyLtd</strong>(HighCourtofAustralia):</p><ul><li><p><strong>Context</strong>:Thiscaseinvolvedashippingcontractforthetransportationofinfluenzavaccine.</p></li><li><p><strong>Facts</strong>:Theshipperprovidedacreditapplicationsignedbyarepresentativeof<strong>Alphapharm</strong>.Thedocumentexplicitlystated,"pleasereadconditionsofcontractoverleafpriortosigning."Thereverseside("overleaf")containedvariouscontractualclauses,includingexclusionofliabilityandindemnificationclauses.</p></li><li><p><strong>TheIssue</strong>:Thevaccinewasspoiledbecauseitwasstoredattoolowatemperature.<strong>Alphapharm</strong>sued,andthecourthadtodetermineifthetermsonthebackofthecreditapplicationweresuccessfullyincorporated.</p></li><li><p><strong>ObjectiveApproach</strong>:TheHighCourtemphasizedthatcontractualrelationsaregovernedbytheobjectivewordsandconductoftheparties,nottheirsubjectivebeliefs.Thecourtseekstodeterminewhatareasonablepersoninthepositionoftheotherpartywouldbelievebasedonthoseexpressionsofagreement.</p></li><li><p><strong>LegalRepresentationofSignature</strong>:Thecourtheldthatsigningadocumentintendedtoaffectlegalrelationsconveysarepresentationtoareasonablereader.Thisrepresentationisthatthesignerhaseitherreadandapprovedthecontentsoriswillingtotakethechanceofbeingboundbythem.Thisrepresentationisparticularlystrongwhenthesignatureisplacedbelowalegiblerequesttoreadthedocument.</p></li><li><p><strong>Ruling</strong>:Wherethereisnoinitiatingelement(suchasfraudormisrepresentation)andnoclaimforequitableorstatutoryrelief,apersonwhosignsadocumentknowntocontaincontractualtermsandtoaffectlegalrelationsisboundbythoseterms.Theexclusionandindemnificationclausesweresuccessfullyincorporated.</p></li></ul></li></ul><h3id="7ee3ff74−a963−46c2−b30b−9693d21bf927"data−toc−id="7ee3ff74−a963−46c2−b30b−9693d21bf927"collapsed="false"seolevelmigrated="true">IncorporationofUnsignedWrittenTerms:Notice</h3><ul><li><p>Whenwrittenclausesarenotsigned,theycanbeincorporatedintoacontractbynotice.Forthistobelegallysuccessful,thenoticemustsatisfytwoprimaryrequirements:</p><ol><li><p>Thenoticemustbe<strong>timely</strong>.</p></li><li><p>Thenoticemustbe<strong>reasonablysufficient</strong>.</p></li></ol></li></ul><h3id="ef3a9ed4−61e5−499b−84ed−b0a3494515db"data−toc−id="ef3a9ed4−61e5−499b−84ed−b0a3494515db"collapsed="false"seolevelmigrated="true">Requirementwindfall, the Court of Appeal required the parties to complete the transaction (selling to Fanshawe) as promised.</p></li></ul></li></ul><h3 id="97172608-6e7b-4e6d-8ff0-5f2105a07cb3" data-toc-id="97172608-6e7b-4e6d-8ff0-5f2105a07cb3" collapsed="false" seolevelmigrated="true">Promissory Estoppel and Part Payment of Debt</h3><ul><li><p><strong>The Rule in Foakes v Beer</strong></p><ul><li><p>Part payment of a debt in satisfaction of the whole is not good consideration. This remains the law in the UK and New Zealand.</p></li></ul></li><li><p><strong>Home Guard Products and the NZ Stance</strong></p><ul><li><p>Justice Mann in Home Guard Products addressed whether promissory estoppel could circumvent the rule in Foakes v Beer.</p></li><li><p>The decision was that promissory estoppel does not fit this situation and cannot be used to extinguish a debt upon part payment. This likely represents current New Zealand law.</p></li></ul></li><li><p><strong>International Perspective: Collier P v MJ Wright</strong></p><ul><li><p>An English Court of Appeal judge suggested promissory estoppel should be applicable to part payments of debt.</p></li><li><p>This suggestion has been firmly criticized as it would effectively destroy the rule in Foakes v Beer and has not been fully accepted in the UK or New Zealand.</p></li></ul></li></ul><h3 id="2c9503cf-3485-4d5b-8c7e-0a42c31fb1f5" data-toc-id="2c9503cf-3485-4d5b-8c7e-0a42c31fb1f5" collapsed="false" seolevelmigrated="true">Terms of the Contract: Introduction and Incorporation</h3><ul><li><p><strong>Shift in Topic</strong></p><ul><li><p>The course is now finished with the requirements for contract formation.</p></li><li><p>Current content relating to "Terms of the Contract" will be examinable in the final year-end exam, not the mid-year exam.</p></li></ul></li><li><p><strong>Types of Contract Terms</strong></p><ul><li><p><strong>Express Terms:</strong> Terms explicitly expressed and agreed upon by the parties.</p></li><li><p><strong>Implied Terms:</strong> Terms not explicitly expressed but implied into the contract.