Contents & Interpretation, Termination & Remedies

Question 1

What two types of terms exist?

Answer 1

express and implied

Question 2

What are express terms?

Answer 2

Condition, warranty, innominate

Question 3

What are implied terms?

Answer 3

Common law, statute, custom or usage

Question 4

What is the difference between a term and a representation?

Answer 4

A term is actionable and forms part of the contract.

A representation is not actionable and does not form part of the contract.

Question 5

“In my experience the best fuel consumption that this car would have is probably about 10km per litre.” is an example of a:

Term
OR
Representation?

Answer 5

Representation

Question 6

“If you buy that car it comes with a 5 year guarantee as to…” is an example of a:

Term
OR
Representation?

Answer 6

Term

Question 7

A statement will form part of a contract when:

Answer 7

It is made as a TERM.

It creates contractual obligations between the parties.

As a collateral contract (i.e. made as a preliminary agreement upon which the main contract will be entered into)

Question 8

Which allows a remedy to an injured party if breached; a term or representation?

Answer 8

Term

Question 9

A statement will NOT form part of a contract when:

Answer 9

It is a simple representation: induces an offeree to enter into the contract but is not part of the contract (does not guarantee)

Is representation is MISREPRESENTED see misrepresentation (breach, and potential remedy)

If it is made as sales “puff”

Question 10

When a court is trying to determine whether a term was an expressed term, they will take into account:

Answer 10

The time lapsed between making the statement and the final agreement

The importance attached to the statement

Whether the innocent party was asked to verify the statement

Whether the statement was made with the intention of preventing the other party from looking for/finding defects

Whether one of the parties had special skills or knowledge

Question 11

What does a collateral contract need not be inconsistent with?

Answer 11

the terms of the main contract

Question 12

Will an oral promise count as a term of a contract?

Answer 12

If made by the parties prior to entering into the main contract an oral promise MAY have a contractual effect as a collateral contract on which the main contract is based.

IF IT IS IMPORTANT, GET IT IN WRITING.

Question 13

What is condition precedent?

Answer 13

A term that prevents an agreement turning into a contract until the happening of a stated event.

Question 14

What is condition subsequent?

Answer 14

A term in the contract which can terminate it on the occurrence of some external event.

Question 15

What is a condition?

Answer 15

A stipulation which “goes to the root of a matter” and failure to to perform would render the performance of the rest of the contract, different than what was intended.

Is essential to the contract. injured party entitled to rescind the contract if breached.

Question 16

What is a warranty?

Answer 16

A term of the contract that is regarded as “less important”. If broken, allows the contract to proceed but injured party can sue for damages due to any financial loss.

Question 17

What is an innominate term?

Answer 17

Not all conditions fall into one of two categories - court to determine if the breach is sufficiently serious and the injured party was substantially deprived.

Depends on the consequences of a breach, may operate as a condition or a warranty.

Court will look at the intentions of the parties.

Question 18

What is the parol evidence rule?

Answer 18

Excludes oral (extrinsic) evidence that will “add to, vary or contradict” a written document.

Question 19

What are the exceptions to the parol evidence rule?

Answer 19

1) Language is ambiguous or could have more than 1 meaning
2) Oral evidence can be provided to IDENTIFY parties
3) If custom or trade usage demands otherwise
4) A collateral contract - verbal agreement relating to the subject matter and not inconsistent with written contract
5) A document was not intended to embody the terms (receipt)
6) When fraud, duress, etc.

Question 20

What is an exclusion clause?

Answer 20

The same as an exemption clause:

a term that attempts to limit or exclude a party from liability for breach of contract or for negligence

Question 21

What is an exception clause?

Answer 21

The same as an exclusion clause:

a term that attempts to limit or exclude a party from liability for breach of contract or for negligence

Question 22

When can an exemption clause be effective?

Answer 22

When formed in the contract and when the interpretation is wide enough to cover the breach

Question 23

When is an exemption clause ineffective?

Answer 23

When it’s limited by legislation

Question 24

When is a signee not bound by an exemption clause in a contract?

Answer 24

When there is a harsh/unusual term that has not been brought to their attention.

Where there was misrepresentation.

Question 25

What is the contra proferentum rule?

Answer 25

The courts will resolve any ambiguity against a party relying on the clause

Question 26

What is the four corners rule?

Answer 26

A exclusion clause will not apply to actions outside the contract (thus exclusion clause will not apply to situations involving deliberate breaches for conduct that is outside the purpose of the contract).

Question 27

What is frustration?

Answer 27

An unforeseen event outside the control of the parties that significantly changed the obligations of the parties as a result.

Neither party caused the event.

Neither party contemplated the event.

Question 28

Mitigation of damages

Answer 28

The plaintiff must take reasonable steps to mitigate, that is to minimise their loss that resulted from the breach of contract. Failure to do so can result in a reduced damages or no damages awarded.

Question 29

What are the Statutes of Limitation?

Answer 29

The Statutes of Limitations of the States and Territories determine the TIME LIMITS within which an injured party must take action