express terms - incorporation of terms

Express Terms - Incorporation of Terms

• The focus is on circumstances where a non-negotiated express term becomes part of a contract.
• Express terms not previously negotiated can be incorporated in three ways:
  • Signature
  • Reference at the time of contracting (Notice)
  • Course of dealing between the parties.

Example 1

• A bus company purchases 20 new electric buses.
• Passengers use the new buses.
• Students are asked to consider how express terms might be incorporated into contracts between the bus company and the supplier, and between the passenger and the bus company.

Example 2

• A student upgrades their mobile phone plan.
• They sign a contract with a local mobile phone shop.
• Students are asked to consider how the express terms might be included in the contract between the student and the mobile phone shop.

Example 3

• A café owner receives weekly deliveries of fresh fruit and vegetables from a local farm.
• A voice note is sent for pumpkins.
• The farmer replies with an email detailing a 25% increase in pumpkin price due to poor harvest and increased demand.
• Students are asked to consider how the express terms might be included in the contract between the café owner and the farm.

Incorporating Express Terms not Previously Negotiated - Quick Reminder

• Express terms (not negotiated) can be incorporated in three ways:
  • Signature
  • Reference at time of contracting (Notice)
  • Course of dealing

Incorporation by Signature

• Effect: Indication of assent.
• Sundolitt v Addison [2017] CSIH 15: Assent to what?
• Montgomery Litho Ltd v Maxwell 1999 SLT 1431: Fair notice of unusual or special conditions.
• Brandon Hire Plc v Russell [2010] CSIH 76: Electronic equivalents of a signature (express assent).
• Online contracts: Electronic equivalents of a signature (express assent).

Incorporation by Reference to Terms and Conditions (1)

• Effect: Terms are incorporated if the document is contractual.
• Examples of contractual documents: Tickets, invoices, receipts, acceptance notes, delivery notes.
• Timing is crucial for incorporation.
• If the document is not contractual, it doesn't incorporate terms.

Incorporation by Reference to Terms and Conditions (2)

• Taylor v Glasgow Corporation 1952 SC 440: Contracts with a "For conditions see other side" clause.

• The Corporation of Glasgow is not responsible for any loss, injury, or damage sustained by persons using the establishment or its equipment.

• Image source and link provided.

Incorporation by Reference to Terms and Conditions (3)

• Thornton v Shoe Lane Parking [1971] 2 QB 163: Reasonable sufficiency of notice test.
  • Offer: Machine ready to take money.
  • Acceptance: Placing money in the machine.
  • Ticket: Subject to conditions displayed on premises.
• Indigo Park Services Ltd v Watson [2017] 9 WLUK 46: Relevant case discussed.

Incorporation by Reference to Terms and Conditions (4)

• Sign v Ticket:
• Chapelton v Barry Urban District Council [1940] 1 KB 532: Example of a sign versus a ticket scenario.
• Sign: "Barry Urban District Council. Cold Knap. Hire of chairs 2d. per session of 3 hours" -Ticket (front): “Barry Urban District Council. Cold Knap. Chair Ticket 2d. Not transferable" -Ticket (rear): “Available for three hours. Time expires where indicated by cut-off and should be retained and shown on request. The council will not be liable for any accident or damage arising from the hire of the chair"
• Relevant link provided.

Incorporation by Reference to Terms and Conditions (5)

• Olley v Marlborough Court Ltd [1949] 1 KB 532: The proprietors are not responsible for lost or stolen articles unless handed to the manageress for safe custody. The notice was inside the bedroom, after the contract was formed.
• Items were stolen from the room.
• Students should discuss with a neighbour: What questions should be asked?

Incorporation by Reference to Terms and Conditions (6)

• Olley v Marlborough Court Ltd [1949] 1 KB 532: Best way to prove incorporation is through a signed document or a notice of the terms at the time of the contract. A prominent, clear public notice in the contract will count as well. These stipulations must be clear.

Reference to Terms and Conditions - Ticket Cases (1)

• Parker v South Eastern Railway Co (1877) 2 CPD 416: Cloakroom ticket case.
• Front of Ticket: See back
• Rear of Ticket: The company will not be responsible for any package exceeding £10.

Reference to Terms and Conditions - Ticket Cases (2)

• Parker v South Eastern Railway Co (1877) 2 CPD 416: Discusses the responsibility of a man of business versus someone not familiar with the rules. A layperson should be informed of the terms.

Reference to Terms and Conditions - Ticket Cases (3)

• Thompson v London, Midland and Scottish Railway Co [1930] 1 KB 41: Excursion ticket case.
• Ticket front: "Excursion, see back" for conditions
• Ticket rear: Includes regulations of the railway company.
• Excursion Bill: Conditions shown in company's timetables.
• The condition that neither the holder nor any other person should have a right of action against the company due to injury or damage caused.

Incorporation by Course of Dealing (1)

• What is a course of dealing? A series of transactions prior to the one in question (e.g. prior contracts).
• What else is required? Objectively, the parties must know the conditions and have agreed to them.

Incorporation by Course of Dealing (2)

• McCutcheon v MacBrayne 1964 SC (HL) 23: Four previous dealings with a signed note but not in this particular case. A series of similar contracts that include certain conditions, and then a new contract, might lead to those conditions being implied.

Incorporation by Course of Dealing (3)

• McCutcheon v MacBrayne 1964 SC (HL) 23: A consistent course of dealing is not apparent (consistent course of asking for signature vs. accepting goods based on word).

Incorporation by Course of Dealing (4)

• British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd 1975 QB 303: Where parties are in similar trades, a course of dealing will be established more easily.
• WS Karoulias SA v Drambuie Liqueur Co Ltd [2005] CSOH 112: A course of dealing might preclude contractual effect (e.g. the preclusion of an implied contract due to the history of dealing).

Incorporation by Course of Dealing (5)

• Unusual or onerous terms.
• Montgomery Litho Ltd v Maxwell 1999 SLT 1431, Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 ALL ER 348, Thornton v Shoe Lane Parking [1971] 2 QB 163 (Red hand rule).