Express Terms and Incorporation of Express Terms Flashcards
what are express terms?
express terms are statements which are expressly communicated by the parties by which they agree to be bound
they can be written or oral
what are the 3 types of pre-contractual statements?
(1) express terms
(2) representations
(3) mere puff
what is a pre-contractual statement that is an express term, and what is the legal effect if it is not true?
an express term is a statement that contains a promise that something is true and is intended to be binding as a term of the contract
if not true: assess if the term is breached with a possible claim for breach of contract allowing the party to claim remedies like damages or rescission
what is a pre-contractual statement that is representation, and what is the legal effect if it is not true?
statement that induces a party to contract but that parties do not intend to be binding - not a term of the contract
if not true: possible action in misrepresentation - but no breach of contract
what is a pre-contractual statement that is mere puff, and what is the legal effect if it is not true?
statements used in advertising that a reasonable person would recognise as not intending to have legal consequences
if not true: no legal effect or recourse for representee
what test is applied to determine if a statement is an express term or a representation?
objective test = what would a reasonable person understand to be the intentions of the parties
–> did the parties intend to be bound by the statement (express term) or did the statement merely induce a party to enter into the contract (representation)?
courts take 5 factors into account when assessing whether parties intended to be bound by the statement
what factors do courts take into account when determining whether parties intended to be bound by a statement to assess whether the statement is a term or representation? (5 factors)
(1) importance of the statement to a party entering into the contract (the more important the more likely it is a term)
(2) timing of statement: greater delay between statement and contract means less likely a term
(3) if contract is in writing, this may indicate that parties intended the written statements to be binding to the exclusion of all other oral statements (parole evidence rule)
(4) if one party has special knowledge or skills compared to the other, then this is considered regardless of who made the statement
(5) a statement is more likely a term where one party assumes responsibility for the statement and dissuades the other party from making their own further checks (but if they advised the party to make further checks then statement likely a representation)
what is the parole evidence rule?
if a contract is in writing then there is a rebuttable presumption that it contains all the terms to the exclusion of other terms
this is esp. true if the contract contains an entire agreements clause
what are the 3 main ways to incorporate terms into a contract?
(1) signed written contract
(2) incorporation by notice
(3) incorporation by a course of dealing
other: via email, oral exchange, etc.
if a party signs a document it has not read or understood, is it bound by its terms? I.e., are its terms incorporated into the contract?
yes
when is a party not bound by the terms of a document it signs? (2)
(1) document is not intended to have contractual effect (invoices/receipts)
(2) document signed as a result of fraud or misrepresentation
what are the 3 requirements for incorporating terms by notice (i.e., notifying the other party of them)?
(1) Reasonable steps must have been taken to notify the other party of the terms (reasonable notice)
(2) Reasonable notice must be given BEFORE OR AT THE TIME of contracting
(3) the document GIVING NOTICE was intended to have contractual effect (as a reasonable observer would determine)
what must a party do to give ‘reasonable notice’ of a term to the other party in order to validly incorporate the term by notice?
depends on the circumstances of the case -
- they can incorporate terms by reference to another document
- a term may be required to be shown on the front of a document
- if the term is particularly onerous or unusual then additional measures must be used to bring it to the other party’s attention like putting it in red, bold, or highlighted
how can a term be incorporated by a course of dealing?
if a contract is one of several entered into by the parties who frequently dealt with each other on specific terms then an unspoken term may be implied into the current contract - if the course of dealing is:
(1) consistent over a period of time - i.e., the term was used consistently in the past
(2) regular - i.e., parties dealt with each other at several instances over a period of time
