3.3.1 Flashcards
What are Express terms?
Contractual terms which are specifically stated in contract
Anything set out in a schedule to a contract
What are Implied terms?
Contractual terms that exist but are not written within the contractual documentation, i.e. the law of the land
What will and an express term in a contract override?
an implied term, unless the implied term is created by statute and the law states that it cannot be overridden
Why should express terms be clear and what should they do in the contract?
Set out the obligations of the purchaser
Set out the obligations of the supplier
Set out the rights of the purchaser if the supplier defaults
Set out the rights of the supplier if the purchaser defaults
State how the parties will deal with circumstances beyond the control of either party
Where possible, either confirm or override any potentially implied terms
What are Schedules?
Appendices to the contract which provide more detail - often technical detail - on the requirements
What is a contract clause?
precise wording in the main document, which will have its own reference number
What is a contract term?
the totality of that part of the agreement and so includes the clause wording and any schedule which it refers
What are Model forms of contract and what do they contain?
A model form of contract is a template.
Model forms contract contain core clauses that are standard, but they are templates designed to be used with supporting documentation that is project-specific
What are Standard terms and conditions?
They are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders
What are the disadvantages of standard terms and conditions?
Risk that they do not become effectively incorporated into the contract - legal uncertainty and potential ‘battle of the forms’
Do not allow for contract-specific risks
Can become out of date
Can create conflicts if attached to purchase orders that are also used as call-off orders under term contracts
What are the advantages of using standard terms and conditions?
Time saved in negotiating individually with suppliers
Reduced admin costs
Consistency of approach
What does Legal certainty mean?
Knowing what the law says, what it means, and therefore how the courts will decide in the event of a dispute
When are Standard terms used?
repetitive transactions, particularly those that are of low value and low risk
What are some examples that an ineffective clause may include?
Exclusion of liability for negligence
Unusual and unexpected conditions that would not normally apply and to which the other party’s attention was not specifically drawn
Exclusion of liability for death of an individual
Lack of warranty of fitness for purpose of the goods
What is an Ineffective contract term?
A term in a contract which cannot be legally enforced
What is a Legalese?
A complex vocabulary of the legal profession
What are the key areas that must be covered in standard terms?
Definitions
Express term to override other standard terms (to avoid battle of the forms)
Express term to state that in specific framework or term contracts signed by the parties, the express terms take precedence over standard terms
Formation of the contract
Order of precedence
Price
Invoicing and payment
Specification
Obligation to comply with the law
Delivery and risk
Warranties and liability
Intellectual property and similar rights
Termination
Confidentiality and use of data
Ethics and CSR
Law and Jurisdiction
What is the meaning of Precedent?
A court judgement which is binding on future legal decisions
Why should simplifying legal contractual language not be done without seeking legal advice?
because simplifying the language might remove some of the protection intended to be afforded by the wording
List the examples of model form contracts
NEC: New Engineering Contract
JCT: Joint Contracts Tribunal
AS: Australian Standards contracts
FIDIC: International Federation of Consulting Engineers
IMechE/IET: Institution of Mechanical Engineers/Institution of Engineering and Technology
CIPS: Chartered Institute of Procurement and Supply
ITC: International Trade Centre
What are the key principles that apply across all the model forms?
Contract-specific details: parties to the contract, contract subject matter, dates etc.
Standard common clauses
Schedules to cover pricing, specification, and any other contract-specific details
What are the advantages of using model form contracts?
Saves time and resource drafting bespoke contracts
Both suppliers and purchasers familiar and comfortable with main terms
Specific to sector or purchase type
A measure of legal certainty on court’s response to disputes
When might improvements to model form contracts come about?
Changes in national or international law
Several legal disputes have highlighted an ambiguity or weakness in the contract
Technological change in the sector creates new problems, risks or opportunities that need to be catered for within the contract
What are the disadvantages of using model form contracts?
Poorly trained staff may use templates incorrectly or choose inappropriate model
Amendments to published templates can create ambiguity
May become out of date if not reviewed regularly
May be biased depending on ownership of the mode
