Terms Flashcards
Contractual terms may be
Express or Implied
Express Terms can be
- Oral
- Written
- a mix
Terms can be subdivided into
- conditions
- warranties
- innominate terms
Express Terms
Terms that both parties have expressly agreed to.
Not all statements of fact are terms.
- only those which the parties intend to be binding
- those statements that the parties do not intend to be binding are classed as representations.
Whether a statement made is a term or a representation depends on
- the intention of the parties, objectively seen as the reasonable man would see it.
The courts will consider various factors when deciding whether it is a term or a representation
- Intention
- Importance
- Timing
- Reduction into writing
- Specialist knowledge
- Assumption of responsibility
Term or Rep: whether the parties intended that it should do so.
Heilbut v Buckleton
Term or Rep: the importance placed upon the statement by the other party
Bannerman v White
- hop treated with sulphur
A statement about the age of a motorbike made two days before the sale was a representation
Routledge v McKay
A statement made at or just before the conclusion of the contract is more likely to be held to be intended as a term
Inntrepreneur Pub v East Crown
Term or Rep: reduction into writing
Intrepreneur Pub v East Crown
- a beer tie was not a term.
Those with specialist knowledge can better verify a representation than the layman.
Oscar Chess v Williams: the buyer was a specialist (not a term)
Bentley v Smith: the seller was the specialist (a term)
A verification of a claim can make it a representation or a term.
Schawel v Reade: assurance that the horse was sound (term)
Hopkins v Tanqueray: claiming the horse was sound (rep)
A seller’s statement and concern about the condition of the item is not an assumption of responsibility
Ecay v Godfrey
The Parol Evidence Rule
Extrinsic evidence may not be adduced to carry and express written contract (Jacobs v Batavia)
The Parole Evidence Rule can be avoided for
Contracts that are not wholly written: (Evans v Merzario)
Collateral Contracts: (Westminster v Mudd)
Terms are onerous: (Interfoto v Stiletto)
Big Red Hand Rule - Denning
Spurling v Bradshaw
Key terms should be expressly pointed out and not be hidden in small print.
Implied Terms
Terms that have not been expressly stated.
They can be implied in both fact and law
The four rationale of Implied Terms
- Implication from Custom
- Implication from Presumed Intention
- Implication from Parties’ Legal Relationships
- Implication from Statute
The parties may be deemed to have contracted with reference to a custom objectively known to operate within a certain activity or area
Hutton v Warren
It was normal trade custom to insure cranes, so the term was implied
British Crane Co v Ipswich Plant
The normal course of dealing between parties must be regular and consistent
Hollier v Ramblers Motors
- Three or four times in five years was not regular enough to outline a regular course of dealing.
The officious bystander test
- It its was so obvious to the officious bystander (The Moorcock)
- ‘oh of course it is’ (Shirlaw v Southern Foundries)
Certain terms are implied in law and will operate irrespective of the intention of the parties
Liverpool CC v Irwin
Terms will only be implied were necessary, and not because it appear fair.
Marks and Spencer v BNP Paribas
An implied term cannot be used to fill a gap in an incomplete contract
Wells v Devani
An implied term must not contradict any express term of the contract
Irish Bank v Camden Market
Employers have a duty to inform their employees of implied terms
Scally v Southern Health
this is not a duty of care - Crossley
Implied terms in statute can be found in:
Sale of Good Act 1979
Consumer Rights Act 2015
The seller holds the title to the goods and is able to sell them
S. 17 CRA
Rowland v Divall: stolen car
Implied Condition: the goods will correspond with the description.
S. 11 CRA
Beale v Taylor: even if the goods have been inspected before purchase
Goods will match any sample provided and be free of defects upon a reasonable examination
S. 13 CRA
Goods will match any model seen
S. 14 CRA
Goods are of a satisfactory quality
S. 9 CRA
Priest v Last
Goods are reasonably fit for purpose
S. 14 CRA
Balmoral Group v Borealis
Goods will not conform to the contract if they are not installed properly
S. 14 SGA
- only in relation to a contract that covers both goods and installation.
Physical goods will not conform to the contract if digital goods do not conform
S. 16 SGA
The supplier of a service will carry out the service with reasonable care and skill.
S. 49 CRA
The service will be carried out within a reasonable time
S. 52 CRA
The party contracting with the supplier will pay a reasonable price
S. 51 CRA
Where the trader has said or written any information about the service to the consumer, that information is taken to be included as a term of the contract.
S. 50 CRA
The distinction between a condition, warranty and innominate term are laid out in
Schuler v Wickman
Condition
goes ‘to the root of the problem’
Poussard v Spiers
Terms implied by CRA and SGA are all classed as
Conditions
The breach of a condition gives the other party the option to
Schuler v Wickman
Terminate the Contract
let the contract proceed
sue for damages
Warranty
A term of less importance (Bettini v Gye)
For a breach of a warranty
Damages
Breach of Innominate Terms
Hong Kong Fir:
The court will ask: ‘does the breach deprive the innocent party of substantially the whole benefit of the contract?’
