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
