Content of a contract: implied and express terms Flashcards
Express terms?
agreed specifically between the parties, can be made either in writing or orally
(on other card)
How can terms be implied
Terms can be implied through statute or common law:
- In common law, terms can be implied in two ways
1) business efficacy and the officious bystander test
2) by custom or prior dealings with the party
Statute law:
Consumer rights act 2015
When would common law be used?
Individual to individual
When would statute law be used
Business to customer
What will the courts consider when using the business efficacy/ officious bystander
1) is the term necessary to make the contract effective
2) if the parties had thought about it, would they have agreed that the suggested term was obviously going to be in the contracti.e. hot coffee
3) was it so obvious that the term would ‘go without saying’
4) business efficacy
The Moorcock
The claimant moored his ship at the defendant’s wharf on the river Thames. The river Thames is a tidal river and at times when the tide went out the ship would come into contact with the river bed. The ship became damaged due to uneven surfaces and rocks on the river bed. The claimant sought to claim damages from the defendant and the defendant argued that there was no provision in the contract warranting the condition of the river bed.
Held:
The court implied a term in fact, that the river bed would be safe for mooring. The court introduced the business efficacy test ie the term must be necessary to give the contract business effect. If the contract makes business sense without the term, the courts will not imply a term.
The officious bystander test:
This is a way courts determine if unwritten terms should be implied into a contract
In simple terms, Shirlaw v Southern Foundries - if someone (officious bystander) was standing nearby when the contract was being made and suggested a particular term, both parties would have said of course, that goes without saying!
terms will not implied if the parties never would have agreed to it if the bystander suggested or if they had thought about
Shell UK v Lostock garage
shell supplied petrol and oil to lostock who in return bought those productw only from Shell. Shell then supplied petrol to other garages at a lower price which forced Lostock to sell at a loss. Lostock argued that there was a term in the contract that Shell wouldn’t abnormally discriminate against it. The argument failed as Shell would never have agreed to such a term
Officious bystander test
Business efficacy
the power to produce the intended result i.e. if it was obvious intended to have that term, the courts will imply it
Marks and Spencer v BNP
supreme court clarified that implied terms and their reasonableness should be judged objectively - not looking at the actual parties and what they thought but with that of a reasonable person in their position.
They also outlined that either test can be used - objective
Prior dealings/ customs
If the parties had prior dealings. then that prior conduct may indicate terms to be impled - Hillas v Arcos
Terms implied by Statute - Consumer Rights act 2015
Concerned with anything between a consumer and business
Consumer - an individuals acting for purposes mainly outside of that persons trade. A company cannot be a consumer
Trader - a person acting for purposes related to their trade, can be a sole trader, company, business partnership
goods and services involved
Section 9 Consumer Rights act
The right to satisfactory quality, this is an implied term into any contract where a business selling goods to a consumer. The quality of goods must be satisfactory.
Objective test - what the reasonable person would consider satisfactory - taking into account:
Maebe v PLT
- description of goods
- price or other considerations
- state and conditions
i.e. vinted
Section 9 Exceptions:
The Act will not apply:
When defects have been drawn to the consumers attention before the contract is made
examines the goods before the contract is made - i.e. dent in car
The goods have been sold after inspection of a sample and the defect would have been apparent
Objective test - based on reasonable person
Section 10 - the right of fitness for particular purpose
the consumer tells the trader the purpose of the goods.
if they state the purpose for the goods, the trader must ensure that the goods are fit for the purpose if they are not
The consumer may be relying on the skill/judgement of the seller and has expressed a particular purpose for which the goods are required
ford car needs a tyre, pump only fits BMW car
Baldry v Marshall - consumer had asked the seller to supply him with a fast, flexible, easily managed car that would be comfortable and suitable for ordinary touring purposes, He was given a Bugatti and then claimed that this was not fit for purpose. The court agreed.
Dont need to state the purpose of the goods if they are being bought for their normal use e.g. grant v knitting mills
Section 11 - the right relating to description
every contract to supply goods by description, has an implied term that the goods will match their description
can be an implied description - if the goods are on display
if the goods are by reference to a model seen/examined by the consumer i.e. earrings, then the goods supplied must match the model +packaging
results can be harsh for the trader
Re Moore and Co = contract was for tinned peaches parked in cartons of 30 tins, many cartons actually contained 24 tins, even though the total number of tins was correct this was still a breach
remedies under the CRA for terms implied in a contract to supply goods:
in addition to usual remedies for breach of contract such as damages
- s20 - short term right to reject
- s23 - the right to repair or replacement
- s24 - the right to a price reduction or the final right to reject
S20 - The short term right to reject
30 day right to reject
this right must be exercised within 30 days of the delivery of the goods - changes for coffee, hot food etc
must be made clear to the trader by the consumer that they are rejecting the goods and terminating the contract
consumer is then entitled to a full refund
must bear the reasonable costs of returning the goods
refund must be given without undue delay, 14 days, beginning with the day on which the trader agrees that the consumer is entitled to a refund.
- s23 - the right to repair or replacement
if the consumer does not exercise their s20 right, they will have the right to repair or replace
replacement is sometimes impossible when the goods are unique
If it would impose an unreasonable cost on the trader to repair/ replace, then an alternative remedy must be used
if it is possible for the trader to do so, they must do so within a reasonable timetable and bear any costs in completing the tasks
the fault complained must have been present at the time of delivery
Remedy - S24 = the right to a price reduction or the final right to reject
If a S23 isn’t satisfactory they have the final right to a price reduction or to reject the product and claim a refund
this means that the consumer has attempted to repair/replace but the consumer still isn’t satisfied
any refund is subject to a deduction for use
the rights/remedies are tiered
Start with S20 not exercised within 30 days, then the consumer has the right to R/R. -If this is unsatisfactory then the consumer has the right to a price reduction or final right to reject and claim a refund
Remedy exceptions
Presumption - if a fault arises in the first 6 months, the fault was present at the time of delivery
the trader can rebut this presumption by providing evidence to show otherwise - oh polly tag = cut it off
this presumption does not apply to the short term right to reject
if the fault develops after the first 6 months, burden is on the consumer to prove that it was faulty at the time of delivery
Implied terms: services
the statutory implied terms differ depending on whether the contract is for goods or services. The remedies are also slightly different.
s49
s52
S49 - Reasonable care and skill
The CRA includes an implied term that if there is a contract for services then the trader must perform the service with reasonable care and skill.
Some contracts include a delivery of goods and services. If this is the case, the service element needs to be completed with reasonable care and skill = divide into two talk about both
the standard of care is equivalent to the standard of care expected in a claim in the tort of negligence - case by case basis
Thake v Maurice = Wilson v Best Travel
Thake v Maurice (1986)
Reasonable care
Mr and Mrs Thake had 5 children, the husband decided to have a vasectomy. After the operation, Mrs Thake fell pregnant again and sued for breach of contract. There was an implied term that the surgeon would perform the operation to the standard of care and skill of a competent surgeon. Evidence showed that he did reach that level so the claim failed.
