Early Cases Of Implied Terms example essay topic

TABLE OF CONTENTS 1) Introduction 2) Implied Terms 3) Custom / Usage 4) Court 5) Past Dealings 6) Statute 7) Goods Act 8) Trade Practices Act 9) Conclusion 10) Recommendations 11) Bibliography INTRODUCTION Agreements are formed in almost every communication; electronic, written or oral; daily. Once an agreement fulfills the components required of a contract, therein lies the existence of terms of a contract. These terms depict an obligation between parties involved in the form of Express terms or Implied terms. Express terms are material terms stated by the parties involved, and can be interpreted in 3 ways; Oral, Written, Oral and Written. Implied terms are terms normally not stated or not known by the parties, and may be derived from Custom / Usage, Court, or Statute.

Custom terms are referenced to conventions or usages in a particular industry or trade. Court terms are adopted when an oversight of the parties occur, in order to give 'business efficacy' to the contract based on prior or past dealings. Statute terms are referred to the various states, territories and Commonwealth Trade Practices Act when the contract is formed. When a sale of goods involving consumer and corporations, Trade Practices Act and the Goods Act; statutes established by the Commonwealth and its State parliament; may be used to protect consumers from the conduct of these contracts. Act's. 4 B of TPA defines a 'consumer' as someone who acquires goods or services for less than $40,000.

Act's. 85 (1) of Goods Act applies if goods are worth less than $20,000. IMPLIED TERMS The case of BROGDEN vs. METROPOLITAN RAILWAY illustrates one of the early cases of implied terms; in which the conduct of a party is sufficient for the courts to hold an implied terms judgement, despite a lack of an offer & acceptance. The unilaterally signed agreement was actually a counter-offer, despite there was no mutual agreement to the changes of terms by Brogden. But the courts held that the conduct of Metropolitan Railway as valid. A simple illustration to determine if a term should be implied into a contract is in the case of SHIR LAW vs. SOUTHERN FOUNDRIES, where MacKinnon LJ quoted, .".. in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying...

". . Custom / Usage In a particular industry, references as to what is 'common practice' or 'usages' of the companies are dictated by themselves and not by the courts. When they act upon a contract based on their trade understanding, certain standards exist. In the case of BRITISH CRANE HIRE CORP LTD vs. IPSWICH PLANT HIRE LTD, a hire form sent to hirer was merely to facilitate the formal procedures and understanding. Neither the terms were read, nor signed by the hirer.

An implied term, that hirer is liable for any damages once taking hold of an equipment, exists as an industry standard term despite not signing the contract. This act of negligence by the hirer may be costly in the future. However, a failed attempt to use industry convention came in the case of SUMMERS vs. COMMONWEALTH OF AUSTRALIA. Measurements of supplied goods could not be implied as an industry convention because an express term has been set by the plaintiff; stating a given measurement to follow. This follows that in a contract, an express term super cedes an implied term. Court Although certain terms are implied as industry convention, if the courts view them as being unfair or nonsensical the courts shall imply its terms to give business efficacy, or commercial realism, into the contract.

In the case of 'THE MOORCOCK', the wharfinger's expertise of allowing vessels to berth must have implied into the contract that they know the jetty and its seabed well in order to provide sound advice and reasonable care during a vessel's berthing. This obviously did not happen. Where no term was submitted into the contract and a mistaken assumption occurred, the High Court rejected the plaintiff's argument in the case of CODE LFA CONSTRUCTION vs. BRISBANE CITY COUNCIL. The plaintiff argued on the fact that a term should be implied to borne his losses. In the case of BP REFINERY vs. HASTINGS SHIRE COUNCIL, the Privy Council gave a description of what implied terms must be. It must be: (1) Reasonable and equitable (2) Necessary to give business efficacy (3) So obvious that it goes without saying (4) Capable of clear expression (5) Not contradicting any express term The above conditions describe the simple definition of implied terms in providing business efficacy into a contract.

Past Dealings When a term has been stated / shown many times before to the plaintiff, the courts held it as acceptable evidence, despite the fact that the plaintiff had not seen or known of the clause, as in the case of BALMAIN NEW FERRY CO LTD vs. ROBERTSON. Whether or not Balmain has read the clause when he passed through the gates everyday, countless people have also traveled through and seen the contract daily. Thereby giving it an instant validity due to Balmain's past dealings. However in relying on the exclusion clause as defence, the defendant failed in the case of HOLLIE R vs. RAMBLER MOTORS (AMC).

