Issue: Whether or not term regarding the vegan leather to be all-natural present in contract between Peter and ACS
Rule: Terms and conditions of Contract
A contract is formed between the customer and the supplier when;
In a contract, the rights and duties of the parties are decided on the basis of terms and conditions agreed upon in the contract, however, the terms might either be expressed clearly on paper or in verbal form. The terms might be taken into consideration by the common law in accordance with the conduct of the parties or conditions or by legal obligations.
Express terms are the terms expressed by the parties before the formation of contract and it comprises of statements determined at the time of contract and correct classification of such pre-contractual statements is considered as significant as, remedies are provided by the law accordingly.
In context of term of contract, the parties are required to plan the contract and the promise to abide by the contract is to be made by both the parties. In Ellul and Ellul v Oakes (1972), the Supreme Court of South held that the statement in the listing of the agent was not a part of the contract and so, Elluls were not provided with the contractual remedy. The intention to create legal relations should be determined objectively in the contract.
Terms of contract are considered as expressed when they are either displayed or delivered even if not discussed between the parties in writing or though notice board and tickets. However, the appropriate implementation of the term in the contract requires that such terms must be informed about or showed to the other party to the contract before the finalization of the contract. In case of Thornton v Shoe Lane Parking Ltd (1971), the court stated that because the exclusion clause could not be considered as the part of contract, protection to the defendant could not be provided.
The implied terms are the terms that are not talked about between the parties to the contract but, might be taken into consideration by common law. In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982), the court set out the conditions essential for implying a term, which stated that the terms must be obvious and clearly expressed.
Application: Peter and ACS entered into the contract after Peter discussed the nature of the materials sold by them. In terms of contract, it can be considered that he informed Martha about the environment consciousness among his vegan clients. He mentioned that his clients wanted shoes manufactured from eco-friendly, natural alternative to animal hide. However, he asked that vegan leather supplied by the ACS was ‘all-natural’, which can be considered as implied terms of the contract because all-natural itself explains that the shoe material must not contain any synthetic material but should be composed of entirely natural components.
Furthermore, even after no mention about the specific material to be used in manufacturing of shoes, it was explicitly clear that no synthetic material should be used as raw material.
Conclusion: It was the implied term in contract between Peter and ACS that the vegan leather used in the shoe manufacturing would be ‘all-natural’ and nothing synthetic will be included in it.
Issue: Was there the existence of implied term in contract between Peter and Samantha that the shoes will be manufactured with all-natural vegan leather without any use of synthetic material?
Rule: Implied term of Contract;
In Common law, terms are usually considered as implicit or implied when it is providing full idea about the purpose of the parties. The common law can involve a term which requires the parties to perform the conditions mentioned essentially for the contract to be accomplished effectively. However, sometimes, the courts might inquire about that if the parties have specifically decided to the term while creating the contract i.e. known as ad hoc implied terms in the contract.
Application: Samantha ordered a pair of customized black boat shoes from Peter made of vegan leather. After a few days, Samantha called Peter and threatened him to sue him. According to her, within minutes of her putting on the shoes, she got infected with painful red patches and blisters on her feet. Samantha was allergic to synthetic colours due to which she was infected.
It was not implied by Samantha when she made the order for the shoes that she was allergic to some kind of chemical or the material of the shoe should be all-natural and even she did not discuss about the material being used in manufacturing of the shoes.
Conclusion: There was no implied term in contract between Samantha and Peter that the shoes will be manufactured with all-natural vegan leather without any use of synthetic material.
Issue: To find out whether the colour of sneakers soles is a condition or a warranty of the contract?
Rules: Condition V/s Warranty of Contract
Under the contract of sale, there are certain conditions that need to be fulfilled as it is demanded by the contract. Conditions are a part of terms of contract which may be expressed in written or oral form. The terms of the contract are of two types implied and expressed. Expressed terms are those that have been discussed prior to the conclusion of the contract. Implied terms on the other hand are those that are implied by law or a statute.
Warranty is a promise that is offered by the business to the other party. According to the Australian Consumer Law, once the consumer buys the product or service this promise becomes the right of the consumer that can be enforced. There are different forms of warranties like
Common warranty under which the business makes extra promises which are generally related to the quality or standard of products.
Manufacturer’s warranty also called warranty against defects under which the business promises either to fix the problem or defect related to the product or the replace it with another one or to compensate for the loss.
In the case of Interfoto Pictures v Stiletto Visual Programs 1989, it was ruled by the court that in order to imply a condition, it is important to bring it in the notice of the customer and also to make it clear.