- yes: condition
- no: warranty
Remedies for CRA breaches
- return for a full refund within 30 days (s. 20; 22)
- repair or replaced (s. 23)
- price reduction or rejection (s. 20; 24)
Remedies for digital goods under CRA
Same for goods under CRA but that the trader has more than one attempt to repair the goods.
Can claim compensation for damage that the digital goods cause to other digital devices or content.
Duress
A term which excludes or modifies an obligation that would otherwise arise under the contract by implication of law
Photo Productions v Securicor
Incorporation
The term must become part of the contract by a certain method
The methods of incorporation
- Signature
- Reasonable Notice
- Consistent and Regular Course of Dealing
- Incorporation of Conflicting Terms
A signature is binding regardless of whether the claimant has read the contract
L’Estrange v Graucob
A signature will not bind if there has been a fraud
Saunders v Anglia Building Society
Incorporation by reference to another document is possible
Thompson v London Midland and Scottish Railway
Conditions printed on the back of a ticket were held not to have been incorporated as they were not drawn to the customers attention
Henderson v Stevenson
Notice must be given before or at the time of contracting
Not incorporated in
Olley v Malbouough: signs in rooms were too late
Thornton v Shoe lane Parking: ticket machine gave terms after the sale
Onerous clauses require greater notice
Should be pointed out or prominent - Denning ‘big red hand’ (Thornton v Shoe Lane Parking)
Any written document or notice containing the clause must be one which has contractual effect.
Chapelton v Barry
- tiny receipt on a sunchair with a clause on the back was not a contractual document.
Contracting 5 times in 13 months was enough to constitute a regular course of dealing.
Petrotrade v Texaco
Words ought to be interpreted in the way in which a reasonable commercial person would interpret them
Lord Napier in
Ettrick v Kershaw
Business contracts should be interpreted to reflect business common sense
Act Paper v Fry
Ambiguity in the clause will be construed against the proferens (person relying on the clause)
Houghton v Trafalgar Insurance
Test for negligence set out by Lord Morton in
Canada Steamship
Canada Steamship Test
- Does the clause specifically refer to negligence or a synonym of negligence.
- If yes, is the clause too wide?
- if yes, and the clause is not too wide, then only if the clause excludes negligence.
Unfair Terms
The terms must not be prohibited by any of the legislation on unfair contractual terms
UCTA only applies to contracts between
Businesses to Business (B2B) contracts
- for exemption clauses only!
B2B: Businesses cannot exclude liability for negligence that results in death or personal injury
S. 2 UCTA
B2B: Businesses can only exclude liability for any other loss or damage resulting from negligence, if the clause passes the reasonableness test, outlined in
s. 11 UCTA
B2B: Where a business is contracting on their own standard terms of business, that business can only exclude or restrict liability for breach of a general term if the clause passes there reasonableness test in s. 11
s. 3 UCTA
B2B: The reasonable test of S. 11
a fair and reasonable test
the burden of proving reasonableness rest of the proferens.
The CRA 2015 applies to
Business to Consumers (B2C) contracts
B2C: exemption clauses cannot exclude or restrict liability for death or personal injury resulting from negligence
s. 65 CRA
B2C: Goods: clauses purporting to exclude terms implied by statute are not effective
ss. 9 - 16 CRA
B2C: Services: clauses purporting to exclude term implied by statute are not effective
ss. 49 - 52 CRA
B2C: Other forms of exclusion are only effective if they are fair
s. 62 CRA
B2C: The fairness test of s. 62
a term is unfair if it is
- contrary to good faith
- causes a significant imbalance in the parties rights to the detriment of the consumer
Any term which attempts to limit or exclude liability may be
reviewed by the courts (s. 71 CRA)
Whilst a trader cannot enforce an unfair term against the consumer, a consumer can choose to rely on an unfair term against the trader
s. 62 CRA
The normal course of dealings between parties must be regular and consistent
McCutcheon v MacBrayne
The Proferens must take reasonable steps to bring the term to the other party’s notice.
Parker v South Eastern Railways
- Terms on the back of a ticket were sufficient
An express oral assurance amounted to a contractual term which overrode the disclaimer in the catalogue.
Couchman v Hill
In general, words should be given their natural meaning, no matter how unreasonable or expensive the result
Arnold v Britton
Limitation clauses
clauses which limit rather than exclude liability are read less restrictively and so are more likely to successfully limit liability
(Craig v Malvern Shipping)
The CRA imposes a general requirement for terms to be ‘transparent’
i.e. written in plain and intelligible language s. 64
There is a general requirement for terms to be ‘prominent’
i. e. brought to the consumers attention in such a way that the ‘average’ consumer would be aware fo the term (s. 64)
- putting Denning’s ‘Big Red Hand Rule’ in statute.
A trader cannot enforce an unfair term against the consumer
A consumer can choose to rely on an unfair term against the trader s. 62