</p></li></ul></li><li><p><strong>Express Terms and Incorporation</strong></p><ul><li><p>Express terms include oral agreements. Determining oral terms involves reviewing negotiations and statements made up until the agreement.</p></li><li><p>For written terms, there are three primary methods of incorporation. The first is through <strong>Signed Documents</strong>.</p></li></ul></li><li><p><strong>Incorporation by Signed Documents: L'Estrange v Graucob</strong></p><ul><li><p><strong>Facts:</strong> L'Estrange (cafe owner) purchased a cigarette vending machine and signed a standard sales agreement. The contract included a clause stating that the written agreement contained all terms and excluded all other express/implied conditions or warranties.</p></li><li><p><strong>Issue:</strong> The machine was defective. L'Estrange sued for damages based on an implied term of fitness for purpose. The contract excluded such terms.</p></li><li><p><strong>The Scrutton LJ Rule:</strong> "When a document containing contractual terms is signed, then in the absence of fraud or… misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not."</p></li><li><p><strong>Outcome:</strong> The exclusion clause was validly incorporated because the document was signed. L'Estrange had no remedy for the defective machine.</p></li></ul></li><li><p><strong>Modern Context and Consumer Protection</strong></p><ul><li><p>In modern business-to-business (B2B) transactions, parties can still contract out of statutory implied terms like fitness for purpose.</p></li><li><p>In business-to-consumer (B2C) transactions, consumer protection laws now prevent parties from opting out of certain statutory requirements, providing more protection than was available in the L'Estrange era.</p></li></ul></li></ul><p></p><h2 id="ab8b7270-2781-483e-9f45-1db51673a3c5" data-toc-id="ab8b7270-2781-483e-9f45-1db51673a3c5" collapsed="false" seolevelmigrated="true">L2</h2><h3 id="0fac2b94-ebb5-4178-a0cb-df6bda6471d7" data-toc-id="0fac2b94-ebb5-4178-a0cb-df6bda6471d7" collapsed="false" seolevelmigrated="true">Incorporation by Signature: Modern Developments</h3><ul><li><p>The fundamental principle of incorporation by signature, established in cases like <strong>L'Estrange v Graucob</strong>, holds that when a party signs a document known to contain contractual terms, they are bound by those terms regardless of whether they have actually read the document.</p></li><li><p><strong>Toll (FCPT) Pty Ltd v Alphapharm Pty Ltd</strong> (High Court of Australia):</p><ul><li><p><strong>Context</strong>: This case involved a shipping contract for the transportation of influenza vaccine.</p></li><li><p><strong>Facts</strong>: The shipper provided a credit application signed by a representative of <strong>Alphapharm</strong>. The document explicitly stated, "please read conditions of contract overleaf prior to signing." The reverse side ("overleaf") contained various contractual clauses, including exclusion of liability and indemnification clauses.</p></li><li><p><strong>The Issue</strong>: The vaccine was spoiled because it was stored at too low a temperature. <strong>Alphapharm</strong> sued, and the court had to determine if the terms on the back of the credit application were successfully incorporated.</p></li><li><p><strong>Objective Approach</strong>: The High Court emphasized that contractual relations are governed by the objective words and conduct of the parties, not their subjective beliefs. The court seeks to determine what a reasonable person in the position of the other party would believe based on those expressions of agreement.</p></li><li><p><strong>Legal Representation of Signature</strong>: The court held that signing a document intended to affect legal relations conveys a representation to a reasonable reader. This representation is that the signer has either read and approved the contents or is willing to take the chance of being bound by them. This representation is particularly strong when the signature is placed below a legible request to read the document.</p></li><li><p><strong>Ruling</strong>: Where there is no initiating element (such as fraud or misrepresentation) and no claim for equitable or statutory relief, a person who signs a document known to contain contractual terms and to affect legal relations is bound by those terms. The exclusion and indemnification clauses were successfully incorporated.