Audio recording 11.1 transcript

Chapter 11 is about the terms of the contract and identifying whether or not the terms have been incorporated into the contract. And that is an objective test, and we've seen the objective principle already. And the easiest way to make sure a term is incorporated into the contract is through signature. So, we have a pretty strict rule that a party is bound by the terms that they sign. And that is generally quite straightforward, but those terms still need to be interpreted, which we'll look at in chapter twelve and implied terms in chapter thirteen. And there might be control of those terms, if they're unfair as well. And we look at that in chapter fifteen. And then subsequent chapters like sixteen, seventeen, eighteen, we'll look at whether or not a party should be able to enforce those terms, if the other side has only entered into them as a result of duress, or undue influence, or misrepresentation, for example. But in principle, the party is bound by what they sign. And if you don't have signature, so if there's no signed written contract, then the question is whether or not reasonable steps have been taken to bring the term to the parties notice. And the more onerous the term, more extensive the steps that need to be taken to incorporate a term into the contract. And it's important that those steps and that reasonable notice must be given before the contract is made. So, timing is important because the idea is that when you bring these terms to the other side's attention, to the party's attention, then they have a choice whether or not they wish to contract on such onerous terms. And freedom of contract means it's important that they have that choice, whether or not to enter into the contract. And at the end of the chapter, there's a section on the ‘parol evidence rule’ as well, which is a rule which has a bad reputation. But I think that there are good reasons to have as a starting point, the idea that where the parties have put their agreements into writing, then that document contains the entirety of their obligations. And I think commercial parties in particular might appreciate such documentary formalism, if you like. And when you think that contractual rights might be assigned to third parties who are not the original parties to the contract, then it helps certainty, it helps commercial certainty, contractual certainty, to have everything in one place. So, although the law commission has said that it doesn't think the rule still serves any purpose, and it is often criticized, and it can very clearly be pushed aside by evidence of contrary intention, I think it's important to bear in mind that the parol evidence rule does still exist, it still affects a positive law at the moment. That's what Lord Hobhouse says in the House of Lords in Shogun Finance. And it fits with how we might want to think about commercial certainty, and how commercial parties can achieve certainty in their contractual dealings.


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