terms

Question 1

what is the difference between terms and representations

Answer 1

• Terms → Agreed points in a contract. Breach = breach of contract claim.
• Representations → Statements made during negotiations. Breach = misrepresentation claim.

Question 2

what factors do courts consider to decide if a statement is a term

Answer 2

importance to statement
special knowledge
time
written contract

Question 3

importance to statement

Answer 3

1. If crucial to C, likely a term.
   
   • Couchman v Hill: Statement was key to purchase, so it was a term.

Question 4

special knowledge

Answer 4

2. More knowledge = more likely a term.
   
   • Dick Bentley v Harold Smith: Misleading mileage was a term.
   • Oscar Chess v Williams: Seller lacked expertise, so it was a representation.

Question 5

time lag

Answer 5

3. Longer gap = more likely a representation.
   
   • Routledge v Mackay: Statement was a representation.

Question 6

written contract

Answer 6

If a contract is written, any extra statements are likely representations.

Question 7

what is an express term

Answer 7

Clearly agreed by both parties.

Question 8

what are types of express terms

Answer 8

conditions
warranties
innominate terms

Question 9

conditions

Answer 9

• Important terms. Breach = contract can be ended.
  
  • Poussard v Spiers & Pond: Lead actress was central, so breach allowed termination.
  • Arcos v Ronaasen: D could repudiate the contract.

Question 10

warranties

Answer 10

• Less important terms. Breach = damages only.
  
  • Bettini v Gye: Breach of warranty, so contract couldn’t be ended.

Question 11

innominate terms

Answer 11

• Court decides if breach is serious enough to repudiate.
  
  • Hong Kong Fir: Treated as a warranty.
  • Schuler v Wickman: Court ignored label and treated as innominate.

Question 12

what is an implied term

Answer 12

Terms automatically included even if not mentioned.

Question 13

how are terms implied by common law established

Answer 13

business efficacy test
officious bystander test
clarification

Question 14

business efficacy test

Answer 14

1. Does it make the contract workable?
   
   • The Moorcock: Implied term that ship wouldn’t be damaged.

Question 15

officious bystander test

Answer 15

2. Would a reasonable person assume the term was agreed?
   
   • Shirlaw v Southern Foundries: If obvious, it’s implied.
   • Shell v Lostock Garage: No implied term as Shell wouldn’t have agreed.

Question 16

clarification

Answer 16

• M&S v BNP Paribas: Term must be necessary for the contract to make sense.

Question 17

how are terms implied by custom established

Answer 17

• Industry norms can be implied.
  
  • Hutton v Warren: Lease terms interpreted in light of custom.

Question 18

how are terms implied by previous dealings established

Answer 18

• If parties have consistently agreed to something before, it’s implied.
  
  • Hillas v Arcos: Implied the same as the 1930 contract.

Question 19

how are terms implied by statute implied

Answer 19

• Consumer Rights Act 2015 → Applies to contracts between traders and consumers.
  
  • s9: Goods must be satisfactory quality (Re: Moore).
  • s10: Goods must be fit for purpose (Baldry v Marshall).
  • s11: Goods must match description (Beale v Taylor).
  • s49: Services must be done with reasonable care (Wilson v Best Travel).
  • s52: Service must be within a reasonable time.

Question 20

what is the difference between exclusion and limitation terms

Answer 20

• Exclusion clause → Prevents liability for breach.
• Limitation clause → Sets a cap on liability.

Question 21

what are common law controls

Answer 21

incorporation by signature
incorporation by notice
incorporation by previous dealings

Question 22

incorporation by signature

Answer 22

1. Signing = bound by contract.
   
   • L’Estrange v Graucob: Bound even without reading it.
   • Exceptions:
     
     • Misrepresentation → Curtis v Chemical Cleaning (misleading info).
     • Harsh terms → Red Hand Rule (extra notice needed).

Question 23

incorporation by notice

Answer 23

2. Term must be introduced before acceptance.
   
   • Olley v Marlborough Court: Clause invalid as seen after acceptance.
   • Chapelton v Barry: Ticket was just a receipt, not a contract.
   • Thornton v Shoe Lane Parking: Clause seen after acceptance = invalid.

Question 24

incorporation by previous dealings

Answer 24

3. Must be consistent in past contracts.
   
   • McCutcheon v MacBrayne: No consistent course = no exclusion clause.

Question 25

what is the contra proferentum rule

Answer 25

• If ambiguous, courts interpret it against the party who wrote it.
  
  • Houghton v Trafalgar Insurance: ‘Load’ was unclear, so interpreted in C’s favor.
  • Transocean Drilling: Only applies if clause is one-sided & unclear.

Question 26

what is the reasonableness test

Answer 26

• Burden is on the party relying on the clause. (Warren v Tuleprint).
• Knowledge test: Was the term fair based on what was known at the time?
• s11(2) Factors:
  
  1. Special order goods?
  2. Likelihood of compliance?
  3. Bargaining strength?
  4. Knowledge?
  5. Inducements?

Question 27

what case reflects the reasonableness test

Answer 27

Watford Electronics v Sanderson → Term was reasonable because both parties had equal power and negotiated it.
* s11(4) Limitation Clauses → Must be reasonable based on:
1. D’s ability to cover full liability.
2. If insurance was possible.
* George Mitchell: Clause wasn’t reasonable because the breach was due to negligence.

Question 28

what are unfair terms according to the grey list

Answer 28

• Excluding liability for poor service.
• Excluding liability for faulty goods.

Question 29

what is the fairness test

Answer 29

• Key terms (price & subject) must be:
  
  1. Transparent
  2. Prominent (average consumer would notice it).