Terms Flashcards
Term
Promise that becomes part of the contract itself.
Representation
Statement which induces a party to enter into a contract, but is not apart of the contract itself.
Liability for false term?
It is deemed a breach of contract and the injured party has a right to sue.
Express Term
Specifically mentioned and agreed to by both parties at the time the contract is made.
Implied Terms
Words or provisions that a court presumes were intended to put into the contract.
What are the main guidelines used to differentiate between a term and a representation?
- Significance of Statement
- Special Knowledge/Skill
- Timing of Statement
- Agreement in Writing
- Strength of Inducement
- Significance of Statement:
Term. If the injured party makes the other aware that if the statement had not been said, they would not have entered the contract.
Bannerman v White
- Special Knowledge/Skill:
Term. Courts deem statements made by experts pertaining to relevant subject as terms.
Dick Bentley Productions v Harold Smith
Dick Bentley Productions v Harold Smith contrasted in:
Oscar Chess v Williams
Buyer should have noticed age of car,
- Timing of Statement
The more time in between the statement being made and the contract being concluded, the less likely a court will regard it as a term.
Routledge v Mckay
Routledge v Mckay contrasted in:
Schawer v Reade
Importance and strength of statement make timing irrelevant.
- Agreement in writing
Any statement present in the written contract is a term.
- Strength of inducement
The more emphatically a statement is made, the more likely the courts will regard it as a term.
Schawer v Reade
3 Ways written terms can be incorporated into a contract:
- By signature
- By reasonable notice
- Previous course of dealings
Parol evidence rule:
If the contract is written, then the writing constitutes the complete contract. Parties cannot add to, vary or contradict the writing.
Henderson v Arthur
Exceptions to Parol evidence rule:
- Rectification
- Partially written agreements
- Implied terms.
- Operation of a contract.
- Evidence about parties.
- Proving custom
Rectification
Document fails to record oral agreement, extrinsic evidence may be used.
Partially written agreements
Where there is a written contract but both parties intended to qualify it with other oral statement, the parole evidence rule does not apply.
Couchman v Hill
Implied terms and Parol Evidence Rule:
Where a contract is the type where its terms are implied by law, then the parole evidence rule does not apply.
Operation of the contract
Parole evidence rule is displaced where extrinsic evidence is shows that the contract would not have come into effect or end, if not for a particular circumstance.
Pym v Campbell
Evidence about parties
Extrinsic evidence can be used to show in which capacities the parties were acting.
Proving custom
Extrinsic evidence can be used to clarify local trade and custom.
Smith v Wilson
Possible status of oral statements made before written contract is made:
- Contract exclusively written. Oral statements are treated as representations.
- Contract partly written and party oral.
- Two contracts. One is written and the other is based on the oral statements.
Collateral Contracts
Secondary contracts based upon oral statements.
City and Westminster Property v Mudd
Types of implied terms
- Terms implied in fact
- Terms implied in law
- Terms implied by custom
- Terms implied by trade usage
Terms implied by fact:
Terms which are not in the contract. It is assumed that both parties would have included them had they remembered at the time.
Marks and Spencer v BNP Paribas
Terms implied in law:
Terms which the law decided must be present in certain types of contract.
Liverpool City Council v Irwin
Terms implied by custom:
Implied if there is evidence suggesting that by traditional custom, the terms are present.
Smith v WIlson
Terms implied by trade usage:
Term implied where it would be part of a contract made by parties involved in trade.
Cunliffe-owen v Teather and Greenwood
Officious Bystander
Something so obvious that should a bystander raise it during negotiations, both parties would agree to inserting it.
Business efficacy
Terms must be implied in order to make the contract function.
The Moorcock
Entire agreement clause
Clauses which state the written contract contains entire agreement.
The law seeks to classify terms based on importance. What are the three types of contractual terms?
- Condition
- Warranty
- Innominate
Condition
Important tern which goes to the root of the contract.
Warranty
Subsidiary term
Innominate
Classification depends on seriousness of breach
Hong Kong Fir Shipping v Kawasaki
Remedy for breach of a condition?
Contract is repudiated
Remedy for breach of warranty?
Can sue for damages
