express and implied terms

Question 1

what are terms in a contract?

Answer 1

what the parties to the contract have agreed

Question 2

what are the two types of terms?

Answer 2

• express - the terms that the parties specifically and mutually agree to
• implied -

Question 3

what are the different types of express terms?

Answer 3

• condition
• warranty
• innominate term

Question 4

what is a condition?

terms

Answer 4

a term in a contract so important that a failure to perform the obligation would destroy the main purpose of the contract.

condition broken = person suffering failure can end contract (repudiatio

Question 5

what is repudiation?

Answer 5

where one party ends the contract due to the other party breaching a condition of the contract

Question 6

Poussard v Spiers and Pond (1876)

Answer 6

• an actress agreed to perform the lead role in a production.
• she failed to attend the first few performances.
• her role was given to an understudy.
• when she did attend, she was not allowed to take up the role.
• she had in fact broken her contract by not turning up for the performances. as the lead, her presence was central. it was therefore a condition in the contract so the contract could be repudiated.

Question 7

what is a warranty?

terms

Answer 7

• a warranty is a minor term of the contract
• only damages can be claimed for a breach of warranty - the contract is not ended and the main purpose of the contract can continue to be performed despite the breach

Bettini v Gye (1876)

Question 8

Bettini v Gye (1876)

Answer 8

• failure to turn up to rehearsals was a breach of warranty, so the concert organiser could not repudiate his contract which continued.
• The singer was, therefore, awarded damages for loss of earnings for the breach of his contract.

Question 9

what is a innominate term?

Answer 9

• a term in a contract that is not clearly a condition or a warranty.
• the effect of its breach may be viewed as a condition or a warranty depending on the consequences

Question 10

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha

Answer 10

Court said that not all contract terms could be simply divided into the two types.

Unless expressly provided for in the contract, the classification will depend upon the consequences of the breach.

Question 11

Is a statement a representation or a term of the contract?

Answer 11

courts take into account the following:
- the importance attached to the representation
- special knowledge or skill of the person making the statement
- the time lag between the statement and the contract
- whether there is a written contract

Question 12

the importance attached to the representation

Is a statement a representation or a term of the contract?

Answer 12

where the statement is obviously important to the contract, it will be seen as a term of the contract.

Couchman v Hill (1947)

Question 13

Couchman v Hill

Answer 13

The statement regarding the heifer clearly important to the purchaser of the animal and so was taken as a contract term rather than a representation

the importance attached to the representation

Question 14

special knowledge or skill of the person making the statement

Is a statement a representation or a term of the contract?

Answer 14

there are 2 contrasting cases which show the importance of the skill expected of a person making a statement

• Oscar Chess v Williams (1957)
• Dick Bentley v Harold Smith Motors (1965)

Question 15

Oscar Chess v Williams (1957)

Answer 15

Private seller of a car believed it to be a 1948 model but it was actually much older. This statement was not a term of the contract.

special knowledge or skill of the person making the statement

Question 16

Dick Bentley v Harold Smith Motors (1965)

Answer 16

• car dealer stated the car had done 20,000 miles when in fact it had done 100,000 miles.
• even though that statement was not written in the contract, it was taken to be a term of the contract rather than a mere statement.

special knowledge or skill of the person making the statement

Question 17

the time lag between the statement and the contract

Is a statement a representation or a term of the contract?

Answer 17

where a contract is made later and does not refer to the statement, it is likely that the statement does not become a term of the contract.

Routledge v Mackay (1954)

Question 18

Routledge v Mackay (1954)

Answer 18

the contract was made later and did not refer to the date of the vehicle. The time lag was seven days. The actual date of manufacture of the vehicle was not seen as important, so the statement was a representation and not a term of the contract.

the time lag between the statement and the contract

Question 19

Whether there is a written contract

Is a statement a representation or a term of the contract?

Answer 19

as we have seen in Routledge v Mackay, the court tends to presume that
everything the parties wanted to include as a term of the contract is put in the
written contract

Question 20

terms can be implied by what?

Answer 20

common law and statute

Question 21

how can terms be implied by common law?

