Contents of a contract

Question 1

What are express terms?

Answer 1

Express statements made by parties, by which they intend to be bound.

Agreed in writing, orally, or a mixture of the 2.

Question 2

What are implied terms?

Answer 2

= terms that are not formed by statements made by the parties or agreed upon, orally or in writing

Question 3

What factors will the court take into account when determining whether a statement is a representation or a term of the contract?

Answer 3

1. IMPORTANCE of statement
2. TIMING of statement
3. The reduction of contract into WRITING.
4. SPECIAL knowledge or skill of the person making the statement
5. Assumption of RESPONSIBILITY

Question 4

What are representations?

Answer 4

Statements of fact or law which induce the making of the contract which the parties do not intend to be binding.

Question 5

What are mere puffs?

Answer 5

Statements of no legal significance

Question 6

What 4 ways can express terms be incorporated into a contract?

Answer 6

· A signed written contract
· Incorporation by notice
· Incorporation by course of dealing
· Other ways of agreeing express terms

Question 7

Is a party bound if they signed a contract but has not read the terms or understood what they mean?

Answer 7

= YES

L’Estrange v Graucob Ltd [1934]

UNLESS - the document signed was not one which was intended to have any contractual effect,
OR
- a party orally misrepresented the meaning of the clause to another party

Question 8

What is the ‘red hand rule’?

Answer 8

Where onerous terms are to be incorporated into a contract, they must be CLEARLY brought to the other party’s attention - when incorporated through reasonable notice.

Thornton v Shoe Lane Parking [1971] - be ‘printed in red ink, with a red hand pointing to it, or something equally startling’

Question 9

When will terms be incorporated by notice into a contract?

Answer 9

If REASONABLE STEPS have been taken to bring them to the claimant’s attention. Depending on the facts of the case can be incorporated by reference to a different document.

Question 10

What 2 elements are necessary to establish incorporation by a course of dealing?

Answer 10

1. the course of dealing must have been CONSISTENT over a period of time
2. the course of dealing must have been REGULAR (a few occasions over a number of years is insufficient)

Question 11

What are 2 examples of other ways of agreeing express terms?

Answer 11

• in a conversation or verbal exchange
• set out in writing (e.g. an email and agreement in reply by email)

Question 12

What is an ‘entire agreement’ clause?

Answer 12

A clause in which the parties agree that the written agreement constitutes the entire agreement between them and supersedes any previous understandings and/or arrangements between them, whether oral or written

Question 13

How can parties to a written contract reduce the possibility of a claim that there are binding oral terms alongside the written terms?

Answer 13

The parties can include an ‘entire agreement’ clause in their written contract

Question 14

What are the 2 ways a term may be implied in a contract?

Answer 14

Implied by fact or law

Question 15

What are the considerations the court will notice to discover the unexpressed intention of the parties relating to terms implied in fact?

Answer 15

1. Trade or professional customs
2. Business efficacy
3. A course of dealing between the parties.

Question 16

What does it mean for the courts to give ‘business efficacy’ to a contract?

Answer 16

To imply a term into a contract if without the implied term, the arrangement would be so unworkable that sensible people could not be supposed to have entered into it.

Question 17

What are the 2 ways terms are implied as a matter of law?

Answer 17

• common law
• statute

Question 18

When will a term be implied at common law?

Answer 18

to give effect to legal duties which arise, as a matter of policy, out of certain common types of contractual relationships

e.g. landlord and tenant relationship

Question 19

What is the main concept of consideration

Answer 19

the concept of exchange – in order to be able to enforce a promise made to you, you must be able to show that you agreed to provide something in return for that promise.

The ‘something in return’ is known as consideration.

Question 20

What is executory consideration?

Answer 20

contracting parties make promises to
each other to perform something in the future after the contract has been
formed.

Question 21

What is executed consideration?

Answer 21

at the time of the formation of the
contract, the consideration has already been performed