Contents

Question 1

Express terms

Question 2

Incorporation of terms

Answer 2

Terms may be incorporated into a contract in the following ways:
* Signature
* Reasonable notice before or at the time of the contract
* A previous consistent course of dealing

Question 3

Reasonable notice

Answer 3

If a term of reasonable notice has not been given in the contract then these factors will be taken into account by the court:

• Nature of the document - Is the document one which a reasonable person expect for there to be contract terms?
• Timing - The notice must come before or at the time of the contract (eg on a quotation) and not afterwards (eg on an invoice).
• Onerous terms - The more onerous the term the more a party must do to bring it to the other party’s attention
• The exemption clause must be legible
• If the term is set out on the back of a document are there words on the front drawing the other party’s attention to them

Question 4

Previous course of dealing

Answer 4

For terms to be incorporated in this way the parties must
have had a lot of regular dealings in the past that were all on exactly the same terms and conditions, the premise being that by this stage in their dealings the parties should be familiar with those terms and conditions (even if on each individual occasion they have been provided after the contract, for example in an invoice).

Question 5

Classification of terms

Answer 5

Termination is only available only if a ‘condition’ has been breached and there are outstanding contractual obligations.

Question 6

Condition

Answer 6

If conditions are breached prima facie the innocent party can terminate the future performance of the contract as well as claim damages.

Even if the breach happens to be fairly insignificant the point is that an important term has been breached and for this reason alone the non-defaulting party has a choice whether to terminate or affirm the contract

Question 7

Warranties

Answer 7

Warranties, on the other hand, are minor terms. If a warranty is breached the only remedy is damages, however serious the breach.

Question 8

Innominate terms - What if breach of a condition is so slight that most people would regard termination as being unreasonable and out-of-proportion to the effect of the breach?

Answer 8

Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd - The Court of Appeal introduced a ‘wait and see’ approach. In other words the remedy would depend on the ultimate effect of the breach. Only if the breach was really serious and effectively deprived the innocent party of substantially the whole benefit they expected to receive under the contract would they have the choice to terminate or affirm the contract.

Question 9

Terms implied at common law

Answer 9

• Terms implied by custom
• Terms implied in fact
• Terms implied in law
• Terms implied by statute

Question 10

Terms implied by custom

Answer 10

A term may be implied if it reflects what are regarded as the well-known and legally binding customs of a particular trade. Note, however, that a term will not be implied by custom if it would contradict an express term of the contract.

Question 11

Terms implied in fact

Answer 11

Here, a term may be implied into a contract where the parties have not expressly agreed something, but the contract would be unworkable without the relevant term. It is taken that the parties have implicitly agreed what is necessary to make commercial sense of their contract. Something that is so obvious it goes without saying.

Question 12

Terms implied in law

Question 13

Terms implied by statute

Answer 13

Terms implied by statute into business-to-business contracts for the sale and supply of goods and/or services
The relevant statutes are the SGA 1979 and the Supply of Goods and Services Act (SGSA) 1982.

Question 14

Sale of Goods Act 1979 implied terms for B2B contracts and supply of goods and/or services

Answer 14

• Seller has a right to sell the goods
• Corresponds with the description
• Satisfactory quality
• Goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
• Fit for that purpose (if seller is aware of it)

They are all conditions and impose strict liability

Question 15

SGA 79 - Strict liability

Answer 15

The fact that these terms are conditions means that if they are breached prima facie the innocent party can reject the goods and get a refund as well as claim damages. The only bars to rejecting the goods are:
(a) where the buyer has accepted the goods (eg they have intimated acceptance or otherwise kept the goods beyond a reasonable time without seeking to reject them); or
(b) in relation to ss 13 and 14, where the breach is so slight that it would be unreasonable to reject the goods.

Question 16

SGA Implied terms - Contracts for a service work or supply of work and materials

Answer 16

Condition:
- Right to transfer the property or good
- Correspond with the description
- Satisfactory quality
- Fit for that purpose

Innominate term:
- Work will be carried out with reasonable care and skill
- Will be done within a reasonable time
- Reasonable sum will be charged, if price is not fixed

Question 17

Consumer Rights Act Implied terms - B2C contracts for the sale of goods and supply of goods and services

Answer 17

Relevant act here is Consumer Rights Act

Sale of goods:
- Satisfactory quality
- Right to transfer or sell the goods at the time
- Correspond with that description
- Fit for that purpose

Goods and services and service contracts.:
- Carried out with reasonable care and skill
- A reasonable sum will be charged
- Work will be done within a reasonable time

Question 18

Consumers’ rights to enforce terms about goods

Answer 18

These rights are set out in s 19 of the CRA 2015, and, broadly speaking, if the goods do not conform to the contract because of a breach of ss 9–11, the consumer has:
(a) the short-term right to reject and get a full refund (ss 20 and 22);
(b) the right to repair or replacement (if appropriate) (s 23); and
(c) the right to a price reduction or the final right to reject and get a partial refund to reflect the consumer’s use of the goods (ss 20 and 24).

Unless the parties have expressly agreed otherwise, the time limit for the short-term right to reject non-perishable goods is 30 days after they have been bought, delivered and, where appropriate, installed. With perishable goods, the time limit is no longer than the goods could reasonably be expected to last

For the purposes of the other rights, if goods do not conform to the contract at any time within six months of the date of delivery, they will be taken as not having conformed to the contract on that day.

Question 19

Consumers’ rights to enforce terms about services/work

Answer 19

Very simply, s 54 of the CRA 2015 provides that where a service/work does not conform to the contract because of either breach of an express term relating to the performance of the service/work or breach of the implied term to exercise reasonable care and skill
(s 49), the consumer has the right to require repeat performance (where reasonable) or to a price reduction.

In relation to a breach of the implied term as to performance within a reasonable time (s 52), the consumer simply has the right to an appropriate price reduction