Contract terms-Implied terms and the Consumer Rights Act 2015 Flashcards
2 ways terms can be implied in common law.
- Business efficacy and the officious bystander
- By custom or prior dealings between the two parties
Test for business efficacy
Is the term necessary to make the contract effective?
Case for business efficacy test.
The Moorcock (1889)
Facts of The Moorcock (1889).
D signed contract allowing C to use their dock on the Thames.
Both parties knew C’s ship would rest on river bottom at low tide.
River bottom damaged the ship.
Was implied that the ship could rest safely at the dock.
The officious bystander test
Had an officious bystander suggested the term when the 2 parties were negotiating, would both parties have agreed the term was obvious?
In what case was the officious bystander test set out?
Shirlow v Southern Foundries Ltd (1939)
Example case for officious bystander test.
Egan v Static Control Components (2004)
In what case did the Supreme Court clarify the business efficacy and officious bystander test?
Marks and Spencer v BNP Paribas Securities (2015)
Case for implied term by custom.
Hutton v Warren (1836)
Facts of Hutton v Warren (1836).
Local custom meant that at the end of an agricultural lease, a tenant farmer was entitled to an allowance for seed and labour on the land.
The court decided that the terms of the lease must be viewed in the light of this custom.
Case for where prior conduct of the parties might indicate implied terms.
Hillas v Arcos (1932)
What Act shows that terms can be implied by statute?
Consumer Rights Act 2015
Key terms defined in the CRA
Consumer
Trader
Definition of a consumer in the CRA.
An individual acting for the purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.
Which section and sub-section of the CRA is a consumer described by?
Section 2(3)
Which section and sub-section of the CRA described what a trader is?
Section 2 (2)
Definition of trader in the CRA.
A person acting for purposes relating to the person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.
Which sections of the CRA deal with statutory rights in regards to the provision of products?
S.9
S.10
S.11
6 rules of business efficacy and officious bystander test which were clarified in Marks and Spencer v BNP Paribas Securities (2015).
- Reasonableness is to be tested objectively
- Fairness and acceptability to the parties are not enough
- Requirement for reasonableness and equitableness (fairness) will usually add nothing to other tests
- Business efficacy and officious bystander tests are not cumulative - only one needs to be satisfied
- Officious bystander test may not be straightforward
- Test of necessity for business efficacy involves a value judgement
What right does section 9 talk about?
Right to satisfactory quality
What does s.9 (1) say?
Every contract to supply goods is to be treated as including a term that the quality of the goods is satisfactory.
How is s.9 (2) tested?
Objectively
What 3 sub-sub-sections does s.9 (2) take into account?
a) any description of the goods.
b) the price or other consideration for the goods (if relevant)
c) All other relevant circumstances
What does s.9 (3) talk about?
The quality of goods includes their state/condition taking into account various sub-sub sections
What 5 sub-sub sections does s.9 (3) take into account?
a) the fitness for all purposes for which the goods of that kinds are usually supplied and their durability
b) Appearance and finish of the goods
c) No minor defects
d) Safety
e) Durability
What does s.9 (4) talk about?
Where the right to satisfactory quality does not apply using its sub-sub sections
Name the sub-sub sections of s.9 (4) where the exceptions to s.9 occur.
a) With respect to defects drawn to the consumer’s attention before purchase
b) Where the consumer has examined the goods or a sample of the goods, sufficient to reveal the defect.
What right does section 10 of the CRA exercise?
The right of fitness for particular purpose
What does s.10 (1) state?
If the consumer tells/implies to the trader what they will be using the goods for, there is an implied term that the goods will be for that purpose.
Case for s.10 (1)
Baldry v Marshall (1925)
When does the purpose for using the good not need to be stated and name the case?
Where it is obvious.
Grant v Australian Knitting Mills Ltd (1936)
When will the trader not be liable under s.10 (1) and name the case?
Where they could not have reasonably known about the purpose.
Griffiths v Peter Conway Ltd (1939)
What right does s.11 of the CRA exercise?
The right relating to the description of the goods
What does s.11 (1) state?
Every contract to supply goods by description is to be treated as including a term that the goods will match the description
Give an example of where description can be implied under s.11 (1)
When goods are on display
Can description be implied under s.11 (1)?
Yes
When should goods match description in relation to a model of the good?
Where the supply of goods is by reference to a model seen or examined by the consumer, then the goods supplied must match the model.
Which case shows that the courts have interpreted the rule of s.11 (1) strictly in the past?
Re Moore & Co. Ltd and Landauer & Co,’s Arbitration (1921)
As regards products, if there is a breach of the CRA, what does the Act allow consumers to follow?
Cumulative remedies.
These are in addition to ordinary damages
As regards products, list the cumulative remedies consumers can follow if there is a breach?
- Section 20 - Short-term right to reject the product in the first 30 days
(If not exercised)
- Section 23 - Right to repair or replace
(if not possible/would put unreasonable burden on trader)
- Section 24 - Right to a price reduction or the final right to reject the contract and gain a full refund
As regards products, why does the burden of proof lie on the trader in the first 6 months under s.19 (14) and (15)?
If a fault in the good arises in the first 6 months after delivery, it is presumed to have been present at the time of delivery-unless the trader can prove otherwise.
When will the trader have to prove the fault in goods was not present at the time of delivery?
Where consumers exercise their right to a repair or replacement or right to reject.
As regards products, after 6 months, who will the burden of proof rest with?
Consumer
Which sections of the CRA talk about the statutory rights in regards to the provision of services?
s.49
s.52
What right does s.49 exercise?
Right to the service being provided with reasonable care and skill
What does s.49 (1) state?
A contract to supply a service is to be treated as including an implied term that the trader must perform the service with reasonable care and skill
In regards to s.49, what is the standard of care equivalent to?
The standard of care expected in a claim in the tort of negligence, as decided on a case-by-case basis
Case which demonstrates where s.49 (1) was met so the claim was unsuccessful.
Thake v Maurice (1986)
Facts of Thake v Maurice (1986)
Mr and Mrs Thake had already had 5 children.
Decided Mr should have a vasectomy.
However, Mrs became pregnant again after operation.
Sued for breach of contract.
Implied term that surgeon would perform the operation to the standard of care and skill of a competent surgeon.
Evidence was that that level of care and skill was reached so claim was unsuccessful.
What right does s.52 exercise?
Right that the services will be provided within a reasonable time
What does s.52 (1) state?
Where the contract does not expressly fix the time for the service to be performed, then the service has to be performed within a reasonable time.
What sections of the CRA talk about the remedies in regards to services?
s.55
s56
What remedy does s.55 provide?
Right to repeat performance.
If a s.55 remedy is demanded , in regards to services what must the trader ensure?
They carry the repeat performance out in a reasonable time and at their own costs.
What remedy does s.56 provide?
Right to a price reduction-can be a partial or total refund
When does the s.56 remedy become available?
When repeat performance is not possible or the trader does not carry it out in a reasonable time.
Can a contract include the provision of both goods and services?
Yes
