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SQE Contract > Contents of a Contract > Flashcards

Contents of a Contract Flashcards

1
Q

Circumstances where the court may imply a term into a contract

A
  1. Custom or trade usage (both in same trade / area)
  2. Consistent course of dealings
  3. Necessary to make a contract commercially viable (business efficacy test)
  4. So obvious parties intended it (both must be in agreement) (officious bystander test)
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2
Q

What is the business efficacy test

A

A term will be implied if…
Necessary to make contract commercially viable

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3
Q

What is the officious bystander test?

A

Term will be implied if…
So obvious goes without saying the parties intended it.

Both must agree to term

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4
Q

Who does the SGA 1979 apply to?

A
  1. b2b
  2. c2c
  3. c2b

Only sale by description applies to consumers (not quality / purpose)

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5
Q

Who does SGSA 1982 apply to?

A

b2b

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6
Q

Who does the CRA 2015 apply to?

A

t2c

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7
Q

What are the statutory implied terms?

A
  1. comply with description
  2. satisfactory quality
  3. fit for purpose
  4. reasonable skill and care
  5. reasonable time (if not otherwise agreed)
  6. reasonable price (if not otherwise agreed)
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8
Q

When is the class of term relevent?

A

Obligations are unfinished

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9
Q

What statutory implied terms are conditions (strict liability)

A
  1. correspondence with description
  2. satisfactory quality
  3. fit for purpose
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10
Q

What statutory implied terms are innominate?

A
  1. reasonable skill and care
  2. reasonable time
  3. reasonable price
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11
Q

When will the court imply a term due to previous course of dealings?

A
  1. consistent (same terms + signed)
  2. course (high number + regular basis)
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12
Q

What is the test to determine whether a term is a condition or warranty?

A

Whether a reasonable person would think the parties intended the term to be a condition / warranty at the time the contract was made

classification in contract can be rebutted

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13
Q

Remedies for breach of a condition

A
  1. Termination (only if future obligations)
  2. Damages
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14
Q

What is an innominate term?

A
  • Cannot be classified at outset as wide spectrum of possible breaches
  • parties wait and see consequence of breach
  • condition if effect deprives innocent party of substantially whole benefit of contract
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15
Q

When is an innominate term a condition?

A

Breach deprives innocent party of substantially whole benefit of the contract

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16
Q

3 conditions

When is the term that goods must comply with description implied by statute?

CRA / SGSA / SGA

A
  1. b2b (SGA or SGSA), c2b or c2c (SGA) or t2c (CRA)
  2. Buyer relies on a description
  3. Reasonable to rely on description
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17
Q

When are the conditions that goods must be of satisfactory quality / fit for purpose implied by statute?

SGA / SGSA / CRA

A

Sold in the course of a business (b2b or t2c only)

Never if a consumer is selling

18
Q

3 exceptions

What are the exceptions to the GR that goods must be of satisfactory quality?

A

Before the contract is made…
1. Defect is specifically drawn to buyer’s attention; or
2. Buyer examined goods and should have noticed defect; or
3. Buyer was supplied a sample and defect was present.

19
Q

When can a buyer rely on ‘fit for purpose’ if not using for intended purpose?

A
  1. Sold in course of business
  2. Buyer makes purpose known to supplier
  3. Reasonable to rely on supplier’s skill / knoweldge
20
Q

What are the statutory remedies under SGA for breach of statutory condition?

e.g. Compliance with description, satisfactory quality, fit for purpose

A
  1. Terminate + reject goods + full refund; or
  2. Affirm + keep goods + damages; or
  3. Damages only

Cannot terminate if fails to reject in reasonable time or minor defect

21
Q

When is termination unavailable as a remedy under the SGA?

A
  1. Buyer accepts goods + does not reject in reasonable time; or
  2. breach is very small (e.g. goods still usable)

Burden is on seller prove that minor breach

22
Q

When will reasonable time and sum be implied?

A

No express agreement in contract

23
Q

Can liability be excluded or restricted for breach of statutory condition?

e.g. by description, satifactory quality, fit for purpose

A
  1. If b2b: UCTA (yes, if reasonable)
  2. if t2c: CRA (no)
24
Q

Statutory remedies for breach of statutory condition under CRA?

