Z3459304David Pan

Contracts Assignment
1. What is the effect of Anns statements on air-conditioned floats?
(a) Wholly written or party oral?
Only statements of a promissory nature1, viewed objectively through its language2, timing
and relevant expertise3 of each parties will be contractually enforceable. Before the parol
evidence comes into effect, surrounding circumstances and extrinsic evidence are examined to
determine if a contract is wholly written or partly oral.4
By John making [it] clear and essential to Ann that during summer horses are
transported in air-conditioned floats prior to signing the agreement, and given the professional
context the elements above are evidently satisfied. However the High Court remains indecisive
of this test set by the State courts, and has yet to fully affirm it in case law.5 In this case of legal
ambiguity, pursuing other recourses may be desirable for John.
(b) Course of dealings

1 Oscar Chess Ltd v Williams [1957] 1 WLR 370, 375.

2 JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435, 442.
3 Dick Bentley Production v Harold Smith (Motors) Ltd [1965] 2 AII ER 65, 67; Oscar
Chess Ltd v Williams [1957] 1 WLR 370, 375.
4 State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR
170.
5 Equuscorp v Glengallan Investments [2004] HCA 55, 438-4.
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The terms may be incorporated by a past course of dealings and a continuance to provide the
services in such a way shows that a party is willingly known to be bound by them.6 The burden
of proof for John now would be to show that in the past two years, air-conditioned floats were
the staple delivery vehicles in summer for his horses. Thus Ann must have been aware that such
floats were significant to the delivery, and shouldve made prior arrangements once she knew
they were going to be in maintenance.
(c) Collateral contract or estoppel
Alternatively, their banter may be considered as a collateral contract for the written contract.
The elements that arise are that the statement is promissory in nature, made with the intention to
induce the other party, communicated before and consistent with the main contract.7 John
decision here was clearly encouraged by Anns promise of air-conditioned floats and as a result
proceeded to sign the contract. Estoppel, as it trumps over common law rights8, is also a viable
approach here.

6 Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379.

7 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133, 147.
8 Saleh v Romanous [2010] NSWCA 274.
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2. Is the exclusion clause applicable in the present case?

