Implied Terms Flashcards
What are implied terms?
They form part of the contract because court or statute has read them into it by:
- Statute
- Court
- Custom
The main reason is to help protect the consumer and prevent them from being taken advantage of.
What is the main statute since 1 October 2015?
Consumer Rights Act 2015
This replaced earlier acts:
1. Sale of Goods Act 1979
2. Supply of Goods and Services Act 1982
How does the CRA 2015 affect business-to-consumer contracts?
It applies to all contracts made on or after 1 October 2015 between a trader and consumer.
Trader = a person acting for purposes relating to that persons trade, whether acting personally or on trader’s behalf (s2(2))
Consumer = a individual acting for purposes that are outside their trade (s2(3))
CRA governs business to consumer contracts.
Contracts between business & business or consumer & consumer remain subject to previous laws.
How are “Goods Contracts” referred to in CRA 2015?
Container in Chapter 2, ss 9-11.
Goods = any tangible, moveable item (s2(8))
Goods contracts include:
1. Sales contracts (goods exchanged for money)
2. Transfer of goods contracts (goods exchanged for consideration other than payment)
3. Hire and hire-purchase agreements
Implied terms in business-to-consumer goods contracts by CRA 2015, include that good will be:
1. Of satisfactory quality
2. Fit for their particular purpose
3. As described
What does “satisfactory quality” mean as an implied term in business-to-consumer goods contracts?
s9
S9(2) - Goods must “meet the standard that a reasonable person would regard as satisfactory, taking into account any description of goods, the price or any of consideration and all other relevant circumstances”
CASE: Bramhill v Edwards
S9(3) - “quality of goods include their state and condition; and the following aspect are in appropriate case aspects of the quality of goods:
a) fitness for all purposes for which goods of that kind are commonly supplied
b) appearance and finish
c) freedom from minor defects
d) safety
e) durability
S9(4) - if defects brought to buyer’s attention before the goods were brought or examined them before buying - promise as to satisfactory quality does not apply.
CASE: Datmare SpA v Union Martime Ltd
CASE: Bramhill v Edwards
(Satisfactory quality in terms of goods contracts)
Held no breach of satisfactory quality when a buyer brought a motor home from US which was 2inches wider than UK legal limits.
CASE: Datmare SpA v Union Martime Ltd
(Satisfactory quality in terms of goods contracts)
The tanker was sold in a condition “as she as at the time of inspection”
The engine then failed.
Held requirement had not been excluded by this phase and ship fell within description of goods - therefore, applied.
What does “fitness for purpose” mean as an implied term in business-to-consumer goods contracts?
S10 of CRA 2015
If the consumer makes known to the trader any particular purpose for which the goods we needed - the goods will need to be fit for purpose.
However, if consumer makes own decision, against the advise of the trader - they will not have a case.
Consumers intended purpose can be made known to trader expressly or by implication.
CASE: Priest v Last
Seller of hot water bottle was liable when it burst.
Held that the buyer did not need to explain the purpose as obvious.
CASE: Griffiths v Peter Conway
Seller of tweed coat not liable when it caused skin irritation because the buyer had not mentioned sensitive skin.
CASE: Lowe v W Machell
Besboke wooden staircase did not meet building regulations.
Defendants liable as not fit for purpose
What does “description” mean as an implied term in business-to-consumer goods contracts?
S11 of CRA 2015
S11(1) - when goods are sold by description - goods must match description
S11(2) - where goods are supplied by sample as well as by description - goods must match both
S11(3) - where goods can be physically examined by the buyer - the buyer can still rely on description.
Seller will be in breach of s11 - even if consumer not ‘harmed’ by misdescription.
But, for s11 to apply, consumer must of relied on traders description - if consumer had knowledge that description was inaccurate - there will be no breach.
How are “Service Contracts” referred to in CRA 2015?
ss49 - 52 CRA 2015
S48 - implied terms into contract for a trader to supply service to consumer (covers repairs, building, dry cleaners)
Key terms implied in services contracts:
1. S49 - that the trader will perform services with reasonable care and skill
CASE: Davey v Cosmos Ai Holiday
Travel agent liable as they didn’t check cleanliness of holiday and family got sick
CASE: Wong Mee Wan v Kwan Kin Travel
Tour operator liable for not using reasonable care and skill and person drowned.
- S50 - anything said or written to consumer, by or on behalf of, about trader or service, will be implied term
If information was taken into account when deciding whether to enter contract. - S51 - consumer must pay a reasonable price for service and no more.
Reasonable price is a question of fact. - S52 - trader must perform the service within a reasonable time.
Only applied where time for performance not expressly fixed in contract and it is a question of fact.
How are “Digital Content” referred to in CRA 2015?
ss34 - 36
S2(9) - digital content is data which are produced and supplied in digital form (e.g apps, music and books downloaded)
The legislation covers contracts under which a trader supplier digital content to a consumer:
1. For a price (s33(1))
2. Free with goods, services or other digital content which has been paid for and which would not otherwise be generally available to consumers (s33(2))
The implied terms are:
1. Satisfactory quality (s34)
2. Fitness for purpose (s35)
3. Description (trail version replacing word sample) (s36)
What are the type legislations for business-to-business contracts?
Sale of Goods Act 1979
covers contracts for the sale of goods
Supply of Goods and Services Act 1982
covers contracts for the transfer of property in goods (no money exchanged) or services contracts.
What is Sale of Goods Act 1979?
Applies to a contract for the sale of goods.
S2(1) - a contract by which the seller transfer or agrees to transfer property in goods to the buyer for a money consideration called the price.
Terms are defined as conditions (unlike the CRA 2015)
What is the Supply of Goods and Services Act 1982?
Applies to contract for the transfer of property in goods and services contracts.
S1 - a contract under which one person transfers or agrees to transfer to another property in goods, other than an expected contract (can’t be for money)
Part 1 - applies to goods transferred under a contract for work and materials (goods and services supplied together)
Implied terms:
1. Reasonable care and skill - s13
2. Reasonable charge - s15
3. Reasonable time - s14
How are implied terms included in contracts by “custom”?
Terms can be implied into a contract as a result of local or trade usuals - “custom”.
It is unusual.
The criteria:
1. Whether term has been in use for sufficient length of time
2. Whether it is reasonable to imply term
3. Whether the term is inconsistent with express term
4. Whether that such term is used in practise
5. Whether that implication of such a term is acceptable to the court
CASE: Hutton v Warren
Farmer able to prove that it was local custom to payment of crops when lease ended even though there was no provision in the lease.