</p></li></ul></li></ul><h3 id="7ee3ff74-a963-46c2-b30b-9693d21bf927" data-toc-id="7ee3ff74-a963-46c2-b30b-9693d21bf927" collapsed="false" seolevelmigrated="true">Incorporation of Unsigned Written Terms: Notice</h3><ul><li><p>When written clauses are not signed, they can be incorporated into a contract by notice. For this to be legally successful, the notice must satisfy two primary requirements:</p><ol><li><p>The notice must be <strong>timely</strong>.</p></li><li><p>The notice must be <strong>reasonably sufficient</strong>.</p></li></ol></li></ul><h3 id="ef3a9ed4-61e5-499b-84ed-b0a3494515db" data-toc-id="ef3a9ed4-61e5-499b-84ed-b0a3494515db" collapsed="false" seolevelmigrated="true">Requirement1:TimelinessofNotice</h3><ul><li><p><strong>ThePrinciple</strong>:Fortermstobeincorporatedbynotice,thenoticemustbegivenpriortoorattheexactmomentthecontractisformed.Ifnoticeisgivenafterthecontractisreached,itistoolateandthetermsdonotapply.</p></li><li><p><strong>OlleyvMarlboroughCourtLtd</strong>(EnglishCourtofAppeal):</p><ul><li><p><strong>Facts</strong>:The<strong>Olleys</strong>stayedat<strong>MarlboroughCourt</strong>,aresidentialhotel.Theypaidaweek′srentinadvanceatthereceptiondesk.Later,aftertheywerealreadyguests,theysawanoticeintheirbedroomstatingthattheproprietorswouldnotberesponsibleforlostorstolenarticlesunlesshandedtothemanageressforsafecustody.Valuablesweretobedepositedinsealedpackageswithareceiptobtained.Athirdpartystolevaluablesfromtheirroomafterstealingtheirkeyfromthereceptiondesk.</p></li><li><p><strong>Ruling</strong>:<strong>LordJusticeDenning</strong>heldthatthenoticeinthebedroomwasnotincorporated.Thecontractwasformedattheoffice/receptionbeforehand(whentheypaidtheadvancerent).Noticeoftermsgivenintheroomoccurs<em>after</em>formationandisthereforetoolate."Thehope[thatguestsarebound]isvainunlesstheyclearlyshowthatheagreedtobeboundbythem."</p></li></ul></li><li><p><strong>ThorntonvShoeLaneParking</strong>(EnglishCourtofAppeal):</p><ul><li><p><strong>Facts</strong>:<strong>Mr.Thornton</strong>,atrumpetplayer,parkedhiscarinanautomatedparkingbuilding.Asignoutsidestated,"allcarsparkedatowner′srisk."Hedroveuptoamachine,aticketwasissued,andthelightchangedtogreen.Afterhehadparkedandwasreturningtohiscar,hewasinjuredinaseriousaccident.Theticketissuedbythemachinestateditwassubjecttoconditions"asdisplayedonthepremises."Thoseinternalnoticesincludedanexclusionofliabilityforpersonalinjury.</p></li><li><p><strong>Denning’sAnalysis</strong>:The"ticketcases"ofthepast(whereacontractwasformedafteraticketwasreceived)donotapplytoautomaticmachines.Usinganautomaticmachine,thecustomeris"committedbeyondrecall"themomentmoneyisputintotheslot.</p></li><li><p><strong>OfferandAcceptance</strong>:Themachine′spresenceistheoffer;puttingmoneyintotheslotistheacceptance.Thecontractisconcludedthen.</p></li><li><p><strong>Ruling</strong>:Thenoticeinsidethebuildingregardingpersonalinjurywastoolatebecausethecontractwasalreadyformedatthemachine.However,thesignoutside("parkedatowner′srisk")wasvisiblebeforeentryandthussuccessfullyincorporated.</p></li></ul></li></ul><h3id="54266b44−1f3f−4e7f−8d2a−c82ea3692028"data−toc−id="54266b44−1f3f−4e7f−8d2a−c82ea3692028"collapsed="false"seolevelmigrated="true">Requirement: Timeliness of Notice</h3><ul><li><p><strong>The Principle</strong>: For terms to be incorporated by notice, the notice must be given prior to or at the exact moment the contract is formed. If notice is given after the contract is reached, it is too late and the terms do not apply.</p></li><li><p><strong>Olley v Marlborough Court Ltd</strong> (English Court of Appeal):</p><ul><li><p><strong>Facts</strong>: The <strong>Olleys</strong> stayed at <strong>Marlborough Court</strong>, a residential hotel. They paid a week's rent in advance at the reception desk. Later, after they were already guests, they saw a notice in their bedroom stating that the proprietors would not be responsible for lost or stolen articles unless handed to the manageress for safe custody. Valuables were to be deposited in sealed packages with a receipt obtained. A third party stole valuables from their room after stealing their key from the reception desk.</p></li><li><p><strong>Ruling</strong>: <strong>Lord Justice Denning</strong> held that the notice in the bedroom was not incorporated. The contract was formed at the office/reception beforehand (when they paid the advance rent). Notice of terms given in the room occurs <em>after</em> formation and is therefore too late. "The hope [that guests are bound] is vain unless they clearly show that he agreed to be bound by them."