Chapter 4 - Contents of Contract Flashcards
Terms
Express - clearly discussed, stated & agreed
or
Implied - not expressly included in the contract but statute or by custom
Judicial Checklist Term or Representation
Timing of the statement - Routledge v McKay
Importance of the statement - Bannerman v White (1861)
Special knowledge or skill
Reduction into writing - putting statement into words - Birch v Paramount Estates
Bannerman v White (1861)
Importance of the statement
Hint: Hops
Birch v Paramount Estates Ltd (1956)
Reduction into writing
HInt: Showhouse
Routledge v McKay [1954]
Timing of the statement & circumstances at the time (time from representation to contract)
Hint: motorbike age
Oscar Chess Ltd v Williams [1957]
Special Knowledge or Skill
Hint: car age - seller no skill
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965]
Special Knowledge or Skill
Representations
TBC
mere (or advertising) puffs
TBC
Mead v Babington
Mead v Babington
Not carhill
mere (or advertising) puffs
Express Terms
Terms which are expressly agreed by the parties
Incorporated by express reference
Express terms can be:
entirely written;
entirely oral;
partly written and partly oral
Includes exclusion clauses – clauses which look to exclude or limit liability
Implied Terms
Terms which are not expressly agreed by the contracting parties
Usually parties expressly agree the terms of a contract however it is possible to overlook or omit to include key obligations
Implied terms may be incorporated into the contract to deal with the parties omissions
Terms can be implied into the contract in the following ways:
Custom/Trade Usage
Statute
Common Law
Exclusion clauses
In order for an exclusion clause to be valid it must be properly incorporated into the contract
Exclusion clauses can be incorporated in the following ways:
Signed documents
Notice
Consistent course of dealing
Curtis v Chemical Cleaning & Dyeing Co (1951)
Written Clause in Signed Document
General rule – clause will be incorporated whether or not the other party is aware of it or read it
Hint: Wedding dress - oral assurance
L’Estrange v Gracoub [1934]
Written Clause in Signed Document
General rule – clause will be incorporated whether or not the other party is aware of it or read it
Incorporation via Notice
Document must be an integral part of the contract
Document must be a type likely to contain contractual terms
Reasonable steps must have been taken to ensure that the notice was available / brought to attention of the party before entering contract
Thornton v Shoe Lane Parking Ltd [1971]
Incorporation via Notice
Hint: Car park - on notice inside - fail
Olley v Marlborough Court Hotel Ltd [1949]
Notice of terms, in room after payment
Parker v South Eastern Railway (1877)
Sufficient notice of terms
notice within cloakroom, SER not responsible for deposits > £10. tickets given on making their deposit had the same notice printed on it. SER appealed & sufficient notice given.
Chapelton v Barry UDC [1940]
Incorporation via Notice
Hint - deckchair - on back of ticket - fail
Spurling v Bradshaw [1956] (oj)
Term incorporated by
Previous Course of Dealings
Previous Course of Dealings
Other party may be aware of the clause as a result of previous dealings
Must be a consistent course of dealings and document must be the type expected to contain such clauses
Hollier v Rambler Motors (1972)
Hollier v Rambler Motors (1972)
Not sufficient course of dealings
claimant had used defendant garage on 3-4 occasions over a five year period
Implied Terms: Statute
Terms may be implied to protect certain types of contract
E.g. Consumer contracts; employment contracts; etc.
