Contractual Terms

Question 1

What are contractual terms?

Answer 1

These in which are the terms which proceed after an agreement. These are the various obligations and rights.

Question 2

What is important to note with a written document?

Answer 2

Oral Statements can also assist alongside written contracts.

Question 3

Can contracts be verbal?

Answer 3

Yes

Question 4

When do special rules of a contract apply?

Answer 4

‘special’ rules apply to terms which seek to exclude/limit liability or are otherwise claimed to be unfair

Question 5

Express terms - what are they?

Answer 5

Express terms are those in which has been specifically expressed in the relevant signed documents.

Question 6

What is the parol evidence rule?

Answer 6

the traditional rule of English law is that verbal ‘evidence’ cannot normally be introduced to add to, vary or (especially) contradict the terms expressed in the written document(s).

Question 7

What is the parol rule’s main duty?

Answer 7

Prevent the abuse of verbal evidence

Question 8

What is an example of an exception to the parol evidence rule?

Answer 8

One exception is where it is clear that the written/signed contract was never intended by the parties to represent their entire contract

Question 9

What happened in the case of Evans C.J. & Son (Portsmouth) Ltd V Merzario (Andrea) Ltd?

Answer 9

Business was based on a promise - oral statement in which is an exception to the parol evidence rule.

Question 10

What is a collateral contract?

Answer 10

A collateral contract is a contract in which exists against the main one. They are not contained within the main documents.

Question 11

Why are collateral contracts used by the courts?

Answer 11

These have often been used by the courts to avoid harsh/unjust results which might flow from a strict application of the ‘parol evidence’ rule.

Question 12

What was held in City And Westminster Properties Ltd v Mudd [1959] - Collateral contract.

Answer 12

The oral statement had turned into a collateral contract. (Business tenant) Collateral contracts can either be written or oral.

Question 13

What was held in Inntrepreneur Pub Co v East Crown Ltd [2000] ?

Answer 13

Case consisted of an entire contract clause in which meant all terms for the contract consisted on the written document - oral statement could not be depend on.

Question 14

Historically, what is the issue for courts in relation to term or representation?

Answer 14

Historically - law did not provide remedy for misrepresentations within contracts. This now led to the courts distinguishing pre-contractual statements as terms.

Question 15

What remedy has now been provided to overcome misrepresentation issues?

Answer 15

The Misrepresentation Act 1967.

• issue of statement of what an individual may do in the future may induce a contract. - not statement of facts.

Question 16

What are the considerations in which help a court justify whether a statement is a term or representation?

Answer 16

• depends on intentions of the parties
  • How central/crucial the statement was to the eventual conclusion of the main contact (Evans v Merzario)

• The respective knowledge/skill of the parties

Question 17

What happened in the case of Dick Bentley v Harold Smith Motors [1965]

Answer 17

Statement of mileage was held a term - Seller appeared to have special knowledge.

Question 18

What was held in the case of Oscar Chess v Williams [1957] ?

Answer 18

Statement about mileage term or misrepresentation? - No significance held on sellers statement as buyer had special knowledge.

Question 19

What approach was used by the judges in reflection to Dick and Oscar?

Answer 19

Realist approach as result driven - Right result is reached.

Question 20

Can written statements be added to oral contracts?

Answer 20

Yes this is possible. This is called an exemption clause.

Question 21

What can the rules of incorporation be viewed as?

Answer 21

the rules on incorporation can be viewed as a method of protecting parties from exemption clauses

Question 22

What issue do the courts face when interpreting a written contract?

Answer 22

Understanding what the parties intentions were with these written contracts.

Question 23

What is the traditional approach taken by courts when interpreting a contract?

Answer 23

This refers to the judges/court taking the wording of the contract literally as oppose to using extravenous descriptions. Also known as the four corner approach.

Question 24

What are the principles held from the ICS case by Lord Hoffman?

