LAW2101 Lecture Notes - Lecture 7: Gate Gourmet, Testator, Blue Circle Industries
LAW2101'CONTRACT'A'-'CASE'SUMMARIES'AND'KEY'POINTS'
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TOPIC'7:'PRIVITY'
Person'who'is'not'party'to'contract'can'neither'enforce'not'incur'obligations'under'it''
*Note:'Privity'of'estate'covenant'binds'all'subsequent'purchasers'of'a'property'in'regards'to'restrictive'
covenants'(Tulk%v%Moxhay)'–'Has'been'altered'by'statute'in'Australia''
'
IDENTIFYING'THE'CONTRACTING'PARTIES'
Case'
Findings'
!"#$$%&'&()*"+,%&-./0#+"1&2&31#%+//&!"&4+5&
(1967)'119'CLR'460'
• “Agreement'between'Arthur'Leopold'Coulls'and'
O’Neil'Construction'Pty'Ltd”'
• Agreement'authorised'payment'of'royalties'to'
Arthur'and'his'wife'Doris'as'joint'tenants'signed'
by'Arthur'&'Doris,'and'O’Neil'
• On'Arthur’s'death,'his'estate'(Arthur’s'children'
from'a'previous'marriage)'and'Doris'claimed'
royalties'
Ø High'Court'Findings:''
v Majority:'Doris'was'not'party'to'the'contract'
§ Contract'expressly'purported'to'be'
made'between'Arthur'and'the'company'
§ Company'made'no'express'promise'to'
pay'royalties'to'Dorris'and'it'was'
impossible'to'imply'such'a'promise'
§ Authorisation'clause'took'effect'as'a'
revocable'mandate'to'the'company'to'
pay'royalties'to'Arthur'and'Dorris'and'it'
lapsed'when'Arthur'died'
v Dissenting'(Barwick'CJ'and'Windeyer'J):'
Doris'was'party'to'the'contract''
§ Doris’'signature'is'an'the'agreement''
§ Company'agreed'to'pay'royalties'to'
them'jointly'while'they'lived'and'to'the'
survivor'if'one'died'
'
NON-APPLICATION'OF'THE'PRIVITY'RULE:'AGENCY'
Agent'can'enter'contract'on'behalf'of'a'principal''
Reasonableness'Test'for'Agency:'
1. Contract'makes'it'clear'that'a'benefit'is'to'be'conferred'on'a'beneficiary'(Carmico%Gold%&%Resources%Ltd%v%
Findlay%&%Co%Stockbrokers%(Underwriters)%Pty%Ltd)'
2. Contract'makes'it'clear'that'the'promisee'is'acting'as'agent'of'the'beneficiary'
3. Promisee'was'authorised'to'enter'into'the'contract'on'the'beneficiary’s'behalf'(or'the'contract'was'
subsequently'ratified)'
*Note:'Ratification'is'the'adoption'of'a'contract'by'someone'not'originally'party'to'it'
4. Beneficiary'provided'consideration'for'the'promise'
Case'
Findings'
6"1+&7)08%"9&:+/'/5"1;9*&'&:)$<"95&2&:=1)**"9&
>+?/&@A/B&C"18&:+)1DE&(1978)'HCA'
• Schick'Razor'Company'of'Canada'(consignor)'
shipped'37'cartons'of'razor'blades'from'Canada'
to'Sydney'on'the'“New'York'Star”,'a'ship'owned'
by'Blue'Star'Line'Ltd'(the'carrier)'
• Bill'of'lading'(sets'out'the'terms'of'the'contract'
of'carriage)'was'issued'by'Blue'Star'Line'Ltd'to'
Schick'
• Schic,'transmitted'the'bill'of'lading'to'Salmond'&'
Spraggon'(Australia)'Pty'Ltd'(the'consignee)'
• 'Bill'of'lading'contained'contractual'terms'which'
included:'
Ø High'Court'–'3-2'Findings:'Stevedore'could'take'
advantage'of'the'limitation'clause'as'a'matter'of'
contract'on'the'basis'of'agency'(Privity'Issue)'
o Barwick'CJ:'Relevant'provisions'of'the'bill'of'
lading'constituted'an'agreement,'rather'than'
an'offer,'for'which'the'stevedore'
subsequently'provided'consideration'by'
discharging'the'goods'
o Mason'and'Jacobs'JJ:'Relevant'provisions'of'
the'bill'of'lading'constituted'an'offer'which'
the'stevedore'accepted'by'discharging'the'
goods'(i.e.'a'unilateral'contract)'
Ø High'Court'–'4-1'(Barwick'CJ'dissenting)'
