Terms

Question 1

What factors do you look at to decide if something is a term or a representation?

Answer 1

1. Timing of the statement
2. Statement maker’s knowledge
3. Importance of the statement

Question 2

What is the difference between a term and a representation?

Answer 2

Breach of a term (depending on what type of term it is), may allow for the contract to be terminated.

Breach of a representation may only allow for damages under misrepresentation (and potentially the right to rescind but this is subject to bars on rescission).

Question 3

What are the different types of terms?

Answer 3

1. Conditions (fundamental and the contract will not work without it) - can lead to repudiation and damages
2. Warranties (not as important as a condition) - can lead to damages only
3. Innominate Terms - if the effect of breach will deprive the innocent party of substantially the whole contract, then it will be treated as a condition. If not, then it will be treated as a warranty.

Question 4

If ‘time is of the essence’ is stipulated in a contract with respect to an obligation, is this a term, warranty or innominate term?

Answer 4

A term.

Question 5

Are entire agreement clauses always valid?

Answer 5

Generally yes, except where it is used to exempt liability for misrepresentation.

Question 6

What is the parole evidence rule?

Answer 6

That everything within the written contract, is the contract between the parties (oral negotiations do not count).

Question 7

When can additional materials be considered as part of the written contract?

Answer 7

1. Collateral Contracts
2. Implied Terms
3. Where there has been a consistent practice of having a partly written and partly oral contract