(a) Application of exclusion clause if incorporated
A signature stipulates that a party has read and is willingly sbound by the terms, regardless
of whether the party actually did so.9 From this, John is susceptible under the exclusion clause
provided that the signed documents were contractual and no vitiating factors were present.10 In
application, exclusion clauses are construed with the entirety of the contract in mind, and contra
proferentem in the case of ambiguity.11 Here the clause is unambiguous, excluding liability for
damage suffered by horses as on her transport vehicles, whether negligently caused or not.
However even if incorporated, it would only suffice to preclude recovery from distressed and
dehydrated horses; it may not prevent liability arising from Anns breach of terms, which would
be an arbitrary and unreasonable construction of the clause.
(b) Contractual documents
For documents to be incorporated via past course of dealings, they must have been regular
and uniform, with the document relied upon to be reasonably contractual in nature, rather than
having the appearance of a mere receipt or docket.12 The facts here are reminiscent of DJ Hill13
and Rinaldi, with the document containing the exclusion clause sent and signature required only
after performance of contractual obligations, or once the horse[s] has been safely delivered.
9 LEstrange v F Graucob Ltd [1934] 2 KB 394; Toll (FGCT) Pty v Alphapharm Pty Ltd
[2004] HCA 52.
10 Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805.
11 Darlington Futures Ltd v Delco Aust Pty Ltd (1986) 161 CLR 500, 501.
12 Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd (1986) WAR 131.
13 DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749.
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Coupled with the lack of a system for passing the duplicate on to John suggesting informality
and triviality of the process, the document should be considered as nothing more than an
acknowledgement of the delivery and therefore non-contractual.
3. Do Anns actions amount to a breach, and if so what is the effect of Johns following
decisions?
(a) Authority of head groom to send horses without air-conditioning
As per Pacific Carriers14 and also Toll15, it would be unreasonable to permit John to depart
from the assumption that the decision was executed with his authority in a situation where he had
specifically put his head groom in the position of dealing and delivering the horses. Thus the
groom wouldve had the ostensible authority to give consent, and the terms of the original
contract may be avoided for that particular transaction. However John may wish to distinguish it
on the fact that the groom only agreed to send the horses under economic duress, as it was the
sole method of punctually transporting the horses given such short notice.
(b) Termination by breach
Only breach of a condition will entitle John the option to terminate the contract. The relevant
test here is whether the particular term is of such importance to the promisee that he would not
have entered into the contract without assurance of its performance.16 Through Johns clear
representation to Ann that the air-conditioned floats are essential, and signature of the
agreement only after as a result that this [was] not a problem; it can be presumed that John
considered the term to be of utmost importance and indeed was assured of its performance.
14 Pacific Carriers Ltd v BNP Paribas [2004] HCA 5.
15 Toll (FGCT) Pty v Alphapharm Pty Ltd [2004] HCA 52.
16 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286.
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Assuming a summer context from 39 degrees Celsius, Ann by not providing the airconditioned floats is likely deemed to have breached this condition.
(c) Election
Where there is a breach of a condition, the aggrieved party has the option to terminate or
affirm with the original contract. To affirm, John is required to have known about the factual
situation which warranted termination17 and unequivocally constitute an intent to affirm18. In the
present case the conditions seem to be fulfilled from Anns plea for one more chance, which
John agrees to; however Johns equivocal statement that any further problems will mean the
end requires careful construction. Prima facie, the statements along with his conduct with Ann
seem to be an affirmation when construed strictly and objectively19, with the phrase problems
to be interpreted as further breaches of the original contract.
One possible inference is that his statement represents a subsequent agreement which has
modified the original contract, granting John the discretion to terminate at will following events
he deems as problems. However, courts have been stringent on the process of modifying
contracts, and would require John to have the subsequent contract in writing20 if he did seek to
vary the original contract.

17 Immer (No 145) v Uniting Church in Australia Property Trust (NSW) (1992) 182
CLR 26, 30.
18 Tropical Traders v Goonan (1964) 111 CLR 41.
19 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002]
HCA 5, 74.
20 Suttor v Gundowda Pty Ltd (1950) CLR 418, 440.
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Another interpretation is that John merely delayed his election akin to Tropical Traders;
though this is unlikely from his continued use of Anns services and 40% discount benefit.

Z3459304David Pan

4. Is time of the essence in the contracts?

(a) Implied in fact
Neither time of delivery nor its essentiality is expressly stated in the original contract
document, hence it can be implied in fact upon satisfying the BP refinery tests.21 Here,
punctuality would be fairly reasonable to have been incorporated and certainly is capable of clear
expression. However it fails to be so plainly obvious that it goes without saying, and the
business efficacy of exclusive use/discount is certainly not hindered without the term. Hence
while the time of delivery expressly provided by the grooms may prove to be essential in each
individual transaction, it is relatively difficult to imply it in context of the originally drafted
contract.
(b) Implied in custom
Moreover, John may propose that punctual delivery is implied through the custom and nature
of the contracts in transportation industry.22 Given successful dealings where time and place of
pick-up and delivery was specified, it should be so well known and acquiesced23 that
punctuality was presumed to have been incorporated into a contract between a horse trainer and
transport company.