Answer 21

• through business efficacy and the officious bystander test
• by custom or prior dealings between the parties

Question 22

terms implied through business efficacy

Answer 22

The courts will imply a term into a contract if the term is necessary to make sure that the contract works on a business-like basis. Two part test to this:

-Is the term necessary to make the contract effective?

-If the parties to the contract had thought about it, would they have agreed that the suggested term was obviously going to be in the contract?

The Moorcock (1889), Schawel v Reade (1913)

Question 23

The Moorcock (1889)

Answer 23

The court implied a term that the ship would be at a safe mooring that would not be damaged.

Question 24

Schawel v Reade (1913)

Answer 24

• Claimant wanted to buy a stallion for stud purposes. D said the horse is perfectly sound. The claimant did not inspect the horse further and bought it. In fact the horse was unfit for stud purposes.
• The court decided that D’s statement was not an express term as to fitness for stud, but there was an implied term in the contract that it would be fit for stud.

Question 25

The officious bystander test

Answer 25

The officious bystander test is outlined in Shirlaw v Southern Foundries

If a third party was with the parties at the time the contract was made and had they suggested the term should be implied it would be obvious that both parties would reply with a hearty ‘oh of course’.

Question 26

Hollier v Rambler Motors (1972)

(officious bystander + previous dealings)

Answer 26

the court accepted that a failure to sign a document on one occasion did not prevent the terms in that document being present in the contract, it was merely an oversight in not signing the document on that particular occasion.

Question 27

Marks & Spencer plc v BNP

Answer 27

court must consider what the reasonable person would have agreed to in the position of the parties at the time they were contracting

Question 28

terms implied by custom

Answer 28

Much of English law is founded on the law of custom. Some local customs
survive, such as the one in the following case:

Hutton v Warren (1836)

Question 29

Hutton v Warren (1836)

Answer 29

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 the custom.

terms implied by custom

Question 30

terms implied by statute

Answer 30

Contract between business and consumer = Consumer Rights Act (2015)

Question 31

Implied terms under the Sale of Goods Act (1979)

Answer 31

The Act contains a number of these terms which provide protection to a purchaser of goods.
These implied terms only apply to business to business contracts and consumer to consumer contracts.

Section 13 - the implied condition as to description
Section 14 (2) (as amended) - the implied condition that the goods are of
satisfactory quality
Section 14(3) - the implied condition that the goods are fit for their purpose

Question 32

Sale of Goods Act (1979) - section 13

Answer 32

Section 13 - the implied condition as to description

In a sale of goods contract, the goods must correspond to any description applied to them.

This has been seen to include the way in which goods are packaged. The result can be quite harsh but also quite sensible.

Re Moore & Co and Landauer & Co’s Arbitration, Beale v Taylor

Question 33

Re Moore & Co and Landauer & Co’s Arbitration (1921)

Answer 33

The contract was for tinned peaches packed in cartons of 30 tins. When the goods were delivered, many of the cartons contained 24 tins although the total number of the tins was correct. This was held to be a breach of Section 13.

Sale of Goods Act (1979) - section 13

Question 34

Beale v Taylor (1967)

Answer 34

The car had in fact been welded together from two different models, one of which was an earlier model. The buyer successfully argued breach of section 13.

Sale of Goods Act (1979) - section 13

Question 35

Sale of Goods Act (1979) - Section 14 (2) (as amended)

Answer 35

Section 14 (2) (as amended) - the implied condition that the goods are of
satisfactory quality

What is ‘satisfactory’ includes:
* Fitness for all purposes for which goods of the kind in question are commonly supplied.
* Appearance and finish
* Freedom from minor defects
* Safety and durability

However, the section does not apply if the defects were brought to the buyer’s attention or the goods were examined and the defect should have been noticed.

Many sale goods are reduced due to a small defect, such as a missing button. If the buyer is told of this, or it is obvious, then section 14 cannot be relied on with respect to the defect.

Question 36

Sale of Goods Act (1979) - Section 14(3)

Answer 36

Section 14(3) - the implied condition that the goods are fit for their purpose