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TERMS OF THE CONTRACT: IDENTIFICATION Having determined that the parties have reached a binding agreement, we have to consider the content of the agreement.

I. PRELIMINARY ISSUES Parol Evidence Rule Where it is proved that the parties to the contract intended that all the express terms of the agreement should be as recorded in the document, evidence will be inadmissible if it is tendered only for the purpose of adding to, varying, subtracting from or contradicting the express terms of that contract. (Law Comm No. 154) Treitel (2011) notes that this definition only applies where both parties share a common intention with regard to the term in question. In most cases in which the rule is invoked, one party alleges, while the other denies, that terms not set out in the document were intended to form part of the contract. In such cases, if it looks like a complete contract to one of the parties taking a reasonable view of it, then the rule will prevent the other party from relying on extrinsic evidence to show that the contract also contained other terms. (ii) Exceptions Extrinsic evidence is admissible, e.g.,to show that the contract is invalid because of misrepresentation, mistake, fraud, duress etcto show that the document should be rectifiedto prove the existence of a collateral agreement

(iii) Justifications (1) Safeguards the primacy of the agreed text and promotes certainty (2) Effectuates the finality intended by the parties in recording their contract in written form (3) Eliminates great inconvenience and troublesome litigation in many cases (iv) Competing Considerations The rejection of evidence of extrinsic terms that were actually agreed may cause injustice to the party relying on those terms, while the reception of such evidence may cause injustice to the other party, if he reasonably believed that the apparently complete contractual document formed an exclusive record of the contract.

The question is which, on balance, is the greater injustice. Treitel (2011) argues that where the evidence is rejected because the party relying on it cannot overcome the presumption arising from the fact that the document LOOKS like a complete contract, the greater injustice would appear to lie in the exclusion of the evidence; for the presumption seem to be based on the nature and form of the document, rather than on any actual belief of the party relying on it, that it formed an exclusive record of the contract. (vi) Current position and consequences There has been a commercial reaction against this drift towards admissibility of extrinsic evidence, because it is said to promote uncertainty. The purpose of 'entire agreement' clauses is generally to exclude evidence that the parol evidence rule would probably have excluded in the past. Entire agreement clauses Entire agreement clauses are intended to prevent the parties to a written agreement from raising claims that statements made during contract negotiations which are not included in the final agreement (pre-contractual statements) constitute additional terms of the agreement or some kind of side agreement (for example, a collateral warranty). The typical entire agreement clause consists of a number of different elements:Entire agreement statement: a statement that the parties have agreed that the terms of the contract between them are to be found in the document containing that statement and nowhere else.
? Exclusion of liability for misrepresentation. Most entire agreement clauses include one or more of the following: o Non-reliance statement. An acknowledgement by the parties that they have not relied on any representation which is not set out in the agreement. This statement is intended to prevent claims in misrepresentation from arising in respect of pre-contractual statements. o Express exclusion of liability. A statement excluding liability for misrepresentation. The limitation may relate to liability for pre-contractual statements, statements that are set out in the agreement, or both. o Restriction of remedies. A statement limiting remedies for misrepresentation to those available for breach of contract. This excludes the remedy of rescission. It also changes the measure of damages available.
? Express carve-out in respect of fraud. A confirmation that the clause is not intended to exclude liability for fraudulent misrepresentation. This wording is intended to prevent the courts from finding that the restriction of liability for misrepresentation is unreasonable.

Parties sometimes argue that an entire agreement statement excludes terms that would otherwise be implied into the agreement. However, there is an issue over whether implied terms can sensibly be seen as separate from the contract in the same way as a collateral warranty or a pre-contractual representation, or whether they should be regarded as an unexpressed part of the contract itself. From the case law, it seems that:??

Implied terms are not excluded where an entire agreement statement is silent on their inclusion/exclusion (Axa v Campbell Martin [2011). If an entire agreement statement uses clear words to exclude implied terms, this will probably exclude terms which would otherwise be implied into the contract as a result of matters that are "extrinsic" to the written agreement. The phrase "extrinsic implied terms" was used by Stanley Burnton LJ in Axa; he did not expand on what the term meant, but the ordinary reading of the phrase suggests that it means terms which require extrinsic facts to be proved, such as trade custom or usage. Terms which would otherwise be implied into the contract to give it business efficacy (intrinsic implied terms) are not affected by a general exclusion of implied terms (Axa). With regard to the various statutory implied terms, clear express wording is required to exclude those terms (e.g. s55 of the Sale of Goods Act 1979). 55 Exclusion of implied terms. (1)Where a right, duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Unfair Contract Terms Act 1977) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract. (2)An express term does not negative a term implied by this Act unless inconsistent with it.

