Express Terms of a Contract & Incorporation (L12) Flashcards
What is a term?
Express terms are those which are expressly agreed by the parties.
Implied terms are those which the law imposes.
Either resulting from:
- “Nominate contracts” e.g. sale, lease, insurance.
- Or from facts specific to an individual contract.
- Implied terms result from a set of default rules known as naturalia, but also from statute, common law, and custom and usage.
Where might express terms be found?
In the written contract.
In negotiations (sometimes).
In an external written source (if incorporated).
Old rules took a strict objective approach, reading express terms within the “four corners of the deed”.
Inglis v Buttery & Co (1877) 5 R 58.
- Sets out the rules for whether express terms have been agreed upon.
- Anything which is part of the contract, will be contained within the contract. Anything else the parties have said or done is not to be taken into account.
- Bits of the document had been erased, dispute about what the final version of the contract actually looked like. Only what is written should be taken as an express term of the contract.
New rules for express terms set out in the Contract (Scotland) Act 1977.
s1: presumption that if the contract is in writing, the terms of the contract are to be found only in the written document.
- This is only a presumption.
- It can be rebutted on evidence of prior conduct, communications etc.
Except if an “entire contract” clause:
s1(3): “where one of the terms in the contract is to the effect that the document does comprise all the express terms of the contract that term shall be conclusive”.
What is the significance of intention in terms during negotiation?
Did the parties intend the statement to be part of the contract?
Malcolm v Cross [1898] SLR 35.
- Bound by statements made before the contract?
- Intention is paramount.
- If intention, then not invitation to treat/advertising puff etc, OFFER.
How may terms be included into a contract via inclusion of an outside source?
By signature.
By reference to terms outwith the negotiations.
By prior dealings.
What is the first test for incorporation?
Test one - incorporation by reference?
Hood v Anchor Line [1918] UKHL 605.
- Anchor Line did “all that they reasonably could” to bring terms to attention of customers.
- Man was injured, but had agreed to contract which limits how much he may claim. Despite fact he didn’t make an effort to read terms, not Anchor Lune’s fault.
Taylor v Glasgow Corporation 1952 SLT 399, IH.
- Just a voucher, not an incorporation. Defender hadn’t done enough with the ticket, unlike in contract of carriage or transport.
- On back of ticket, said they wouldn’t accept any liability. Ticket was given after she was contracted, terms not incorporated into the contract itself.
What is the second test for incorporation?
Test two - are the Ts&Cs known to have existed prior to the formation of the contract?
Thornton v Shoe Lane Parking [1971] 2 QB 163.
1. The more onerous the term, the more notice needs to be given.
2. Need for incorporation prior to formation.
What is the third test for incorporation?
Test three - has sufficient notice been given?
Lord Denning’s test in Thornton v Shoe Lane Parking.
- For very onerous terms:
- “In order to give sufficient notice, it would need to be printed in RED INK with a RED HAND pointing to it - or something equally startling.”
See also: J Spurling v Bradshaw [1956] EWCA 3.
What is incorporation by prior practice?
Parties proceeded on the basis of a contract term?
- McCutcheon v MacBrayne [1964] 1 WLR 125.
Relationship?
- British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1973] EWCA Civ 6.
Course of conduct?
- Hollier v Rambler Motors (AMC) Ltd [1971] EWCA Civ 12.
What is a “boilerplate” clause?
The clauses, common to nearly all commercial contract, which deal with the way in which the contract itself operates, as opposed to the rights of the parties under the particular transaction.
What is an interpretation clause?
“Every provision set out in a separate paragraph will be construed as a separate and independent provision severable from all or any of the other provisions.”
What is an indemnity clause?
“During the continuance of the hire period, the Hirer shall fully and completely indemnify the Owner in respect of all claims by any person whatsoever for injury to person or property caused by or arising out of the use of the plant…”
What is an assignation clause?
“The Contractor shall not assign the contract or any part thereof or any benefit or interest therein or thereunder without the consent of the Employer.”
What is a jurisdiction clause?
“This contract shall be governed and construed in accordance with the Laws of Scotland”.