</p></li></ul></li><li><p><strong>Thornton v Shoe Lane Parking</strong> (English Court of Appeal):</p><ul><li><p><strong>Facts</strong>: <strong>Mr. Thornton</strong>, a trumpet player, parked his car in an automated parking building. A sign outside stated, "all cars parked at owner's risk." He drove up to a machine, a ticket was issued, and the light changed to green. After he had parked and was returning to his car, he was injured in a serious accident. The ticket issued by the machine stated it was subject to conditions "as displayed on the premises." Those internal notices included an exclusion of liability for personal injury.</p></li><li><p><strong>Denning’s Analysis</strong>: The "ticket cases" of the past (where a contract was formed after a ticket was received) do not apply to automatic machines. Using an automatic machine, the customer is "committed beyond recall" the moment money is put into the slot.</p></li><li><p><strong>Offer and Acceptance</strong>: The machine's presence is the offer; putting money into the slot is the acceptance. The contract is concluded then.</p></li><li><p><strong>Ruling</strong>: The notice inside the building regarding personal injury was too late because the contract was already formed at the machine. However, the sign outside ("parked at owner's risk") was visible before entry and thus successfully incorporated.</p></li></ul></li></ul><h3 id="54266b44-1f3f-4e7f-8d2a-c82ea3692028" data-toc-id="54266b44-1f3f-4e7f-8d2a-c82ea3692028" collapsed="false" seolevelmigrated="true">Requirement2:ReasonablySufficientNotice</h3><ul><li><p><strong>GeneralRule</strong>:Noticemustbereasonablyprominentandavailable.Forexample,usingsize: Reasonably Sufficient Notice</h3><ul><li><p><strong>General Rule</strong>: Notice must be reasonably prominent and available. For example, using size8fontinanobscurecornerwouldnotbesufficient.</p></li><li><p><strong>OnerousorUnusualTerms</strong>:Ifaclauseisparticularlyunusual,unreasonable,oronerous,ahigherlevelofnoticeisrequired.</p><ul><li><p><strong>The"RedHand"Rule</strong>:In<strong>JSpurlingLtdvBradshaw</strong>,<strong>LordJusticeDenning</strong>notedthatsomeclauseswouldneedtobeprintedinredinkwitharedhandpointingtothemtobeheldsufficient.</p></li></ul></li><li><p><strong>InterphotoPictureLibraryLtdvStilettoVisualProgrammesLtd</strong>:</p><ul><li><p><strong>Facts</strong>:<strong>Stiletto</strong>orderedfont in an obscure corner would not be sufficient.</p></li><li><p><strong>Onerous or Unusual Terms</strong>: If a clause is particularly unusual, unreasonable, or onerous, a higher level of notice is required.</p><ul><li><p><strong>The "Red Hand" Rule</strong>: In <strong>J Spurling Ltd v Bradshaw</strong>, <strong>Lord Justice Denning</strong> noted that some clauses would need to be printed in red ink with a red hand pointing to them to be held sufficient.</p></li></ul></li><li><p><strong>Interphoto Picture Library Ltd v Stiletto Visual Programmes Ltd</strong>:</p><ul><li><p><strong>Facts</strong>: <strong>Stiletto</strong> ordered47transparencies(stockimages)from<strong>Interphoto</strong>.Thetransparenciesweredeliveredwithanotestatingalatefeeoftransparencies (stock images) from <strong>Interphoto</strong>. The transparencies were delivered with a note stating a late fee of£5perdaypertransparency.<strong>Stiletto</strong>returnedthemlateandwaschargedper day per transparency. <strong>Stiletto</strong> returned them late and was charged£3,783.50.</p></li><li><p><strong>Issue</strong>:Wasthelatefeetimelyandsufficientlynoticed?</p></li><li><p><strong>Timeliness</strong>:Thecourtfoundthenoticewastimelybecausethecontractwasnotactuallyformeduntilaconfirmationphonecalloccurred<em>after</em>thenotehadbeendeliveredwiththeimages.</p></li><li><p><strong>Sufficiency</strong>:<strong>LordJusticeBingham</strong>lookedatthenatureofthetransactionandthefairnessofholdingapartybound.Thecourtcomparedthe.</p></li><li><p><strong>Issue</strong>: Was the late fee timely and sufficiently noticed?</p></li><li><p><strong>Timeliness</strong>: The court found the notice was timely because the contract was not actually formed until a confirmation phone call occurred <em>after</em> the note had been delivered with the images.</p></li><li><p><strong>Sufficiency</strong>: <strong>Lord Justice Bingham</strong> looked at the nature of the transaction and the fairness of holding a party bound. The court compared the£5perdayfeetothestandardborrowingcost(roughlyper day fee to the standard borrowing cost (roughly£3.50perweek).Becausethelatefeewasper week). Because the late fee was10 times higher than a reasonable fee, it was deemed "onerous."