If the entire agreement refers expressly to intrinsic implied terms being excluded, this might, according to Stanley Burnton LJ in Axa, be effective. However, it is not clear how a term that is necessary to make the express terms of the contract work can be excluded in practice. An entire agreement clause will not prevent a party from bringing a claim for rectification on the basis that the document does not reflect what was actually agreed (Surgicraft v Paradigm [2010]) Collateral contracts Although a statement is not part of the main contract, the court may hold that it is a term of a collateral contract. The collateral contract will add to or even contradict the terms of the main contract.


The court will only give contractual effect to a separate oral/written promise if the court thinks that it qualified as a term, as opposed to a mere representation, based on what the parties intended, judged objectively.

The effect of an entire agreement clause in the main written contract is to rule out arguments about collateral contracts (Inntrepreneur Pub v East Crown [2000]). If the contract is caught by UCTA, the clause may be subject to a requirement of reasonableness under s3(2)(b).

II. INCORPORATION OF TERMS (THIS INCLUDES EXCLUSION CLAUSES) Incorporation by Signature (i) Rule If one party has signed a contractual document, he is bound by the terms contained in that document (L'Estrange v Graucob [1934]). (ii) Exceptions (1) Non est factum: a party may be able to deny that the document which he has signed is his deed if he is unable, through no fault of his own, to understand the document without explanation (2) Inducement to sign by fraud or misrepresentation (3) Signed document does not purport to have contractual effect. It was held in Grogan v Robin[1996] that you will not be bound by a document that you have signed if the type of document is not one that 'a reasonable man would expect to contain, relevant contractual conditions'Ie signing of a timesheet in this case was not viewed as a reasonable man expecting to contain relevant contractual information, as a timesheet is an administrative document

(iii) Assessment (1) Artificiality of the rule Lord Devlin in McCutcheon v David [1964] regarded the elevation of the party's signature to crucial status as artificial. It should make no difference that the document has been signed. Certain documents are not meant to be read, and signature is merely a formality akin to a handshake. Lord Denning did not regard the commercial certainty justification for the L'Estrange principle as compelling. In some cases it may be unreasonable to expect the ordinary consumer to read and understand the terms of a complex contract before signing it to purchase a product.

(2) Analysis on the basis of the objective theory of contract Spencer (1973) argues that the L'Estrange rule is inconsistent with orthodox offer and acceptance principles. Signing a document is just one way of accepting an offer and the principle of objective interpretation dictates that if it does not reasonably appear to the offeror that you are accepting a particular term by signing a contract, then you should not be taken to accept the term, so the rule in L'Estrange seems too absolute.The Ontario CA in Tilden Rent-A-Car v Clendinning (1978) supported this view. The defendant rented a car and signed the contract without reading it. On the back of the contract, in fine and faint print, was a clause seeking to limit the claimant's liability. The court, applying orthodox offer and acceptance principles, held that a signature will only indicate acceptance of a term where it is reasonable for the other party to believe that the offeree really did agree to the term in question.

In ordinary commercial practice where there is a sense of formality in the transaction, and where there is a full opportunity for the parties to consider the terms of the proposed contract submitted for signature, a court should be reluctant to find that a signature did not indicate acceptance of a particular term (otherwise commercial uncertainty would result). But where the transaction is carried out in a hurried, informal manner, and the clauses relied on are inconsistent with the overall purpose for which the contract is entered into by the purchaser, something more should be done by the party submitting the contract for signature than merely handing it over to be signed. (3) Justification & Solution?
The simple, clear-cut rule in L'Estrange is beneficial from the perspective of commercial certainty. It gives commercial parties the certainty that if an agreement is signed, it is binding. There is very little scope for argument about whether enough was done to incorporate the terms. This attitude reflects the principle of freedom of contract: if a sane adult signs a document then, provided he was not misled or forced to do so, he is deemed to agree to everything in it, even if he did not read it or agree to its contents in a meaningful sense. If there are problems with one party being tricked into signing a document or a strong commercial actor taking advantage of a consumer then these problems can be dealt with by specific doctrines, such as misrep, duress and unconscionability, rather than by making inroads into the rule in L'Estrange. The UCTA 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 also offer some protection against unfair terms.

