Unsigned agreements – incorporating terms – limitation, exemption or exclusion clauses
This case turns on its own facts. It is an example of incorporation of terms, including limitation of liability, by reference to another document.
The parties entered into a contract under which Morgan Consulting Engineers Pty Ltd (defendant) was to provide engineering services to Surfstone Pty Ltd and another party (plaintiffs). The contract was formed on the basis of an unsigned fee proposal, which nominated a fee and stated that the services would be supplied 'generally in accordance with the ACEA Guideline Terms of Agreement' (ACEA terms). The defendant did not provide the ACEA terms to the plaintiffs. Clause 4.3 of the ACEA terms limited the defendant's liability, including in tort law, to one year from completion of the services.
The plaintiffs claimed that the defendant was negligent. The defendant relied on the ACEA terms, particularly the limitation of liability. The plaintiffs submitted that there was no evidence to show that the defendant had drawn the limiting term to its attention and accordingly that clause 4.3 was not incorporated into the contract.
Justice Peter Lyons found that the ACEA terms were incorporated into the contract.
His Honour concluded that it is not always necessary to draw an exemption clause to a party's attention in order for them to be bound by it. He identified the fundamental question as being 'whether the offeror is reasonably entitled to conclude that the acceptor has accepted the terms in the document, including the exemption clause'. He found that the plaintiffs had been provided with the fee proposal prior to formation of the contract, had a reasonable opportunity to consider the terms and had behaved in a way which manifested acceptance of those terms.