    • Outcome: Because the term was onerous, it required additional, special notice. Since this was not provided, the term was not incorporated.

Online Contracting: Clickwrap and Browsewrap

  • These are generally categorized under incorporation by notice.

  • Clickwrap: Requires a positive action (clicking "I agree") to demonstrate acceptance.

    • Feldman v Google Inc: Feldman, a lawyer, used Google AdWords. He had to click "Yes, I agree" below a scrollable box of terms to activate his account. The court applied ordinary common law rules; because there was a visible instruction to read the terms and a required positive click, the notice was reasonable, and the forum selection clause was validly incorporated.

  • Browsewrap: No positive affirmation/click is required for the terms; they are simply made available via a link on the website.

    • Nguyen v Barnes & Noble Inc: This concerned an arbitration clause for the purchase of a NOOK e-reader. The "Terms of Use" link was placed in the bottom left corner of every page and during the checkout process, but no click was required to proceed. The court held the notice was not sufficient because the design and prominence of the link did not reasonably bring the terms to the customer’s attention. Thus, the terms were not incorporated.

Modern E-commerce Practices and Contract Formation

  • Standard Online Formation: Conventionally, a contract is formed once payment (e.g., credit card) is successful.

  • Redefining Formation: Online sellers often include terms that delay formation to protect against automated pricing errors or stock issues.

    • Contracts may only be formed upon confirmation by the seller (manual approval).

    • Contracts may be formed upon dispatch/delivery of goods.

