Contents of contracts

Question 1

3 ways to incorporate a term

Answer 1

1. signature
2. reasonable notice before/at time of contract
3. previous consistent course of dealing

Question 2

What is the difference between a condition and warranty?

Answer 2

Condition: contract can be terminated and damages can be claimed, even if the breach is minor
Warranty: the only remedy are damages, regardless of the seriousness of the breach

Question 3

What is an innominate term? When is termination available?

Answer 3

A term where the remedy for breach depends on the effect of the breach

Termination is available if the breach deprives C of substantially the whole intended benefit

Question 4

Key CONDITIONS in business-business and business-consumer contracts (found in SGA and CRA)

Answer 4

• seller has the right to sell the goods
• if goods supplied in the course of business, they’ll be of satisfactory quality,
• if goods sold by description, they must comply with the description,
• if the seller knows the buyer’s purpose for the goods, they must be reasonably fit for that purpose

Question 5

2 tests for validity of exemption clauses

Answer 5

• incorporation
• construction (it must cover the harm suffered)

Question 6

What is the consequence of statutory controls in the UCTA on business to business contracts?

Answer 6

It may prevent restricting liability, or have no impact
BUT: usually subjects the term to a “requirement of reasonableness”

Question 7

What is the impact of CRA statutory controls on business-consumer sales contracts?

Answer 7

The exclusion clause won’t be binding to the extent that it’d exclude the rights/remedies for the satisfactory quality, description, and fit for purpose terms

Question 8

What is the impact of CRA statutory controls on business-consumer service contracts?

Answer 8

Liability/remedy for the breach of reasonable care, reasonable time, or reasonable price cannot be restricted

Question 9

When can a 3rd party rely on an exemption clause?

Answer 9

If the 3rd party is named, or identified as a member of the class entitled to benefit from the exemption clause, he can rely on it just like the contracting parties

Question 10

Under the SGA, what can the buyer do if s.12, 13, or 14 is breached?

Answer 10

Reject the goods and get a refund + damages, unless:
- they accepted the goods (eg. by keeping them beyond a reasonable time), or
- the s.13 or 14 breach was so slight that rejection is unreasonable

Question 11

How is liability for breaches of s.12, 13 and 14 SGA (and the same terms in the CRA) determined?

Answer 11

It’s strict liability (liability regardless of fault)

Question 12

What are the 3 INNOMINATE TERMS in contracts for services?

Answer 12

• work must be done with reasonable care and skill,
• if the sum isn’t fixed, a reasonable sum must be charged,
• if the timeframe isn’t agreed, work must be done in a reasonable time

Question 13

In a business-consumer contract, what can the consumer do if there’s a breach of one of the statutory conditions?

Answer 13

• Short term right to reject goods and get a refund (usually 30 days)
• Right to repair/replacement, if appropriate/reasonable
• Right to price reduction, or rejecting the goods and getting a partial refund based on use