terms

Question 1

contracts have both express and implied terms. how do express terms arise?

Answer 1

Express terms are specifically agreed upon by the parties (e.g., they are spoken or written).

Question 2

how do implied terms arise?

Answer 2

implied terms are included in the contracts either by the courts, trade customs or by statute
e.g. the parties do not expressly agree on them

Question 3

why might a court imply a term into a contract?

Answer 3

• terms may be implied to protect parties from exploitation e.g., employment contracts (these can be from statute or case law)
• terms may be implied from a particular trade or custom which defines how a business is conducted e.g., Hutton v Warren (tenant farmer)

Question 4

In the case of an innominate term, how will a court decide whether a term should be classified as a condition or a warranty?

Answer 4

If the parties would have considered the term vitally important the term will be a condition. i.e., does it go to the root of the contract

If the parties would not have considered the term to be vitally important it will only be a warranty. i.e., it does not go to the root and the contract can survive if it is breached.

The court looks at the consequences of the breach before deciding if the term should be classed as a major or minor term

Question 5

What are the remedies available for breach of the following:

1. condition
2. warranty
3. innominate term

Answer 5

CONDITION ; allows the injured party to treat the contract at an end and/or claim damages. The innocent party can keep the contract alive if they wish. They are major terms.
WARRANTY; warranty allows the injured party to claim damages but not to treat the contract at an end. They are minor terms (Bettini v Gye (1876)).
INNOMINATE; will always allow the injured party to claim damages. The injured party will be entitled to treat the contract at an end only if he was deprived of substantially the whole benefit of the contract. (Hong Kong Fir Shipping Co (1962)).

Question 6

An exclusion clause can be incorporated into a contract if both parties agree or if the party affected by the clause has reasonable notice of it.

At what point must the clause have been agreed upon or notice of it have been given?

Answer 6

Before any clause can be effective the following criteria must be satisfied:

1. the clause must be incorporated into the contract
2. it must be clear and unambiguous

Question 7

timing - Olley v Marlborough Court Hotel (1949)

Answer 7

• Must have notice either before or at the time they enter into the contract.
• case demonstrates that for a term to be included in a contract, it must be made known to all parties involved before or at the time the contract is made. Terms introduced after the formation of a contract are generally not enforceable.

Question 8

thornton v shoe lane parking 1971

Answer 8

A notice inside a car park stated that the proprietors would not be liable for injuries to customers. The same notice was also printed on the ticket dispensed from the machine at the entrance to the car park.

It was held that the clause did not form part of the contract.

The contract was made when the customer drew up to the ticket machine (this was the offer) and put his money into the machine (acceptance of that offer).

The ticket was therefore dispensed after the contract had been concluded and the clause was not seen before or at the time the contract was made.