The principles found in the ticket cases
169 Identification of the occasion of the formation of the relevant contract is pivotal in the ticket cases. It is axiomatic that if one party purports to give the other notice of the terms on which they intend to contract after the agreement has been formed, those terms do not form part of the contract: Oceanic Sun Line v Fay. This was made clear by Brandon J in Daly v General Steam Navigation Co Ltd [1979] 1 Lloyd's Rep 257, 262 ("The Dragon") where his Honour noted that if the carrier's conditions are not incorporated into the contract when it is made, the carrier cannot subsequently, "by issuing a ticket containing the conditions concerned, however clearly referred to in it, introduce such conditions into the contract when it was not subject to them originally". A unilateral attempt to include conditions, even if only a short time after a contract is concluded, does not change this outcome: NAB v Dionys at [53].
170 Where the terms and conditions are made available prior to the contract's formation, a second question arises as to the sufficiency of the notice given of them. Indeed, it arises in two ways. First, in relation to whether, prior to the contract's formation, the customer was given "reasonable notice" of the terms said to form part of the agreement. Second, in relation to so-called "unusual" or "onerous" terms (such as exemption clauses), whether the party relying on them had done all that was reasonably necessary to bring them to the customer's attention. As a review of the cases disclose, the distinction between these two issues is not always maintained. Regularly, the issue at hand is whether an exclusion clause or other limitation of liability clause has been brought to the customer's attention and thereby incorporated into the agreements. Often, those questions are determined without reference to whether, if those clauses are not incorporated, the remaining terms on the ticket or which are otherwise displayed are part of the agreement. Nevertheless, common to each is that what amounts to satisfactory notice is very much fact specific, with the result that drawing guiding principles as to this issue is difficult if not impossible. This has, perhaps, led to some scepticism as to whether any principled approach exists or that the courts, "while relying ostensibly on conventional techniques, are fundamentally concerned not with reasonable notice, but with the appropriateness of the term in question in the context of the relationship between the parties": Horne J and Lewis C, Fitting Pigs into Pokes - the Incorporation of Terms in Contract (1998) 12 JCL 237. Such criticism may be unjustified. The process of ascertaining whether particular terms are part of a concluded agreement requires the objective assessment of the circumstances with the relevant question being "whether a contracting party can be reasonably taken to have assented to a particular term, not whether a contracting party should be subject to an unreasonable term": Maxitherm Boilers Pty Ltd v Pacific Dunlop Ltd [1998] 4 VR 559, 569 (Buchanan JA) (Maxitherm Boilers v Pacific Dunlop).
171 A useful starting point in relation to the incorporation of terms generally is the seminal case of Parker v South Eastern Railway. It involved a customer who received a ticket on the deposit of articles in a cloakroom. On the reverse of the ticket was a notice stating that the company would not be responsible for any package exceeding the value of £10. A placard containing the same condition was displayed in the cloakroom. In considering whether the exclusionary provision formed part of the contract, Mellish LJ (at 421) observed that:
If in the course of making a contract one party delivers to another a paper containing writing, and the party receiving the paper knows that the paper contains conditions which the party delivering it intends to constitute the contract, I have no doubt that the party receiving the party does, by receiving and keeping it, assent to the conditions contained in it, although he does not read them and does not know what they are.
172 His Lordship (at 423) then noted that the proper direction to give a jury for it to determine whether the condition was a term of the contract was (emphasis added):
That if the person receiving the ticket did not see or know that there was any writing on the ticket, he is not bound by the conditions; that if he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions; that if he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could see there was writing upon it, was, in the opinion of the jury, reasonable notice that the writing contained conditions.
173 As appears from his Lordship's observations, the touchstone of incorporation is the timely giving of notice of the terms to the contracting party who, with the opportunity to consider them, proceeds to enter into the contractual relationship. The contracting party's objective conduct indicates their acceptance of the terms. Drawing on the above passages in Parker v South Eastern Railways, Professor JW Carter in Carter on Contract (LexisNexis, 2021, 10-170) suggests that the following three questions can be posed in considering the application of the ticket cases:
(a) Did the person who received the ticket know that there was writing on the ticket?
(b) Did that person know that the ticket referred to terms?
