Contract Terms and Express Terms

Question 1

Conditions

Answer 1

Conditions are the most important terms. The innocent party can treat the contract as ended (known as repudiation of the contract) and can sue for damages (Poussard v Spiers).

Question 2

Warranties

Answer 2

Warranties are less important terms. If broken, the innocent party must carry on with the contract and can only sue for damages (Bettini v Gye).

Question 3

Innominate terms

Answer 3

These are terms that, when looking at the contract, don’t quite fit into either conditions or warranties. Instead, the court will look at the consequences of the actual breach of the term (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd).

Question 4

Mere puffs

Answer 4

These are extravagant claims for the thing being offered eg “Carlsberg, probably the best lager in the world”. They do not form part of the contract.

Question 5

Representations

Answer 5

These are usually pre contractual statements of fact that are intended to persuade the other party to enter the contract but are not intended to form part of the contract itself. They do not form part of the contract. If broken the contract remains intact (although there may be a claim for misrepresentation).

Question 6

Representation or term? Importance of statement

Answer 6

The more important the statement the more likely it will be a term (Couchman v Hill)

Question 7

Representation or term? Verbal or in writing?

Answer 7

If a contract is in writing then the court will usually hold that any verbal statements not included in the written agreement are representations (Routledge v McKay).

Question 8

Representation or term? Timing

Answer 8

If there is a large gap between the making of the statement and the formation of the contract then the statement is less likely to be a term.

Question 9

Representation or term? Specialist knowledge

Answer 9

If either party has specialist knowledge (especially if the other party does not) then a statement made by him/her is more likely to be a term (Dick Bentley v Harold Smith Motors).

Question 10

Express terms

Answer 10

These are terms that are explicitly agreed upon by the parties.

Question 11

Exclusion clauses

Answer 11

Exclusion clauses are express terms of a contract which attempt to remove or restrict a party’s liability in the event of a breach of contract.

Question 12

Exclusion clauses - signed agreements

Answer 12

If the agreement is signed by a party then he/she is bound by its terms including any exclusion clauses (L’Estrange v Graucob).

Question 13

Exclusion clauses - express knowledge of the clause

Answer 13

In the absence of a signed written agreement then the courts will uphold an exclusion clause providing the party subject to the clause had notice of it at the time the contract was entered into (Olley v Marlborough Court Hotel).

Question 14

Exclusion clauses - reasonable notice of clause

Answer 14

In order to rely on the exclusion clause the party must demonstrate that the relevant terms were sufficiently brought to the notice before hand. The more onerous the exclusion clause the greater the effort needed to bring it to the other’s attention (Thornton v Shoe Lane Parking Ltd).