Chapter 2: The terms of the contract

Question 1

Implied terms of the contract

Answer 1

In addition to those terms expressly included in the contract, terms can be implied by statute, the courts and custom and practice.

Question 2

Difference between contractual terms and representations

Answer 2

A term is part of the contract.

A representation is something said by the offeror to induce the offeree to enter into the contract. It becomes a term once it is included in the written contract or is an important part of the contract i.e. one on which the other party relies.

Question 3

Why is it important to know whether a statement in negotiations is a term or a representation?

Answer 3

The remedies available to a wronged party will be different.

Question 4

Remedies for when representation included in the contract as a term is found to be untrue.

Answer 4

The party misled has a remedy for breach of the terms as well as for the misrepresentation.

Question 5

Remedies for when representation is not a term of the contract and is found to be untrue.

Answer 5

The party misled can only claim remedies for the misrepresentation.

Question 6

Express Terms

Answer 6

these terms are the elements of a contract which have been specifically agreed.
They can be written, oral or a combination of the two.
Such terms are specifically inserted into the contract by either or both parties.
They must be clear for them to be enforceable.

Scammell v Ouston (1941)

Question 7

Facts of ‘Scammell v Ouston (1941)’

Answer 7

An agreement provided for the balance of the price to be paid …‘on hire purchase terms over a period of two years’…

Question 8

Held by ‘Scammell v Ouston (1941)’

Answer 8

The words ‘hire purchase terms’ were considered too imprecise as the seller had a range of such terms.

Question 9

Implied terms

Answer 9

These are terms which are not expressly included but are still part of the contract. They can be implied in four different situations.

Question 10

What are the four situations where terms can be implied?

Answer 10

Terms implied due to the type of contract

Terms implied by the courts in order to give business efficacy

Terms implied to comply with custom and usage

Terms implied by Acts of Parliament

Question 11

Terms implied due to the type of contract

Answer 11

The courts will imply certain terms to certain types of contract because they are felt to be an implicit requirement of that type of contract.

Question 12

Terms implied by the courts in order to give business efficacy

Answer 12

If the parties have failed to cover a matter which, when addressed, would make the agreement unworkable, the courts imply a term to carry out the parties’ presumed intentions.

The Moorcock (1889)

Question 13

Terms to comply with custom and usage

Answer 13

The courts will imply terms into contracts if they are felt to be usual in that type of agreement, but only if it will not create an inconsistency with the express terms.

Question 14

Terms implied by Acts of Parliament

Answer 14

Legislation can imply terms into particular contracts if Parliament has felt it is important to give statutory protection.

The Consumer Rights Act 2015
The Partnership Act 1980

Question 15

Illustration of Terms implied by the type of contract

Answer 15

In an employment contract many matters may not be expressly agreed, but the
courts have implied terms described as duties of the employee (such as to give
honest service) or as duties of the employer (such as to use reasonable care in
providing a safe place of work).

Question 16

Illustration of Terms implied to give business efficacy: Facts of ‘The Moorcock (1889)’

Answer 16

There was an agreement by a wharf owner to allow a ship owner to unload his ship at the wharf. the ship was damaged at low tide when it hit a hard ridge on the bottom of the river.

Question 17

Illustration of Terms implied to give business efficacy: Held by ‘The Moorcock (1889)’

Answer 17

The court implied a term into the agreement that the river bottom would be reasonably safe.

Question 18

Illustration of Terms implied due to legislation

Answer 18

The Consumer Right Act 2015 - Goods must be of satisfactory quality and fit for purpose.

The Partnership Act 1890 - In the absence of an express provision to the contrary, profits will be shared equally between the partners.

Question 19

Battle of the Forms

Answer 19

Care should be taken during negotiations when each party have their own standard terms.
If this does not happen the courts will look at the contract objectively, taking into account what has happened, to determine which terms are to apply (aka factual matrix).