Lecture 3 - Terms and content of a Contract

Question 1

What are representations?

Answer 1

Pre-contractual statements intended to persuade someone to enter in to a contract, but not part of it. If these are untrue, the injured party has the right to cancel the contract and potentially claim damages (unless it was innocent).

Question 2

What is a term?

Answer 2

Statements incorporated in to the contract expressly or by implication. Terms are usually important parts of the contract.

Question 3

What are the three types of terms?

Answer 3

A condition - vital to the performance of the contract.
A warranty - Not fundamental to the contract, but could cause some loss. Injured party is only entitled to damages, not contract cancellation.
Innominate terms - Between a condition and a warranty, ie the court will ask whether the innocent party has been deprived of substantially what he should have received.

Question 4

How might terms be implied?

Answer 4

By statute (law)
By the court, ie the parties must have intended it.
By custom, however local or trade customs cannot override express terms of a contract.

Question 5

What is the parol evidence rule? What are exceptions to this rule?

Answer 5

Extrinsic evidence outside of a contract is not permitted to vary written terms, unless:
It is local or trade custom
The written contract was clearly not the full agreement
The written agreement doesn’t reflect the true agreement.

Question 6

What are the main features of an exclusion clause?

Answer 6

Exclusion - excluding liability for breach
Limitation - limiting liability to a specific amount
Conditions - imposing conditions before liability may be accepted.

Question 7

What makes an Exclusion Clause valid?

Answer 7

Incorporation - must be a term of the contract, known before the contract is entered into,
Clear and Unambiguous - if there is any doubt about the meaning, the court will rule against the part trying to rely on it.
Fail for misrepresentation - EC is invalid if entered through fraud or misrepresenation
Statutory Regulation - cannot exclude liability for death, and must meet ‘reasonableness test’ (eg liability for breach of contract)

Question 8

The Unfair Terms in Consumer Contracts Regulations 1999 and The Consumer Rights Act 2015

Answer 8

• Only applies to consumer contracts, and aims to control unfair terms and give consumers defined rights.
• Unfair terms do not destroy the contract, the contract itself will likely be binding, but without the clause in question. (Unfair terms could include excluding liability for death or injury, termination without reasonable notice or altering the product without reason)

Question 9

Distinguish between duress and economic duress

Answer 9

Duress refers to threats of physical violence, whereas economic duress occurs when the pressure exerted from one party to another with regards to business is too much to counter.
(In these situations, innocent party can void the contract and recover damages, but they must act reasonably promptly!)

Question 10

What are some examples of undue influence?

Answer 10

Presumed undue influence occurs in situations such as parent and child, doctor and patient, solicitor and client etc. (Not presumed for husbands or wives, but they can still have undue influence).

if there is undue influence, innocent party is able to cancel the contract and recover money or property disposed of.