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Contract Terms Flashcards

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1
Q

What are contractual terms not to be confused with?

A

Pre-contractual statements, ie. Trade puffs, Opinions & Representations

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2
Q

What are trade puffs?

A

Statements that are so frivolous, exaggerated, boastful that no reasonable person would or could assume that they are true.

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3
Q

Do trade puffs create any rights of have remedies?

A

no, TP’s do not create any contractual rights and obligations; and no remedies are available to the party that relied on false TP

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4
Q

What contract law case exhibits that no remedies are available to a party that relied on a trade puff?

A

Carlill v Carbolic Smoke Ball Co [1892]

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5
Q

What are ‘Opinions’?

Is there a remedy for false opinions? What case confirms this? What case exhibits an exception?

A

Statements that are not based on facts

Bisset v Wilkinson [1927]

Esso v Mardon [1976]

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6
Q

What are representations?

A

Statements made at the pre-contractual stage of entering into a legally binding contract;

True statements of fact that entice the other party to contract

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7
Q

How can you distinguish representations from contractual terms?

A

a test of contractual intentions, judged objectively

&

contractual intentions a question of fact

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8
Q

What 5 circumstances must be looked at to ascertain the intention of the contracting parties?

A
  1. relative knowledge of the parties
  2. importance of the statement
  3. taking responsibility for the truth of the statement /advising verification
  4. whether the statement’s incorporated into the contract by signature
  5. reducing contract to writing & time lapse between statement and contract
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9
Q

In establishing the intention of the party, what case is used to exemplify ‘1. Contract reduced to writing’?

A

Entrepreneur Pub Co. v East Crown Ltd [2000]

  • Statement not incorporated in the written contract > so it was a representation
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10
Q

In establishing the intention of the party, what case is used to exemplify - Time lapse between statement and contract?

A

Routledge v McKay [1954] - The longer the interval between statement and contract > less likely it is a term

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11
Q

In establishing the intention of the party, what case exemplifies (2) whether the statement’s incorporated into the contract by signature?

A

The principle of L’Estrange [1934]

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12
Q

In establishing the intention of the party, what case exemplifies the ‘3. Responsibility for the truth of the statement’ circumstance?

A

Schawel v Reade [1913] (term)

BUT

When statement maker advises verification (Ecay v Godfrey) > is a representation

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13
Q

In establishing the intention of the party, what case exemplifies 4. the importance of the statement?

A

Statement is of high importance to one of the parties > more likely a term than representation.

Bannerman V White [1861] (hops with sulphur)

Couchman v Hill [1947]
(Young cow)

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14
Q

In establishing the intention of the parties, what case exemplifies 5. the relative knowledge of the parties?

A

I.e. who was in a better position to know the truth, special knowledge/expertise

Dick Bentley v Harold Smith Motors [1965] - ‘well-vetted’ Bentley, special knowledge > contract term

Oscar Chess v Williams [1957] - The 1948 Morris car > not an expert, so representation

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15
Q

What liability arises when trade puffs are false?

A

None

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16
Q

What liability arises when opinions are false?

A

None, except those with expert knowledge

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17
Q

What liability arises when representations are false?

A

liability > Misrepresentation

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18
Q

What liability arises when contractual terms are false?

A

Liability > Breach of Contract

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19
Q

What is an Express Term?

A

A promise by one party to another as regards to the truth of their statement; and can be written or verbal

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20
Q

When can it become difficult to see if an Express Term forms part of a contract?

A

When:
A) a written doc wasn’t intended to be a complete record of the parties agreement

B) One of the parties might claim that a written agreement doesn’t represent their true intention

C) One of the parties to an oral agreement might claim that there are some written terms that also form part of the contract

D) Disagreements as to the meaning of the express terms of the contract

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21
Q

What is the parol evidence rule? Established by what case?

A

If the contract is written, then that writing is the WHOLE contract and the parties CANNOT add to, vary or contradict that writing.

Shogun Finance Ltd. V Hudson [2013]

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22
Q

What 6 exceptions exist to the parol evidence rule?

A
  1. Only applies to express terms, not implied terms.
  2. Court will accept oral/other evidence if one party disputed the validity of the contract on the grounds of MISTAKE, MISREP, INCAPACITY.
  3. If contract was intended to be partly written/partly verbal - court will accept parol evidence
  4. Parol evidence can also be used to explain the meaning of words that are v ambiguous
  5. If parties make a mistake when transcribing an oral agreement - parol evidence can be admitted (Webster v Cecil [1861])
  6. rule might be disapplied if the intention of the parties was to enter into two related agreements - principal and collateral.
23
Q

What exception exists to the L’Estrange rule?

A

Contract may be rescinded if one party has been induced to enter into it by fraud or misrepresentation - Peekay Intermark Ltd [2006]

24
Q

What case set the precedent that fraud or misrepresentation limits the L’Estrange rule?

A

Curtis v Chemical Cleaning Co. [1951]

25
Q

What statutory limits exist on the L’Estrange rule?

A

UCTA 1977 and CRA 2015

26
Q

In what ways can terms be implied into contracts?

