Contents of a contract

Question 1

Express terms - Incorporation of terms

Answer 1

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 2

Express terms - Classification of terms

Answer 2

Conditions = important terms - remedy damages and termination

Warranties = minor terms - remedy damages

Innominate terms = ‘Wait and see’ approach. The courts look at the effects of the breach on the injured party to determine whether the breach itself was a condition or warranty.

Question 3

Implied terms - terms implied at common law

Answer 3

Terms implied by custom =
A term may be implied if it reflects what are regarded as the well- known and legally binding
customs of a particular trade. Unless it
would contradict an express term of the contract.

Terms implied in fact =
Where the parties have not expressly agreed
something, but the contract would be unworkable without the relevant term.

Terms implied in law =
Because the law regards it as a necessary
incident of a particular type of contract. E.g. in an employment contract, there is an
implied duty on the employer to provide a healthy and safe environment for the employee
to work in.

Question 4

Implied terms - terms implied by statute

Answer 4

Terms implied by statute into business- to- business contracts for the sale and supply of goods
and/ or services.

Question 5

Implied terms - terms implied by statute - which act applies?

Answer 5

Sale of goods act 1979 = selling and buying of goods.

Supply of goods and services act 1982 = if it’s for a service/work, e.g installing machinery, between businesses.

Consumer rights act 2015 = sale of goods and supply
of goods and services between consumers and business

Question 6

Implied terms - terms implied by statute - description

Answer 6

All 3 acts state that goods will correspond to description.

Question 7

Implied terms - terms implied by statute - sample

Answer 7

All 3 acts state that goods will be of same quality of sample.

Question 8

Implied terms - terms implied by statute - quality fit for purpose

Answer 8

All 3 acts state that goods will be of satisfactory quality and reasonably fit for purpose.

Question 9

Implied terms - terms implied by statute - consumer rights act remedies

Answer 9

If goods do not match description, are not of satisfactory quality and fit for purpose then remedies:
(a) the short- term right to reject and get a full refund;
(b) the right to repair or replacement (if appropriate); 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.

In that order.

Question 10

Implied terms - terms implied by statute - Supply of goods and services act 1982

Answer 10

Innominate terms (do not impose SL, not a condition/warranty):

Where work or a service is done in the course of a business there is an implied term that it will be carried out with reasonable care and skill.

Where work or a service is done in the course of a business and no time
for performance has been agreed, it is implied that the work will be done within a
reasonable time.

If a price for work or a service has not been fixed, there is an implied term that a reasonable sum will be charged.

Question 11

Implied terms - terms implied by statute - Consumer rights act 2015

Answer 11

Where work or a service is done in the course of a business there is an implied term that it will be carried out with reasonable care and skill.

Where work or a service is done in the course of a business and no time
for performance has been agreed, it is implied that the work will be done within a
reasonable time.

If a price for work or a service has not been fixed, there is an implied term that a reasonable sum will be charged.

Question 12

Consumers’ rights to enforce terms about goods

Answer 12

(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).

Question 13

Consumers’ rights to enforce terms about services/ work

Answer 13

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.

Question 14

Exemption clauses

Answer 14

Commercial suppliers often include clauses in contracts to limit, or exclude, their liability for loss or damage in the event of failure to perform the contract properly

Question 15

Exemption clauses - common law rules

Answer 15

1st test - whether an exemption clause truly is part of the contract between the parties? Incorporation

2nd test - Does the clause exempt liability for the particular breach
and loss suffered? Construction

Question 16

Exemption clauses - statutory controls - Unfair Contract Terms Act 1977

Answer 16

Governs exemption clauses
in business- to- business contracts.

(a) it prevents the defendant from excluding or restricting their liability by reference to the term (eg in relation to death/ personal injury caused by negligence)
and the seller’s implied undertaking as to title of goods sold or transferred; or
(b) it has no effect on the term, and so the defendant can rely on the term; or
(c) it subjects the term to a ‘requirement of reasonableness’.

Question 17

Exemption clauses - statutory controls - Unfair Contract Terms Act 1977 - reasonableness test

Answer 17

Applies to most clauses, in particular clauses excepting liability for:
* loss or damage (other than death and personal injury) caused by negligence;
* breach of the statutory implied terms relating to goods – description, quality and fitness
for purpose; and
* breach of an express term contained in the standard written terms of the person seeking to exempt liability.

Test = the clause must have been a fair and reasonable one to be included in the contract.
We judge that at the time of the contract by taking into account all
the circumstances including what the parties knew or ought to have known at that point in time.

Question 18

Exemption clauses - statutory controls - Consumer Rights Act 2015

Answer 18

Governs exemption clauses in business- to- consumer
contracts.

• Sales contracts
  Terms not binding if it would exclude or restrict a right or remedy in respect of breach of ss 9– 11 (satisfactory quality, git for purposes, as described) or prevent enforcement.
• Service contracts
  Trader cannot exclude or restrict liability for breach of s 49 (the implied term to perform a service with reasonable care
  and skill).

Cannot restrict liability for reasonable price and reasonable time.

Question 19

Exemption clauses and third parties

Answer 19

General rule is that an exemption clause in a contract cannot protect a third party due to privity rule.