A

Within 30 days of delivery / installation:
* rejection + full refund

Within 6 months of delivery / installation:
* repair or replacement; or
* price reduction OR rejection + partial refund (only if repair / replacement is inappropriate)

EXCEPTIONS:
* if perishable: time limit as long as goods can be expected to last
* no remedy after 30 days if seller can prove goods conformed with contract on day of delivery

25
Q

Statutory remedies under CRA for breach of
* reasonable care; or
* express term

A
  1. repeat performance (if reasonable); or
  2. price reduction
  3. damages for breach of express term
26
Q

Statutory remedy under CRA for breach of:
* implied terms reasonable time and price
* express term relating to time

A

Price reduction

27
Q

When is a clause incorporated?

A
  1. Signature (unless illegible OR misrep OR unusual or onerous + not drawn to attention OR mistake)
  2. Notice (contractual in nature + C knows of clause OR D took reasonable steps to alert C)
  3. consistent course of dealings (same terms + signed + regular + frequent)
28
Q

3 exceptions

Exceptions to the GR that a signed contractual document incorporates a clause?

A
  1. clause is illegible (more than regrettably small) ; or
  2. effect is described inaccurately + C reasonably relied on misrep (e.g. consumers not businesses); or
  3. unusual and onerous + not fairly drawn to C’s attention
29
Q

Conditions for terms in an unsigned document to be incorporated?

e.g. notice / ticket

A
  1. contractual document (reasonable person would expect to contain terms)
  2. C knows of clause OR D takes reasonable steps to bring it to C’s notice
  3. C knows of clause before contract is finalised UNLESS consistent course of dealings
30
Q

Contra proferentem rule?

A

Court will interpret an ambigious clause in favour of C

31
Q

Coverage / construction rule for exemption clauses?

A

clause must cover:
1. breach
2. loss / damage
3. remedy

32
Q

What conditions must be satisfied for an exemption clause to be enforceable?

A
  1. Incorporated
  2. Construction
  3. Reasonable / Fair (if implied term OR express term in standard T&Cs OR express term in consumer contract)

An express term in bespoke b2b contract does not need to be reasonable

33
Q

When will an exemption clause be automatically void?

A

Excludes liability for death or personal injury

34
Q

Can liability be excluded for breach of an express term in b2b contract (not T&Cs)?

A

Yes provided incorporation and construction conditions satisfied.

No need to satisfy reasonableness test in UCTA

35
Q

UCTA reasonableness test

A

Was the clause reasonable to include at the time the contract was made?

Burden is on person seeking to rely on clause to prove reasonable

36
Q

Who must prove an exemption clause is reasonable?

A

person seeking to rely on it (benefit from it)

37
Q

Factors the court will take into account when considering whether an exemption clause is reasonable?

A
  1. strength of bargaining position (size, age and experience)
  2. ability to bear loss (resources)
  3. inducement (price reduction) abiilty to enter similar contract without exemption clause
  4. reasonable to expect C to comply with condition? (how long for defect to emerge / perishable?)
  5. Special order
  6. Best placed to insure
  7. Difficulty of task
  8. Practical consequences (invalid if loss bourne by taxpayer / D stands to profit)
  9. Knew of existence (clear / previous dealings)
38
Q

When is UCTA not applicable?

A
  1. t2c contract
  2. contract of insurance
  3. contract relating to creation, transfer or termination of an interest in land
39
Q

When is UCTA applicable?

A
  1. Negligent breach
  2. breach of statutory implied term
  3. breach of express term in standard T&Cs
40
Q

When is an exclusion clause under CRA void?

A

Statutory conditions (as described, fit for purpose, quality)
* excludes or restricts liability

Reasonable skill
* excludes liability
* restricts liability + prevents C from obtaining remedy

Death and personal injury
* Excludes liability

Any statutory term
* makes enforcement subject to restrictive or onerous condition
* Puts C at a disadvantage for pursuing right / remedy
* excludes or restricts rules of evidence or procedure

Express terms
* Causes a significant imbalance to the detriment of consumer (i.e. unfair)

Loss resulting from property damage
1. Were parties of equal bargaining power?
2. Difficulty of task
3. Best placed to insure?

41
Q

Can a 3rd party be protected by an exemption clause

i.e. be sued personally?

A

GR: An exemption clause cannot protect a 3rd party
EXCEPTION:
A 3rd party can rely on an exemption clause if:
1. named OR member of class OR answers particular description; and
2. express benefit or purports to confer benefit + nothing to contrary; and
3. exemption clause is valid (incorporated, construction + reasonable (if applicable))

42
Q
A

SQE Contract (11 decks)

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