Lecture 4 - Contractual Terms

Question 1

what are contractual terms?

Answer 1

obligations or binding promises exchanged in entering into the contract

Question 2

representation = ?

Answer 2

something said which induces the formation of a contract

not a term

Question 3

what is the distinction between a term and a representation?

Answer 3

different remedies are used when a term is broken or a representation is untrue

Question 4

what are the two types of terms?

Answer 4

conditions and warranties

Question 5

condition = ?

Answer 5

a vital term going to the root of the contract

Question 6

breach of a condition results in…

Answer 6

the injured party is entitled to treat the contract as discharged

breach of a condition destroys the contract

Question 7

warranty = ?

Answer 7

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

Question 8

what happens when when it’s not clear what the effect of breach of the terms was intended to be?

Answer 8

can’t be classed as a condition or warranty

classed by court as innominate

Question 9

express terms = ?

Answer 9

terms specifically mentioned and agreed by the parties

can be done in writing, or orally

Question 10

implied terms = ?

Answer 10

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)

Question 11

terms implied by statute?

Answer 11

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)

Question 12

sale of goods act 1979 = ?

Answer 12

protects consumers who buy goods from traders

Question 13

what terms are implied by the sale of goods act of 1979?

Answer 13

seller’s right to sell
sale by description
satisfactory quality
fit for purpose
sale by sample

Question 14

section 12 SOGA 1979 - sellers right to sell = ?

Answer 14

implies into contracts confirming the seller has a right to sell

Question 15

section 13 SOGA 1979 - sale by description = ?

Answer 15

goods must correspond with their description

Question 16

section 14 (2) SOGA 1979 - satisfactory quality = ?

Answer 16

goods must be of satisfactory quality for the consumer

Question 17

section 14 (3) SOGA 1979 - fitness for purpose = ?

Answer 17

goods must be fit to carry out the purpose for which they were designed

Question 18

section 15 SOGA 1979 - sale by sample = ?

Answer 18

the bulk will correspond with the sample in quality

Question 19

supply of goods and services act of 1982?

Answer 19

protects the provision of services and goods for consumers

Question 20

what are the three terms implied by the supply of goods & services act of 1982?

Answer 20

• supplier will carry out services with reasonable care and skill
• within a reasonable time period
• entitled to a reasonable payment

Question 21

when is it necessary for the court to imply a term into a contract?

Answer 21

when an issue arises, and parties haven’t made an express provision for a certain aspect

Question 22

purpose of terms implied by the courts?

Answer 22

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

Question 23

exclusion clause = ?

Answer 23

a clause in a contract which purports to exclude/limit liability by imposing conditions

Question 24

what acts as the limitation to exclusion clauses?

Answer 24

the unfair contract terms act of 1977 (UCTA)

Question 25

judicial controls for exclusion clauses?

Answer 25

• exclusion clause must be properly incorporated into a contract
• exclusion clauses are interpreted strictly
• fundamental breach

Question 26

rules for incorporation of exclusion clauses?

Answer 26

• 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

Question 27

rules for interpretation of exclusion clauses?

Answer 27

• 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

Question 28

fundamental breach (judicial control for exclusion clauses) = ?

Answer 28

failure to fulfil the contract at all is a fundamental breach

exclusion clauses are ignored when a fundamental breach takes place

Question 29

statutory control for exemption clauses = ?

Answer 29

the unfair contract terms act of 1977

Question 30

what is the purpose of the unfair contract terms act of 1977 (UCTA)?

Answer 30

courts wanted to strike the balance between:
- the principle of freedom to contract
- the need to protect the public from unfair exclusion clauses

Question 31

what does the UCTA 1977 not apply to?

Answer 31

doesn’t apply to:
- contracts relating to patents
- insurance contracts
- contracts involving land
- contracts relating to company formation/dissolution

Question 32

which two techniques does the UCTA 1977 use to control exclusion clauses?

Answer 32

• some types of clauses are void
• some are subject to a test of reasonableness

Question 33

what does the UCTA 1977 include?

Answer 33

• exclusion of liability for negligence
• standard term contracts and consumer contracts
• seller’s right to sell
• sale by description
• statutory test of reasonableness

Question 34

exclusion of liability for negligence?

Answer 34

exclusion clause is void when death or personal injury results from negligence

Question 35

standard term contracts and consumer contracts?

Answer 35

the person who deals with the consumer cannot restrict liability for his own breach

Question 36

statutory test of reasonableness?

Answer 36

term must be reasonable and fair as perceived by the courts