Terms and ECs

Question 1

puffs

Answer 1

vague statements because of exaggeration.
these statements have no legal effects
“this is the fastest car ever”

Question 2

representations

Answer 2

statements made before or at the time a contract is formed concerning some matter relating to the contract
not an integral part of the contract

Question 3

terms

Answer 3

statements which form part of the contract & if it is breached, the party can initiate an action for breach of contract

Question 4

Guidelines for distinguishing terms from representations

Answer 4

• Timing when the statement was made
  if it is closer to when the contract is concluded -> term.
  𝐑𝐨𝐮𝐭𝐥𝐞𝐝𝐠𝐞 𝐯 𝐌𝐜𝐊𝐚𝐲
  statement made one week before contact was concluded was deemed as it wasn’t a term
• Maker’s Emphasis
  the greater the emphases, more likely it is a term
  𝐁𝐚𝐧𝐧𝐞𝐫𝐦𝐚𝐧 𝐯 𝐖𝐡𝐢𝐭𝐞
  White emphasised that if the hops were grown with sulphur suggests that it was important to him; it was a term
• Written Statement
  if statement was made orally and later reduced into writing, it is more likely to be a term of the contract
• Maker’s special knowledge
  if the maker of the statement has a greater knowledge concerning statement compared to the other party, it is more likely to be a term bc the other party will be dependent on that statement
  𝗗𝗶𝗰𝗸 𝗕𝗲𝗻𝘁𝗹𝗲𝘆 𝗣𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻𝘀 𝗟𝘁𝗱 𝘃 𝗛𝗮𝗿𝗼𝗹𝗱 𝗦𝗺𝗶𝘁𝗵 (𝗠𝗼𝘁𝗼𝗿𝘀) 𝗟𝘁𝗱
  where motor car dealer with more knowledge would have his statements held as terms
• Invitation to verify the statement
  if maker invited another party to verify statement -> rep bc he wants the OP to evaluate the statement himself
  𝗘𝗰𝗮𝘆 𝘃 𝗚𝗼𝗱𝗳𝗿𝗲𝘆
  where the invitation to verify boat made the seller’s words as representations

Question 5

Parol Evidence Rule

Answer 5

Codified in s93 & s94 of the Evidence Act
cannot introduce extrinsic evidence to add to/vary/contradict terms of a written contract

exception 1: extrinsic evidence is only admissible where the words of a written contract are ambiguous
exception 2: if there was a misrep, fraud or mistake, oral evidence can be presented
exception 3: if evidence shows the presumption that the written doc forms the entire contract can be rebutted

Question 6

Express Terms

Answer 6

can be oral or written

Question 7

Implied Terms

Answer 7

1. implied by Court
   - Business Efficacy Test
   𝐓𝐡𝐞 𝐌𝐨𝐨𝐫𝐜𝐨𝐜𝐤
   implied that the jetty bottom had to have mud for the ship to rest on.
   - Officious Bystander Test
   “but of course!”
2. implied by Statute
   - SOGA, goods sold will be of reasonable quality.
3. implied by custom
   - practice is consistent and over a long period of time
   𝐇𝐮𝐭𝐭𝐨𝐧 𝐯 𝐖𝐚𝐫𝐫𝐞𝐧

Question 8

Business Efficacy Test

Answer 8

The Court will supply a term which it considers as having been intended by the parties, so as to ensure that their contract will proceed on normal business lines
𝐓𝐡𝐞 𝐌𝐨𝐨𝐫𝐜𝐨𝐜𝐤

Question 9

Officious Bystander test

Answer 9

if the term is so obvious that it goes without saying, the term passes the test and is implied as a term in the contract by the Court

Question 10

𝐒𝐞𝐦𝐛𝐜𝐨𝐫𝐩 𝐌𝐚𝐫𝐢𝐧𝐞 𝐯 𝐏𝐏𝐋 𝐇𝐨𝐥𝐝𝐢𝐧𝐠𝐬 𝐏𝐭𝐞 𝐋𝐭𝐝

Answer 10

The implication of terms is to be considered using a 3 step process:

1) Ascertain how the gap in the contract arises; The parties did not contemplate gap
2) Business efficacy test
3) Officious Bystander test

Question 11

Classification of terms

Answer 11

Warranty, Condition, Innominate terms

Question 12

Conditions

Answer 12

They are terms which are essential and fundamental to the contract, they are the main purpose of the contract.
Intention of the parties and the purpose of the contract would determine whether the statement is a condition or warranty.
If breached, innocent party can terminate the contract

Question 13

Warranty

Answer 13

A less important term to the contract and gives rise to secondary obligations
If breached, innocent party cannot terminate the contract, can only claim damages
𝐁𝐞𝐭𝐭𝐚𝐧𝐢 𝐯 𝐆𝐲𝐞
where rehearsals for the opera singer are just warranties.