Macdonald (2010) notes that the debate has contemporary relevance beyond signature made by hand, because there are many situations where one accepts electronically in a way that might be regarded as analogous to a signature, such as clicking 'I agree' on a website. We should be cautious about extending the L'Estrange rule to electronic signatures, not least because the reality of purchasing electronically is that the purchaser does so very quickly, having only seen the standard terms at the point of purchase. Incorporation by Notice (for unsigned contracts) Where the contract is not embodied in a signed document, a term will be incorporated only where reasonable steps are taken by one party to bring it to the other's attention. 3 requirements must be satisfied: (1) Notice must be given before or at the time of contracting (ie might fail because notice came too late) Terms can only be introduced before or at the time the contract is made, although later terms might operate as an offer to vary the terms of the initial contract (Jayaar Impex v Toaken Group [1996])
- Olley v Marlborough Court Ltd [1949] (Notice in the room, C registered and paid for hotel room 1 week in advance) -> held that notice was too late to be effective
- Thornton v Show Parking Ltd [1971] (Exclusion clause found inside the carpark)
-> contract concluded at the moment of entry so notice too late to be effective (2) Notice must be in a document intended to have contractual effect If the terms are contained in the sort of document in which a reasonable person would not expect to find contractual terms, this is unlikely to count as reasonable steps to bring the terms to the notice of the other contracting party. In Chapelton v Barry [1940] (exclusion clause on back of receipt for deckchairs), an exclusion clause was ineffective after CA held the ticket on which it was printed not to be a contractual document. The reasonable person would not expect to find contractual terms contained in mere receipts of this kind. (3) Notice must be reasonable (ie need to take reasonable steps to bring its terms to other party's intention) The nature of the term is relevant: the more onerous or unusual the term, the greater the steps that must be taken in order to draw attention of the existence of the term to the other party.
- Denning LJ in J Spurling Ltd v Bradshaw [1956] with his "red hand rule" -> "the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses...need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be significant"

This was a useful way of removing the impact of onerous exclusion clauses, by making it almost impossible to incorporate them into the contract. Since the UCTA 1977, it might be thought that there is little need for a special rule to incorporate onerous or unusual clauses, but the courts still have recourse to it where the term is not regulated by the UCTA. In Interfoto v Stiletto [1989], a delivery note that accompanied the transparencies hired by the defendant included a statement that purported to charge a very high rate. CA held that the statement was not incorporated, as the claimant had failed to prove that that onerous condition was brought to the defendant's attention.
- This was not caught by UCTA 1977 as this was not an exclusion clause
- Will not be caught by CPA 2015 as C was a company and not a person
- This applied the rule in Parker v South Eastern Railway Co (1877) (ticket excluding liability for losses exceeding 10 quid that appropriate question to ask (as noted by Megaw LJ in Thornton v Shoe Lane Parking (1971)) is (1) Did the passenger know that there was printing on the railway ticket? (2) Did he know that the ticket contained or referred to conditions and (3) Did the railway company do what was reasonable in the way of notifying prospective passengers of the existence of conditions and where their terms might be considered) that dealt with exclusion clauses to "onerous or unusual" terms The result is unusual as the parties were both businesses and the clause was not of a type which is regulated under the UCTA, so one might have expected the court to be less indulgent of the defendant. However, the CA regarded the rules on incorporation of onerous terms as having a role beyond the protection of consumers. While English law does not adopt a general notion of good faith in contractual dealings, it has a number of piecemeal devices to ensure fair dealing between contracting parties, of which the requirement of sufficient notice of onerous terms is one. o

However, determining whether a term is "onerous" or "unusual" has given rise to practical difficulties and contrasting judicial opinions
- Eg AEG (UK) Ltd v Logic Resources Ltd [1996] where C sought to recover the cost of shipping defective goods to be fixed based on clause "the purchaser shall return the defective parts at his own expense to the supplier immediately upon request by the latter" held to be onerous and not incorporated
? But Hobhouse LJ (dissenting) -> that not incorporating clauses like this would lead to uncertainty, should instead rely on UCTA to give a solution


The fair dealing approach conflicts with the need for commercial certainty. Much uncertainty and inefficiency will be introduced into commercial dealings if the policy of English law is that all clauses have to be analysed for their onerousness or unusualness.

Accordingly, (EXAMPLE OF A CASE WHERE ADEQUATE NOTICE WAS SATISFIED AND WHERE THE CLAUSE WAS NEITHER "ONEROUS" OR "UNUSUAL") CA in O'Brien v MGN [2001] (Scratch card relied on clause to announce a prize of 50000 quid and distributing the rest of the money as a result) held that Interfoto should be regarded as exceptional. Only if the clause in issue is a

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