Sale of Goods Act 1979
Consumer Rights Act 2015
Most statutory implied terms are implied into the contract to protect certain types of parties from being at a disadvantage as against other parties who may be in a stronger bargaining position
Sale of Goods Act 1979
B-2-B
s14(2) satisfactory quality
s14(3) fitness for purpose
s13 description
Sale of Goods and Services Act 1982
B-2-B
s4 satisfactory quality / fit for purpose
s3 description
s13 reasonable care and skill
s15 reasonable price
s14 reasonable time
Consumer Rights Act 2015
B-2-C GOODS: s9(2) satisfactory quality s10 fitness for purpose s11 description
SERVICES s49 reasonable care and skill s50 ... s51 reasonable price s52 reasonable time
DIGITAL s33(1) price s34 satisfactory quality s35 fitness for purpose s36 description
Implied Terms: Custom
Terms may be implied into a contract by custom if there is evidence that under local custom they would normally be in the contract
Hutton v Warren (1836))
Implied Terms: Trade Usage
Terms may be implied by trade usage where a term would routinely be part of a contract in a particular trade or business
Note: only relevant to certain types of contract e.g. commercial
“It has long been settled that…extrinsic evidence of custom and usage is admissible to annex incidents to written contracts, in matters with respect to which they are silent.”
British Crane Hire Corp Ltd v Ipswich Plant Hire
Hutton v Warren (1836))
Implied Terms: Custom
Hint plant seed payment - local custom - won
British Crane Hire Corp Ltd v Ipswich Plant Hire
Implied Terms: Trade Usage
Sinking crane
Onerous Clauses
Onerous clauses must be drawn to the attention of the other party.
Interfoto Picture Library v Stiletto Visual Programmes Ltd (1988)
Interfoto Picture Library v Stiletto Visual Programmes Ltd (1988)
Onerous clauses
Late charges -on back of receipt & not brought to attention = fail
Implied Terms: Common Law
A contract may also contain terms which have been judicially implied into it
Terms implied by the courts at common law may be separated into two types:
Terms implied as a matter of fact
Terms implied as a matter of law
Implied Terms:Matter of Law
Obligations which arise irrespective of the parties’ intentions or the facts of the particular case
Implied as a matter of policy
Objective Test Applies!
Term must be a ‘reasonable’ one to imply
Must be a necessary incident of the particular type of contract
Liverpool City Council v Irwin [1976]
Liverpool City Council v Irwin [1976]
Implied Terms:Matter of Law
Flats - implied term to look after common areas - fail
Implied Terms:Matter of Fact
Based on parties’ intentions
Implied due to parties’ omissions
Courts gives effect to the unexpressed will of the parties
But is always imputed from the presumed intentions
How do the courts determine the intentions of the parties’?
Two tests developed by the courts to ascertain the parties’ intentions:
The Business Efficacy Test
The Officious Bystander Test
The Business Efficacy Test
Term must be obvious and necessary to give business efficacy to the parties’ agreement
Liverpool City Council v Irwin:
“the court must be able to say that the insertion of the terms is necessary to give…business efficacy to the contract and that if its absence had been pointed out at the time both parties…would have agreed without hesitation to its insertion.”
Lord Cross
The Moorcock (1889)
The Officious Bystander Test
Something which is so obvious that it goes without saying
Shirlaw v Southern Foundries Ltd [1939]
Term is only implied if the contract would be incomplete without it
Term must be strictly necessary
Term must have been intended by both parties
The Moorcock (1889)
The Business Efficacy Test
Unload ship low tide - ship would not be damage term implied and contract useless if not implied
Shirlaw v Southern Foundries Ltd [1939]
The Officious Bystander Test
It goes without saying.
Importance / Status of the Terms - what 3 ways can terms be classified
Terms can either be classified as:
Conditions
Warranties
Innominate Terms
Condition
A major term of the contract
An obligation, the performance of which goes to the root of the contract
Breach = right to terminate the contract and claim damages
Poussard v Spiers (1876)
Poussard v Spiers (1876)
Condition
Singer & understudy - condition of the contract -fail
Warranty
A minor term of the contract
An obligation, the performance of which does not go to the root of the contract
Breach = claim for damages
Bettini v Gye (1876)
Bettini v Gye (1876)
Warranty
rehearsal seen as a warranty not condition - not enforceable, but damages
Innominate Term
An intermediate term
Term is neither a condition or warranty
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]
Innominate Term
seaworthy ship - look at the consequences of breach