    • These terms are generally effective in New Zealand if there is reasonable notice of them, allowing sellers to refund money and void a transaction before dispatch if necessary.

Practical Application: Time and Form of Acceptance (Case Study)

  • Scenario: Gerald attempts to accept an offer via email. The offer (quotation) states: "nothing in this quotation designates an information system for the purposes of the Act."

  • Governing Law: Contract and Commercial Law Act (CCLA), Section 214.</p></li><li><p><strong>DesignationofInformationSystems</strong>:</p><ul><li><p><strong>PrescribedModevs.Designation</strong>:Thesearedistinct.Prescriptionisaboutthe<em>method</em>required;designationisaboutthe<em>time</em>ofreceiptunderSection.</p></li><li><p><strong>Designation of Information Systems</strong>:</p><ul><li><p><strong>Prescribed Mode vs. Designation</strong>: These are distinct. Prescription is about the <em>method</em> required; designation is about the <em>time</em> of receipt under Section214.</p></li><li><p><strong>TimeofReceiptRules</strong>:</p><ol><li><p>Ifsystemisdesignated:Receiptoccurswhentheemailentersthesystem.</p></li><li><p>Ifsystemis<strong>not</strong>designated:Receiptoccurswhenitcomestotheattentionoftheaddressee.</p></li></ol></li></ul></li><li><p><strong>AnalysisofGerald′sAttempts</strong>:</p><ul><li><p><strong>FirstAttempt</strong>:Senttoanon−designatedaddress.Becausethequotationspecificallyexcludesdesignation,andthereisnoevidenceofhistoricaluse(asper<strong>PetersonvGothard</strong>),thedefaultruleapplies.ReceiptoccursonMay.</p></li><li><p><strong>Time of Receipt Rules</strong>:</p><ol><li><p>If system is designated: Receipt occurs when the email enters the system.</p></li><li><p>If system is <strong>not</strong> designated: Receipt occurs when it comes to the attention of the addressee.</p></li></ol></li></ul></li><li><p><strong>Analysis of Gerald's Attempts</strong>:</p><ul><li><p><strong>First Attempt</strong>: Sent to a non-designated address. Because the quotation specifically excludes designation, and there is no evidence of historical use (as per <strong>Peterson v Gothard</strong>), the default rule applies. Receipt occurs on May15when<strong>Manaia</strong>actuallyreadstheemail.SincetheofferexpiredonMaywhen <strong>Manaia</strong> actually reads the email. Since the offer expired on May14atat5PM,thefirstattemptislikelytoolate.</p></li><li><p><strong>SecondAttempt</strong>:<strong>Gerald</strong>signstheformandreturnsittothe"sales"emailasrequested.Thissatisfiesthe<strong>prescribedform</strong>.However,withoutdesignation,itisonlyeffectivewhenread.<strong>Manaia</strong>reportsreadingitonthemorningofMayPM, the first attempt is likely too late.</p></li><li><p><strong>Second Attempt</strong>: <strong>Gerald</strong> signs the form and returns it to the "sales" email as requested. This satisfies the <strong>prescribed form</strong>. However, without designation, it is only effective when read. <strong>Manaia</strong> reports reading it on the morning of May15.BecausethisisstillaftertheMay. Because this is still after the May14$$ expiry, a contract was likely not formed.

Questions & Discussion

  • Question: In Olley v Marlborough Court, does it matter if the guest stayed for weeks and paid rent multiple times? Would they have notice after the first week?

  • Response: In this specific case, it was treated as one continuous contract. If it had been a series of new contracts every week, the notice in the room would have been timely for the second and subsequent weeks. Since it was one ongoing contract, the notice remained too late.

  • Question: What if the guest viewed the room beforehand and saw the notice?

  • Response: From an objective perspective, if they viewed the room and the notice was there before the contract was formed, those terms could potentially be incorporated, provided the requirement for reasonably sufficient notice was also met.

  • Question: Does New Zealand use electronic signatures?

  • Response: Yes, there are statutory rules legitimizing electronic signatures in the Contract and Commercial Law Act. While physical signatures remain common in some services, offer and acceptance only require conduct that shows a reasonable person has agreed.