Contracts

(Elements) Contracts on the Run
(Interpretation) Pacific Carriers Ltd v BNP Paribas [2004] HCA 35
- It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations.
- What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe.
- References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement.
- The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean.
- That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction
(Interpretation) Toll (FGT) v Alphapharm Pty Ltd (2004) 219 CLR 165
- where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature.
- Legal instruments of various kinds take their efficacy from signature or execution.
- Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution.
- It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.
Royal Botanic Gardens v South Sydney (2002) 240 CLR 45¹⁾
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) CLR 181 ²⁾
IATA v Ansett Australia Holdings Ltd (2008) 234 CLR 151,³⁾

¹⁾ p10]

²⁾ p11

³⁾ p53

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