(c) Did the party relying on the terms do what was reasonable to bring notice of the existence of the terms sought to be incorporated to the other party's attention?
174 Whilst the first and second are legally uncontentious and require no elaboration, the concept of "reasonable notice" raised in the third requires further analysis.
175 In that latter regard, in Hood v Anchor Line (Henderson Bros) [1918] AC 837 (Hood v Anchor Line), the House of Lords considered this issue in the context of a customer who had purchased a ticket with a condition limiting the liability of the steamship proprietor for loss occasioned to the passenger or their property to £10. An envelope containing the purchased ticket, had a printed notice on it stating that it was subject to conditions and that "passengers are particularly requested to carefully read the above contract". In approving the approach in Parker v South East Railway, the House of Lords held that reasonable steps had been taken to bring the condition to the plaintiff's knowledge. Viscount Haldane (at 844) framed the question as being whether the company had done all that was reasonably necessary as a matter of ordinary practice to give the customer notice of the particular condition. The issue of reasonable notice (at 844) was a question of fact which required consideration of all the circumstances and the situation of the parties. Lord Dunedin (at 847) held that the answer depended on both the circumstances of the particular case as well as the class of case, and ultimately concluded that the carrier had done what was reasonably sufficient to bring to the customer's notice the existence of the restriction on which it relied. Importantly, his Lordship implicitly differentiated between a clause which was usual and one that was not. His comments about doing that which was reasonable to bring the customer's attention to the clause was confined to "usual" clauses (at 846 - 847). Lord Finlay LC and Lord Parmoor considered the question in terms of whether the defendant had taken steps that were reasonably sufficient to give the customer notice that the carriage was subject to the conditions set out. In the reasons of the latter can be found the origins of the principles of the ticket cases as to when the contract in question is formed. At 848 - 849 Lord Parmoor said:
If an intending passenger; either personally or through his agent, has reasonable notice that the ticket or document handed to him by a carrier contains certain conditions, and accepts the document or ticket as handed to him without objection, and without taking the trouble to make himself acquainted with such conditions, he must be taken to have assented to them, and they thereupon become evidence of the contract of carriage made between such passenger and the carrier.
176 The reference to the "acceptance" of the ticket without objection necessarily connotes the opportunity to consider the ticket's terms in order to ascertain whether they are acceptable and the entitlement and ability to then accept or reject them. Similar reasoning was adopted in the deliberations of the High Court in MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125 (MacRobertson Miller Airline) where the issue under consideration was whether an airline ticket was chargeable with stamp duty as an agreement or memorandum of agreement. The terms printed on the airline ticket, which had been issued on payment of the fare, reserved to the carrier the right to abandon any flight, to cancel any booking, and to refuse to carry the passenger without having to incur any liability. The High Court held that the ticket did not record the terms of an agreement, but instead constituted an offer which could subsequently be accepted by conduct. Each member of the Court, however, adopted different reasons in reaching their conclusion.
177 Barwick CJ held (at 133) that the exemption, being the right to cancel any flight, "fully occupies the whole area of possible obligation, leaving no room for the existence of a contract of carriage". His Honour ultimately concluded that there was no contract until the airline provided the passenger with a seat on the airplane. Stephen J (at 137) identified that the "conventional analysis" "in transactions involving the issue of a ticket in return for payment of a fare and the subsequent performance of the contract by the act of transportation, is to regard the ticket as an offer, the contract being made upon acceptance of that offer by the passenger, usually by conduct". Thus, acceptance will normally be by either an overt act consistent only with acceptance, or alternatively, through the passenger's failure to reject the offer after having an opportunity to consider the conditions of carriage. Jacobs J agreed with Stephen J that formation of the contract could not precede the notification of special conditions, and the ticket simply recorded the terms of an offer made by an airline. Stephen J highlighted the difficulty of applying the offer and acceptance model to this type of transaction at 136-137:
This doctrine, of the formation of contracts by offer and acceptance, encounters difficulties when sought to be applied, outside the realms of commerce and conveyancing, to the everyday contractual situations which are a feature of life in modern urban communities. Contracts for the carriage of passengers, one of the most common classes of contract in a commuter society and one which ordinarily involves the attempted imposition of contractual restrictions upon the passenger's rights should he suffer loss or injury, provide an instance of these difficulties … .the contract being "inferred from the acquiescence of the carrier in the presence of the passenger on the conveyance" - Lord Dunedin in Hood v Anchor Line [1918] AC 837 at 846, and see Wilkie v London Passenger Transport Board [1947] 1 All ER 258, per Lord Greene MR, at 259.
