First Principles of Business Law

11.10. Predicting the outcome

Having reviewed the relevant case law it is time to apply it to the facts of the case and predict the likely outcome should the case go to trial. Which of the following is the best prediction of the outcome in Lillian's case? Read both predictions carefully and try to work out exactly why one is more likely than the other.

(a) The term relied on by Paul only appeared on a document that would not normally be expected to contain contractual terms, and which Lillian did not sign. But, by signing another document that she knew contained contractual terms, Lillian appeared to be acknowledging the existence and acceptance of additional terms on other documents. In the absence of any suggestion of fraud or misrepresentation on Paul's part, Lillian would be bound by this acknowledgement. Accordingly the case of Causer v Browne can be distinguished on its facts and Paul will be able to avoid liability for the lost wristwatch.

(b) In the absence of any fraud or misrepresentation by Paul, Lillian would be bound by any terms that appeared in the written document that she signed because she knew it contained contractual terms. This is the effect of Toll (FGCT) v Alphapharm, a precedent that is binding on a NSW Local Court. But as regards terms contained on another document that would not be expected to contain contractual terms, a NSW Local Court would likely follow the precedent in Causer v Browne with the result that Paul will not able to avoid liability for the lost wristwatch.