Incorporation Of Terms

Question 1

What are the two broad ways to classify contract terms R5P1

Answer 1

Express terms are those agreed by the parties and implied terms which are put there by either by common law or statute.

Question 2

Examples of express terms R5P1

Answer 2

They may be in a notice, for example on a wall in a shop or a piece of paper given to a customer.
They may be in a document that was signed or acknowledged by ticking a box on a computer screen.
They may be on a ticket, this is a bit like a notice but there are special rules for tickets.
They may be an oral statement made by one party when entering the contract.

Question 3

What is the basic rule of incorporation of terms R5P1

Answer 3

A term must be available before acceptance.
This was shown in the case Thornton V Shoe Lane Parking - a notice inside a car park didn’t incorporate terms into the contract. The contract was made when the customer took a ticket from a machine and the barrier went up allowing them into the car park, all terms had to be available at that point.

Question 4

How do you incorporate harsh or unusual terms into a contract R5P1

Answer 4

Harsh or unusual terms must be prominent.
This was shown in the case Interfoto V Stilletto - a term giving a large penalty for late return of pictures was hidden in the terms of the contract. The court said it wasn’t fair to enforce it as it wasn’t made clear enough.

Question 5

Example of a case that follows Thornton R5P1

Answer 5

Olley V Marlborough Court (1949) - The claimant booked into a hotel. The contract was made at the reception desk where there was no mention of an exclusion clause. In the hotel room on the back of the door it sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. The claimant had her fur coat stolen.
Held: the notice was ineffective. The contract had already been made by the time the claimant had seen the notice. It did not therefore form part of the contract.

Question 6

Chapelton V Barry (1940) R5P1 (Read this throughly as when copied didn’t quite get it)

Answer 6

The claimant hired a deck chair from Barry for the use of the beach. There was a notice on the beach next to the deck chairs stating that the deck chairs could be hired at 2d for three hours and also respectfully requested the public to obtain tickets issued by the chair attendants. The claimant obtained a ticket and put it in his pocket without reading it. In fact there was an exclusion clause written on the printed on the ticket excluding the council’s liability for personal injury in using the deck chair. The fabric of the deck chair split away from the frame. He bought an action against the council and they sought to rely on the exclusion clause contained in the ticket. The exclusion clause was not incorporated into the contract. A reasonable person would regard the ticket as nothing more than a receipt and would not expect it to contain contractual terms. Furthermore, the wording of the notice suggested that a person could obtain the deck chair and get a ticket later. The notice constituted an offer and the collecting of the chair would amount to acceptance. It would not be open to the council to introduce new terms after the contract had been formed.

Question 7

Incorporation by signed documents R5P1

Answer 7

Filler

Question 8

L’Estrange V Graucob (1934) R5P1

Answer 8

A signature suggests you have read a document and are agreeing to it. If you sign without reading first then too bad, the terms are part of the contract.

Question 9

What if you sign something which isn’t a contractual document R5P1

Answer 9

It won’t incorporate things on the document as terms. In the case Robin V Grogan Meredith it was held that signing a time sheet didn’t incorporate terms into the contract as it was just an evidential document to show what hours had been worked, a bit like a shop receipt.

Question 10

Incorporation by ticket R5P1

Answer 10

Tickets don’t follow the rule in Thornton V Shoe Lane parking, we know a train ticket has terms on the back so it incorporates terms even though you can’t see it until after acceptance. This was shown in the case Parker V SE Railway.

Question 11

What happens if the customer is illiterate R5P1

Answer 11

In Thompson V LMS Railway the customer was illiterate so unable to read the terms on the back of the train ticket. The court held that the train company had done everything it reasonably could, so the terms were still part of the contract.

Question 12

Do oral statements made before entering a contract incorporate terms R5P1

Answer 12

An oral statement made before entering a contract may incorporate terms. This depends on three factors, each of which must be weighed up.
01) How important was the statement?
02) How much knowledge did each side have?
03) How much time lapsed between the statement and the contract being made.
You don’t need a case for each of these rules just Oscar Chess V Williams about how much knowledge did each side have.

Question 13

Oscar Chess V Williams R5P1

Answer 13

Mrs Williams purchased a second hand Morris car on the basis that it was a 1948 model. The registration document stated it was first registered in 1948. The following year her son used the car as a trade in for a brand new Hillman Minx which he was purchasing from Oscar Chess. The son stated the car was a 1948 model and on that basis the Oscar Chess offered £290 off the purchase price of the Hillman. Without this discount Williams would not have been able to go through with the purchase. 8 months later Oscar Chess ltd found out that the car was in fact a 1939 model and worth much less than thought. They brought an action for breach of contract arguing that the date of the vehicle was a fundamental term of the contract thus giving grounds to repudiate the contract and claim damages.
Held: The statement relating to the age of the car was not a term but a representation. The representee, Oscar Chess ltd as a car dealer, had the greater knowledge and would be in a better position to know the age of the manufacture than the defendant.

Question 14

What are implied terms and examples R5P2

Answer 14

Implied terms are put there by either common law or statute. Examples of this:
In limited circumstances the courts can add a term to the contract.
Sometimes a term will be added because of previous course of dealings of the parties.
The Consumer Rights Act adds terms into consumer contracts to make them fairer.
The Consumer Protection from Unfair Trading Regulations makes traders liable for misleading claims. Not really incorporation of contract terms but consumer protection so useful to look at with the Consumer Rights Act.

