Chapter 5 Terms & Representation Flashcards
What are the categories a statement can be classified under?
Describe them!
- Puffs, statements that are exaggerations. No legal effect
- Representation, statements made before or at the time of the contract being formed. Representations usually has matters regarding the contract.
- Terms, statements which form part of the contract. If term is breached, can seek damages or repudiation.
How many ways are there to ascertain representation from terms? List all of them!
1) When statement was made
2) Maker’s emphasis [maker of statement]
3) Was statement reduced into writing?
4) Maker’s special knowledge
5) Invitation to verify information
What is the case study to showcase “When statement was made”
Explain the case study
Case study: Routledge V Mckay
Details: Routledge was interested in purchasing a motorcycle from McKay of a certain model. McKay gave him the model number. One week after, Routledge bought the motorcycle. However, he found out that it was the wrong model
Interestingly, the court found that since there was an entire week that had passed after McKay provided the information, the statement was most likely a representation rather than a term. Therefore, statement was not a term of the contract.
What is the case study to showcase “Maker’s special emphasis”
Explain the relevant details
Case: Bannerman V White
Case details: White wanted to purchase hops for the making of beer from Bannerman. He specifically asked Bannerman if any sulfure was used in the making of the hops. To which Bannerman said there wasn’t. After purchase, White found that silfure was used in the making of the hops bought from Bannerman. Therefore, the court found that White’s special emphasis on the use of sulfur was a term in the contract.
What is the general rule regarding when statement was reduced into writing?
If the statement had been reduced into writing, it is more likely to be a term in the contract rather than a representation
What is the case studies on maker’s special knowledge?
Provide details
Are there any exceptions?
Case: Oscar Chair V Williams
Defendant was an individual car collector who wanted to sell the car to a dealership. However, after the sale the dealership realised that defendant quoted the wrong model from a different year. HOWEVER, court held that since defendant was only an individual, he could not have special knowledge about the car’s make and year. Hence, statement was representation rather than a term.
Exception case: Dick Bentley V Harold Smith
Details: A car dealer quoted the wrong model to defendant, court held that since it was a car dealership. They ought to have special knowledge of the car’s model. Therefore, statement was a term.
What is the case study on invitation to verify statement.
What is the rationale?
Case study: Eckay V Godfrey. Godfrey invited other party to verify the statements he made regarding the sale of his vehicle. However, after the sale, the other party found faults in the statements.
Therefore, court held that the fact that Godfrey invited other party to verify his statement shows that he does not intend for contractual liability to arise from making that statement
What are the two general categories for terms?
- Expressed Terms
2. Implied Terms.
With regards to implied terms, what are the different kinds of implied terms?
- Implied terms by statute
2. Implied terms by court
What is the case study used to describe business efficacy?
Describe the details of that case
Case study: The moorcock
Detail: A boat’s captain rented space by a jetty with the other party. Both parties understood that at low tide, the ship will rest on soft mud. However, one day, the ship rested on hard rocks and damaged the exterior of the ship.
Court held that even though term was not spoken or reduced into writing, it was a term implied for ease of business efficacy. Therefore term was valid
What are the different level of terms for how important it is.
Describe each of the term’s importance and it’s legal effects
- Condition Terms
- conditions are essential and fundamental to the contract
- intention of parties would determine if the term is a condition or not
(example of carrying fragile goods)
Legal effect:
If a condition term is breached, allows the injured party to repudiate, discharge from date of breach or affirm contract - Warranty Terms
- conditions that are less important and give rise to secondary obligation
- dates in contracts are usually warranty condition, unless the subject matter was to deliver by that date for a particular event etc.
Legal effect: breach of warranty terms are generally trivial and does not entitle injured party to discharge contract. HOWEVER, if breach was so serious such as that of RDC concrete, injured party can seek repudiation.
- Innominate Terms
- An innominate terms is one that comprises of varying obligations that are hard to classify.
Legal effect:
- usually breach of innominate terms are trivial and does not entitle the injured party to repudiate or discharge. HOWEVER, if breach of innominate terms were so severe such as that of HONGKONG FIR SHIPPING. Injured party can repudiate and discharge contact
What is the purpose of an exemption clause?
An exemption clause is used to exclude total liability of the defaulting party relying on the clause
What are the necessary factors to ensure a ‘good’ exemption clause?
- Incorporation
- Construction
- Unusual Factors
- Must comply w UCTA
How can a exemption clause be properly incorporated.
List relevant case studies where possible.
- Signature.
- Lestrange V Graucob - By notice
-Where notice of exemption clause was placed [Chapelton V Barry]
-When notice of exemption clause was noticed [Olley V Malborough]
-Adequacy of notice regarding exemption clause[Thompson V London Midland]
– To note: if other party has a disability preventing them from understanding the exemption clause, you have to take reasonable steps to support them. If not, inadequate notice of EC
[Geier V Kujawa]
- Previous course of dealing, if parties had contracted before, and in previous contract there was an EC, then EC is assumed to apply to latest dealings as well [Henry Kendall & Sons V Williams]
In construction of the EC, what are the rules needed to ensure proper construction? List the case studies where possible.
- Contra proferentem rule.
- According to this rule, if terms of the EC are ambiguous, the EC will least favour the person relying on it. - Main purpose rule
- According to the main purpose rule, there is a general presumption that parties do not intend an EC to defeat the main purpose of the contract
[B Gold Interior V Zurich Insurance]
UNLESS EC was construed so well that it is clear and unambiguous.
[Photo production V Securicor Transport]
