the law of commercial contract revision. the law of commercial contract terms 2 types
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THE LAW OF COMMERCIAL CONTRACT
Revision
THE LAW OF COMMERCIAL CONTRACT
Terms 2 types
THE LAW OF COMMERCIAL CONTRACT
Express Terms Test for determining if it is a term Guidelines
THE LAW OF COMMERCIAL CONTRACT
Express Terms - Guidelines Was the representation included in a written
document When, in the negotiations, was the
representation made Did the representation sound promissory How objectively important is the representation
to the whole deal Did either party have special knowledge about
the subject matter of the representation
THE LAW OF COMMERCIAL CONTRACT
Implied Terms 2 sources of implied terms 2 types of terms implied by courts 3 types of terms implied as a matter of fact
THE LAW OF COMMERCIAL CONTRACT
Exemption Clauses What are they 2 stage test The 3 rules of contruction
THE LAW OF COMMERCIAL CONTRACT
Terms of the Contract
Statutory Implied Terms(Sweeney & O’Reilly
Chapter 7, pp164 – 170
Chapter 8, pp 175 - 184)
THE LAW OF COMMERCIAL CONTRACT
History Courts developed standard implied terms for sale of
goods These terms could be excluded by express agreement In 1883, these terms were codified in the Sale of Goods
Act In 1970’s, State legislation provided for mandatory
inclusion of terms in consumer contracts State legislation was not uniform In 1975, Trade Practices Act applied standard provisions
across Australia States then “filled in the gaps” with Fair Trading Acts Sale of Goods Act still applies in non-consumer contracts
THE LAW OF COMMERCIAL CONTRACT
Terms Implied by Statute Trade Practices Act
Services; and Goods
Sale of Goods Act Goods only
Where there is an overlap – Trade Practices Act applies
THE LAW OF COMMERCIAL CONTRACT
Application of Trade Practices Act Applies only where
The vendor\supplier is subject to the Act The purchaser is a consumer The service is provided in the course of
business
THE LAW OF COMMERCIAL CONTRACT
Application of Trade Practices ActThe supplier is subject to the Act if: A trading, financial or foreign corporation It is operating in a territory (e.g. NT) The contract involves interstate trade The contract involves overseas trade The contract involves the Commonwealth or its
organisations
THE LAW OF COMMERCIAL CONTRACT
Application of Trade Practices Act (s4B)A person is a consumer if: Price of goods\services <= $40,000; or Goods\Services are of a type ordinarily acquired for
personal, domestic or household use or consumption; or Goods are a commercial road vehicle; and Goods are not acquired:
For resale; or To be used in commercial production or manufacture;
or To be used in the repair or treatment of goods or
fixtures on land In the course of an auction
ie one of the first 3 and not one of the last 4 items
Go
od
s &
Services
Go
od
s O
nly
THE LAW OF COMMERCIAL CONTRACT
Is the Supplier a corporation?
Price <= $40,000
Personal, domestic or
household use
Supply in the course of a business
Commonwealth is the supplier
Interstate or Overseas trade
Trade Practices Act applies
Supplier operating in a
Territory
Service
Good
Commercial Road Vehicle
Not for ResaleNot used in manufacture etc
THE LAW OF COMMERCIAL CONTRACT
Acquired for Personal Use Crago v Multiquip (S&O p177) Atkinson v Hasting Deering (Queensland) (S&O
p177) Note that the actual use is irrelevant
THE LAW OF COMMERCIAL CONTRACT
Does the TPA apply?1. Jim buys a new lawn mower for $350 from Garden
Supplies Pty Ltd2. X Ltd buys a new BMW for $75,000 from Classy Motors
Pty ltd for use by its Managing Director3. Classy Motors buys a new BMW from BMW Imports Pty
Ltd for $50,000 to fulfil the order to X Ltd4. Sue, who is a farmer buys a tractor for use on her farm
from Tractors Galore for $39,0005. Betty and Tom buy a second hand bus for $52,000 to
use as a campervan in a round Australia trip6. Ford Motor Company buys $35,000 of paint to paint the
cars it builds
THE LAW OF COMMERCIAL CONTRACT
In The Course of Business Private contracts are not subject to the TPA “Business” implies an ongoing undertaking for
profit Irrelevant if the buyer acquired goods\services in
the course of the buyer’s business – it is the seller’s business which is relevant
Does not need to take place in the ordinary course of business – one-off transactions are covered
THE LAW OF COMMERCIAL CONTRACT
Application of Trade Practices Act Goods includes: Hire of goods Ships, aircraft and other vehicles Animals including fish Minerals Trees and crops Gas and electricity
