2): Contents of a Contract Flashcards
What is an express/implied term?
express: put into contract by one/both parties which is expressly undertaken and agreed. (Written/Oral)
implied: not agreed by parties but implied by common law (custom/trade usage), the courts OR statute
What is the Parole Evidence Rule?
if contract is written, then the writing will constitute the whole of the contract
parties cannot adduce extrinsic evidence such as:
oral statements
written material to add
or vary/contradict the writing
NOTE: subject to exceptions!
What are the exceptions to the Parole Evidence Rule?
rectification
partially written agreements (where oral terms may override inconsistent provisions in the contract)
implied terms
What are the methods by which a written term can be incorporated into a contract?
By signature: if signed at time of making contract, contents become terms of contract even if they have not been read/understood
By reasonable notice: if given before/at time of contract it is OK, the more onerous the term, there notice is needed to incorporate it
by previous course of dealing: where parties have dealt together before on the exact same ts & cs, dealings must be regular + consistent
Which terms are implied by statute for contracts between businesses?
Business to Business Contracts:
Sale of Goods Act 1979 - for the sale + supply of goods and/or services
Supply of goods and Services Act 1982 - for service/work or contracts that involve supply of works + materials
What are the main terms implied under the Sale of Goods Act 1979?
Description s 13(1): where contract is for sale of goods by description, it is implied that goods will correspond to the description
Satisfactory Quality s 14(2): implied that goods are of satisfactory quality
Standard of Quality s 14(2)(a): goods are of satisfactory quality if they meet a standard that a reasonable person would regard as satisfactory (regard description, price + other circumstances)
Fit for Purpose s 14(3): where the buyer expressly/impliedly makes the purpose of the goods known, goods will be reasonably fit for purpose if the buyer relies on the seller’s skill/judgment
What are the terms implied under the Supply of Goods and Services Act 1982?
Description s 3(1): usual meaning.
Satisfactory quality s 4(2): usual meaning but here in the course of business
Fit for purpose s 4(5): usual meaning but in the course of business
Reasonable care and skill s 13: work/service carried out in the course of business will be carried out with reasonable care + skill
Reasonable time s 14: where work?service carried out in course of business + no time for performance agreed, work will be done in a reasonable time
Reasonable price s 15: where price of work/service not fixed, reasonable price will be charged.
Which terms are implied into business to consumer contracts?
Consumer Rights Act 2015 - sale of goods and/or supply of goods + services
What are the implied terms in the Consumer Rights Act 2015?
Satisfactory Quality s 9: usual meaning
Fit for Purpose s 10: usual meaning when goods are sold/supplied in the course of business
Description s.11: usual meaning
Reasonable care and skill s 49: usual meaning
Reasonable price s 51: usual meaning
Reasonable time s 52: usual meaning
What rights does a consumer have for a breach of the Consumer Rights Act 2015?
- goods: short term right to reject, full refund (non- perishable goods: 30 days)(perishable goods: no longer than they would be expected to last)
right to repair or replacement (if appropriate)
right to price reduction or final right to reject and get partial refund to reflect use of the goods
- services/work: right to repeat performance (if reasonable) or to price reduction
- reasonable time: right to appropriate right reduction
What is an exemption clause?
contract term aiming to restrict/exclude one party’s liability and/or remedies available to non-breaching party
What does the common law state about exemption clauses?
they must be incorporated validly and will be subject to rules of interpretation
How can an exemption clause be incorporated into a contract?
by:
signature: clause: is legible, not too onerous, reasonably drawn to other party’s attention + ha snot be misrepresented
Reasonable notice: notice must be: timely, reasonable steps taken to bring the term to the attention of the other party + doc must be one that usually has contracted effect
by previous course of dealing: evidence of consistency needed
What are the rules of interpretation regarding exemption clauses?
they must cover the damage which has arisen
rule of constructions states that clause will be interpreted against the party seeking to rely on the exemption clause
What happens if an exemption clause doe snot pass the interpretation and incorporation rules?
it won’t form part of the contract
if it doesn’t pass the common law rules it will be subject to the statutory controls
What are the statutory controls on exemption clauses?
Unfair Contract Terms Act 1977 - business to business contracts
Consumer Rights Act 2015 - business to consumer contracts
What is the purpose of the Unfair Contract Terms Act 1977 in relation to exemption clauses?
declares contracts void or makes them subject to reasonableness
What are the 3 main sections of the Unfair Contract Terms Act 1977?
Liability for negligence s 2: liability for death/ personal injury resulting from negligence cannot be excluded or limited. Liability for negligence (for harm other than death/personal injury) subject to reasonableness.
liability for non-performance of an express term s 3: if contract is made on a party’s standard business terms, contract terms cannot restrict liability for non-performance of an express term which is substantially different from what is agreed. Subject to reasonableness.
liability for breach of implied terms in sale of goods and supply of goods and services contracts s 6 + 7: liability for breach of implied terms under either of the acts is subject to reasonableness.
How is reasonableness of exemption clauses determined?
assessed at the date of making the contract
not as a result of subsequent events
party relying on exemption clause must prove it is reasonable
court will consider:
relative strength of bargaining positions
if customer received inducement to agree to the term/ could have made a similar contract with another party without agreeing the term
if customer knew/ought to have known the term due to customs/ previous course of dealings
where exemption clause only comes into effect if condition fulfilled
if goods were made/adapted to special order
What is the purpose of the consumer rights act 2015 in relation to exemption clauses?
applies to business to consumer contracts
trader: trader is a person acting in relation to their trade/profession/business
consumer: person acting wholly outside their trade
unfair term: contrary to good faith, causes significant imbalance to detriment of consumer
liability for negligence: if result is death/personal injury it cannot be excluded/limited. Clause is non-binding but contract stays valid.
liability for satisfactory quality/ fit for purpose/ description: cannot be excluded/restricted. Clause is non-binding but contract stays valid.
liability for reasonable care + skill/ reasonable price + time: cannot be excluded/restricted if it would prevent costumer getting a refund. Clause is non-binding but contract stays valid.
What are the 3 classifications of terms and what is the effect of breach?
conditions: partly can terminate the contract + claim damages
warranties: no termination option + only remedy is damages
Innominate terms: parties wait to see what consequence of breach is. Termination only possible if it deprives innocent party of substantially the whole of the intended benefit.
How can variation of a contract occur?
a party must show that it has provided additional consideration for a promise
performance of an existing contractual duty is not valid, must be a new exchange
What are the two main types of alteration promises (variation of a contract)?
alteration promises to pay more: performance of an existing duty is not consideration of a promise of extra payment unless it confers a practical/factual benefit
Alteration promises to accept less: part payment of a debt is not consideration for a promise to pay less unless some additional consideration is given for that concession.
If no additional consideration has been given, creditor may apply defence of promissory estoppel.
What are the requirements to apply the defence of promissory estoppel?
may be applied by the creditor if:
there was a clear promise that existing legal rights will not be enforced + such a promise was freely given
promise was intended to be binding + was relied upon
it would be inequitable to go back on the promises (there has been detrimental reliance)
