Determining the terms of a contract

Question 1

What are the two types of contract terms?

Answer 1

1. Conditions
2. Warranties

Express or implied

Question 2

What is the difference between a term and a representation?

Answer 2

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

Question 3

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

Answer 3

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

Question 4

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

Answer 4

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)

Question 5

What happens if there is a breach of a term?

Answer 5

It is a breach of contract

Question 6

What happens if there is a breach of a misrepresentation?

Answer 6

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

Question 7

What is the remedy for a breach of a condition?

Answer 7

innocent party can terminate the contract

Question 8

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

Answer 8

Innominate term

Question 9

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

Answer 9

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

Question 10

What is a condition?

Answer 10

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

Question 11

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

Answer 11

Party breaching it is repudiating the contract ntirely

Question 12

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

Answer 12

Terminate contract and claim damages

Question 13

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

Answer 13

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

Question 14

What is a warranty?

Answer 14

Incidental or collateral term to the main terms of a contract

Question 15

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

Answer 15

No

Question 16

What is an innominate term?

Answer 16

Term which is unclear as to being a warranty or condition

Question 17

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

Answer 17

Look at the effect of the breach and determine the remedy

Question 18

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

Answer 18

Condition

Question 19

What is the presumption about time in commercial contracts?

Answer 19

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

Question 20

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

Answer 20

The other party must have REASONABLE NOTICE of the term

Question 21

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

Answer 21

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

Question 22

What is the parol evidence rule?

Answer 22

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

Question 23

What are the exceptions to the parol evidence rule?

Answer 23

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

Question 24

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

Answer 24

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

Question 25

How can terms be implied into contract?

Answer 25

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

Question 26

What are the main statutes that imply terms into contracts?

Answer 26

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

Question 27

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

Answer 27

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

Question 28

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

Answer 28

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)

Question 29

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

Answer 29

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

Question 30

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

Answer 30

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

Question 31

Are SGA implied terms warranties or conditions?

Answer 31

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

Question 32

What happens if an SGA condition is breached?

Answer 32

Buyer can terminate the contract BUT MUST RETURN THE GOODS

Question 33

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

Answer 33

Business-to-business transactions Private agreements

Question 34

Are SGSA implied terms conditions or warranties?

Answer 34

Neither, they are innominate terms

Question 35

What innominate terms does the SGSA imply?

Answer 35

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

Question 36

Can you contract out of SGSA terms?

Answer 36

Yes

Question 37

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

Answer 37

Supply of goods and services to consumers

Question 38

What are some key implied terms under CRA?

Answer 38

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

Question 39

Can CRA implied terms be excluded from a contract?

Answer 39

No

Question 40

What are the CRA implied terms for SERVICES?

Answer 40

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)

Question 41

What terms will courts imply into a contract?

Answer 41

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

Question 42

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

Answer 42

Strictly necessary terms No terms that would contradict the express terms

Question 43

What are terms implied by custom and usage?

Answer 43

Industry and market standards

Question 44

Can customs and usage implied terms be excluded?

Answer 44

Yes

Question 45

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

Answer 45

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

Question 46

When will a court not enforce a contract?

Answer 46

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

Question 47

What is an agreement to agree and is it enforceable?

Answer 47

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

Question 48

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

Answer 48

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

Question 49

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?

Answer 49

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

Question 50

What is the test for severance of a term?

Answer 50

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