Contract Terms

Question 1

What is an expressed term?

Answer 1

Specifically agreed, discussed between parties, both parties are aware of it.

Question 2

What is an implied term?

Answer 2

Silent in nature. Not discussed or agreed but it is taken almost obvious. Too obvious to state in the contract so it is implied.

Question 3

How can terms be implied?

Answer 3

By law - legislation puts them into contracts, statutory implied terms where an act of parliament injects terms into contracts

By facts through the courts - most are this type, court decides on the facts whether it should be in the contract

By customs and usage - certain terms present in all contracts within an industry or by geographic area

Question 4

What is the case of L’Estrange v Graucob (1934) highlighting an express term?

Answer 4

• Claimant purchased a vending machine which she found out didn’t work
• Signed a doc with small print stating ‘any express or implied, condition, statement of warranty, statutory or otherwise expressly excluded’
• Sought to reject under SoGA for not being of merchantable quality
• Held: bound by express terms even if they don’t know what they are, signing a doc means they agree

Question 5

What is the case of the Moorcock (1889) highlighting an implied term?

Answer 5

• Owner of a hard agreed to provide mooring facilities for ‘The Moorcock’
• Ship was damaged when it hit a rock in wharf
• Defendants had no legal control over riverbed but could have ascertained its state
• Held: honesty of business required an implied part on the wharf owner that it was reasonably safe to moor the ship there
• The wharf owner was liable for damages

Question 6

What is the Sale of Goods Act (1979) as a statutory implied term?

Answer 6

Introduced to protect consumers, gives certainty when they enter a contract. Only goods not services. Implied terms for B2B contracts. If there is the sale of goods between B2C then it is the consumer rights act.

Question 7

What is the Consumer Rights Act (2015) as a statutory implied term?

Answer 7

Provisions for the supply of goods and services from business to consumer. Also relates to digital streaming and downloading contracts.

Question 8

What is S.12 - Title in the Sale of Goods Act 1979?

Answer 8

Title is the right to and ownership of goods. Implied condition that the seller has the right to sell; cannot pass title unless you have the title.

Implied warranty that the goods sold are free from encumbrances (buyer can enjoy possession). No 3rd party claims, restrictions or limitations on those goods.

Question 9

What is the case of Rowland v Divall (1923) in terms of S.12?

Answer 9

• Defendant unknowingly purchased stolen car and sold to Rowland
• Rowland sold it
• Police sought to return it to original owner
• Rowland sued Divall
• Sale breached statutory implied term relating to title

Question 10

What is S.13 (1) Description in the Sale of Goods Act 1979?

Answer 10

• Implied term that goods are sold by description, they will match description
• When establishing if there is a breach, they want to satisfy themselves that the sale was by description and that you are relying on the description given to you

Question 11

What is the case of Harlingdon and Leinster Enterprises Ltd v Christoper Hull Fine Art Ltd (1991) in terms of S.13 (1)?

Answer 11

• Claimant purchased painting after it was described as by famous German artist
• Defendant nor claimant was expert in German art
• Claimant brought in experts to examine the painting prior to the sale and bought the painting
• Later found it was fake, tried to sue but held as the claimant did not buy it based on description, they examined it

Question 12

What is S.14 (2) Satisfactory Quality as part of the SoGA 1979?

Answer 12

Implied term that where goods are sold in the course of business they shall be of satisfactory quality. Must be a business seller. Merchantable quality (prior to 1979)

Satisfactory quality - reasonable man deems it satisfactory, price, durability, safety, appearance, finish

Question 13

What is the case of Ward v MGM Marine Ltd (2012) in terms of S.14 (2)?

Answer 13

• Yacht sold to claimant which later exploded
• Expert witnesses unable to find any cause and thus it was not of satisfactory quality
• Agreed that nothing done by the new owner could have caused it so held and claimant received damages

Question 14

What is S.14 (3) Fitness for Purpose as part of the SoGA 1979?

Answer 14

Implied term that where goods are sold in the course of business they shall be fit for their usual or ordinary purpose plus any specific purpose made known to the seller at the time of sale

Question 15

What is the case of Frost v Aylesbury Dairy Co (1905) in terms of S.14 (3)?

Answer 15

• Purchased milk and wife got typhoid poisoning after drinking it and died
• Action against Dairy co saying it was not fit for purpose
• Held: the milk was not fit for its usual purpose of drinking

Question 16

What is the term S.15 Sale by Sample under the SoGA 1979?

Answer 16

Implied term that where goods are sold by sample, the sample will correspond with the remainder of the bulk e.g perfume, carpets

Any defect in the remainder will be visible upon a reasonable inspection of the sample

Question 17

What is the case of Godley v Perry (1960) in terms of S.15?

