Chapter 40 - Types of terms, Exclusion clause

Question 1

Types of Term

Answer 1

-Condition
-Warranty
-Innominate Term

Question 2

Term - Condition

Answer 2

-Condition is a term in a contract that is central to the contract. Breach of this term may allow the contract to be repudiated
-Seen in Poussard v Spiers and Pond

Question 3

Term - Warranty

Answer 3

-A minor term in a contract. Breach of this term does not end the contract but allows a claim for damages only
-Seen in Bettini v Gye

Question 4

Term - Innominate Term

Answer 4

-A term in a contract that is not defined as a condition or warranty.
-Dealt with corresponding to the seriousness of the breach.
-Seen in Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd

Question 5

Exclusion Clause

Answer 5

A term in a contract that prevents one party being liable for a breach of contract

Question 6

Looking at use of language in a contract

Answer 6

Use case of Pink Floyd Music Ltd v EMI Records Ltd- States that ordinary English words will mean what they say.

Question 7

If words are unclear and unambiguous

Answer 7

-Objective test should be applied
-Investors Compensation Scheme Ltd v West Bromwich Building Society - What would a reasonable man interpret to be the meaning of the contract

Question 8

Questions to be considered when deciding if the term is part of the contract

Answer 8

1. Is the agreement signed
2. IS any notice with the term in it incorporated in the contract
   3.Is the term incorporated as a result of the previous dealings of the parties

Question 9

Is the agreement signed ?

Answer 9

-Where a party has signed a written agreement they are bound by that agreement - L’Estrange v Graucob
-If agreement is signed whilst being misrepresented by the party then it will be bound to the misrepresentation - Curtis v Chemical Cleaning and Dyeing Co. Ltd

Question 10

Did the other party know of the term

Answer 10

-Key point is to ask whether the term was brought to the attention of the other party before the contract was made
-Seen in Olley v Marlborough

Question 11

Rules to incorporate exclusion clause into a contract

Answer 11

1. Must be a contractual document, with reference to the distinction between such a document and a receipt, Chapelton v Barry
2. There must be reasonable steps to draw the exclusion clause to the other party’s attention, Thompson v LMS Railway
3. The reasonable notice must be given before conclusion of a contract by acceptance of an offer, Thornton v Shoe lane Parking Ltd

Question 12

Exclusion Clauses - incorporated due to previous dealings between the parties

Answer 12

-If parties have dealt on the same terms in the past, is possible to imply knowledge of the clause from those past dealings, Hollier v Rambler Motors

Question 13

How can a third party benefit from an exclusion clause ?

Answer 13

-Four conditions to be met
1. Was the third party intended to benefit from the contractual term?
2.Was it clear that the contracting party was also contracting as agent for the third party
3. Had they authority to do so
4. Was any difficulty with consideration overcome ?

Question 14

Contra Proferentem rule

Answer 14

If the meaning of a term is unclear, the words will be construed against the person who put them in the contract

Question 15

Where does Contra Proferentem rule not apply ?

Answer 15

-Does not apply in commercial contracts where the parties bargain on equal and clear terms
-McCutcheon v David MacBrayne Ltd