Contract 2 - Contract Terms Flashcards
What are the contents of a contract defining rights and obligations called?
Terms.
Terms define the legal relationship between the parties involved.
What are the three groups into which statements made during negotiations can be divided?
- Mere puff
- Representations
- Terms
What constitutes a breach of contract?
Failure to fulfill a term.
A breach of contract occurs when a binding term is not met.
What is a misrepresentation?
An unfulfilled representation that is not a breach of contract but may allow for a remedy.
Misrepresentation provides grounds for legal action but differs from breach of contract.
What is the objective test used to determine if a statement is a representation or a term?
What would a reasonable person understand to be the intention of the parties?
What factors are examined to determine whether a statement was meant to be binding?
- Importance
- Timing
- Writing
- Special knowledge or skill
- Assumption of responsibility
True or False: A signed written contract binds a party even if they have not read or understood the terms.
True.
What must be shown for terms to be incorporated by a course of dealing?
Consistency and regularity over time.
What is an ‘entire agreement clause’?
A clause stating that a document constitutes the entire agreement between parties, superseding previous arrangements.
What are implied terms?
Terms inferred by courts that are binding to the same extent as express terms.
What is the difference between terms implied in fact and terms implied by law?
- Terms implied in fact: Reflect presumed intentions of the parties.
- Terms implied by law: Arise from legal duties in certain contractual relationships.
What conditions must be met for goods under the Sale of Goods Act?
- Title
- Description
- Satisfactory quality
- Fit for particular purpose
- Sale by sample
What are the obligations on a supplier under the Supply of Goods and Services Act?
- Care and skill
- Time of performance
- Consideration
What remedies are specified under the Consumer Rights Act 2015 for breached implied terms?
- Short term right to reject
- Right to repair/replacement
- Right to a price reduction/final right to reject
Fill in the blank: A statement that is a term and is not fulfilled amounts to a _______.
breach of contract.
True or False: The burden of proof that a breach is slight and unreasonable is on the buyer.
False.
What must be included for goods to be of satisfactory quality under the Consumer Rights Act?
- Meets reasonable person standards
- Considers description and price
- Accounts for public statements about the goods
What is the implication of a statement made at the time of contracting?
It is more likely to be treated as a term of the contract.
What is the implication of onerous terms incorporated by notice?
Must be made especially clear to the other party.
What is the statutory term regarding satisfactory quality under the Sale of Goods Act?
Goods must meet the standard of a reasonable person considering description, price, and relevant circumstances.
What does the Consumer Rights Act specify about services provided?
- Performed with reasonable care and skill
- Provided in a reasonable time
- Reasonable price if not agreed
What is the ‘final right to reject’ in consumer rights?
Consumer is entitled to a full refund within 6 months if goods do not conform after one repair or replacement or if repair/replacement is impossible or disproportionate.
Does not apply to motor vehicles or statutorily specified goods.
What must a trader do if digital content is non-conforming?
The trader must repair or replace the digital content in a reasonable time without significant inconvenience to the consumer and bear any necessary costs incurred.
Includes costs of labor, materials, or postage.
What is the right to price reduction in the context of digital content?
This right is exercisable when repair or replacement is impossible, or the trader has failed to repair or replace within a reasonable time without significant inconvenience.
Consumer is also entitled to a refund of all moneys paid within 14 days.
What are the two remedies available when services are non-conforming?
- Right to repeat performance
- Right to price reduction
Define ‘Conditions’ in contract law.
Conditions are important terms that go to the root of the contract, and their breach allows the innocent party to terminate the contract and sue for damages.
What is a ‘Warranty’ in the context of contracts?
A warranty is a less important term that does not go to the root of the contract, and the only remedy for its breach is to sue for damages.
What are ‘Innominate terms’?
These are terms that are neither conditions nor warranties but are of an intermediate nature, categorized based on whether a breach deprives the innocent party of substantially the whole benefit of the contract.
What does ‘Time is of the essence’ mean in contracts?
