contents of a standard contract Flashcards
what are paragraphs in a contract?
known as terms or clauses, can be express or implied
what are express terms?
- what was actually said or written as part of a contract
- usually accepted by courts as intention of parties is clear
- if terms are written, court assumes all relevant terms of the contract are included in written doc (none are verbal)
what are implied terms?
- “invisible terms”, not written or even mentioned as terms are considered so obvious that they dont need to
- courts assume certain terms are in contract & will enforce them (eg. statutory protection)
what are conditions of a contract?
- fundamental terms of a contract (can have serious consequences if breached)
- breach of condition is serious (innocent party can end contract & claim compensation)
what are warranties of a contract?
- terms which are ancillary to the main purpose (minor parts of the contract)
- breach of warranty is less serious (innocent party can only claim compensation)
what are innominate terms in a contract?
when the importance of a term is unclear, so courts have to determine the importance of it by looking at :
- intention of parties
- practical consequences of any breach (destructive or just inconvenient?)
what is vagueness in terms of a contract?
- completely meaningless or ambiguous terms are seen as void
- if judge cant rescue / interpret then can either void & sever term from contract or destroy whole contract
- if term can be rescued, then judge will try to interpret, cannot rewrite terms though
what are boilerplate clauses in a contract?
refers to the standard, common clauses found in a contract. collective name for certain standard terms
why are boilerplate clauses used?
- cheaper for company
- provides consistency
- saves time
- weighted in companys favour
give seven examples of a boilerplate clause.
- interpretation clauses
- price variation clauses
- liquidated damages clauses
- force majeure clauses
- retention of title clauses
- choice of law clauses
- exclusion clauses
what is an interpretation clause?
clauses which outline what certain terms mean. some industries can create industry standards & have glossary of all terms. eg. transportation & freight have INCOTERMS which is readymade glossary which can be put in any contract
what is a price variation clause?
clause which can fix a price or a method of calculating a price, agrees a current price for the future. esp used in long term contracts
what is a liquidated damages clause?
clause which acts as a precaution for realistic things that could go wrong (eg. late delivery, sub-par goods).
agree compensation for things to potentially go wrong (genuine pre-estimate of loss).
what happens if there is an underestimate of losses on a liquidated damages clause?
they lose out on money, their fault they didnt calculate it properly.
cellulose acetate silk vs widres foundry :
- set up clause for £20pw loss for every week they go over
- went over by 30 weeks
- received £600
- actually incurred losses of £6000
- only received £600 though
what happens if there is an overestimate of losses on a liquidated damages clause?
if courts decide compensation is too large, judges will strike it out. will sub for their own realistic figure
what is a force majeure clause?
clauses used for external event beyond control, which is unexpected (war, natural disaster, epidemics, terrorism). the event must deem contract impossible or pointless to complete. needs to be quite specialist & precise
what happens if a force majeure event happens?
- frustrated contract act 1943 used
- contract gets terminated
- left to negotiate over money (draconian & inconvenient tbh)
what is a retention of title clause?
clause that means that the ownership of a good can be retained by seller until fully paid by the buyer. have to include this clause, otherwise general rule of sale of goods applies.
what is a choice of law clause?
clause which allows you to choose relevant law and court that will be used in the event of a dispute. be clear about what is & isn’t wanted
what is an exclusion clause?
clause which aims to limit / exclude a party’s responsibility for things going wrong. should be written in express terms. it is controlled by law.
what are the three steps included in the control of an exclusion clause?
- incorporation
- relevance
- must not be adversely affected by statute (UCTA 1977, CRA 2015)
explain the incorporation step in the control of an exclusion clause.
exclusion clause must be incorporated into contract somehow. if unclear that exclusion clause has been agreed to then :
- reasonable notice must be given before contract made (other person must know clause exists)
- “notice” can be given verbally or displayed through posters
- “reasonable” refers to whether a reasonable man would have noticed the notice (has NOTHING to do with content of notice at this point, all to do with style, size, location etc)
explain the relevance step in the control of an exclusion clause.
refers to the relevance of the wording to the notice
explain how UCTA 1977 relates to statute in exclusion clauses.
unfair contract terms act 1977. only deals with B2B contracts.
section 2 subsection 1 :
cannot limit / exclude liability for death or personal injury caused by negligence
section 2 subsection 2 :
can limit / exclude liability if some other loss / damage is caused by negligence if reasonable to do so
related as can help to determine whether exclusion clause can apply to specific situation and whether it is held up by law. eg. if employee dies at work being crushed by machinery, employer cannot claim exclusion clause as UCTA contradicts it