178 The consequence of this analysis was that the proffering of a ticket amounted to the making of an offer such that the contract was not formed at that time. That offer remained open, affording the customer a reasonable opportunity to consider its terms and conditions, and it might subsequently be accepted by conduct. It followed that despite the issuing of a ticket "there was no agreement or memorandum of agreement in writing, hence nothing that was chargeable with stamp duty": Oceanic Sun Line v Fay at 207 (Wilson and Toohey JJ).
179 The mention by Stephen J in his reasons that the opportunity for a passenger to ascertain the condition which the carrier seeks to impose would be "rarely availed of", is not unimportant. The view is sometimes expressed that the law relevant to the ticket cases is based on the fiction that where a ticket is retained without objection, the non-drafting party has read and agrees with all its contents; or the fiction that where the ticket is retained the non-drafting party is prepared to accept, even without reading it, whatever is in it: Freilich A & Webb E, The Incorporation of Contractual Terms in Unsigned Documents - Is it Time for a Realistic, Consumer - Friendly Approach? (2009) 34(2) University of Western Australia Law Review 261 at 263. Similar concerns were expressed by Lord Denning MR in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, 169 where his Lordship said:
Based on the theory that the customer, on being handed the ticket, could refuse it and decline to enter into a contract on those terms. He could ask for his money back. That theory was, of course, a fiction. No customer in a thousand ever read the conditions. If he had stopped to do so, he would have missed the train or the boat.
180 With respect, notions that the formation of contracts in the area roughly described as the ticket cases involves a fiction are somewhat misplaced. Based on the objective theory of contract the question of whether a particular term or condition formed part of a contract is not answered by asking "whether the person affected by the clause actually knew of it (a subjective test) but rather whether he or she had the means of actually knowing about it (an objective test)": Davis, Contract: General Principles - The Laws of Australia (Thomson, 2006) at 416 (Davis). To similar effect are the comments in Toll v Alphapharm at 179 [40] that:
This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. 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.
(Citations omitted).
181 It follows that when, in the course of transactional dealings leading to the formation of a contract, one party is given appropriate notice of the terms on which the other is prepared to contract and then proceeds to enter into the contract, by their conduct they have objectively indicated acceptance of those terms. On the other hand, matters of policy and pragmatics are involved in the conclusion that the agreement so formed does not include so called "unusual" or "onerous" terms which by the same conduct, the parties have indicated their intention to include in their contract, but are excluded because insufficient notice of them was given.
182 Subsequent cases have sought to distinguish the reasoning in MacRobertson Miller Airline. In Oceanic Sun Line v Fay, a case also involving the creation of a passage contract for a cruise on an ocean liner, the High Court was required to ascertain the occasion on which the passage contract was formed. Resolution of that issue would determine the scope of its terms. On the occasion of the payment of the fare the passenger was handed an "exchange order" which stated that a ticket would be provided to the holder on the boarding of the vessel. It included a term permitting the carrier to cancel the cruise. The passenger obtained his ticket when he arrived in Greece for the purpose of boarding the vessel. Upon the ticket were printed conditions which included both a Greek choice of law and a Greek exclusive jurisdiction clause. The High Court noted (at 207) that the ratio in MacRobertson Miller Airline "does not determine the question whether, in the present case, there was a contract once the exchange order issued allocating a particular cabin to the respondent and with all remaining to be done being the exchange of the order for a ticket in Athens". Wilson and Toohey JJ (at 207) concluded that the contract was formed when the exchange order was issued to the passenger and held that:
Once it is accepted that there was a contract of carriage concluded between the parties in Sydney, there are formidable obstacles in the path of the appellant's argument that the conditions on the ticket and in particular the submission to Greek jurisdiction formed part of that contract. Yeldham J. was surely right in his view "that the brochure was not contractual in nature and did not enter into or form any part of the relevant contract of carriage".
