Contract Renewal & Offer Acceptance

This solved assignment examines the case of *Unison Finance Group Pty Ltd v Electric Life Pty Limited*, focusing on key legal principles such as contract renewal, offer acceptance, clarity of terms, and the application of the Parole Evidence Rule. The assignment includes a comprehensive analysis of the case, along with detailed answers to four specific questions about its legal implications.

Case 1
Unison Finance Group Pty Ltd v Electric Life Pty Limited1
Background
In this case, the parties had the intent of entering into a hire-purchase agreement in which some
electronic equipment had to become the renting party’s property once the initial four year term
was expired. Though, the agreement terms failed to reflect the same and instead the agreement
stated that the rental agreement would roll over once the initial term ended automatically. As a
result of this, the rental payments were being deducted for every quarter from the bank account
of the renting party for a period of 9 years, since the expiry of the initial term. These payments
were attempted to be recovered based on these being made in error, though it was claimed upon
by the hiring party that the contract had been renewed and was on foot when these payments had
been made. As a result of this, the payments were deemed to have been made in a proper manner
and also been received properly2.
The rental agreement covered a renewal clause where automatic renewal was provided for a
twelve month period, once the initial term ended. The main issue of dispute here was that the
renewal clause had to be read to mean that there had to be only a single renewal or whether each
of the successive terms had to be subjected to their own twelve month auto renewal. It was stated
in the agreement that there would be an automatic renewal once the initial term was brought to
an end “upon the same terms and conditions as appear in this Agreement”. It was stated by the
1 [2015] NSWSC 170
2 King & Wood Mallesons, Unison Finance Group Pty Ltd v Electric Life Pty Limited [2015] NSWSC 170 (02 July
2015) <http://www.kwm.com/en/au/knowledge/insights/unison-finance-group-electric-life-nsw-contract-law-
20150702>

court that the clear wordings of this meant that the renewal clause had been incorporated into the
agreement which was renewed, in addition to all of the other terms. This meant that the
agreement had to be renewed automatically, in addition to all of the other term3.
In short, the agreement had to be renewed again for a twelve months period, in succession, till
the time the one of the parties took some action to terminate the contract. As a result of this, the
renting party formed a view that with the end of initial term, the agreement had expired, where
the reality was that the same had been renewed for an additional period of 9 years resulting in
creating of additional liability for the next 9 year period, for the rental payments. Even though
this result was deemed as quite harsh, it was deemed as just as the court could not depart from
the clear wordings which gave a clear meaning to the agreement4.
Question 1
Whether the term “upon the same terms and conditions as appear in this Agreement” created a
new (renewed) contract, with regards to offer and acceptance?
Answer 1
The contract formation requires certain elements to be present for the contract to be binding in a
legal manner. This includes the offer, the acceptance, the intention, consideration, capacity and
clarity5. The agreement clauses are that of offer and acceptance. For a contract to be made, one
party has to offer certain terms to the other party. This offer than has to be accepted by the party
to which the offer had been made6.
3 Austlii, Unison Finance Group Pty Ltd v Electric Life Pty Limited [2015] NSWSC 170 (10 March 2015) (20 March
2015) <http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2015/170.html>
4 At 2
5 Linda Mulcahy, Contract Law in Perspective (Routledge, 5th ed, 2008)
6 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)

In this case, the original contract which had been formed covered offer and acceptance. And the
term “upon the same terms and conditions as appear in this Agreement” meant that when the
contract had to be renewed, it had to be done on the basis of the terms of the original contract.
And this contract also covered the word automatically, which meant that in the original offer and
acceptance, it was clearly stated that the new contract did not require new offer and acceptance
and that the offer and acceptance of the original offer had to be rolled over in this contract,
owing to the automatic renewal term. Hence, in the renewed contract, the offer and acceptance
would be deemed to be present, resulting in a contract being formed.
Question 2
Whether the term “upon the same terms and conditions as appear in this Agreement” contained
intention of the parties?
Answer 2
An important part of contract is the intention of the parties. The intention of the parties denotes
that the parties have the intent of going forward with creation of legal terms7. In this case, the
intent was clearly present, as the parties created the contract and even acted upon the same. The
intention here would again be deemed to be present owing to the automatic renewal of the
original terms, as was the case with the offer and acceptance. And so, the intention of parties can
be clearly claimed in this case.
7 Brian A. Blum, Contracts: Examples & Explanations (Aspen Publishers Online, 4th ed, 2007)

Question 3
Whether the term “upon the same terms and conditions as appear in this Agreement” contained
clarity of the terms to the parties?
Answer 3
Another important aspect of contract formation relates to the presence of clarity with regards to
the terms of the contract8. In this case, it was very clear that the contract would be renewed once
the original period expired on the very same terms and conditions. It was clearly stated that the
automatic renewal would be of entire contract. This meant that till it was terminated, it would
continue in perpetuity. It was provided in an apparent and lucid manner that the term had to be
renewed. In this regard, the perception of the parties is not to be given weightage but the terms of
the contract is. Hence, as the term clearly provided for automatic renewal on same terms, the
contract would be deemed to have been formed.
Question 4
Can Parole Evidence Rule be applied in this case?
Answer 4
Parole Evidence Rule provides that the written terms of the contract are to be given supremacy,
irrespective of the oral terms which led to the formation of the contract9. In this case, the terms of
the contract clearly provided for automatic renewal on same terms, which had to be given
weightage over any other factor. And hence, for purpose of interpretation, this rule can be
applied.
8 Jill Poole, Casebook on Contract Law (Oxford University Press, 13th ed, 2016)
9 Jeffrey A. Helewitz, Basic Contract Law for Paralegals (Aspen Publishers Online, 5th ed, 2007)

Bibliography
Articles/ Books/ Journals
Blum BA, Contracts: Examples & Explanations (Aspen Publishers Online, 4th ed, 2007)
Helewitz JA, Basic Contract Law for Paralegals (Aspen Publishers Online, 5th ed, 2007)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Mulcahy L, Contract Law in Perspective (Routledge, 5th ed, 2008)
Poole J, Casebook on Contract Law (Oxford University Press, 13th ed, 2016)
Cases
Unison Finance Group Pty Ltd v Electric Life Pty Limited [2015] NSWSC 170
Legislations
Contract Law
Others
Austlii, Unison Finance Group Pty Ltd v Electric Life Pty Limited [2015] NSWSC 170 (10
March 2015) (20 March 2015)
<http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2015/170.html>

King & Wood Mallesons, Unison Finance Group Pty Ltd v Electric Life Pty Limited [2015]
NSWSC 170 (02 July 2015) <http://www.kwm.com/en/au/knowledge/insights/unison-finance-
group-electric-life-nsw-contract-law-20150702>