A

By statute

In fact

In law

By custom

27
Q

What 2 ways can courts imply terms into a contract by?

A

In fact & In law

28
Q

When terms are implied by courts in FACT, what does the court aim to determine most?

What will the intention be?

A

The intentions of the parties, judged objectively

Implicit, not explicit

29
Q

What must an implied term NOT do?

What must the implied term DO?

A

It cannot contradict the express terms of a contract

Be reasonable and equitable, and capable of clear expression

30
Q

Above all, what must an implied term BE?

A

Necessary!

31
Q

Why are terms implied in fact done?

A

implied on a one-off basis, they’re implied if its necessary, in order to give efficacy to a particular contract, by giving effect to the unexpressed intentions of the parties

32
Q

What is an un satisfactory explanation for implying terms by fact?

A

Just because the court thinks it would be ‘better’ to have the term (Lord Wright in Eastbourne v Cooper [1941] )

33
Q

Implication must be necessary for terms to be implied in fact. What two tests exist to see if implication is necessary?

A
  1. The ‘officious bystander’ test

2. The ‘business efficacy” test

34
Q

What is the ‘officious bystander’ test?

What case established this test?

A

= A term will be implied in a contract if it is so obvious that it’s undeniable that the parties must have intended that term to form part of the contract

Shirlaw v Southern Foundries Ltd [1939]

35
Q

What is the business efficacy test?

Founded by what case?

A

A term will be implied if without the implication, the contract would be unworkable

The Moorcock [1889]

36
Q

What is the justification for the officious bystander test?

What standard exists for the officious bystander test?

A

Hypothetical consent/presumed intention - parties must have intended it but did not write it down

Strict necessity rather than reasonableness. (i.e. in the moorcock case, business could not be carried on unless their was this term)

37
Q

Lord Hoffmann offered a different approach to implication (which is a single test of construction) in which case?

A

Attorney-General of Belize v Belize Telecom Ltd [2009]

38
Q

The traditional tests of incorporation (officious bystander & business efficacy tests) were re-established in what case?

A

Marks and Spencer v BNP Paribas Ltd [2015]

39
Q

Concerning terms implied by courts IN LAW, what principle did Shell v Lostock [1977] establish?

A

That there is no need to establish the intentions of contractual parties when implying terms IN LAW.

40
Q

How is a term implied if it is implied IN LAW?

A

A term is implied as a matter of policy, into ALL contracts of a particular type

41
Q

In order for a term to be implied by a court IN LAW, what must be satisfied?

A
  • The contract must be of sufficiently common kind

- Parties have not expressed their intention on a particular subject matter.

42
Q

What did the case of Liverpool City Council v Irwin [1977] establish?

A

A term in tenancy agreements re: repair of common areas was IMPLIED because the term was necessary due to ‘the inherent nature of the contract and relationship’.

43
Q

What two cases exhibit terms being implied by courts BY CUSTOM?

A

Hutton v Warren [1836]

British Crane Hire [1975]

44
Q

When may a term be implied BY CUSTOM?

A

If there’s sufficient evidence to suggest that there is an established custom, the court is prepared to take this custom into consideration and interpret a contract in the light of this custom

45
Q

Which party must prove the existence of the custom?

A

The party that relies on it/claims the existence of it

46
Q

In what circumstance will a court not imply a term by custom? What case set the precedent for this?

A

If the parties have explicitly agreed on something different

Les Affréteurs Réunis v Leopold [1919]

47
Q

What 3 reasons may parliament have to want to regulate contractual relationships?

A
  1. Intervention may be necessary to protect weaker party
  2. Concerns over business efficacy
  3. Intervention might resolve some important social/economic issues
48
Q

In what ways can terms be implied by statute?

A
  1. terms can be implied by primary or secondary legislation

2. Terms can be implied by parliament or by industry regulators /

49
Q

Terms are implied by 3 main statutes. What are these?

A
  • Sale of Goods Act 1979
  • Supply of Goods and Services Act 1982
  • Consumer Rights Act 2015
50
Q

What is the Consumer Rights Act 2015?

A

A statutory regime for consumer contracts

51
Q

What are the Sale of Goods Act 1979 and Supply of Goods and Services Act 1982?

A

A statutory regime for business-to-business and consumer-to-consumer contracts

52
Q

Give 3 examples of statutory implied terms from the Sale of Goods Act 1979

A

S12 - Implied that the seller has the RIGHT TO SELL goods

S13 - Where goods have been sold by DESCRIPTION, they’ll correspond with it

S14(2) - The goods supplied under the contract are of satisfactory quality

53
Q

Give 3 examples of statutory implied terms from the Supply of Goods and Services Act 1982

A

S4 - Contracts for work and materials

S9 - Contracts for the hire of goods

S13 - In supply of a service, there’s an implied term that the supplier will carry out with reasonable care and skill

54
Q

Give 3 examples of statutory implied terms from the Consumer Rights Act 2015

A

S9 - Satisfactory quality

S10 - Fitness for purpose

S11 - Fitting any description

Contract Law (5 decks)

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