management & legal implications of ecommerce revision
TRANSCRIPT
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Revision
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Acceptance Final & Unqualified Communication of acceptance Postal Rule
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Consideration What is it? Privity of Contract Value of consideration Past Consideration Part Payment of a debt Promise to perform an existing contract
Certainty Courts will uphold a bargain if possible
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms of the Contract
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
What are the Terms Terms can be
Express In writing Oral Partly in writing and partly oral
Implied By the Courts By legislation
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Express Terms The terms of the contract are ascertained by
examining the evidence Not all pre-contractual statements become
terms of the contract
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Express Terms (cont.) Meaning of the terms may not be clear Where the parties have used language that is
incapable of any precise meaning the contract may be void for uncertainty
It is not the role of the Court to make a bargain for people
However, the Courts are reluctant to destroy a bargain
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Pre-Contract Representations An oral statement can be a term Only promissory statements become terms All other statements are mere representations A statement does not have to be in the form of a
promise to be promissory Remedies
Term of contract – Remedy for breach of contract Representation – law of misrepresentation Mere puff – no remedy
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Reasonable Bystander Test Which statements and representations would
a reasonable bystander, aware of the circumstances of the case, regard as promissory?
The test is objective Parties actual intention is irrelevant
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Reasonable Bystander Test (cont) 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
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Was There a Written Document? If the statement was included in a document drawn
up by the parties then this is good evidence that the parties regarded the statement as sufficiently important to be a term
Alternatively, if it is left out, that indicates that the parties did not intend it to be a term. State Rail Authority of NSW v Heath Outdoor Pty
Ltd (S&OR p131) This is not conclusive of itself, it is merely one matter
to be considered
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
When was the statement made? How much time elapsed between the
representation and the making of the contract?
Statements made only once early in negotiations are less likely to become terms. Van Den Esschert v Chappel (S&OR p132)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
How Important was the Statement Must be judged in the context of the
negotiations Van Den Esschert v Chappel (S&OR p132) Hospital Products v United States Surgical
(S&OR p134)What words were used The more precise the language, the more
likely it is a term Ross v Allis-Chalmers Australia (S&OR
p133)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Did a Party have Special Knowledge? Did one party rely on the other’s expertise or
special knowledge rather than form its own judgement Oscar Chess v William (S&OR p130) Esso Petroleum v Mardon (S&OR p134)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Parol Evidence Rule Courts presume that written formal contracts
that appear to be a complete record of the agreement, contain the whole agreement
Courts will not let a party ‘subtract from, add to or contradict the language of the written agreement’
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms implied by the Courts
Implied as a matter of law Implied as a matter of fact
Past DealingsBusiness efficacyTrade Custom
Implied Terms
Terms implied by Statute
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied by the Courts Cannot conflict with express terms Must not be unreasonable or unjust in the
circumstances Implied as a matter of law
Common situations which are so settled that terms “go without saying”
Implied as a matter of fact Arise out of the particular facts of the case
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied as a Matter of Law Professionals and Clients
Professional must use reasonable care and skill
Service Contracts Provider must take reasonable care and skill in
providing the service Service must be reasonably fit for the purpose for
which it was acquired Costa Vraca v Berrigan Weed & Pest Control (S&O
p159)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied as a Matter of Law (cont.) Work and Materials
Contractor must use reasonable care Services must be fit for the purpose for which
they were acquired Materials must be of good quality Reg Glass v Rivers Locking Systems (S&O
p158) Helicopter Sales v Rotor Work (S&O p158)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied as a Matter of Law (cont.) Hire Contracts
Goods are reasonably fit for the purpose for which they are hired
Landlord & Tenant Landlord must give the tenant ‘quiet
enjoyment’ of the premise Tenant must
Pay rent Act in “tenant-like” manner
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied as a Matter of Law (cont.) Employment Contracts
Employer must Provide a safe system of work Not require employee to do an unlawful act
Employee must: Obey reasonable instructions Use reasonable level of skill and competence Act in good faith to employer Keep employer’s trade secrets confidential
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Terms Implied as a Matter of Fact Past dealings Custom or trade usage To make the contract effective
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Past Dealings Term is clearly identifiable Previous dealings are numerous and consistent Present dealing fits into the course of dealing No conflict between implied term and an express
term Henry Kendall v William Lillico (S&O p181)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Custom or Trade Usage Can state term with precision Custom is so well known & widespread that all
contracts can be said to have the term Custom is reasonable No conflict with an express term British Crane Hire v Ipswich Plant Hire (S&O
p161)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
To Make a Contract Effective Term is capable of clear and precise expression The term is necessary to make the contract
effective not just reasonable The term is obvious (“officious bystander test”) The term is fair & equitable to both parties No conflict with an express term The Moorcock (S&O p162) Codelfa Constructions v State Rail Authority
(S&O p163)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Exemption Clauses A clause that limits or excludes the
consequences of a breach of a party’s obligations
Courts are biased against them Bias is less noticeable in commercial
contracts Courts adopt a 2 step process
Has the exemption clause become a term of the contract?
