Determining the Terms of a Contract

Question 1

What are the types of terms in a contract.

Answer 1

Conditions

Warranties

Innominate Terms

Question 2

What is the difference between a term and a representation?

Answer 2

A term is incorporated into the contract.

A representation is not incorporated. It is usually made to induce the other party to enter the contract, but not actually included.

Question 3

What is a Condition v. what is a Warranty?

Answer 3

Condition: A term so fundamental to the contract that it is said to go to the root of the contract

Warranty: A term this is incidental/collateral to the main terms of a contract

Question 4

Effect of breaching a Condition

Answer 4

Breaching party is repudiating the contract (bc they are breaching a core term).

Innocent party can either:
- Terminate the contract and sue for damages
- Affirm the contract, lose the right to terminate but still sue for damages.

Question 5

Effect of breaching a Warranty

Answer 5

Innocent party cannot terminate the contract, but remedies are available (albeit fewer).

Question 6

What is an Innominate term?

Answer 6

Any term which not clearly a condition or a warranty

Question 7

Effect of breaching an Innominate term

Answer 7

Court will look at the effect of the breach on the contract. If the innocent party loses substantially all of their benefit, it will be treated like a breach of a condition.

Question 8

What kind of term is a “time is of the essence” clause?

Answer 8

Treated as a condition in included. Innocent party can terminate if performance is late.

Presumption that time is of the essence in commercial contracts for a delivery if a time has been provided.

Question 9

What is the Parole Evidence Rule?

Answer 9

Presumption that external evidence of an agreement cannot contradict or vary the terms of a written contract.

Question 10

Exceptions to the Parole Evidence Rule

Answer 10

Contract terms that are implied by:
- Statute (SOGA, CRA, SGSA)
- The courts
- Custom and usage
- Course of dealing

Question 11

Who does the Consumer Rights Act involve

Answer 11

It implies terms between businesses and consumers

Question 12

Who does SOGA/SGSA involve

Answer 12

Private sales, B2B transactions

Question 13

SOGA Implied Terms

Answer 13

• The seller has the legal right to sell the goods in questions
• Goods must match any description the seller gives them
• If sold by a business, goods must be of satisfactory quality
• If sold by a business, goods must be fit for a particular purpose made known to the seller by the buyer

Question 14

Are SOGA implied terms conditions or warranties?

Answer 14

Conditions, unless the breach is so slight that it would be reasonable to treat them as conditions.

Question 15

SGSA Implied Terms

Answer 15

A supplier will carry out the service within a reasonable time (if no time is agreed) and with reasonable care and skill.

If goods are supplied as part of the supply of services, similar implied terms as SOGA.

Question 16

Are SGSA implied terms conditions or warranties?

Answer 16

They are innominate terms. Court will decide the remedy based on the seriousness of the breach.

Question 17

Can you exclude liability for any breach of implied terms under SOGA or SGSA?

Answer 17

Not for legal right to title, but maybe for the other implied terms (subject to reasonableness test)

Question 18

CRA Implied Terms

Answer 18

In the sale of goods:
- The seller has legal rights to the goods
- The goods match the seller’s description
- The goods are of satisfactory quality
- The goods are fit for purpose

In the provision of services:
- Services are carried out with reasonable care and skill
- Completed in accordance with information the consumer is relying on (e.g., price quote)
- Completed for a reasonable price (if not agreed)
- Completed within a reasonable time (if not agreed)

Question 19

Can you exclude liability for any breach of implied terms under CRA?

Answer 19

Not at all

Question 20

When will a court imply terms into a contract?

Answer 20

When it is NECESSARY to give the contract “business efficacy” (i.e., to make them work in the way the parties intended)

Note: They will not do this if it contradicts the agreement.