183 Brennan J (at 226) rejected the defendant's submission that the exemption clause in the exchange order was comparable with the clauses in the ticket in MacRobertson Miller Airline:
As the exemption clause in the exchange order is significantly different from the exemption clauses in the ticket in MacRobertson Miller, it is not necessary to analyse the construction which Barwick C.J. and Jacobs J. placed on those clauses in that case. The exemption indorsed on the exchange order is not so wide as to preclude the existence of any contractual obligation on the part of the defendant when the exchange order was issued. To the contrary, the exchange order contains promises to refund the fare if the cruise is cancelled and to exchange the exchange order for a "Sun Line ticket when boarding vessel" if the cruise is to proceed. So far as appears from the terms of the exchange order, if the cruise proceeds, the passenger is contractually entitled on presentation of the exchange order to a ticket entitling him to be carried. The defendant reserves no right to cancel any ticket or booking or to refuse to carry the passenger named in the exchange order if the booked cruise proceeds.
184 His Honour then went on (at 227) to reject the application of the "conventional analysis" in the following terms:
But the conventional analysis cannot be applied to a ticket which the defendant is obliged to issue in exchange for an exchange order when a passenger is boarding a vessel. It can hardly have been the parties' intention at the time when the passenger pays his fare that the ticket to be given him on boarding should be a mere offer of carriage. Much less could it have been their intention that the offer might contain exemption clauses which were unknown to the passenger when the original contract was made. The arrangements contemplated at the time of the issue of the exchange order for exchanging that document for a ticket cannot reasonably support the hypothesis that when issued the ticket might be a mere offer containing exemption clauses which should bind the plaintiff only upon subsequent acceptance.
185 The fact that the exchange order included a term entitling Oceanic Sun to cancel the cruise at any time was found not to have the same significance which Barwick CJ had given to the cognate clause in MacRobertson Miller Airline. Had its effect been that no agreement was entered into because the carrier's obligations were illusory, it would have followed that the agreement was only entered into once the ticket was issued and the passenger had presented themselves for boarding.
186 Although the result in Oceanic Sun Line v Fay had the consequence that the choice of law and exclusive jurisdiction clauses formed no part of the contract between the parties, neither were any of the other terms and conditions contained in the ticket. If the agreement were confined to the terms of the exchange order, its scope would be limited to those matters being the ship on which the cruise was to occur, the sailing date, time of sailing and of embarkation, the ports of departure and arrival, cabin number, and the fare charged and other amounts payable by the passengers. It seems to have been assumed that a reasonable person would have regarded the parties as having intended to contract on those bare terms at the time of the issue of the exchange order. That is with respect somewhat improbable and it calls to mind the observations of Lord Parmoor in Hood v Anchor Line (at 849):
It is, however, an extravagant assumption that a passenger by an ocean-going steamship from New York to Glasgow would expect to be carried without a contract containing some conditions, or that he would regard the ticket issued to him merely as a voucher or receipt for payment.
187 A similar question as to the timing of the formation of a passage contract arose in Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1991) 22 NSWLR 1 (Baltic Shipping). There, the passenger responded to an advertisement for an ocean cruise appearing in a travel brochure, paid a deposit through a travel agent, and received a booking acknowledgement. She subsequently received a booking form which contained the statement that the document was not a travel document and that a contract of carriage was made "only at the time of issuing of tickets" and would be subject to the terms and conditions on the ticket. It advised that the terms and regulations of travel were available at the offices of the travel agent. The booking form also contained details of penalties for cancellation of the booking. The plaintiff paid the balance of the fare approximately one month later and subsequently received her ticket approximately two weeks prior to the departure of the cruise. The ticket contained certain exclusions limiting the liability of the cruise line for personal injury and damage to personal effects. The plaintiff sustained physical injury and shock when the cruise liner sank on the tenth day of the cruise and her belongings were lost. Relevant to the appeal was her claim for personal injuries, the outcome of which turned on the occasion of the formation of the contract of passage and its terms. Gleeson CJ held (at 7) that there was no reason to disregard the statement in the booking form that the contract of carriage would only arise when the ticket was issued. This had the consequence of displacing the analysis exemplified by Hood v Anchor Line as well as the analysis in Oceanic Sun Line v Fay that the contract came into effect on the issuing of the booking form, or when the balance of the fare was paid. However, it also had the consequence that the plaintiff was not bound by the terms and conditions on the ticket which were neither drawn to her notice nor, in respect of which, she was not given an opportunity to decline. The point here is that, although the notice on the booking form deferred the occasion on which the contract came into effect, the carrier was only entitled to rely upon the terms and conditions in the ticket if reasonable notice of them had to be given prior to the contract's formation. On the Chief Justice's reasoning, the payment of the fare by the passenger was an offer which was accepted by the issuing of the ticket. On that analysis, the passenger did not have any opportunity to consider the terms and conditions contained in that ticket which, therefore, did not form part of the passage contract.