If so, does it cover the breach in question?
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Is It a term of the contract? Essentially the same test as for all terms An exclusion clause cannot be incorporated after the
contract has been made (e.g. parking ticket) Past dealings may imply an exemption clause but the
Courts are reluctant to do this Signed documents will usually be binding even if the
party was unaware of the term unless Signed document could not reasonably be
regarded as likely to contain contractual terms Estoppel exists Exemption clause has been misrepresented See Curtis v Chemical Cleaning Co (S&OR p142)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Is It a term of the contract? Unsigned exemption clauses will be binding if
The innocent party was aware of it; or reasonable notice of it has been given to
the innocent party
before the contract is made.
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
What is reasonable notice (cont) What is reasonable notice depends on:
The nature of the document; The nature of the transaction; and The nature of the exemption clause.
Would it be reasonable to expect the document to contain an exemption clause (e.g. a receipt)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
What is reasonable notice Is the transaction one where you would
expect an exemption clause to exist The wider the exemption the greater the
steps to be taken to bring it to the attention of the other party
Cases Thornton v Shoe Lane Parking (p144) Parker v South Eastern Railway (p126) Oceanic Sun Line Special Shipping v Fay (p127) DJ Hill & Co v Walter H Wright Pty Ltd (p124)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Does the Clause Cover the Breach? Courts will examine the clause carefully to determine
its effect and limit its scope where possible Generally, the Courts will give effect to the parties
intentions as evidenced by the natural and ordinary meaning of the words
There are 3 rules that courts use to limit exemption clauses: The Contra Preferendum rule Negligence Clauses The Four Corners Presumption
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Contra Preferendum Rule Any ambiguities in the exemption clause will
be construed against the party seeking to rely on the clause Andrews Bros v Singer Car Co (S&OR
p145) Alex Kay v General Motors Acceptance
Corp & Hartford Fire Insurance (S&OR p145)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Negligence Rule Liability for negligence may be expressly or impliedly
excluded but if the words could reasonably be applied to protect against some ground of liability other than negligence, then liability for negligence will not be excluded White v John Warick & Co (S&OR p146)
To exclude liability for negligence, clear words are required Tech Pacific v Air Pacific (S&OR p146)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The 4 Corners Presumption The exemption clause will only cover matters within
the 4 corners of the contract Whether an event falls outside the contract depends
on the reasonable person test – would a reasonable person aware of the terms of the contract conclude that the parties must have had the relevant event in mind in drawing up the contract.
Sydney Corporation v West (S&OR p148) TNT v May & Baker (S&OR p149) Darlington Futures v Delco Australia (S&OR p149)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Statutory Reforms In many cases, it is Illegal to attempt to
exclude terms implied by statute e.g. Trade Practices Act
Attempting to exclude statutory liability (where not permitted) may be misleading and deceptive conduct contrary to section 51 of the Trade Practices Act