Geoffrey had clearly mentioned to Peter about the colour of the sole which was supposed to be white and hence, this can be considered as expressed terms of the contract. Condition of the contract of sale is something that is pre discussed and hence, the business is expected to accomplish the demands of the customer according to the rules. The sign that read as “We accept no responsibility for breach of any warranty” does not mean that Peter cannot be held responsible for the wrong colouring of the sole of sneakers as the colour of the sneaker as discussed earlier falls under the conditions of contract and not as warranty of contract.
Conclusion: This can be regarded as breach of contract and not breach of warranty.
Issue: Whether Peter is responsible for the wrong colour of the sneakers soles.
Rules: Terms of Contract
Every contract has terms and conditions which marks the rights as well as responsibilities of both the party involved in the contract. Conditions of the contract are usually pre discussed as they are demanded by both the parties. There are two types of conditions or terms of the contract and they are, expressed terms and implied terms. Expressed terms are those terms that are pre discussed between both the parties before the conclusion of the contract. Second is the implied terms that are not explicitly mentioned but needs to be followed like any common law or through a statute. The terms of contract can be written or verbal. It is important to fulfil the demands mentioned by the customer discussed during the time of the contract.
Warranty is something that is voluntarily promised by the seller to the customer which is related to the quality of the product and services. Warranty and conditions of the contract are different things. In the case Ellul and Ellul v Oakes 1972 the Supreme Court of South Australia gave the decision that the condition, pre discussed before the conclusion of the contract is a part of the contract and needs to be fulfilled.
Peter here is clearly responsible for the wrong colour of the sneakers soles as according to the terms and conditions of the contract, Geoffrey had already mentioned that he wanted white colour soles. But, Peter failed in this and gave him caramel coloured sole. And on the basis of this, Geoffrey can complaint against him as he failed to fulfil the pre discussed conditions of the contract.
ACCC, 2018. Entering into a contract. [Online] Available at: https://www.accc.gov.au/consumers/contracts-agreements/entering-into-a-contract [Accessed 31 August 2018].
ACCC, 2018. Offering warranties. [Online] Available at: https://www.accc.gov.au/business/treating-customers-fairly/offering-warranties [Accessed 31 August 2018].
ACCC, 2018. Standard terms and conditions. [Online] Available at: https://www.accc.gov.au/system/files/ACCC%20standard%20terms%20and%20conditions.pdf [Accessed 31 August 2018].
ACCC, 2018. Warranties. [Online] Available at: https://www.accc.gov.au/consumers/consumer-rights-guarantees/warranties [Accessed 2018].
ACL, 2013. Ellul and Ellul v Oakes (1972) 3 SASR 377, Supreme Court of South Australia. [Online] Available at: https://www.australiancontractlaw.com/cases/ellul.html [Accessed 31 August 2018].
ACL, 2013. Interfoto Pictures v Stiletto Visual Programs 1989) QB 433. [Online] Available at: https://www.australiancontractlaw.com/cases/interfoto.html [Accessed 31 August 2018].
Australian Contract Law, 2018. Terms of a contract. [Online] Available at: https://www.australiancontractlaw.com/law/scope-terms.html [Accessed 31 August 2018].
Bayer, 2018. Terms and Conditions of Sale. [Online] Available at: https://www.bayer.com.au/au_terms-conditions-of-sale.php [Accessed 31 August 2018].
Carter, J.W., 2013. Contract Law in Australia. LexisNexis Butterworths.
Clarke, J., 2013. Ellul and Ellul v Oakes. [Online] Available at: https://www.australiancontractlaw.com/cases/ellul.html [Accessed 31 August 2018].
Clarke, J., 2013. Terms of a contract. [Online] Available at: https://www.australiancontractlaw.com/law/scope-terms.html [Accessed 31 August 2018].
Clarke, J., 2013. Thornton v Shoe Lane Parking Ltd. [Online] Available at: https://www.australiancontractlaw.com/cases/thornton.html [Accessed 31 August 2018].
Queensland Government, 2014. General Contract Conditions. [Online] Available at: https://www.hpw.qld.gov.au/SiteCollectionDocuments/GeneralContractConditionsV2.pdf [Accessed 31 August 2018].
Small Business Development Corporation, 2018. Contracts and agreements. [Online] Available at: https://www.smallbusiness.wa.gov.au/business-advice/legal-essentials/contracts-and-agreements [Accessed 31 August 2018].
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