Contract Law - Terms of the Contract

Question 1

TERMS: Warranties

Answer 1

Not fundamental to the contract, breach of a warranty allows you to claim damages

Question 2

TERMS: Conditions

Answer 2

Fundamental to the contract. If condition is untrue party can terminate the contract

Question 3

Innominate terms

Answer 3

Neither conditions nor warranties - unclear how serious the effect will be if the term is breached

Courts will look at the effect of the breach of the term to determine what remedy

Did the breach deprive the innocent party of substantially the whole benefit of the contract?

Question 4

Express terms

Answer 4

Parties have reasonable notice of the term (e.g. price of a coffee on the wall of the coffee shop)

Question 5

Parol Evidence Rule

Answer 5

Applies to written contracts ONLY. Contract presumed to contain all of the terms that have been agreed, can’t bring in external evidence to vary its terms

However, if there has been a collateral contract the Court will give effect to that

Question 6

Implied Terms

Answer 6

By statute (e.g. that a product will be of satisfactory quality) - SGA, CRA and SGSA

By the courts (Court will only imply a term if it is necessary to make the contract work and give if business efficacy)

Question 7

Uncertain Terms

Answer 7

Can term be severed?

Can it be resolved by statute?

Question 8

Representations

Answer 8

Made to incduce the other party to enter into the contract - do not form part of the contract

Question 9

Term vs Representation

Answer 9

Court will take the following factors into account:

1. Importance of the statement
2. Stage in the contract negotiations
3. Whether person making the statement has any specialist skills or knowledge

Question 10

Time is of the essence

Answer 10

If time is of the essence in respect of an obligation it will be a condition

General presumption in commercial contracts that time is of the essence unless the contract provides for what would happen in case of late performance

Question 11

SGA Implied Terms

Answer 11

Conditions

However, if breach is slight and would be unreasonable for buyer to reject goods then treated as a condition

Question 12

SGSA Implied Terms

Answer 12

Innominate terms in relation to service contracts

Conditions in relation to goods supplied as part

Question 13

CRA Implied Terms

Answer 13

Breach cannot be excluded or limited at all

Question 14

Terms implied by the Courts

Answer 14

Will do so to give the contract business efficacy

Will only imply a term if it is so obvious to a reasonable person that it goes without saying (officious bystander test)

Question 15

Terms implied by custom

Answer 15

Industry or market standard

Can be excluded by an express term

Question 16

Severing uncertain terms

Answer 16

Term can be severed if it doesn’t affect the substance of the bargain

If not capable of being severed then whole contract void for uncertainty