1. Revision

2. Terms
2 types

3. Express Terms
Test for determining if it is a term
Guidelines

4. Express Terms - Guidelines
Was the representation included in a written document
When, in the negotiations, was the representation made
Did the representation sound promissory
How objectively important is the representation to the whole deal
Did either party have special knowledge about the subject matter of the representation

5. Implied Terms
2 sources of implied terms
2 types of terms implied by courts
3 types of terms implied as a matter of fact

6. Exemption Clauses
What are they
2 stage test
The 3 rules of contruction

7. Statutory Implied Terms
Terms of the Contract
Statutory Implied Terms
(Sweeney & O’Reilly
Chapter 7, pp164 – 170
Chapter 8, pp )

8. History Courts developed standard implied terms for sale of goods
These terms could be excluded by express agreement
In 1883, these terms were codified in the Sale of Goods Act
In 1970’s, State legislation provided for mandatory inclusion of terms in consumer contracts
State legislation was not uniform
In 1975, Trade Practices Act applied standard provisions across Australia
States then “filled in the gaps” with Fair Trading Acts
Sale of Goods Act still applies in non-consumer contracts

9. Terms Implied by Statute
Trade Practices Act
Services; and
Goods
Sale of Goods Act
Goods only
Where there is an overlap – Trade Practices Act applies

10. Application of Trade Practices Act
Applies only where
The vendor\supplier is subject to the Act
The purchaser is a consumer
The service is provided in the course of business

11. Application of Trade Practices Act
The supplier is subject to the Act if:
A trading, financial or foreign corporation
It is operating in a territory (e.g. NT)
The contract involves interstate trade
The contract involves overseas trade
The contract involves the Commonwealth or its organisations

12. Application of Trade Practices Act (s4B)
A person is a consumer if:
Price of goods\services <= $40,000; or
Goods\Services are of a type ordinarily acquired for personal, domestic or household use or consumption; or
Goods are a commercial road vehicle; and
Goods are not acquired:
For resale; or
To be used in commercial production or manufacture; or
To be used in the repair or treatment of goods or fixtures on land
In the course of an auction
ie one of the first 3 and not one of the last 4 items
Goods & Services
Goods Only

13. Is the Supplier a corporation?
Service
Is the Supplier a corporation?
Price <= $40,000
Commonwealth is the supplier
Supply in the course of a business
Personal, domestic or household use
Interstate or Overseas trade
Supplier operating in a Territory
Commercial Road Vehicle
Not used in manufacture etc
Not for Resale
Good
Trade Practices Act applies

14. Acquired for Personal Use
Crago v Multiquip (S&O p177)
Atkinson v Hasting Deering (Queensland) (S&O p177)
Note that the actual use is irrelevant

15. Does the TPA apply?
Jim buys a new lawn mower for $350 from Garden Supplies Pty Ltd
X Ltd buys a new BMW for $75,000 from Classy Motors Pty ltd for use by its Managing Director
Classy Motors buys a new BMW from BMW Imports Pty Ltd for $50,000 to fulfil the order to X Ltd
Sue, who is a farmer buys a tractor for use on her farm from Tractors Galore for $39,000
Betty and Tom buy a second hand bus for $52,000 to use as a campervan in a round Australia trip
Ford Motor Company buys $35,000 of paint to paint the cars it builds

16. In The Course of Business
Private contracts are not subject to the TPA
“Business” implies an ongoing undertaking for profit
Irrelevant if the buyer acquired goods\services in the course of the buyer’s business – it is the seller’s business which is relevant
Does not need to take place in the ordinary course of business – one-off transactions are covered

17. Application of Trade Practices Act
Goods includes:
Hire of goods
Ships, aircraft and other vehicles
Animals including fish
Minerals
Trees and crops
Gas and electricity
(Section 4 (1) Trade Practices Act)

18. Application of Trade Practices Act
A service is:
Performance of work with or without supply of goods
Provision of facilities for amusement, entertainment, recreation or instruction
Insurance contract
Banking contract
Contract in relation to lending of money
(Section 4 (1) Trade Practices Act)

19. Trade Practices Act Definitions
Service does not include
Supply of goods
Work under a contract of service
(Section 4 (1) Trade Practices Act)
E v Australian Red Cross Society (S&O p167)

20. Terms implied in the supply of Services
Services will be rendered with due care and skill
Materials supplied in connection with a service will be reasonably fit for the purpose for which they were supplied
(Section 74 (1) Trade Practices Act)

21. Terms implied in the supply of Services
Where consumer, expressly or impliedly, makes known purpose for which services are required or desired result
Then it is implied term that services and goods supplied in connection with the services
will be reasonably fit for that purpose; and
Might be reasonably expected to achieve the result
Unless
Consumer does not rely; or
It is unreasonable for consumer to rely
on the supplier’s skill or judgement
(Section 74 (2) Trade Practices Act)

22. Terms implied in the supply of Services
Exclusions
Transport contracts
Storage contracts
Insurance contracts
Architects and engineers (in relation to achieving a result)
(Section 74 (2) Trade Practices Act)
Read v Nerey (S&O p168)

23. Terms implied in the supply of Goods
Seller has the right to sell (s69(1)(a))
Buyer shall have quiet possession (s69(1)(b))
Goods are free from encumbrance (s69(1)(c))
Where a sale by description, goods match the description (s70)
Goods are of merchantable quality (s71(1))
Where a sale by sample, goods match the sample (s72)

24. Terms implied in the supply of Goods
Where
buyer has expressly or impliedly made known to the seller the purpose for which the goods were being purchased
In circumstances where seller knew, or ought to have known, that buyer was relying on the sellers skill or judgement
It is an implied term that the goods are fit for that purpose (s71(2))

25. Fitness for a Particular Purpose
The buyer expressly or impliedly made known to the seller the purpose for which the goods were acquired
The buyer relied on the seller’s skill and judgement
It was reasonable for the buyer to rely on the seller’s skill and judgement
The goods must be reasonably fit for the specified purpose
Carpet Call v Chan (S&O p181)

26. Merchantable Quality
The goods are as fit for their normal purpose or purposes as is reasonable to expect having regard to the price and other circumstances
Defect has not been specifically drawn to buyers attention before contract made
If buyer examines goods before sale, defect would not have been revealed by such examination

27. Correspondence with Sample
Bulk of goods must correspond with sample in quality
Buyer must have a reasonable opportunity to compare bulk with sample
Goods are free from any defect, rendering them unmerchantable, that would not be apparent on reasonable examination of the sample

28. Trade Practices Act Excluding Implied Terms
Implied terms cannot be excluded, restricted or modified (section 68 Trade Practices Act)

29. Limiting Liability Liability can be limited:
Where goods\services are not of a type ordinarily acquired for personal, domestic or household use
To :
Supplying the services again
Paying to have the services supplied again
(Section 68 (1) Trade Practices Act)
Liability cannot be limited where it would not be fair and reasonable to do so (Section 68A (2) Trade Practices Act)

30. Limiting Liability
Court will have regard to all circumstance but particularly:
Strength of bargaining positions
Whether buyer received an inducement to agree to the term
Whether the buyer had an opportunity to obtain goods\services from another source without the limitation
Whether the buyer knew of the term or could reasonably be expected to know of the term
Whether goods were manufactured or adapted to the special needs of the buyer
(Section 68A (3) Trade Practices Act)