Chapter 6 - Contents of a Contract

Question 1

How can terms be incorporated?

Answer 1

• Through **signature **
• Through reasonable notice BEFORE or AT THE TIME of the CONTRACT
• A **previous consistent course of dealings **

Question 2

If you sign a contract but haven’t read the terms and conditions, will you be bound by the terms?

Answer 2

Generally yes, you will be bound

Question 3

What circumstances would mean that signing does NOT mean you’ve assented?

Answer 3

If the term is illegible

Particularly onerous and not reasonably drawn to the other party’s attention

The contents of the document have been misrepresented

Question 4

If the terms of the document HAVEN’T been signed, how can they be incorporated into the contract?

Answer 4

The party who wants to rely on them has to give REASONABLE NOTICE AT or BEFORE the time of the contract.

If reasonable notice HAS been given, then it’ll be considered incorporated into the contract.

Question 5

What factors does the court consider when looking at whether reasonable notice of the terms has/hasn’t been given?

Answer 5

Nature of the document - i.e. is this a document where a reasonable person would expect there to be contract terms?

Timing - Notice must come before and at the time of the contract and NOT AFTER.

Onerous terms - The more onerous a term is, the more a party must do to bring it to the other party’s attention

Legible

Back of document - Are there words drawing the other party’s attention to them e.g. see terms overleaf.

Question 6

What constitutes a previous consistent course of dealing?

Answer 6

Has to be regular dealings in the past that were all on EXACTLY THE SAME TERMS AND CONDITIONS.

Means that the parties are familiar with those terms and conditions.

Question 7

What is a condition vs what is a warranty?

Answer 7

Condition = important term of the contract

Warranty = minor term of the contract

Question 8

What happens if a condition is breached?

Answer 8

Then the innocent party can terminate future performance of the contract AND claim damages.

Question 9

What happens if a warranty is breached?

Answer 9

Even if the damage is serious, the only remedy is damages.

Question 10

What happens if the written contract has been drafted by a non-lawyer and they call a particular term a condition?

Answer 10

Need to look at ALL the circumstances and need to look at whether the parties could have intended breach to lead to termination. (Aka doesn’t necessarily mean it’s a condition).

Question 11

For ships, is the term ‘expected ready to load’ clause a condition or a warranty?

Answer 11

A condition - this has been judicially recognised by the court.

Question 12

What are innominate terms?

Answer 12

Innominate terms are ‘wait and see’ terms.

Only if the breach was really serious and effectively deprived the innocent party of substantially the whole benefit under the contract would the party have the choice to terminate/affirm the contract.

Question 13

What are implied terms?

Answer 13

Terms that are so obvious that they go without saying e.g. that the goods bought will work or that the builder will exercise reasonable skill and care.

Question 14

How are terms implied into contracts? (4 ways)

Answer 14

By custom

In law

In statute

In fact

Question 15

What are terms implied by custom?

Answer 15

If it reflects well-known and legally binding customs of a particular trade.

**However, a term won’t be implied by custom if it would contradict an express term of the contract.

Question 16

What are terms implied in fact?

Answer 16

Where the parties haven’t expressly agreed something but the contract would be unworkable without the term.

Question 17

What are terms implied in law?

Answer 17

Here, the law regards it as a **necessary incident of a particular type of contract. **

e.g. implied duty on the employer to provide a healthy and safe environment.

duty on employee to provide an honest and loyal service.

Question 18

What are terms implied by statute?

Answer 18

Listed in the:

Sale of Goods Act 1979 (B2B)

Supply of Goods and Services Act 1982 (B2B)

Consumer Rights Act 2015 (Trader to consumer)

Question 19

What are the key implied terms in the Sale of Goods Act?

Answer 19

Implied term that seller has the right to sell the goods.

That the goods will correspond with description.

The goods are of satisfactory quality.

They meet the standard that a reasonable person would regard as satisfactory.

Where the buyer (a business) makes it known to the seller that the goods are for a particular purpose, the goods supplied under the contract are impliedly reasonably fit for that purpose.

*All CONDITIONS (even though they’re implied terms - super important!!)

Question 20

What happens if any of the implied terms (which are also conditions) of the SGA are breached?

Answer 20

Innocent party can:

• Reject the goods
• Get a refund
• Claim damages

Question 21

What are some bars to rejecting the goods?

Answer 21

1) Where the buyer has accepted the goods (kept them beyond a reasonable time) OR

2) Where the breach is so slight that it would be unreasonable to reject the goods.

Question 22

What does it mean that there’s strict liability regarding the implied terms?

Answer 22

Means the seller doesn’t need to be PERSONALLY at fault for the goods not matching their description/being defective.

Doesn’t matter that it’s not their fault - can still be sued for it.

Question 23

What are the key implied terms in the Supply of Goods and Services Act?

Answer 23

• The seller has an implied right to sell the goods
• That the goods will be of satisfactory quality
• Will match their description
• If buyer has given a purpose, should be suitable for purpose
• Where work/service is done in the course of a business, it’ll be carried out with reasonable skill and care.*
• Where no time for performance has been agreed, implied that work will be done within a reasonable time.*
• Where no price for work or service has been fixed, implied term that a reasonable sum will be charged. *
• = NOT STRICT LIABILITY and are innominate terms.

Question 24

What are the key implied terms in the Consumer Rights Act 2015? (B2C)

Answer 24

• Goods will be of a satisfactory quality
• If purpose is known, implied that the goods will be fit for purpose
• Goods will correspond with description
• Right to sell
• Carried out with reasonable care and skill.
• If price isn’t fixed, reasonable sum will be charged.
• If no time for performance has been agreed, implied it’ll be done within a reasonable time.

Question 25

What rights do the consumers have to enforce terms about goods?

Answer 25

1) Short term right to reject & get a refund

2) Right to repair or replacement (if appropriate)

3) Right to a price reduction or the final right to reject and get a partial refund to reflect customer’s use of goods.

• Follow this order of remedies, if 1) is not available, look to number 2) etc.

Question 26

What is the time limit for rejecting non-perishable goods and perishable goods?

Answer 26

Non perishable = 30 days

Perishable = no longer than the goods could reasonably be expected to last.

Question 27

Time limit for everything else apart from rejecting?

Answer 27

If goods don’t conform to the contract at any time within 6 months of the date of delivery, they will be taken as not having conformed to the contract on that day.

Exception = perishable goods.

Question 28

What are consumers’ right to enforce terms about service/work?

Answer 28

Where there’s been a breach of an express or implied term, the consumer has the right to require:

• Repeat performance (where reasonable) OR
• Price reduction

With performance within a reasonable time, have right to appropriate price reduction.