188 It is relevant that Gleeson CJ identified the twin levels of notice required in circumstances where terms and conditions are sought to be incorporated by notice. He noted (at 8) that the statement on the booking form that the terms and conditions were available at the travel agent may have been sufficient notice of many of the terms of carriage and may have informed the passenger that there were detailed conditions of carriage which were available for inspection if she were interested. However, in view of the nature and extent of the limitation clauses, his Honour (at 8 - 9) did not "regard such a statement as adequate notice of the existence of clauses significantly limiting the appellant's common law liability in events such as those which occurred in the present case".
189 Kirby P also addressed the submission that the "conventional analysis" applied such that the contract of passage occurred when the ticket was ultimately issued or after the passenger had been given a reasonable opportunity to consider its terms and conditions and opted to commence the carriage. Whilst his Honour noted that the approach adopted in Hood v Anchor Line, being the possible origin of the conventional analysis, was of some antiquity and possibly overtaken by more modern concepts of contractual formation: The Dragon: in the circumstances of the notice on the booking form, he was prepared to accept that the contract of carriage did not come into effect until the ticket was issued. However, he concluded (at 25) that Baltic Shipping had not brought the unusual terms and conditions of travel, including the limitations for liability in relation to personal injury, to the plaintiff's knowledge. That being so, the plaintiff had not been given a reasonable opportunity to consider and agree to them and that, once the contract was made, it was not possible to unilaterally impose additional conditions of travel. His Honour appears to have reached this conclusion on the basis that the terms on which the carrier sought to rely were unusual provisions although no differentiation was made between them and other terms of carriage.
190 Mahoney JA (dissenting) adopted a different view. His Honour accepted that a contract was entered into on the making of the reservation and the payment of a deposit. He held, however, that it was not the contract of carriage on which the plaintiff sued and pursuant to which Baltic Shipping agreed to carry her on the vessel. Like Kirby P his Honour (at 44 - 45) was prepared to give full force and effect to the booking form which eschewed the existence of any contract of carriage until the ticket was issued. He was also prepared to give effect to the statements on the booking form that when a contract of carriage came into existence it would be in accordance with the terms and conditions printed on the ticket actually issued. It followed that when the ticket was issued and Baltic Shipping came under the obligation to carry the plaintiff, it was subject to the terms and conditions of that ticket. His Honour distinguished the analysis of Brennan J in Oceanic Sun Line v Fay because the passenger in that case was contractually entitled on the presentation of the exchange order to be issued with a ticket entitling him to be carried. There was no such entitlement in the matter before his Honour.
191 His Honour identified that there was no special principle in the approach taken by the Courts in relation to the incorporation of terms and conditions in ticket contracts. It is one of merely applying the ordinary principles concerning the construction of contractual negotiations where an agreement is not wholly in writing. One such principle is that where the contract is to be discerned from what the parties have said and done and the writing they have used, terms proffered by the carrier may not be incorporated into the contract where it has not done all that was reasonably necessary to bring them to the passenger's notice. Without being explicit, his Honour recognised (at 46 - 47) this principle as being possibly anomalous in that, whilst the carrier has expressly identified that it is only prepared to carry the passenger on its terms and conditions, the Courts have refused to conclude that the terms or, at least, all of them are part of the contract if reasonable notice of them had not been given. That has the consequence of permitting the passenger to accept an offer which the carrier did not make, and hold the carrier to a contract which it did not intend to enter into. Nevertheless, this was the result of the application of the objective theory of contract. On the facts of the matter his Honour concluded that the carrier had made it expressly clear that it would only provide passage on the terms and conditions identified and there was no basis, being either as to the time of the formation of the carriage contract or as to what a reasonable person would perceive the terms of booking were, which would alter that.