Answer 24

• intention of parties of objective
• allows the parties intentions to be determined
• something must have gone wrong with the language
• Exclusion form the matrix of facts
• the words used in a contract do not have to be taken literally

Question 25

What is an implied term?

Answer 25

These are invisible terms in which are hidden within the contract that courts must derive. Can be implied by legislation or the courts.

Question 26

What is the significance of terms implied by legislation?

Answer 26

No clause within a contract can overcome these legislative implementations.

Question 27

What is the example of two statues where terms are implied by legislation?

Answer 27

Sales of Goods Act 1979 and Consumer Rights Act 2015

Question 28

How can terms be implied by the courts?

Answer 28

These are terms implied in fact & law.

Question 29

What is the key point to note with the implementation of terms by the courts?

Answer 29

Judges can not implement terms because they feel is was reasonable to do so.

Question 30

What does implementation by fact mean?

Answer 30

Used by the courts as a gap filler in which implements the parties intentions - manner that the parties would’ve intended.

Question 31

What was held in the case of The Moorcock 1889?

Answer 31

Courts held that the term could be a term in fact. Necessary to the business contract - efficiency.

Question 32

What test was developed in Shirlaw?

Answer 32

The officious bystander - know it all test. the test being whether, if a disinterested person had asked the parties if such a term should be included, they would have replied ‘Oh, of course’. Reflect parties intentions but as a one off. Term must be necessary.

Question 33

What did Lord Hoffman state in relation to the business efficiency test and the officious bystander test in Attorney General of Belize v Belize Telecom (2009) UKPC 10?

Answer 33

Both tests are really about contextual interpretation of the contract as a whole.

Question 34

Issues of implied terms of fact can also arise - this being present in the case of Supreme Court Belize Telecom.

Answer 34

No term refund available Implied terms by the courts in which HOL refused .

Question 35

`What was held in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company by Lord Neuberger?

Answer 35

Interpretation is a distinct issue.

Question 36

Some terms can be implied as a necessary incident to the type of contract in question

Answer 36

When a court implies this type of term for the first time it lays down a general rule for contracts of the same defined type. The result is that the term will be implied in subsequent cases concerning that type of contract.

Question 37

What was held in the case of Liverpool CC v Irwin?

Answer 37

Such a term was not necessary to be implied as the contract worked without the clause.

Question 38

What is the courts aims when implying a term of present type?

Answer 38

In implying a term of the present type, the court is not trying to put the parties’ intentions, actual or presumed, into effect but is imposing an obligation on one party or the other, irrespective of their actual (or presumed) intentions.

Question 39

What is the difference between implying a term because it is a ‘necessary incident’ of a particular type of contract, and implying a term to give ‘business efficacy’ to a contract?

Answer 39

The basis of implying a terms as a necessary incident was explained by Dyson LJ in Crossley v Faithful & Gould Holdings Ltd [2004] EWCA Civ 293. There it was stated that the court should really imply the term based on ‘reasonableness, fairness and the balancing of competing policy considerations

Question 40

Terms can also be implied by local custom or trade usage - Hutton v Warren
-Cunliffe-Owen v Teather and Greendwood

Answer 40

• A local trade custom provided that a tenant was under an obligation to farm according to a certain method and would be entitled to an allowance for seeds and labour. It was stated that objectively, the custom must be a ‘known’ usage.

Here the court explained that for a custom to be ‘known’ it must be notorious, established and reasonable.’ This means that it must be well known to the market by those that do business and recognised as binding rather than a mere courtesy

Question 41

What is an exemption clause?

Answer 41

A clause that excludes the liability of the party in breach (exclusion clause)

Question 42

What is a limitation clause?

Answer 42

a clause which limits the liability of the ‘guilty’ party to a specified sum of money and no more

Question 43

What is the issue with exemption clauses?

Answer 43

They are regarded as a form of contractual abuse. - Imposed as one party has more bargaining power than the other.