BLAW10001 Lecture Notes - Lecture 5: Parol Evidence Rule, Caveat Emptor, Puffery
15 May 2018
School
Department
Course
Professor
Principles of Business Law
• Lecture 1
• Week 5
• The terms of a contract
• A te is a patiula ageed udetakig o poise ade i iustaes fo
which it can be inferred that is was intended to be legally binding
• tes of a otat desie the entire contents of a legally enforceable agreement
• terms define the rights and duties of the parties
• terms provide the yardstick by which performance of the contract is measured
• Goods sold by description on ss 18
• Freedom of contract
• Law allows contracting parties the freedom to neogiate and agree to the terms of
their contract without outside interference
o Some general limits on the extent to which freedom of contract operates
▪ Illegal undertakings are not enforceable
o Freedom of contract principles continue to underlie contract law
• Agreed terms and terms implied by law
• Terms can become part of a contract either
o By agreement (which can be expressed or implied)
o Because they are put into contract by operation of law (either the general
law or legislation)
• Expressly agreed terms
• Tes ae epessl ageed he the hae atuall ee delaed o defiitel
stated, either in writing or orally
• Terms may be expressly agreed in various ways
o By being discussed
o Included in a signed document
o Referred to on a ticket or notice
• Providing the terms of a contract
• Wholly oral contracts
o Terms of wholly oral contracts are established by evidence from the arties
themselves, or other witnesses
• Wholly written contracts
o Terms of wholly written contracts are proved by reference to the written
contract alone
▪ The parol evidence rule
o Various circumstances in which the parol evidence rule will not be strictly
applied
▪ Include evidence in support of rectification
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• What parties truly meant
▪ Written contract is only part of the agreement
▪ Resolution of uncertainty in the written document (interpretation)
o Do not hear about other pieces of evidence
o If you signed it, you are bound by the terms whether or not you read and
understand them
▪ May not subjectively know or understand them, but contractually
bound
• L’Estrange v F Grauo
• L was bound by the terms of the document she signed
• When a person signs what is clearly a contractual document, and were not induced
to do so by fraud or misinterpretation, they will be bound by the terms of the signed
document whether or not those terms were read or understood
• Causer v Browne
• No- the document signed did not appear to be a contractual document
• Is this ase osistet ith LEstage?
• Van den Esschert v Chappell
• Contract was partly-written, partly-oral (because of the importance of the promie)
• Statements made during negotations- the promise requirement
• A statement made by one party to another during negotiations may fall into one of
the three categories
o It may be of no legal effect (eg. Puffery, statements of opinion)
o It may constitute a representation of fact which, if untrue, may allow the
promisee to rescind the contract at common law or under s 237 of the ACL
o It may constitute a contractual promise
• Statements that do not become terms of the contract (because they are not
promissory)
• Not everything that is said while negotiating a contract becomes legally enforceable
part of that contract
o Distinguish between the following
• puffs
o are exaggerated or obviously insincere statements made by contracting party
to engage, attract or excite others into contracts
• opinions
o are statements of personal views or beliefs
o even if wrong, the expression of an opinion does not create legal liability if
honestly made
• representations
o is a stateet of fat ade oe pat he egotiatig a otat
find more resources at oneclass.com
find more resources at oneclass.com
