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Contract Law > Determining the terms of a contract > Flashcards

Determining the terms of a contract Flashcards

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1
Q

What are the two types of contract terms?

A
  1. Conditions
  2. Warranties

Express or implied

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2
Q

What is the difference between a term and a representation?

A
  1. Term = statement of fact during negotiations incorporated into the contract itself
  2. Representation = statement of fact not incorporated but made to induce other party to contract
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3
Q

What is the standard of measure you use to determine if something is a term or a representation?

A

Intention of the parties, viewed objectively from a reasonable person’s perspective and having regard t conduct of parties

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4
Q

What factors do the courts use to determine if something is a term or a representation?

A
  1. Importance of the statement (would party have contracted if it as not for statement, if no = term)
  2. What stage of negotiations was statement made (at time of contract = term, preliminary negotiations = rep)
  3. Did the statement maker have specialist knowledge or information or a particular skill (if within scope of knowledge = term)
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5
Q

What happens if there is a breach of a term?

A

It is a breach of contract

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6
Q

What happens if there is a breach of a misrepresentation?

A

Remedy depends if the representation was made innocently, negligently or fraudulently and the amount of damages may be less

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7
Q

What is the remedy for a breach of a condition?

A

innocent party can terminate the contract

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8
Q

What is a term called if it cannot be determined to be a condition or a warranty?

A

Innominate term

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9
Q

Will the courts look at the label given to a term and agree that it is a condition, if labelled as such?

A

No, they will look at the actual effect of the term

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10
Q

What is a condition?

A

Fundamental term going to root of contract, breach of which makes the contract unworkable

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11
Q

Why is a breach of a condition called a repudiatory breach?

A

Party breaching it is repudiating the contract ntirely

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12
Q

What can an innocent party do if there is a breach of a condition?

A

Terminate contract and claim damages

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13
Q

What if an innocent party does not terminate the contract for breach of a condition?

A

They lose their right to terminate but can still sue for damages

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14
Q

What is a warranty?

A

Incidental or collateral term to the main terms of a contract

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15
Q

Can an innocent party terminate the contract for a breach of a warranty?

A

No

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16
Q

What is an innominate term?

A

Term which is unclear as to being a warranty or condition

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17
Q

What will the court do if an innominate term is breached?

A

Look at the effect of the breach and determine the remedy

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18
Q

If a term contains something that implies time is of the essence, is that term a condition or warranty?

A

Condition

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19
Q

What is the presumption about time in commercial contracts?

A

Time is of the essence for delivery if a time for delivery is agreed

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20
Q

What is essential for a term to form part of a contract, whether written or oral?

A

The other party must have REASONABLE NOTICE of the term

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21
Q

Are the prices of coffee on a board at Coffee Angel terms of the contract with a customer?

A

Yes, they are incorporated because the customer has reasonable notice of the terms

22
Q

What is the parol evidence rule?

A

Presumption that external evidence cannot add to, subtract from, contradict or vary the terms of a written contract

23
Q

What are the exceptions to the parol evidence rule?

A
  1. Implied terms
  2. Collateral contracts
  3. If the contract was partly oral and partly written
24
Q

What is the purpose of an entire agreement clause and will the courts uphold it?

A

Upholds the parol evidence rule and is upheld unless it is seen as an attempt by a party to avoid liability for misrepresentation

25
Q

How can terms be implied into contract?

A
  1. Statute
  2. Courts
  3. Custom and usage
  4. Course of dealings between the parties
26
Q

What are the main statutes that imply terms into contracts?

A
  1. Sale of Goods Act 1979
  2. Consumer Rights Act 2015
  3. Supply of Goods and Services Act 1982
27
Q

Briefly describe what the sale of goods act, supply of goods and services act and the consumer rights act do?

A
  1. Sale of goods act and supply of goods and services = apply to private sales and B2b transactions
  2. CRA = consumer to business
28
Q

What terms do the SGA (Sale of Goods Act) imply?

A
  1. Seller has title to goods
  2. Goods match description applied by seller
  3. Goods of satisfactory quality (IF SOLD BY BUSINESS)
  4. Fit for purpose made known to the Buyer (IF SOLD BY BUSINESS)
29
Q

What does it mean under the SGA that goods must be of satisfactory quality?

A

Fit for purpose for which such goods are generally used
Free from minor defects
Safe and durable

30
Q

What is the exception to the SGA rule that goods must be safe from defects under the satisfactory quality provision?

A

No liability for defects pointed out to the Buyer
Defect was obvious if Buyer inspected goods prior to sale

31
Q

Are SGA implied terms warranties or conditions?

A

Conditions, unless breach is so minor that it would be unreasonable to reject the goods

32
Q

What happens if an SGA condition is breached?

A

Buyer can terminate the contract BUT MUST RETURN THE GOODS

33
Q

Does the Supply of Goods and Services Act (SGSA) apply to consumers or businesses, or both?

A

Business-to-business transactions
Private agreements

34
Q

Are SGSA implied terms conditions or warranties?

A

Neither, they are innominate terms

35
Q

What innominate terms does the SGSA imply?

A
  1. Supplier will carry out service in reasonable time (if no time specified)
  2. Supplier will carry out service with reasonable care and skill
36
Q

Can you contract out of SGSA terms?

A

Yes

37
Q

To whom does the consumer rights act (CRA) apply?

A

Supply of goods and services to consumers

38
Q

What are some key implied terms under CRA?

A
  1. Goods and services must match description
  2. Be of satisfactory quality
  3. Be fit for purpose
39
Q

Can CRA implied terms be excluded from a contract?

A

No

40
Q

What are the CRA implied terms for SERVICES?

A
  1. Carry out with reasonable care and skill
  2. Complete in accordance with information the consumer relies on
  3. Complete for a reasonable price (if no price agreed)
  4. Complete in a reasonable time (if no timescale agreed)
41
Q

What terms will courts imply into a contract?

A

Business efficacy terms - to make terms work in a way that reflects parties intentions and expectations (terms implied by fact)

STRICT TEST of NECESSITY, not REASONABLENESS

42
Q

What are the tests for implied terms a court will apply?

A

Strictly necessary terms
No terms that would contradict the express terms

43
Q

What are terms implied by custom and usage?

A

Industry and market standards

44
Q

Can customs and usage implied terms be excluded?

A

Yes

45
Q

When will terms be implied from a course of dealings between the parties?

A

Parties contract regularly on regularly on similar terms to show regular and consistent course of dealings

46
Q

When will a court not enforce a contract?

A

When the terms are incomplete or vague (lack of sufficient certainty)

47
Q

What is an agreement to agree and is it enforceable?

A

Using words “to be agreed” in relation to an essential term prevents a contract from coming into existence

48
Q

When will courts nontheless become involved to enforce a vague/incomplete contract?

A

When there is evidence that parties intended to be bound by the terms of the contract as they stand, the court will give effect to this intention by resolving uncertainty

49
Q

When are the courts more likely to enforce a vague contract where there is evidence that parties intended to be bound by and stand by the existing terms?

A
  1. Where there’s a mechanism agreed to resolve uncertainties
  2. Commercial cases where parties are familiar with the trade in question
  3. Contracts for future performance over a period of time where parties leave matters to be adjusted
  4. Where there has been partial performance
50
Q

What is the test for severance of a term?

A

Whether severance will not affect the substance of the bargain between the parties

Contract Law (14 decks)

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