SQE2 Contract: Has a Term Been Breached

Question 1

How can terms be included in a contract?

Answer 1

1. Express Terms
   - part of written contract
   - incorporated orally before formation (subject to presumption)
2. Implied
   - Sale Of Goods Act 1979
   - Supply of Goods Act 1982 (B2B)
   - Consumer Rights Act 2015 (B2C)
   - Through industry custom
   - Through past dealing

Question 2

How to decide if term or representation?

Answer 2

Courts use objective (reasonable person test)

1. Form
   - presumption that if not part of written agreement then not term
   - Rebuttable
2. Importance
   - Would they have entered contract without it
3. Stage of Negotiation
   - closer to time of formation of contract more likely a term
4. Specialist Knowledge
   - if factual statement that should be in sellers knowledge; or
   - statement of belief with no direct knowledge

Question 3

What are the types of Terms and effect of breach

Answer 3

Condition
- Term so fundamental that it is goes to the root of the contract
- If breached contract does not work

Warranty
- Term that is incidental or collateral to main terms of contract

Innominate
- Term where it is unclear at the outset whether it is a condition or warranty
- If after breach innocent party loses substantially the whole of the benefit of the contract then treated as condition

Question 4

Effect of later performance

Answer 4

1. Is time of the essence
   - presumed for commercial delivery of goods with agreed time
   - is it expressly included
2. If time is of essence
   - breach = condition
3. Time not of the essence
   - breach = warranty

Question 5

Implied terms for any sale of goods (include name)

Answer 5

Sale of Goods Act 1979

1. Seller has title to goods in question

2.Goods match any description applied to them by the seller

3. Goods be of satisfactory quality
4. Goods be fit for any particular purpose made known to the seller by the buyer

Question 6

Implied terms in B2B contracts

Answer 6

Supply of Goods and Services Act 1982

1. Supplier will carry out the service within
   - reasonable time (if no time is agreed) and
   - with reasonable care and skill (innominate)
2. Goods same as SGA

Question 7

Implied terms in consumer contracts

Answer 7

Consumer Rights Act 2015?

1. Goods should match their description and be of satisfactory quality and fit for purpose
2. Services should be carries out with reasonable care and skill
3. Completed in accordance with any information which the consumer relies on (eg. Price quotations)
4. Completed for a reasonable price (if not price has been agreed)
5. Competed within a reasonable time (in not timescale has been agreed)

Question 8

What is the meaning of satisfactory quality in SGA?

Answer 8

Goods must be what reasonable person would consider satisfactory taking into account:
- fit for purpose for which such goods are generally used;
- free from minor defects;
- safe and durable.

Exception
- for defects brought to buyers attention or
- (if inspected) defects which where obvious

Question 9

When might the court imply terms into contract?

Answer 9

1. If it is necessary to give business efficacy
   - so to make contract work in way parties intended (obvious by-stander test)
2. if there is the a industry standard
   - can be implied by custom and usage
   - unless excluded on contradicts express term
3. through course of dealing
   - if can show it is regular and consistent

Question 10

If agreements are incomplete or terms are vague when will the court enforce contract / NOT enforce?

Answer 10

1. contract provides mechanism for resolving uncertainty
2. contract for future performance over a period of time and leave matter to be adjusted
3. if uncertain terms can be severed

NOT Enforce
4. Cannot conclude intention of parties (ie agreements to agree)