Bob's Right to Sue Southfield for Violating Oral Agreement

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Contents
Solution.......................................................................................................................................................2
Issue........................................................................................................................................................2
Law..........................................................................................................................................................2
Application..............................................................................................................................................3
Conclusion...............................................................................................................................................4
Reference List.............................................................................................................................................5

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Solution
Issue
Whether Bob has any right to sue Southfield for violating the oral agreement amid them and
whether the clause made part of the contract is binding on Bob?
Law
A contract is a legally binding document and the parties must comply with its terms. In every
contract the terms can be: (Latimer 2012)
i. Express - The terms which are mutually decided by the parties and become part of the
contract.
ii. Implied –The terms which are part of the contract by the operation or law, trade,
usage, custom, etc (BP Refinery (Westernport) v Shire of Hastings (1977)
Now, before a contract is made, there are several verbal communications that are exchanged
amid the parties called representations. Those representations which are made part of the contract
are called terms and are binding on the parties. Those negotiations that are not made part of the
contract are mere representations and nothing else.
As per Parole evidence rule, if a written contract is made amid the parties and if the previous
verbal communications amid the parties are not made part of the written contract, then, the rule
submits that if the contract is considered to be an entire contract, then, no previous oral
communications are considered to be binding nor any evidence is permissible to be laid to prove
the same (Mercantile Bank of Sydney v Taylor (1891).
But, in order to determine the true nature and validity of the contract evidence can be laid (Van
Den Esschert v Chappell [1960] to prove that all the terms are not meant to be part of the
contract.
Further, many a times pre contractual statements results in the formation of an additional
contract along with the written contract and such contracts are collateral contracts. The terms are
considered to be collateral provided they are promissory in nature (JJ Savage and Sons v Blakney
[1970], the statement is intended to be made part of the written contract, the term must not be
contrary to the written contracts and a consideration must move for such oral term, that is, if the
party establishes a written contract based on the oral term then it is a consideration for such
collateral term (Hoyt's Pty Ltd v Spencer (1919).
Further, if a document is signed then the parties are bound by the terms irrespective of the fact
whether the terms are read or not (L’Estrange v Graucob [1934]). But if the party can prove that
there is :