LAW P3 CONTRACT (TERMS) Flashcards
What are the 2 things statements made during the course of negotiations can amount to?
Statements made during the course of negotiations could amount to a contractual terms or a representation.
If the statement amounts to a term of the contract which is not fulfulled, the innocent party may sue for breach of contract.
If the statement is merely a represenation which turns out to be untrue, the innocent party may bring an action for misrepresentation.
What are the 4 factors courts look at in deciding whether a statement amounts to a term or represenation?
- The parole evidence rule
- Relative expertise of the parties
- Importance of the statement
- Time
What are the 3 things contractual terms can be?
Contractual terms can either be:
- Conditions
- Warranties
- Innominate terms
Where there has been a breach of contract, it is important to determine which type of term has been breached in order to establish the remedy available.
What are conditions?
Conditions - a condition is a major term of the contract which goes to the root of the contract. If a condition is breached the innocent party is entitled to repudiate (end) the contract and claim damages.
CASE - Poussard v Spiers, Madame Poussard was in breach of condition and Spiers were entitled to end the contract.
What are Warranties?
Warranties - Warranties are minor terms of a contract which are not central to the existence of the contract. If a warranty is breached the innocent party may claim damages but cannot end the contract.
CASE - Bettini v Gye, Bettini was in breach of warranty and therefore the employer was not entitled to end the contract.
What are innominate terms?
Innominate terms - The innominate terms apporach was established in the case of Hong Kong Fir Shipping. The innominate terms approach looks to the effect of the breach and questions whether the innocent party to the breach was deprived of substantially the whole benefit of the contract.
CASE - Schuler v Wickman Tools, Despite the fact the contract had expressly stated the term was a condition, the HOL held that it was only a warranty.
What are terms implied by common law?
Terms implied at common law refers to where the courts imply terms into a contract, where the term hasn’t been expressly agreed between the parties and has not been implied by statute.
What are the situations where courts will imply a term into a contract at common law?
The courts are reluctant to imply terms into a contract. There are limited circumstances where the courts will imply a term into a contract at common law:
- Terms implied through custom (Hutton v Warren)
- Terms implied in fact (Shirlaw v Southern Foundries)
- Terms implied at law (Liverpool city council v Irwin)
What are statutory implied terms?
In contracts for the sale of goods and supply of services, certain basic provisions are implied by statute in order to provide protection to purchasers.
These protections are in the form of statutory implied terms.
This means that the CRA 215 or sales of goods act will put these terms into all contracts for the sale of goods no matter what the parties themselves have agreed in the terms and conditions of sale.
