Chapter 6: Contract Terms Flashcards
Term
Any statement forming part of a contract
If a term of a contract is broken, the injured party can bring an action for breach of contract
Representation
A statement made by one party designed to induce the other party to enter the contract
The court will look at WHEN the statement was made and the IMPORTANCE of the statement
Condition (Fundamental)
A major term of the contract which goes to the heart of the contract, the very essence of the contract.
Breach of a condition allows the injured party to repudiate (reject) the contract or continue with it and claim damages from the beach.
Warranty
A less vital. although still important, term of a contract.
Breach of warranty entitles injured party to damages but they can’t reject the contract completely.
Innominate terms (unclear)
Terms classified as warranties or conditions in a contract can be classified innominate if the consequences of the breach of the term were more or less serious than originally thought when the contract was made.
Court will determine if a term is a condition or a warranty irrespective of what the contract says
Express terms
Those terms expressly stated in the contract
Implied terms
Defined as a ‘term deemed to form part of a contract, even though not expressly mentioned’
Terms can be implied by:
Statute - example employment law
Custom - according to the customs or usual practices
The courts - where necessary to imply a term to achieve the result the parties obviously intended when they made the contract. Avoids gross unfairness. (Courts will not imply terms simply to make the contract ‘fairer’)
Exclusion clause
3 levels of protection
A contract term that attempts to exclude or limit liability for breach of contract or negligence.
Common Law
Statute - Unfair contract terms act
Consumer rights Act
Exclusion clause - Common Law
If the party signs a document containing the clause:
Terms in a unsigned document
Clear notice given
Knowledge derived from a course of dealings between the parties (regular dealings)
If the party signs a document containing the clause:
difficult to dispute is the contract is signed, terms in
Terms in a unsigned document - A person seeking to rely on exclusion clause must show that the document was an integral part of the contract, which could be expected to contain terms. Think is it a suitable document?
Clear notice given before or at the time the contract is made. (never after)
Knowledge derived from a course of dealings between the parties (regular dealings) - But to be bound, a party must be aware of the exclusion at the time of the latest contract.
Contra Proferentem rule
This means if there is any ambiguity or room for doubt as to the existence or meaning of an exclusion clause, the courts will construe it in a way unfavourable to the person seeking to reply on it.
Repugnancy rule
Allows courts to strike out repugnant exclusion clauses, that is clauses that effectively contradict the main purpose of the contract.
The doctrine of fundamental breach
An exclusion clause may be allowed even if it allows a fundamental breach of contract, provided the clause is ‘reasonable’
Unfair Contract Terms Act (UCTA)
applies to who?
Void:
Void unless reasonable:
Applies where both parties are businesses
Cannot have an exclusion clause if:
-the goods are not yours to sell
-death or injury from negligence
Cannot have an exclusion clause unless shown to be reasonable:
-exclusion of implied conditions relating to description, sample, quality and fitness for purpose under the Sale of goods Act
-Restriction or exclusion of liability for other losses arising from negligence
Consumer Rights Act
applies to who?
Voids:
Business to Consumer
Void (has no legal affect):
-Death and personal injury
-Any other sales of goods conditions and other losses from negligence are also void: reasonable test not applied)
