Lecture 3 - Terms and Content of a Contract Flashcards
What constitutes terms of contract?
Whatever parties have agreed
‘Puffs’
Extravagant claims about product. No legal effect as no-one really believes them
Representations
Pre-contractual statements intended to induce/ persuade other party to enter contract, but not part of it.
If representation untrue…
Injured party should be able to rescind (cancel) contract and maybe claim damages unless totally innocent
Terms
Statements incorporated into contract expressly/ by implication.
If contract term broken…
Breach of contract
If something really important part of the contract..
Is a term
If one party asks other to check out particular statement for himself..
Unlikely to be term
Whether one party has special skill or knowledge
Not important factor
If statement made long before contract concluded
Evidence parties didn’t intend it to be a term
Condition
Term vital/ fundamental to performance of contract
If condition broken
Either:
- Treat contract as at an end
- Carry on with it
Either case, can also sue for damages for breach of contract
Breach of warranty
Can only claim damages, not cancel contract
Innominate terms
When impossible to say whether condition or warranty. If court thinks innocent party has been deprived substantially, treated as condition. If not, warranty
Express terms
Clear, written or oral. What parties have expressly agreed
Implied terms
Implied in contract without specifically being mentioned/ agreed by parties
Terms implied (2)
- By Statute eg Sale of Goods Act 1979
- By the court eg seems reasonable that parties intended that
Two tests for terms:
- Business efficacy - term is essential to make contract work properly
- Officious bystander - if someone suggested to parties a particular clause, they would have said it was taken as read
Customs
Local/ industry trade custom is implied in contract where necessary but has to be clear and definite.
Can local trade/ custom override express terms of contract?
No
Parol evidence rule
If all terms of contract are in writing, no evidence supporting different oral agreement is permitted to vary those terms
Exceptions of parol evidence rule (3)
- If written contract clearly not full agreement
- Local/ trade custom
- If written agreement does not reflect true terms
Exclusion clause
Term in contract whereby one party attempts to limit liability in event of breach
Main features of exclusion clause (3)
- Exclusion > excluding liability for breach of contract
- Limitation > limiting liability to specific amount
- Conditions > imposing conditions before liability is accepted
Criteria for exclusion clauses to be valid (4)
- Must be incorporated into contract
- Must be clear, unambiguous and cover exact situation
- Must not fail for misrepresentation
- Must not fall foul of statutory regulation eg death/ injury
Incorporation of ECs (3)
- EC must be term of contract
- Notice must be given before contract entered into
- Party whose terms and conditions were last in time wins battle (Battle of the Forms)
EC (and only EC) invalid if
Entered into through fraud or misrepresentation
The Unfair Contract Terms Act 1977 aimed more at
Unfair ECs
ECs for Manufacturers’ guarantees
Liability cannot be excluded in such guarantees
Unfair term =
Contrary to the requirement of good faith and causes a significant imbalance in parties’ rights and obligations
Contracts voidable (and any money/ property recovered) if consent negated by: (3)
- Physical threats (duress)
- Excessive/ improper commercial pressure/ threats
- Using influence to take unfair advantage
Presumed undue influence
Automatically presumed in certain relationships eg parent and child, therefore must prove that they didn’t use undue influence
If undue influence can be shown..
Innocent party relieved from obligations of contract, and can recover money paid/ property disposed of
