Contract Law - Terms (1)

Question 1

What is a condition?

Answer 1

A term in a contract that is so important that a failure to perform the obligation would destroy the main purpose of the contract. If a condition is broken the person suffering the failure is entitled to end the contract (repudiation).

Question 2

What is a warranty?

Answer 2

A minor term of the contract. Only damages can be claimed for a breach and the contract is not ended.

Question 3

What is an innominate term?

Answer 3

A term which is not clearly a condition or warranty. Whether it is a condition or a warranty depends on the consequences of any breach of the term.

Question 4

What will the courts take into account when trying to decide if what was said was a term or a representation?

Answer 4

• The importance attached to the statement.
• The special knowledge/skill of the person making the statement.
• Any time lag between making the statement and making the contract.
• Whether there is a written contract.

Question 5

Which statutes deals with business-to-business contracts?

Answer 5

• Sale of Goods Act 1979.
• Sale of Goods and Services Act 1982.

Question 6

What statute deals with contracts between a business and a consumer?

Answer 6

Consumer Rights Act 2015.

Question 7

How can terms be implied through common law?

Answer 7

• Business efficacy test.
• Officious bystander test.
• By custom or prior dealings between the parties.

Question 8

Why are terms implied through business efficacy and the officious bystander test?

Answer 8

The courts will imply a term into a contract if the term is necessary to make sure that the contract works on a business-like basis. Two part test:
- Is the term necessary to make the contract effective?
- If the parties had thought about it, would they have agreed that the suggested term was obviously going to be in the contract?

Question 9

What is business efficacy?

Answer 9

The term could only be implied, if without it, the contract would lack coherence or not make business sense. In other words, the term goes without saying and it makes no sense to do the contract without it.

Question 10

What is the officious bystander test?

Answer 10

A term that is so obvious it goes without saying. An officious outsider looking in and determining if the implied term makes sense.

Question 11

To whom does the Consumer Rights Act 2015 apply to and what is it?

Answer 11

• Rights and remedies between consumers and traders.
• Wider definition and covers contracts entered into for a mixture of business and personal reasons.
• Sets out the first implied terms in pre-contract info.

Question 12

What does the Consumer Rights Act 2015 apply to in respect to the supply of goods?

Answer 12

• Sale
• Hire
• Hire-purchase
• Other contracts for the transfer of goods.

Question 13

What section of the CRA deals with the right of satisfactory quality and what does it say?

Answer 13

s9 - Goods need to be in a state that a reasonable person would find satisfactory given the description, price, etc. This doesn’t apply if the purchaser is made aware of defects, etc.

Question 14

What section of the CRA deals with the right of fitness for a particular purpose and what does it say?

Answer 14

s10 - applies if before the contract is made, the consumer makes know to the trader (expressly or by implication) any particular purpose for which the consumer is contracting for the goods. In these circumstances there is an implied term that the goods are reasonably fit for that purpose, whether or not that is the purpose for which goods of that kind are usually supplied.

Question 15

What section of the CRA deals with the right relating to description and what does it say?

Answer 15

s11 - Goods must match the description and relevant info provided.

Question 16

Remedies to provide the rights with respect to supply of goods - s20?

Answer 16

• Short term right to reject.
• Trader will bear any reasonable costs of returning the goods.
• A full refund given within 14 days.

Question 17

Remedies to provide the rights with respect to the supply of goods - s23?

Answer 17

The right to repair or replacement.

Question 18

Remedies to provide the rights with respect to the supply of goods - s24?

Answer 18

Right to either a price reduction or a final right to reject. The trader only has one attempt at repair or replacement before this route is open to the consumer. Any refund is subject to deduction for use.

Question 19

The rights with respect to the supply of services - s49?

Answer 19

The trader must perform the service with reasonable care and skill.

Question 20

The rights with respect to the supply of services - s52?

Answer 20

The service must be performed within a reasonable time where no expressed time has been agreed.

Additionally the where no price is agreed the trader has the right to be paid a reasonable sum (this might not be in s52).

Question 21

Remedies to provide the rights with respect to the supply of services?

Answer 21

• The consumer has the right to require a repeat performance if the service was not carried out sufficiently the first time.
• The consumer has the right to a price reduction, s56.