Lecture 4 - Contractual Terms Flashcards
what are contractual terms?
obligations or binding promises exchanged in entering into the contract
representation = ?
something said which induces the formation of a contract
not a term
what is the distinction between a term and a representation?
different remedies are used when a term is broken or a representation is untrue
what are the two types of terms?
conditions and warranties
condition = ?
a vital term going to the root of the contract
breach of a condition results in…
the injured party is entitled to treat the contract as discharged
breach of a condition destroys the contract
warranty = ?
a term subsidiary to the main purpose of the contract - a minor term in the contract
breach of a warranty entitles the injured party can only claim damages
can’t repudiate the contract
what happens when when it’s not clear what the effect of breach of the terms was intended to be?
can’t be classed as a condition or warranty
classed by court as innominate
express terms = ?
terms specifically mentioned and agreed by the parties
can be done in writing, or orally
implied terms = ?
terms not expressly adopted by the parties, but is imported into the contract
often done through the court or statute
(e.g., sale of goods act 1979)
terms implied by statute?
terms may be implied by statute to form a part of a contract which hasn’t been expressly mentioned by the parties
(e.g., sale of goods act 1979, supply of goods & services act 1982 etc)
sale of goods act 1979 = ?
protects consumers who buy goods from traders
what terms are implied by the sale of goods act of 1979?
seller’s right to sell
sale by description
satisfactory quality
fit for purpose
sale by sample
section 12 SOGA 1979 - sellers right to sell = ?
implies into contracts confirming the seller has a right to sell
section 13 SOGA 1979 - sale by description = ?
goods must correspond with their description
section 14 (2) SOGA 1979 - satisfactory quality = ?
goods must be of satisfactory quality for the consumer
section 14 (3) SOGA 1979 - fitness for purpose = ?
goods must be fit to carry out the purpose for which they were designed
section 15 SOGA 1979 - sale by sample = ?
the bulk will correspond with the sample in quality
supply of goods and services act of 1982?
protects the provision of services and goods for consumers
what are the three terms implied by the supply of goods & services act of 1982?
- supplier will carry out services with reasonable care and skill
- within a reasonable time period
- entitled to a reasonable payment
when is it necessary for the court to imply a term into a contract?
when an issue arises, and parties haven’t made an express provision for a certain aspect
purpose of terms implied by the courts?
to fill omissions and give business effects to the intentions of the parties
imposed at the court’s discretion
can also be imposed to maintain a standard of behaviour
exclusion clause = ?
a clause in a contract which purports to exclude/limit liability by imposing conditions
what acts as the limitation to exclusion clauses?
the unfair contract terms act of 1977 (UCTA)
judicial controls for exclusion clauses?
- exclusion clause must be properly incorporated into a contract
- exclusion clauses are interpreted strictly
- fundamental breach
rules for incorporation of exclusion clauses?
- document containing notice of the clause must be an integral part of the contract (clear)
- explanation can’t be misleading
- term must be put forward before contract is made
- if parties have had previous dealings, then they must communicate updates to the terms
- unusual terms must be highlighted
rules for interpretation of exclusion clauses?
- courts interpret any ambiguity against the person who relies on the clause - liability can only be restricted by clear words (contra preferentum rule)
- strict interpretation - exclusion clause is only effective if it covers the exact liability which has arisen
- main purpose rule - courts will consider whether the clause defeats the main purpose of the contract
fundamental breach (judicial control for exclusion clauses) = ?
failure to fulfil the contract at all is a fundamental breach
exclusion clauses are ignored when a fundamental breach takes place
statutory control for exemption clauses = ?
the unfair contract terms act of 1977
what is the purpose of the unfair contract terms act of 1977 (UCTA)?
courts wanted to strike the balance between:
- the principle of freedom to contract
- the need to protect the public from unfair exclusion clauses
what does the UCTA 1977 not apply to?
doesn’t apply to:
- contracts relating to patents
- insurance contracts
- contracts involving land
- contracts relating to company formation/dissolution
which two techniques does the UCTA 1977 use to control exclusion clauses?
- some types of clauses are void
- some are subject to a test of reasonableness
what does the UCTA 1977 include?
- exclusion of liability for negligence
- standard term contracts and consumer contracts
- seller’s right to sell
- sale by description
- statutory test of reasonableness
exclusion of liability for negligence?
exclusion clause is void when death or personal injury results from negligence
standard term contracts and consumer contracts?
the person who deals with the consumer cannot restrict liability for his own breach
statutory test of reasonableness?
term must be reasonable and fair as perceived by the courts
