Contract 2.1: Terms

Question 1

How can terms be included in a contract?

Answer 1

Express Terms
- Signed by both parties
- Reasonable notice
- Prev consistent course of dealings
- Oral statements

Implied Terms
- implied by statute, courts or custom and usage

Question 2

What is considered when deciding if something is a term of representation?

Answer 2

Courts to consider intentions of party viewed objectively (reasonable person test) taking into account:

1. Form
   - if contract was written out why was term oral (more likely rep.)
2. Important
   - to person who made it (would they have entered contract if it wasn’t for the statement)?
3. Stage of Negotiation
   - if at time of contract more likely term
   - if during negotiations then rep.
4. Specialist Knowledge
   - If seller makes a factual statement that should be within the scope of their knowledge, intending the buyer will act on that statement, more likely to viewed as term
   - Statement of belief of which they have no direct knowledge then representation

Question 3

What are the types of terms?

Answer 3

Condition
- Term so fundamental that it is goes to the root of the contract
- If breached contract does not work

Warranty
- Term that is incidental or collateral to main terms of contract

Innominate
- Term where it is unclear at the outset whether it is a condition or warranty
- If after breach IP loses substantially the whole of the benefit of the contract then treated as condition

Question 4

What is the effect of breaching different types of terms?

Answer 4

Condition
- Repudiatory breach
- IP has option to terminate the contract and claim damages for loss
- Can choose to affirm it but will lose right to terminate and claim damages

Warranty
- Cannot terminate / only damages

Question 5

What is the Parol Evidence Rule?

Answer 5

If contract is in writing presumption that external evidence cannot add to, subtract from, contradict or vary the terms

Exception
- implied terms
- collateral contracts
- court finds contract is part oral part writing

Question 6

What is the effect of SGA 1979 ?

Answer 6

B2B contract

Implied terms whenever goods are sold that:
- Seller has title to goods in question
- Goods match any description by seller
- Goods be of satisfactory quality
- Goods be fit for any particular purpose made known to the seller by the buyer
- Sale by sample

Question 7

Are terms implied by SGA 1979 conditions or warranties?

Answer 7

• Typically, conditions
• BUT if breach is so slight that it would be unreasonable for buyer to reject goods or buyer accepted goods and taken no action- warranty

Question 8

Can implied terms under SGA 1979 be excluded?

Answer 8

• Cannot exclude implied term for title (has to own it duh)
• Other implied terms can be excluded if UCTA reasonable

Question 9

What is the effect of the SGSA 1982? Condition vs Warranty?

Answer 9

Implied terms for B2B, sales for services and goods

• Supplier will carry out the service within reasonable time (if no time is agreed), reasonable price + reasonable care and skill (innominate)
• Goods same as SGA

Question 10

Can implied terms under SGSA 1982 be excluded?

Answer 10

Subject to UCTA reasonableness test

Question 11

What are the effects of CRA 2015?

Answer 11

Applies to B2C contracts

Goods
- Goods should match their description + satisfactory quality + fit for purpose

Services
- Carried out with reasonable care and skill
- Completed in accordance with any info which the consumer relies on
- Completed for a reasonable price (if not agreed)
- Competed within a reasonable time (in not timescale has been agreed)

Question 12

How can CRA implied terms be excluded?

Answer 12

• Sales and services = CANT
• Other = Must meet fairness test

Question 13

What is the meaning of satisfactory quality in SGA?

Answer 13

Goods must be:
- fit for purpose for which such goods are generally used;
- free from minor defects;
- safe and durable.

Exception
- for defects brought to buyers attention or which would have been obvious if buyer had inspected goods

Question 14

When might the court imply terms into contract?

Answer 14

1. If it is necessary to give business efficacy
2. if there is the a industry standard
   - can be implied by custom and usage
   - unless excluded on contradicts express term
3. through course of dealing
   - if can show it is regular and consistent

Question 15

If agreements are incomplete or terms are vague when will the court NOT enforce contract?

Answer 15

Not if:
- court is unable to conclude intentions of parties
- eg “agreement to agree”

Question 16

What is the most likely remedy when a term labeled as a “condition” in a contract is breached, but the term is not a true legal condition?

Answer 16

The term is likely mislabeled as a “condition” but is warranty and the breach will lead to damages for the loss of expected benefits from the contract.

Question 17

When can a party terminate a contract for breach of an innominate term?

Answer 17

A party can only terminate if the breach is serious enough to deprive them of substantially the whole benefit of the contract.

Question 18

What are consumer rights for breach of SGA 1979 implied terms?

Answer 18

• They are conditions = IP can reject, refund and claim damages
• Strict laibiliy
• BUT becomes warranty if breach so slight unreasonable to reject

Question 19

What are consumer rights for breach of SGSA 1979 implied terms?

Answer 19

Innominate terms (does breach deprive IP substantially of benefit)
- If interpret as condt: Damages + refuse repayment
- If interpret as warranty: Damages only

Question 20

What are consumer rights for breach of CRA 2015 implied terms?

Answer 20

Supply of goods (strict liability) :
- Reject and full refund + damages (30 days NP. P is less)
- Repair and replace if above unavailable
- Price reduction/Partial refund if above unavailable

Supply of services (strict liability)
- Care and skill breach = repeat performance in reasonable time or price reduction
- Time and performance breach = price reduction
- Seller needs to do this in 14 days from date he agrees they have remedy

Question 21

What is the legal position when two parties have not consistently agreed on terms and conditions in their dealings?

Answer 21

There is a contract, but it is not on either party’s terms and conditions.

If the customer’s terms were never requested or seen, and there is inconsistency in how the client accepted orders, neither party’s terms are incorporated into the contract.

Question 22

What is a court implied term in all employment contract?

Answer 22

An obligation not to disclose confidential information is a necessary incident of all employment contracts.

Question 23

How can a contract be formed when neither party’s terms and conditions (Ts & Cs) are incorporated?

Answer 23

A contract may still come into existence without incorporating either party’s Ts & Cs when:

• Essential terms are agreed: The main elements, such as offer, acceptance, and consideration established.
• Course of dealing: There may be a history of transactions that indicate an agreement to contract, even if terms were inconsistent.
• No clear reference to Ts & Cs: If neither party consistently communicated their Ts & Cs, they won’t be binding.
• General contract law applies: The contract will be governed by standard legal principles in the absence of specific terms.