Question 15

What are the terms implied by the courts R5P2

Answer 15

Business efficacy and officious bystander.

Question 16

Business efficacy R5P2

Answer 16

Business efficacy - the courts imply a term to make sense of the contract.
The Moorcock - in a contract to unload a ship in a harbour, the courts implied a term that there would be enough water there. When the tide went down and the boat hit rocks on the sea bed, the owner of the harbour was in breach of contract even though the depth of water had never been discussed.

Question 17

Officious bystander R5P2

Answer 17

Officious bystander - the court will ask whether, if an officious bystander (nosy person) were to ask whether a term should have been in the contract, the parties would have said ‘yes of course.’
Spring V National Stevedores and Dockers Society - one of the parties had never heard of the term so they wouldn’t have replied ‘yes of course’.
It just means that a term will be included in the contract is both parties would have expected it to be there, but had forgotten to actually say it.

Question 18

Incorporation of terms through course of dealings R5P2

Answer 18

In Kendal V William Lillico - A pheasant breeder ordered several sacks of pheasant food every month from a supplier. Each time they placed the order on the phone and signed a delivery note when it came. (So the delivery note came after acceptance and wouldn’t normally incorporate terms). There was an exclusion clause on the delivery note, if the food was defective and caused loss (eg if pheasants died) the supplier would not be responsible. One lot of the food was defective and the breeder sued, the supplier claimed the exclusion clause was a term of the contract.
Held: both parties were aware of the terms of the contract, they were always signed in the delivery note and so they had become a term of the contract through course of dealings.
This is less likely to be used if one party is a consumer.

Question 19

Consumer course of dealings example R5P2

Answer 19

If someone is a regular customer they should know the usual terms. BUT she is also a consumer and the courts don’t like to include terms by course of dealings in a consumer contract.

Question 20

Why does the Consumer Rights Act 2015 imply terms into all consumer contracts R5P2

Answer 20

The CRA implies terms into all consumer contracts to make sure that consumers are not treated unfairly by companies.
This is justified because companies have all the power, they have the advantage of company lawyers who advise them on what to put in their contracts. There is also an imbalance of power if there is a dispute, consumers would find it difficult to argue their case against a company if there were no clear terms implied in the contract to help them.

Question 21

What different parts of the CRA 2015 says R5P2

Answer 21

Filler

Question 22

S.9 R5P2

Answer 22

Goods should be of satisfactory quality.
Goods and packaging should meet the standard that a reasonable consumer would find satisfactory, bearing in mind the price and the description.
It will not cover defects that have been drawn to the buyer’s attention, or if the buyer has made an inspection that should have uncovered the defects.

Question 23

S.10 R5P2

Answer 23

Goods should be fit for their purpose.
In a consumer sale, goods should be fit for any purpose expressly or impliedly made known;
Except where the buyer does not rely or it’s not reasonable for him to rely, on the skill or judgement of the seller.

Question 24

S.11 R5P2

Answer 24

The goods should correspond to a description of them.

This applies to private as well as business sales.

Question 25

S.19 W5P2

Answer 25

The short term right to reject is the buyer now has a short term right to reject the goods. Specifically, if the goods do not conform to the contract (the buyer has to prove this). The buyer may reject goods within the first 30 days unless subsection 4 applies, this involves perishable goods, where the time limit is shorter. S.19(6) If the trader is in breach that is (right to supply) requires to be treated as included in the contract, the consumer has the right to reject.

Question 26

S.22 R5P2

Answer 26

The short term right to reject end (S.22) - A consumer who has the short-term right to reject losses it if the time limit for exercising passes it, unless the trader and the consumer agree that it may be exercised later. This time is 30 days beginning with the day it was delivered for example. Unless it’s reasonable to expect the good to perish after a shorter period.

Question 27

S.20 R5P2

Answer 27

What right the consumer has to refund (S.20) – You have a right to a return or refund if something you buy is faulty or unfit for purpose. 20(7)(a) – Trader has a duty to give a consumer a refund, subject to subsection 18. 20(18) which highlight where there is no entitlement.

Question 28

What does the Consumer Protection from Unfair Trading Regulations 2008 do R5P2

Answer 28

Unfair commercial practice, misleading action and misleading omission.

Question 29

What is unfair commercial practice R5P2

Answer 29

Unfair commercial practices are prohibited. The wording is deliberately wide to catch any unfair practices that may be developed in the future.
A practice is unfair if:
It fails to meet the standard of ‘professional diligence’ (the standard of skill and care that would reasonably be expected of a trader in its field of activity) and it materially impairs an average consumer’s ability to make an informed decision, causing him to make a decision he would not have otherwise have made.

Question 30

Misleading action R5P2

Answer 30

A misleading action contains false info or in some way deceives (or is likely to deceive) the average customer. An example would be providing misleading information about the origin of a product, or false info about the trader himself (eg qualifications or awards).

Question 31

Misleading omission R5P2

Answer 31

Misleading omissions are when a trader hides material information, provides it in an unclear or ambiguous way, or fails to make it clear he has a commercial intent. This is defined as information the average consumer needs to make an informed decision.