CONTRACT LAW L4 - Terms - EXPRESS TERMS CONTRASTED WITH REPRESENTATIONS Flashcards
When does the distinction between representations and terms become important?(2)
When the statement turns out to be untrue or the promise is not fulfilled.
What can statements made by parties during negotiations leading up to a contract be divided into? (3)
Statements of no legal significance.
Representations - statements of fact or law which the parties do not intend to be binding.
Terms - statements of fact which the parties intend to be bound.
What will happen if a statement is a term of the contract and is not fulfilled? (1)
It will amount to a breach of contract and the innocent party may claim damages.
What will happen if a statement is a representation and is not fulfilled? (1)
This may amount to a misrepresentation and not a breach of contract but the innocent party may still be able to obtain a remedy under the law of misrepresentation.
Can a statement be both a term and a representation? (1)
Yes.
How will the courts differentiate between a term and a misrepresentation? (1)
By applying an objective test.
How can we tell if a party intended to be bound? (5)
By taking into account the importance of the statement, the timing of the statement, the reduction of the contract into writing, the special knowledge or skill of the person making the statement and the assumption of responsibility.
What is meant by the importance of the statement? (1)
A statement may be regarded as a term of the contract if it can be shown that the injured party considered it so important that it would not have entered the contract but for that statement.
How does the case of BANNERMAN V WHITE 1861 demonstrate the importance of the statement. (3)
In respect of negotiations to purchase hops the defendant said, ‘if they have been treated with sulphur, I am not interested in even knowing the price of them’ and when the plaintiff produced samples the defendant enquired again if sulphur had been used and was assured it has not but a small amount of the crop had been treated with sulphur.
The defendant treated the contract as repudiated and the question of whether they were allowed to do so rested on whether it could be regarded as a condition of the agreement that the hops may be rejected if sulphur was preliminary to entering the contract.
The court held that the statement was understood and intended by the parties to a term of the contract of sale.
What is meant by the timing of the statement? (2)
If the statement was made at the time of contracting then it is more likely to be a term than at an early stage of negotiations and if there is a delay between the making of the statement and the entering the it is less likely to be treated as a term.
How does the case of ROUTLEDGE V MCKAY 1954 demonstrate the timing of the statement? (3)
A private seller of a motorcycle told the buyer that it was a 1941/2 model and a week later they entered into a contract of sale.
The written memorandum did not mention the year of the model and the motorcycle was a 1930 model and the buyer sued for breach of contract.
Court of appeal held that the lapse in time between making the statement and entering meant the year of model was a representation and not a term.
How does the case of ROUTLEDGE V MCKAY 1954 demonstrate the reduction of contract into writing? (3)
The written contract made no mention of the previous oral statement about the motorcycle being a 1941 or 1942 model.
The statement could not have been regarded as significant by the parties as it would have been written into the contract.
The year of model was a representation and not a term.
How does the case of OSCAR CHESS LTD V WILLIAMS demonstrate special knowledge / skill? (4)
The claimant car dealers, Oscar, agreed on a trade-in of William’s old car as part of a new purchase and Williams’ had no knowledge of the motor trade.
The registration book of the car traded gave its date as 1948 but was later to be discovered to be 1939 and the car was worth much less than originally anticipated.
The court of appeal held that the age of the car was not a term of the contract and there was no breach of contract since the skill laid in the hands of Oscar and not Williams.
Williams’ statement was a representation.
How does the case of DICK BENTLEY PRODUCTIONS V HAROLD SMITH MOTORS demonstrate special knowledge / skill? (3)
Mr Smith / defendant told Mr Bentley that a car had done 20,000 miles since the new engine and gearbox and the milometer showed this.
After purchase it was clear that the car had done more than 20,000 miles.
The court of appeal held that the statement as to the mileage was a term of the contract and the car dealer has the skill and knowledge of such matter.
When may a statement become a term in relation to the vendor? (1)
Where the vendor expressly accepts the responsibility for the soundness of sale item in questions.