(Section 4 (1) Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Application of Trade Practices Act A service is: Performance of work with or without supply of
goods Provision of facilities for amusement,
entertainment, recreation or instruction Insurance contract Banking contract Contract in relation to lending of money(Section 4 (1) Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Trade Practices Act Definitions Service does not include
Supply of goods Work under a contract of service
(Section 4 (1) Trade Practices Act) E v Australian Red Cross Society (S&O p167)
THE LAW OF COMMERCIAL CONTRACT
Terms implied in the supply of Services Services will be rendered with due care and skill Materials supplied in connection with a service
will be reasonably fit for the purpose for which they were supplied
(Section 74 (1) Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Terms implied in the supply of Services Where consumer, expressly or impliedly, makes known
purpose for which services are required or desired result Then it is implied term that services and goods supplied
in connection with the services will be reasonably fit for that purpose; and Might be reasonably expected to achieve the result
Unless Consumer does not rely; or It is unreasonable for consumer to rely
on the supplier’s skill or judgement(Section 74 (2) Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Terms implied in the supply of Services Exclusions
Transport contracts Storage contracts Insurance contracts Architects and engineers (in relation to
achieving a result)
(Section 74 (2) Trade Practices Act) Read v Nerey (S&O p168)
THE LAW OF COMMERCIAL CONTRACT
Terms implied in the supply of Goods Seller has the right to sell (s69(1)(a)) Buyer shall have quiet possession (s69(1)(b)) Goods are free from encumbrance (s69(1)(c)) Where a sale by description, goods match the
description (s70) Goods are of merchantable quality (s71(1)) Where a sale by sample, goods match the
sample (s72)
THE LAW OF COMMERCIAL CONTRACT
Terms implied in the supply of Goods Where
buyer has expressly or impliedly made known to the seller the purpose for which the goods were being purchased
In circumstances where seller knew, or ought to have known, that buyer was relying on the sellers skill or judgement
It is an implied term that the goods are fit for that purpose (s71(2))
THE LAW OF COMMERCIAL CONTRACT
Fitness for a Particular Purpose The buyer expressly or impliedly made known to
the seller the purpose for which the goods were acquired
The buyer relied on the seller’s skill and judgement
It was reasonable for the buyer to rely on the seller’s skill and judgement
The goods must be reasonably fit for the specified purpose
Carpet Call v Chan (S&O p181)
THE LAW OF COMMERCIAL CONTRACT
Merchantable Quality The goods are as fit for their normal purpose or
purposes as is reasonable to expect having regard to the price and other circumstances
Defect has not been specifically drawn to buyers attention before contract made
If buyer examines goods before sale, defect would not have been revealed by such examination
THE LAW OF COMMERCIAL CONTRACT
Correspondence with Sample Bulk of goods must correspond with sample in
quality Buyer must have a reasonable opportunity to
compare bulk with sample Goods are free from any defect, rendering them
unmerchantable, that would not be apparent on reasonable examination of the sample
THE LAW OF COMMERCIAL CONTRACT
Trade Practices ActExcluding Implied Terms Implied terms cannot be excluded, restricted or
modified (section 68 Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Limiting Liability Liability can be limited:
Where goods\services are not of a type ordinarily acquired for personal, domestic or household use
To : Supplying the services again Paying to have the services supplied again
(Section 68 (1) Trade Practices Act) Liability cannot be limited where it would not be fair and
reasonable to do so (Section 68A (2) Trade Practices Act)
THE LAW OF COMMERCIAL CONTRACT
Limiting Liability Court will have regard to all circumstance but
particularly: Strength of bargaining positions Whether buyer received an inducement to agree to
the term Whether the buyer had an opportunity to obtain
goods\services from another source without the limitation
Whether the buyer knew of the term or could reasonably be expected to know of the term
Whether goods were manufactured or adapted to the special needs of the buyer
(Section 68A (3) Trade Practices Act)
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