192 The authorities have developed to the stage where "the requirement for notice is stricter in the case of particularly stringent limiting or excluding terms than in the case of other types of terms": Davis at 412. If a court concludes that the document is one in which special conditions would not usually be expected, then "merely proffering or displaying the document is not sufficient to satisfy the reasonable notice test": Davis at 414: with the consequence that those special conditions would not form part of the agreement. For example, Lord Denning in Thornton suggested that "an unexpectedly stringent or harsh exclusion clause would have to be presented in red writing with a red hand pointing to it for sufficient notice to be given to the customer". The courts may require more, such as the positive act of drawing attention to a particular term. In Oceanic Sun Line v Fay, Brennan J (at 229) stated that "in differing circumstances, different steps may be needed to bring an exemption clause to a passenger's notice, especially if the clause is an unusual one". Buchanan JA echoed similar sentiments in Maxitherm Boilers at 569, but recognised that the focus should not be on whether a party should be subject to an unreasonable term:
As I have said, in my opinion the inclusion of an unusual term, at least in an unsigned document, may require its proponent to take special steps to bring it to the attention of the other party, for otherwise it may not be reasonable to assume consent to the term. Whether special steps are required, and what those steps must be, will depend upon the circumstances of each case. Further, I think that a term may be unusual because it is more than ordinarily onerous. However, I do not consider that the mere fact that a provision is onerous entitles a court applying the common law to reject it as a term unless special steps have been taken to draw attention to it. The relevant question is whether a contracting party can be reasonably taken to have assented to a particular term, not whether a contracting party should be subject to an unreasonable term.
193 The concern expressed by his Honour in the latter part of that passage is not consistent with what appears to be now well accepted; namely that in order to incorporate onerous terms, more than mere reasonable notice is required. The party proffering the term must do all that is reasonably necessary to bring it to the other's attention. On the other hand, his Honour's observations highlight that the principle is not justifiable by reference to the standard concepts of the objective theory of contract but is based on pragmatics and a crudely formed public policy of consumer protection.
194 The extent to which one party is to prove that reasonable notice of limiting or unusual clauses was provided to the other party is not without limit. The learned authors of Cheshire and Fifoot (at 10.70) recognise this point and provide the following explanation (citations omitted):
In none of the cases, however, has the court required that the limiting term must have been read (let alone understood) for a party to be bound by it. Such a requirement would have been unrealistic. But more than acceptance or receipt of the document may be required. In general an effort should be made to bring it to the attention of the other party that the document contains limiting terms. Limiting terms may not be hidden away or slipped in underhand. But if a reasonable effort has been made to give notice of their existence, there is no objection to their incorporation, whether they have been read or not.
195 This is consistent with questions of onus in contractual disputes. In the ordinary course the onus rests on the plaintiff alleging a breach of contract to prove all elements necessary to establish the defendant's liability. However, a special rule applies in relation to certain terms that "would defeat the legitimate transactional expectations of the parties": NC Seddon, RA Bigwood and MP Ellinghaus, Cheshire and Fifoot's Law of Contract (10th ed, 2012) at [10.66] (Cheshire and Fifoot). In such cases where a limiting or unusual term is sought to be enforced, the defendant will bear the onus of proving that it was incorporated into the contract: Causer v Browne [1952] VLR 1 at 5 - 7; NAB v Dionys [56] - [59], [165].
196 The decision in that last-mentioned case provides a further instance of where an attempted incorporation of an unsigned document into a contractual arrangement failed due to a lack of reasonable notice. Ms Dionys had opened an account with the defendant bank. She had met with an officer at the bank's Marrickville branch and signed an authority card for the account to be opened in her name. It recorded her as being the only authorised signatory on the account. The card was also signed by an officer on the bank's behalf. Whilst the bank officer who had attended on Ms Dionys gave evidence of his regular practice of handing to the customer opening an account a pamphlet copy of the NAB Business Products Terms and Conditions (NAB Conditions), it was determined that his evidence was insufficient to establish that he had done so on this occasion. One important issue was whether cl 5.18 of those conditions formed part of the agreement between the bank and Ms Dionys as its customer. That clause read as follows:
You must check your statements
Without limiting any part of these terms and conditions for your account, you must promptly review your statement of account to check for and tell NAB of any transaction recorded on your statement that you suspect for any reason that you did not authorise or for which the information recorded is incorrect. If you do not, then subject to any applicable law, you do not have any right to make a claim against NAB in respect of such a matter (for example, a forged cheque).
