Express Terms

Question 1

Do all contract terms need to be stated in a written contract?

Answer 1

No

Terms can also be implied or agreed orally

Question 2

What is a term?

Answer 2

A statement of fact which the parties intend to be binding

Question 3

What is a representation?

Answer 3

It is a statement of fact or law which induce the making of the contract which the parties do not intend to be binding

Question 4

How is a representation different from a term?

Answer 4

Unlike a term a representation is not legally binding

Question 5

What is a mere puff?

Answer 5

A statement of no legal significance

Question 6

How do the courts assess whether a statement is a representation or term?

Answer 6

Courts will apply an objective test - ‘what would a reasonable person understand to be the intention of the parties, having regard to all the circumstances?’

Question 7

What inference arises where a statement is made during negotiation for the purpose of inducing the other party to enter into contract?

Answer 7

Inference that the statement was intended to be binding so a term (albeit this is rebuttable)

Question 8

What will courts take into account when regarding the importance of the statement in deciding whether it is intended to be a term or a representation?

Answer 8

Courts will consider the importance attached to it by one of the parties.

If it can be shown the injured party considered it so important that it would not have entered into the contract if it were not for that statement, then it is likely a term.

Question 9

What will courts take into account when regarding timing of the statement in deciding whether it is intended to be a term or a representation?

Answer 9

If the statement was made at the time of contracting, more likely to be term than if it was made early in negotiations

Question 10

What will courts take into account when regarding the reduction of the contract into writing in deciding whether it is intended to be a term or a statement?

Answer 10

If statement is not reduced into writing but rest of contract is, then unlikely to be a term

Question 11

What will courts take into account when regarding the special skill or knowledge of the parties in deciding whether it is intended to be a term or a statement?

Answer 11

Where the party who made the statement has special skill or knowledge in relation to the statement, this is likely to be count in favour of the party trying to rely on the statement as a term

Question 12

What will courts take into account when regarding the assumption of responsibility/further checks in deciding whether it is intended to be a term or a statement?

Answer 12

A statement may become a term of the contract where the vendor expressly accepts the responsibility for the soundness of the sale item in question

If however defendant with statement insists the other party makes further checks to verify statement then unlikely to be term

Question 13

How are the express terms of a contract ascertained?

Answer 13

By asking what the objective observer would think that the parties intended to be bound by

They are the essence of the agreement between the parties

Question 14

What is the effect of signing the contract?

Answer 14

In almost all cases, signing of a contract will show the parties intended to be bound by a contract even if they did not read the contract before signing

Question 15

When will a party not be bound by a contract they have signed?

Answer 15

If what they signed was not intended to have contractual effect as signing such a document does not show an intention to be bound

Question 16

When may a party be prevented from relying on incorporation of a clause through signature of a document?

Answer 16

If it has orally misrepresented the meaning of the clause to the other party

Question 17

When will a term be incorporated by notice?

Answer 17

If reasonable steps have been taken to bring them to the attention of the other party

Question 18

What must a party do if they want to incorporate terms by the notice which are particularly adverse?

Answer 18

They must clearly bring these terms to the attention of the other party

Question 19

Will a party be bound by an onerous clause if it signs the contract?

Answer 19

Yes

Question 20

What must be done with regards to timing for a clause to be incorporated into the contract?

Answer 20

Reasonable notice must be given before or at time of contracting

Any clause communicated after contracting will not be binding

Question 21

What is meant by contractual effect for incorporation by notice?

Answer 21

A term can only be incorporated by notice if the document giving notice is intended to have contractual effect

Question 22

What is required for terms to be incorporated by a course of dealing?

Answer 22

• clause must have brought to notice of other party in previous dealings
• clause has been omitted in this particular occasion
• course of dealing must have been regular
• course of dealing must have been consistent over a period of time

Question 23

Can terms be binding either by expressly in writing or by notice of incorporation?

Answer 23

Yes provided there the parties adequately express an intention to be bound

Question 24

What is the effect of an ‘entire agreement’ clause?

Answer 24

Provides that a particular document or set of document constitutes the entire agreement between the parties

Question 25

What is the benefit of an ‘entire agreement’ clause?

Answer 25

It reduces uncertainty and confusion about what terms form part of the contract

Question 26

Do the courts uphold ‘entire agreement’ clauses?

Answer 26

Yes - where they are intended to avoid any misunderstanding about the scope of the parties’ agreement