Answer 17

• Catapult purchased was not as robust as the sample inspected causing injury to young boy
• Held: breached the statuary implied term that the sample should match the remainder the bulk

Question 18

What is the Unfair Contract Terms Act 1977 (UCTA)?

Answer 18

Legislation which imposes limits on the extent to which civil liability for breach of contract, for negligence or breach of other duty, van be avoided by means of contract terms and otherwise

Question 19

What is the case of R+B Customs Brokers Co. Ltd v United Dominions Trust (1988) in terms of UCTA 1977?

Answer 19

Claimants bought faulty second hand car and wanted to repudiate contract. It is a business which would imply repudiation could not be a remedy for breach.

The purchase of the car was clearly not an integral part of the claimants business, nor was it regular enough to be regarded as integral.

Therefore, held: claimant regarded as consumer, as consumer contract - repudiation was allowed and damages claimed

Question 20

What is the case of Stevenson v Rogers (1999) in terms of UCTA 1977?

Answer 20

• Defendant argued that the sale of the boat was not in his course of business
• His business was catching and selling fish
• Held: the sale was in the course of business and thus Rogers had to ensure quality

Question 21

What is S.2 Consumer Rights Act 2015 “Dealing as a Consumer”?

Answer 21

Trader - a persona sting for purposes relating to that person’s trade, business, craft or profession

Consumer - an individual acting for purposes that are wholly or mainly outside of that individuals trade, business, craft or possenssion

Question 22

What is “reasonableness” as part of S.11 UCTA?

Answer 22

S.11 UCTA states that all terms must pass the test of reasonableness if they are to be allowed. Use common law to decide if the provisions of UCTA will stand.

If you are going to introduce a term that limits or excludes liability you can only do so if it is reasonable to do so. Nature of these are restrictive and unfair on parties.

Question 23

What is the case of Woodman v Photo Trade Processing Ltd (1981) in terms of S.11 UCTA?

Answer 23

• Defendant’s photo processing business lost pictures taken by the claimant at a wedding
• Photos had been brought to defendant to be developed
• Defendant’s standard contract clause excluded liability for damages that exceeded the cost of the material
• Held: defendant was liable, no other shop or service was available and no service was offered with out such a clause e.g insurance option
• UTCA Schedule 2 tests strength of relative bargaining positions, availability of alternatives

Question 24

What is the case of Chesterhall Ltd v Finney Lock Seeds Ltd (1983) in terms of UCTA S.11?

Answer 24

• Claimant bought cabbage seed for £192, seed was defective and crop of £60,000 expected value failed
• Clause on delivery not limited liability to the price of the seed
• Defendant sought to rely on this limitation clause
• Held: the clause was unreasonable, the buyer was unaware of the fault yet the seller knew.
• Defendant had previously failed to rely upon their own clause so could not argue that the claimant should have known due to previous dealings

Question 25

What is schedule 2 UCTA (1977)?

Answer 25

a) Strength of bargaining positions relative to each other; considering alternative means by which customer’s reqs. could have been met
b) Whether customer received an inducement to agree to the term or if there was opportunity to accept similar contract with another but without the term
c) Whether the customer knew or ought reasonably to have known the existence and extent to the term (previous dealings)
d) Where term excludes/restricts any relevant liability if some condition was not complied with, whether it was reasonable at time of contract to expect that compliance with that condition would be predictable
e) Whether the goods were manufactured, processed or adapted to the special order of the customer

Question 26

What are common law regulation of exemption clauses?

Answer 26

• Incorporation e.g by signature
• When?
• How?

Question 27

What is the case of Olley v Marlborough Court (1949) in terms of common law regulation of exemption clauses?

Answer 27

Claimant boded into hotel. Exclusion clause was not mentioned as the contract was signed at reception. Limited liability excluding liability for theft/loss/damage was made too late – on the back of the hotel room door, for it to be included in the contract.

Held: the notice behind the hotel bedroom door was ineffective as it was introduced too late to be incorporated into the contract

Question 28

What are ineffective terms in UCTA?

Answer 28

UCTA deems some terms as ineffective regardless of whether it meets the test of reasonableness.

Remove or limit liability for personal injury. Says you can never exclude liability by a contract cause for death or liability as far as it arises from negligence. (Section 1).

Other loss e.g loss of income, damage to personal belongings. Can only do it for another loss, providing it is reasonable to do so. (Section 2).
S.2 (1) UCTA 1977
S.2 (2) UCTA 1977