Contents of a Contract Flashcards
3 ways that terms can be incorporated into a contract
- Signature
- Reasonable notice at or before time of contract
- Previous and consistent course of dealing
What does the court take into account for whether reasonable notice has been given?
- Nature of the document [back of a ticket]
- Timing [term cannot come on an invoice later]
- Onerous Terms
What does the court take into account for previous consistent courses of dealing?
Regular and consistent dealings in the past.
All dealings must have been on the same terms and conditions.
The parties should be familiar with those terms due to the consistency of their dealings.
Will terms be incorporated if the parties have had three or four dealings over the last five years on the same terms?
Likely no, as three or four dealings over five years may not be considered frequent or regular enough to establish a consistent course of dealing
Why might terms not be incorporated if one party sometimes asks the other to sign a document containing terms?
Because there is no consistency—sometimes terms are signed, and sometimes they are not. This inconsistency means the parties cannot reasonably be expected to know the terms in advance.
What is a condition?
An important term of the contract
What can you do on the BREACH of a CONDITION
Terminate the contract
Claim damages
What is a warranty?
A minor term of the contract
What can you do on the BREACH of a WARRANTY?
Claim damages only
What is the clause ‘expected ready to load’ a condition or a warranty?
A Condition
What if a ‘condition’ is breached but it is so slight that terminating the contract would be so unreasonable?
These are called innominate terms.
What is the remedy for breaching an innominate term?
It depends on how severe the consequences are. If it is so serious then termination, if not, damages.
So,
Condition -
Warranty -
Innominate -
Termination, Damages, Termination and Damages.
What are implied terms?
Terms that the parties have not expressly agreed, they are so obvious they go without saying.
Terms implied by statute under the Sale of Goods Act 1979:
These are terms implied into buisness to buisness contracts for the sale and supply of goods and servics.
List of Terms implied by statute under the Sale of Goods Act 1979:
12[1] Seller has the right to sell the goods
13[1] Goods will correspond with the description
14[2] Goods are satisfactory quality
14[2a] Goods are satisfactory if a reasonable person would regard as such
14[3] Where buyer expressly makes known a particular purpose these will be used [infrared] there is an implied term that the goods supplied are reasonably fit for those purpose.
Exception: Circumstances show its unreasonable for the buyer to rely on skill of seller.
Really Delicious Sandwiches Please
R – Right to Sell (Section 12(1))
The seller has the right to sell the goods.
D – Description (Section 13(1))
Goods must correspond with their description.
S – Satisfactory Quality (Section 14(2))
Goods must be of satisfactory quality (reasonable standard considering price, description, etc.).
P – Purpose (Section 14(3))
Goods must be reasonably fit for the buyer’s specific purpose (if made known to the seller).
Under the Sale of Goods Act, these terms are all conditions, therefore if they are breached what happens?
They are conditions, meaning a breach allows the buyer to reject the goods, get a refund, and claim damages.
What is strict liability under the SGA 1979?
Strict liability means the seller is liable if the goods do not comply with the implied terms, regardless of fault. For example, if the goods are defective or do not match their description, the seller is liable even if they did not cause the defect.
When can a buyer not reject goods for breach of an implied term?
They have accepted the goods (e.g., by keeping them beyond a reasonable time), or
The breach is so slight that rejection would be unreasonable.
What is the Supply of Goods abd Services Act 1982?
It implies certain terms in relation to any work or service supplied.
List of implied terms in the Supply of Goods and Services Act 1982?
Right to transfer goods [strict condition]
Correspond with description [strict condition]
Satisfactory quality [strict condition]
Fitness for purpose [strict condition]
Reasonable care and skill [innominate]
Reasonable time [innominate]
Reasonable price [innominate]
Breach of reasonable care and skill, reasonable time and reasonable price
It depends on how severe the consequences are. If it is so serious then termination, if not, damages.
Consumer Rights Act 2015
Terms implied by statute for the sale of goods and supply of goods and services
Consumer Rights Act 2015
Satisfactory quality
Fitness for purpose
Correspond with description
Right to sell or transfer goods
Reasonable care and skill
Reasonable price
Reasonable time
Question: Jenny decided to have a conservatory built at the back of her house and contracted with Windows Ltd for them to build it. Two days after the conservatory was completed, it became apparent that some of the double-glazed window panels were defective and were getting misted up. When she pointed this out to Windows Ltd, they said it was not their fault as it was a manufacturing defect.
Consumer Rights Act
Satisfactory Quality
Fitness for Purpose
Strict Liability
If these are breached under the CRA 2015:
Satisfactory quality
Fitness for purpose
Correspond with description
a] consumer has a short term right to reject and get a full refund and damages
(if not)
b] consumer can get repaired or replaced
(if not)
c] consumer can have price reduced or partial refund if goods used
What is the time limit for the short term right to reject non-perishable goods?
30 days after they have been bought, delivered [and installed].
What is the time limit for the short term right to reject perishable goods?
The time limit is no longer than the goods could reasonably be expected to last.
Where a service of work does not conform to the contract because of the performance of the contractor, what remedy does the consumer have?
Right to require repeat performance [where reasonable] or a price reduction.
If the term is reasonable time, then this is price reduction only.
Jenny contracted with Windows Ltd to build a conservatory. Two days after completion, some double-glazed window panels were defective and misted up. Windows Ltd claimed it was a manufacturing defect and not their fault. What are the legal implications?
This is a goods and services contract under the Consumer Rights Act 2015 (CRA 2015).
Windows Ltd breached the implied terms of:
Satisfactory quality (s 9 CRA 2015).
Fitness for purpose (s 10 CRA 2015).
Liability is strict, so it is no defence that the fault was due to a manufacturing defect.
Remedies:
Jenny can exercise her short-term right to reject the faulty panels.
Alternatively, she can request replacement panels, which may be more practical.
Repair or a price reduction would not be appropriate in this case.
Patrick hired John, a builder, to supply and lay a grey Indian stone patio. John laid brown stones instead, and the surface was not level. What are the legal implications?
This is also a goods and services contract governed by the CRA 2015.
John breached:
An express term (brown instead of grey stones).
The implied term that goods must correspond with their description (s 11 CRA 2015).
The implied term to carry out work with reasonable care and skill (s 49 CRA 2015) (due to the uneven surface).
Remedies:
Patrick can exercise his short-term right to reject the non-conforming stones.
Alternatively, he can request replacement stones that match the contract description.
For the poor workmanship, Patrick can require repeat performance (re-laying the patio properly) rather than a price reduction.
In a commercial dispute, the buyer’s order forms referenced their standard terms and conditions (Ts & Cs) with the statement ‘Available on request’, but the seller never requested them. The seller sometimes accepted orders by email (attaching their Ts & Cs in small print) and sometimes by phone (without referencing their Ts & Cs). The buyer is now suing the seller for defective goods from the last order, which was accepted by phone. The seller wants to rely on an exemption clause in their Ts & Cs.
Which of the following statements best explains the legal position regarding the incorporation of terms in this scenario?
The customer’s Ts & Cs were never requested or seen by the client, so they were not incorporated.
The client’s Ts & Cs were not consistently brought to the customer’s attention (e.g., small print in emails, no reference during phone acceptances).
Therefore, neither party’s Ts & Cs were incorporated into the contract