It signifies that a failure to meet the stipulated date for delivery constitutes a repudiatory breach, allowing the other party to terminate the contract.
What is an ‘Exemption clause’?
A contractual term that limits or excludes liability that would otherwise attach to one of the contracting parties.
What are the three key points to consider when relying on an exemption clause?
- Incorporation
- Construction
- Statutory controls
What is the general rule regarding the construction of exemption clauses?
Exemption clauses are construed contra proferentem, meaning any ambiguity is interpreted against the party seeking to rely on the clause.
What is the Unfair Contract Terms Act 1977?
It applies to contracts between businesses, regulating exemption clauses and ensuring they are reasonable.
What must be demonstrated for an exemption clause to be effective under UCTA?
The clause must pass the reasonableness test and cannot exclude liability for death or personal injury resulting from negligence.
What is the ‘reasonableness test’ under UCTA?
A term must be fair and reasonable considering the circumstances known to the parties at the time of the contract.
What distinguishes a condition from a warranty?
Conditions go to the root of the contract and allow for termination upon breach, while warranties do not.
What happens if a breach of contract is deemed a breach of warranty?
The innocent party is entitled only to claim damages, not to terminate the contract.
Fill in the blank: A trader must give a refund within ______ days.
14
True or False: An exemption clause can completely exclude liability.
True
What is the significance of the phrase ‘time is of the essence’ in a contract?
It indicates that timely performance is a critical aspect of the contract.
What does ‘contra proferentem’ mean in legal terms?
It means that any ambiguity in a contract is interpreted against the interests of the party that drafted it.
Under what conditions can a consumer receive a full refund when exercising the final right to reject?
If exercised within 6 months and after one repair/replacement, or if repair/replacement is impossible or disproportionate.
What does exemption from liability for breach of contract depend on?
It is limited to where reasonable in a party’s standard terms and not limited if in a negotiated agreement.
How does UCTA apply when a party’s general terms have been negotiated?
They are still dealing on standard terms for the purposes of the UCTA.
If an exemption clause is from one party’s standard terms, what is the implication?
UCTA will apply even if other clauses are negotiated or come from the other party.
Are exclusions/limitations for breach of contract in individually negotiated business to business contracts regulated by UCTA?
No, unless they relate to areas regulated by other areas of UCTA.
What can a party not claim entitlement to under UCTA?
- Render a contractual performance substantially different from that reasonably expected
- Claim to be entitled to render no performance at all
What does the Consumer Rights Act 2015 (Part 2) state about liability for death or personal injury?
Not binding on the consumer, except for limitations in relation to s 49, which are not binding if preventing recovery of price paid.
What types of terms cannot be assessed for fairness under the CRA?
Transparent and prominent terms specifying the main subject matter of the contract/price.
What happens to unfair terms in consumer contracts under the CRA?
Any unfair term is not binding on the consumer.
What areas does Part II of the CRA regulate?
- Attempts to exclude or limit liability for breach of contract
- Unfair terms in consumer contracts
How does the CRA differ from UCTA in terms of contract types?
The CRA makes no distinction between contracts on standard terms and contracts which have been individually negotiated.
What cannot be excluded or restricted under the CRA?
- Liability for death or personal injury from negligence
- Breach of statutory implied terms under the CRA (goods)
- Breach of statutory implied terms under the CRA (digital content)
What is the implication of exempting liability for breach of statutory implied terms about services?
Any attempt to entirely exclude liability will not be binding on the consumer.
What is the limitation on attempts to restrict/limit liability under the CRA?
It cannot prevent the consumer from recovering the price paid.
What defines unfairness in contract terms under the CRA?
If, in bad faith, it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer.
What are anti-avoidance provisions related to in the CRA?
They prevent creating separate contracts to avoid CRA limitations in the original contract.
What is an example of a tactic to bypass CRA rules?
Using Contract B to make the other party agree not to pursue claims related to Contract A.
What is prohibited regarding imposing conditions on liability?
Imposing heavy conditions or limiting the rights/remedies/evidence/court procedures for enforcing liability.