Although there were past dealings involved, the frequency in which it happened was too sparse to justify as past dealings. A case that questions the 'What if?' to the ability of relying on past dealings as a defence comes in the case of OLLEY vs. MARLBOROUGH COURT LTD. Without the consent of both parties, new terms cannot be added into an agreed contract. The exclusion clause in context here was introduced only after the contract has been concluded. It is then deemed a voidable contract.

But what if The Olley's has had previous dealings with the hotel? Can the exclusion clause still be valid? Definition of this varies from the frequency and duration that passed. Statute Parliament intervention of enforcing implied terms has its origins in the landmark case of DONOGHUE vs. STEVENSON. The decision imposes statutory obligation to manufacturers with the purpose of providing for 'consumer protection'. Previously there wasn't a provision on duty of care owing to consumers.

Some corporations managed to 'get away's several times before. A David & Goliath legal battle has seen many corporations using their size & legal power to succumb consumers to their terms. Statutes were later enacted by the Commonwealth Government and its State Parliament; under Trade Practices Act & Goods Act Part 4 respectively; to protect consumers against these corporations and / or other consumers. Many a times contract laws have insufficient grounds as a shield or sword, thus statutes were formed. These statutes provide defence for us Davids. Goods Act In giving equal bargaining power to the consumers, a Sales of Goods Act was enacted; with each of the State determining its own statute.

Victoria Goods Act Part 4 applies to sale of goods in a consumer transaction if the cash price is not more than $20,000 or the goods are acquired for personal, domestic or household use. Case of DONOGHUE vs. STEVENSON clearly illustrated in's. 14 of Goods Act Part 4 which states that the condition of goods sold must be of merchantable quality. Trade Practices Act Several important terms implied under the TPA include title, sales by description, quality and fitness, and sales by sample. If any of the 3 requirements below is met, it will be sufficient to subject a contract to Trade Practices Act: (1) Sale of goods price below $40,000 (2) Sale of goods for personal, domestic, household use (3) Seller is a corporation A case in which requirement no. 2 was met is the case of CARPET CALL PTY LTD vs. CHAN. The courts held that the definition of 'Carpet' is of domestic consumption, irregardless if the goods were for commercial use.

An action that spans across the States, generally involving consumers and corporation, generally utilise Trade Practices Act because of its wide ranging and powerful statutes. Courts generally favour the consumers in an action suit against corporation. There is in fact a broad similarity between implied terms in the TPA and the Goods Act. CONCLUSION Before entering into a contract, some parties may lack reasonable knowledge regarding the law and its implied terms. Certain parties have their express terms spelt out, saving a lot of hassle should any problem arises. Several areas of importance needing looking into when identifying express terms include consideration, performance, responsibility and the parties liability.

As terms fall out of the expressed agreement context, implied terms are then used as the judging criterion. It is based upon the contract's business efficacy, related statutes and / or industry customs. To provide further understanding about implied terms, an availability of a compiled listing of cases where decisions were made on implied terms, should be available. A listing such as this may prove useful in assisting the parties in examining implied terms that has relation to their contract.

It may contain local and international cases involving terms of subject and the outcome of previous judges ruling, with more focus on implied terms and its application. As the Asean Free Trade Agreement (AFTA) comes into full effect within the next few years, it may be crucial as a reference point for the ever-growing international trade practice. Most ASEAN countries' judicial system is based on the Commonwealth regulation, implementation of a common body of understanding; focused on listing description of cases; will be relatively smoother. A knowledge base may also help reduce the load of the courts in its issuance of judgement.

And in Malaysia, the government has of course the pivotal role of enacting more up-to-date laws to cope with the advent of international trade. The world is growing smaller by the day. We have to build a strong local database of knowledge in implied terms to compete formidably with our neighbouring countries. Without faster actions, local businesses may lose out in their defence, or offence, against more established law courts.

Bibliography

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Allan & Mary E. His cock Law of Contract in Australia 2nd CCH Australia Ltd 11 Andrew Terry and Des Giu gui Business Society and The Law 3rd 2003 Thomson 12 J W Carter & DJ Harland Cases and Materials on Contract Law in Australia 1993 Butterworths 13 Visa Sinnadurai Law of Contract in Malaysia and Singapore - Cases and Commentary 1987 Butterworths Asia 14 Lee Mei P heng and Detta Same Commercial Law in Malaysia 1997 Malayan Law Journal 15 RH Heckling / Wu Min Aun Conflict of Laws in Malaysia 1995 Butterworths.