21 BP Refinery (Westernport) Pty Lyd v Shire of Hastings (1977) 180 CLR 266, 283.
22 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust)
Ltd (1986) 160 CLR 226.
23 Ibid at 238.
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On the other hand Ann can argue that the original contract was not a contract for
transportation but rather a discount agreement. Furthermore, delivery time may not satisfy the
necessity test24 as a condition even as an implied term, only permitting John to claim damages.
5. Can John rightfully terminate the principal contract, or did he repudiate it?
(a) Termination by repudiation
If the above recourses of termination are all exhausted, John may wish to terminate on
repudiation, following Anns defective deliveries in respect of one or more instalments similar
to Maple Flock25. The relevant test would be the objective test of the default to the whole
purpose of the contract, not the subjective thoughts of Anns driver. Here Anns repeated
failures in fair delivery suggest another high chance of default and John may be entitled to
terminate.
(b) Australian Consumer Law provisions
S63 of Australian Competition and Consumer Act prevents recovery by statute, barring the
application of consumer guarantees for services26 involving transportation of goods for
businesses.27
(c) Repudiation by John
If there was no fundamental breach of the principal contract by Ann, then John did not
possess the lawful right to terminate it and thus remains subject to all his obligations under the
24 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286.
25 Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB
148.
26 Australian Competition and Consumer Act 2010 (Cth) pt 3 div 2 sub-div B.
27 Ibid s 63.
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contract.28 At common law, repudiation may be either indicated by an express statement or

inferred from conduct.29 Here John has personally conveyed to Ann that he is tearing up their
agreement and hires another transport firm to send his horses, signifying his unwillingness to
abide with the original contract. Thus Ann would have the right to terminate.

28 Bowes v Chaleyer (1923) 32 CLR 159.

29 Carr v JA Berriman Pty Ltd (1953) 89 CLR 327.
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6. Is there frustration of the principal contract due to the suspension of Johns license?
A contract may be frustrated when circumstances beyond the control of either party renders
contractual obligations radically different from that which the parties had originally agreed to.30
By the suspension of Johns license and the confiscation of his horses, Ann is deprived of all her
commercial interest31 in the contract with John as there will be no further deliveries.
Furthermore, it must be also shown that the event was neither foreseeable, nor specified for
in the contract and without the fault of the parties.32 The contract is only frustrated if John is able
to prove that he is not liable for the drugs his horses tested positive for. This is rather difficult, as
he was found guilty at the subsequent hearing which led to his suspension, alluding to his
responsibility for the doping of his horses.

30Davis Contractors Ltd v Fareham Urban District Council [1956] AC, 696, 731;
Codelfa Construction v State Rail Authority of New South Wales (1982) 149 CLR 337.
31 Brisbane City Council v Group Project Pty Ltd (1979) 145 CLR 143.
32 Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 452.
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Bibliography
Case Law
Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379
Bank Line Ltd v Arthur Capel & Co [1919] AC 435
Bowes v Chaleyer (1923) 32 CLR 159
BP Refinery (Westernport) Pty Lyd v Shire of Hastings (1977) 180 CLR 266
Brisbane City Council v Group Project Pty Ltd (1979) 145 CLR 143
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Codelfa Construction v State Rail Authority of New South Wales (1982) 149 CLR 337
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160
CLR 226
Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805.
Darlington Futures Ltd v Delco Aust Pty Ltd (1986) 161 CLR 500
Davis Contractors Ltd v Fareham Urban District Council [1956] AC, 696
Dick Bentley Production v Harold Smith (Motors) Ltd [1965] 2 AII ER 65
DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749
Equuscorp v Glengallan Investments [2004] HCA 55
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133
Immer (No 145) v Uniting Church in Australia Property Trust (NSW) (1992) 182 CLR 26
JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
LEstrange v F Graucob Ltd [1934] 2 KB 394
Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB 148
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Oscar Chess Ltd v Williams [1957] 1 WLR 370

Pacific Carriers Ltd v BNP Paribas [2004] HCA 5
Rinaldi & Patroni Pty Ltd v Precision Mouldings Pty Ltd (1986) WAR 131
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5
Saleh v Romanous [2010] NSWCA 274
State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170
Suttor v Gundowda Pty Ltd (1950) CLR 418
Toll (FGCT) Pty v Alphapharm Pty Ltd [2004] HCA 52
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 61 CLR 286
Tropical Traders v Goonan (1964) 111 CLR 41

Legislation
Australian Competition and Consumer Act 2010 (Cth)

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