197 This was held to be an "unusual condition" because it went beyond the general law by imposing substantially more onerous duties on customers and limiting their rights to claim compensation in respect of unauthorised transactions facilitated by the bank. It followed that the bank bore the onus of establishing that it was incorporated into the agreement. Sackville AJA (with whom Macfarlan JA and White J agreed) held that the agreement was concluded when Ms Dionys signed the authority card, which on the evidence, could not be said to be before she received the booklet containing the terms and conditions. The authority card made no express reference to the NAB conditions such that they were not incorporated into the agreement. His Honour concluded at [84] that there was no indication to a "hypothetical reasonable observer that the agreement between NAB and Ms Dionys would not be finalised until she received the Booklet and had an opportunity to consider whether she would accept the NAB Conditions". However, he also held that, in the event this conclusion was incorrect, it would be necessary to determine whether the steps taken by NAB were sufficient to incorporate cl 5.18 into the agreement. As Ms Dionys was never asked to sign the booklet or to acknowledge its terms in writing, that clause could only form part of the agreement if she accepted, or at least had the opportunity of accepting it. His Honour observed that if it were assumed that Ms Dionys was given the pamphlet, "NAB would have to show that it had done all that was reasonably necessary to bring any "unusual conditions" in the NAB Conditions to Ms Dionys' attention". He held that this had not occurred where the clause was one contained in a booklet of some 71 pages, and the customer's attention was not drawn to it. His Honour said (at [88]):
88 In my view, NAB did not take the steps reasonably necessary to bring cl 5.18 to Ms Dionys' attention so as to incorporate the provision into the agreement. On Mr Ahmad's evidence, he did no more than hand the Booklet to Ms Dionys and inform her that she could also access the terms and conditions on NAB's website. The Booklet comprises 71 pages and deals with many different topics. The terms imposing duties on customers or limiting NAB's liability are not highlighted. It would take a considerable effort for a lay person to read and comprehend the contents of the Booklet in order to ascertain his or her responsibilities towards NAB. This case is different, for example, from one where a straightforward exemption clause is prominently displayed on a notice or ticket. It is also not a case where NAB can rely on a course of dealing to establish that a limitation clause has been brought to the attention of a customer.
(Citations omitted).
198 White J agreed that even if the pamphlet had been provided to Ms Dionys, cl 5.18 would not have been incorporated into the banker/customer contract because the former had not taken any step to bring to it or its effect to her attention. It would have been insufficient to merely hand her the terms and conditions. In support of this conclusion reference was made to the summary by Lyons J of the relevant legal principles in Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2015] QSC 290 [70]:
[70] My examination of these authorities leads me to adopt the following propositions for determining whether a party (the acceptor) is bound by a term set out or incorporated in an unsigned document which the other party (the offeror) has provided to the acceptor in circumstances which show the offeror intends the document to identify terms of the contract. It is not always the case that the acceptor is not bound by an exemption clause, unless the offeror directs attention to the clause. The fundamental question is whether the offeror is reasonably entitled to conclude that the acceptor has accepted the terms in the document, including the exemption clause. That conclusion should be reached where the second party has had a reasonable opportunity to consider the terms, including the exemption clause, and has behaved in a way which manifests acceptance of the document as recording contractual terms. In other cases, where the clause is one reasonably to be expected in contracts of the kind in question, acceptance of the document makes the clause binding, even if the acceptor does not know its terms, or even that it is contained in the document. If the clause is not one reasonably to be expected, then something more is required by way of provision of information about the clause to the acceptor before the contract is formed. What information will be required will depend on the circumstances, but particularly on the terms of the clause.
199 In NAB v Dionys the issue was effectively obiter and there was little discussion as to the nature of the notice which would have been required to incorporate the NAB Conditions into the contract between the bank and Ms Dionys. It is possible to discern an assumption that if they were provided to her prior to her signing the authority card, they would generally have been taken as part of the agreement. However, that process would not have incorporated any limiting terms in respect of which more substantial notice would have been required.