Expressed + Implied Terms Flashcards
What can be argued to e a term of a contract?
All statements made before the final agreed contract may be agreed to be terms of the contract
Why is it important to know if statement is a term of a contract or not?
If its not a term, the innocent party cannot argue a breach in contract
Therefore will have access to a full range of contractual remedies
How to the Cts determine if a statement is a term of a contract?
Will look at the parties intention - did they intend the statement to be a contractually binding?
Detached objectivity
What would a reasonable 3rd party have taken the parties to have intended
What test is applied to determine if the parties intended to be bound by a statement?
Objective test
Specifically, detached objectivity
- what would a reasonable 3rd party have taken the parties to have intended?
What are the factors that the Cts consider when deciding the intention of the parties regarding a statement?
- Knowledge of the parties
- Reliance/ importance at the time
- Writing/ parole evidence rule
How can the knowledge of parties determine if a statement is a term?
Cases?
Where 1 party relies on a statement made with specialist knowledge or skill of the other party in deciding whether or not the enter into a contract, then the statement may be considered to be a term of the contract
Bentley (Dick) Prod. v Smith (Harold) Motors Ltd (1965)
Oscar Chess Ltd v Williams (1957)
Bentley (Dick) Prod. v Smith (Harold) Motors Ltd (1965)
Claimant asked the D to source a ‘well vetted’ Bentley
D claimed that a particular car had 20,000 miles since being fitted with a new engine + gearbox
In fact, it had done 100,000 miles
Claimant discovered this after purchasing the car
Held: statement regarding the milage was a term of the contract
Claimant had relied on the specialist knowledge of the dealer in making the statement which = major factor in his decision to enter into the contract
Oscar Chess Ltd v Williams (1957)
D sold a Morris car to the claimants (motor traders) for £290
Ds provided copy of the vehicles 1st registration
Indicating car = 1st registered in 1948
8 months later, claimants became aware that the car had actually been registered in 1939
Therefore only worth £175
D honestly believed that the car = 1948 model
Claimant claimed for breach of contract
Held:
Statement relating to age of the car = representation
Not a term
Representee, had the greater knowledge + would be in a better position to know the age of the manufacture than the D
How may the timing of the statement determine if it is a term of the contract?
Cases?
Statements made by A to B during the course of negotiations will not become a term unless B reasonably relies on A’s statement + A knows, or ought to know, that B may be relying on the statement
The longer the lapse of time between the statement + the formation of the contract, the more likely the Cts will consider the statement to be a representation rather than a term
Schawel v Reade (1913)
Bannerman v White (1861)
Schawel v Reade (1913)
Claimant purchased a horse from D
Told D he wished to use the horse as a stud
Whilst he was examining the horse, D told him that the horse was sound
Stated that if there = anything wrong with the horse he would tell him - = no need to get a vet to check him out
Reliance of these statements, claimant purchased the horse
Horse had hereditary eye disease - not able to be used as a stud
Held: statement = contractual term
D had assured him he could rely on his word
Claimant had communicated the purpose for which the horse was to be used
D = thus in breach of contract
Bannerman v White (1861)
Claimant agreed to purchase some hops - to make beer
He asked seller if the hops had been treated with sulphur - wouldn’t buy them if they had
Seller assured him that the hops hadn’t been treated with sulphur
In fact they had been
Held: Statement that the hops hadn’t been treated = term of the contract, not a representation
Claimant had communicated the importance of the term + relied on the statement
Claimants action fro breach of contract = successful
What is the parole evidence rule?
States that where a contract has been reduced to writing, extrinsic evidence = inadmissible to add to, vary or contradict the terms
At CL a written contract = presumed to contain everything upon which the parties agreed
Only these terms are the ones that the parties will to be bound by
Shogun Finance Ltd v Hudson (2003)
Car dealer sold a car to a fraudster, who produced a stolen license as his own
Dealer wrote out the hire-purchase contract in the name written on the license
Fraudster took physical possession of the car
D purchased the car from the fraudster in good faith
Upon discovery of the dishonoured payment by the fraudster + failure to make payments under the hire purchase agreement, SF brought action against D for conversion
D counter claimed, claiming to have obtained the right title of the vehicle
Ct: dismissed Ds appeal
s21(1) of the Sale of Goods Act 1979
Title of the vehicle = S’s - had been no consideration on S’s part for the vehicle, as the vehicle was subject to the terms of the hire purchase agreement
D couldn’t have acquired title from fraudster - he never owned vehicle
Hire purchase agreement = not between the fraudster + S, as the name on the agreement = stolen license = fraudulent ID
= no agreement/ hire purchase between S + the fraudster
Fraudster couldn’t have passed a possessive title to D, as he never had one
D = required to return the car to S
What are collateral contracts?
Case?
A promise that is contractually binding but not in the main contract
They have implications to the main contract
De Lassalle v Guildford (1901)
De Lassalle v Guildford (1901)
Potential tenant of a house said that he would only sign the lease if the landlord gave him assurance that the drains = in good order
LR gave him his assurance (oral agreement)
The lease = signed, but it said nothing about the quality of the drains
Tenant tried to argue that the oral agreement should be part of the main contract
Held: the LR had contracted that the drains were in good order
In additional to the contract contained the lease
= also ‘collateral contract’ between the parties
In consideration of the tenant signing the lease, the LR promised that the drain = good
(unilateral collateral contract - Tenant = no obliged to sign, but once signed, binds the LR)
Tenant = entitled to damages for the collateral contract
City and Westminster Properties v Mudd (1959)
Main contract = lease
Contained a covenant not to use the premises fro any purposes other than trade purposes
Earlier lease, D had been in the habit of sleeping on the premises (even though = contrary to lease)
D declined to sign the new lease unless claimant agreed to him sleeping there
Claimant = unwilling to include a clause BUT orally assured the D he could sleep there
Claimant brought action - forfeiture of the lease
Action failed - assurance = collateral contract
Ds consideration = signing the lease
Hugely undermines parole evidence rule!!
Why is the signature of a contract so significant?
Case?
Where a written agreement is signed, the parties t it are considered to be in agreement with everything it contains even if they have not read it
(in absence of fraud, misrepresentation…)
L’Estrange v Graucob (1934)
L’Estrange v Graucob (1934)
Claimant signed a document to purchase a machine from the manufactures
The claimant had signed a contract without reading it
Ds knew that the claimant had not read the agreement
Held: Ds were still entitled to enforce the agreement
What was held in the case of L’Estrange v Graucob (1934)?
The party who signs the document expresses his assent to the terms in it, whatever they may be and regardless of whether those terms have been read + understood
Do you have to be given reasonable notice to be bound by a term?
Case?
Yes - the other party has to have given you reasonable notice for you to be bound by a term
Parker v South Eastern Railway (1877)
Parker v South Eastern Railway (1877)
Claimant left a bag in the cloakroom at the Ds railway station
Then received a ticket with a number, date + words ‘see back’ on it
The back had exclusion for liability clauses
Claimant didn’t read the ticket
Claimants bag got lost
Held: reasonable notice had been give
Claimant had bee clearly signposted to the exclusion clause
When giving notice of a term, what are you allowed to presume?
Case?
Allowed to presume that the person you are giving noticed to can read + understand English
Thompson v London, Midland and Scottish Railway (1930)
Thompson v London, Midland and Scottish Railway (1930)
Claimant = illiterate
Purchased a ticket
On the front on the ticket: ‘see back for conditions’
= no indication that the claimant = illiterate
CA: reasonable notice had been given
How much notice needs to be given for onerous terms?
Case?
No exact time frame
The Harsher the term, the more notice that as to be given
Thornton v Shoe Lane Parking (1971)