Question 14

Innominate Terms

Answer 14

Terms which are too complicated to be either categorized into a condition/warranty. Focuses on the consequences.
If the consequence is trivial, remedy in damages
If the consequence is serious, innocent party can terminate the contract
𝐇𝐨𝐧𝐠𝐤𝐨𝐧𝐠 𝐅𝐢𝐫 𝐒𝐡𝐢𝐩𝐩𝐢𝐧𝐠 𝐂𝐨 𝐋𝐭𝐝 𝐯 𝐊𝐚𝐰𝐚𝐬𝐚𝐤𝐢 𝐊𝐚𝐢𝐬𝐞𝐧 𝐊𝐚𝐢𝐬𝐡𝐚 𝐋𝐭𝐝

Question 15

RDC Concrete v Sago Kyogo Pte Ltd

Answer 15

1: express termination of contract
2: Party renounces by conveying to innocent party that it will not perform its contractual obligations
3a: Party breached a condition
3b: The breach has deprived the innocent party of substantially the whole benefit of the contract

Question 16

𝐁𝐚𝐧𝐧𝐞𝐫𝐦𝐚𝐧 𝐯 𝐖𝐡𝐢𝐭𝐞

Answer 16

Maker’s Emphasis:

where White’s emphasis on the non-usage of sulfur used in growing of hops shows that its a term

Question 17

𝐃𝐢𝐜𝐤 𝐁𝐞𝐧𝐭𝐥𝐞𝐲 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬 𝐋𝐭𝐝 𝐯 𝐇𝐚𝐫𝐨𝐥𝐝 𝐒𝐦𝐢𝐭𝐡 (𝐌𝐨𝐭𝐨𝐫𝐬) 𝐋𝐭𝐝

Answer 17

Maker’s Special Knowledge:

where the motor car dealer with more knowledge has his statements held as terms

Question 18

𝐄𝐜𝐚𝐲 𝐯 𝐆𝐨𝐝𝐟𝐫𝐞𝐲

Answer 18

Invitation to verify statement:

where invitation to verify the seller’s boat made the seller’s words as representation

Question 19

𝐓𝐡𝐞 𝐌𝐨𝐨𝐫𝐜𝐨𝐜𝐤

Answer 19

Implied in Fact:

where it was implied that the jetty bottom had to have mud for the ship to rest on

Question 20

𝐒𝐞𝐦𝐛𝐜𝐨𝐫𝐩 𝐌𝐚𝐫𝐢𝐧𝐞 𝐯 𝐏𝐏𝐋 𝐇𝐨𝐥𝐝𝐢𝐧𝐠𝐬 𝐏𝐭𝐞 𝐋𝐭𝐝

Answer 20

3 step approach in implying terms into contract:

1) Can only imply a term if the gap arose bc the parties did not contemplate the gap at all
2) Business Efficacy test
3) Officious Bystander test

Question 21

𝐁𝐞𝐭𝐭𝐚𝐧𝐢 𝐯 𝐆𝐲𝐞

Answer 21

warranty:

where the rehearsals were considered a warranty to the contract

Question 22

Exemption/Limitation Clauses

Answer 22

Excludes altogether or limits liability for breach of contract
To ensure EC is effective:
1) Incorporation
2) Construction
3) Overriding Factors
4) Unfair Contract Terms Act

Question 23

Incorporation

Answer 23

Where EC is in a signed document:
- deemed incorporated even if person signed without reading document
𝐋’𝐄𝐬𝐭𝐫𝐚𝐧𝐠𝐞 𝐯 𝐆𝐫𝐚𝐮𝐜𝐨𝐛
where ECs are binding in signed documents, regardless if he had read them or not.

Where EC is not in a signed document (eg notice/oral):
(guiding factors)
1. Person relying on EC must take reasonable notice to other party
𝐓𝐡𝐨𝐦𝐩𝐬𝐨𝐧 𝐯 𝐋𝐨𝐧𝐝𝐨𝐧 𝐌𝐢𝐝𝐥𝐚𝐧𝐝 𝐒𝐜𝐨𝐭𝐭𝐢𝐬𝐡 𝐑𝐚𝐢𝐥𝐰𝐚𝐲 𝐂𝐨.
where reasonably sufficient notice of EC was given, since the front of the ticket made reference to the EC.

• notice must be reasonably legible and conspicuous
• where was the notice?
  
  • would you expect a ticker/receipt to have a contractual term?
    𝐂𝐡𝐚𝐩𝐞𝐥𝐭𝐨𝐧 𝐯 𝐁𝐚𝐫𝐫𝐲 𝐔𝐫𝐛𝐚𝐧 𝐃𝐢𝐬𝐭𝐫𝐢𝐜𝐭 𝐂𝐨𝐮𝐧𝐜𝐢𝐥
    where EC on a ticket was not incorporated as it was just like a receipt.

2. The more unusual the EC, the more must be done to give notice of the clause
   𝐓𝐡𝐨𝐫𝐧𝐭𝐨𝐧 𝐯 𝐒𝐡𝐨𝐞 𝐋𝐚𝐧𝐞 𝐏𝐚𝐫𝐤𝐢𝐧𝐠 𝐋𝐭𝐝
   where EC was not given reasonable notice since it was on a ticket issued after payment, where the contract had already formed.
3. Notice of EC must be given before/at time of contract
   𝐎𝐥𝐥𝐞𝐲 𝐯 𝐌𝐚𝐫𝐥𝐛𝐨𝐫𝐨𝐮𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 𝐋𝐭𝐝
   where EC given in a hotel room is deemed as given too late.
4. Previous course of dealing can constitute reasonable notice if
   a. sufficient no. of trx
   b. consistent trx
   c. current trx is same as prev ones

Question 24

Construction

Answer 24

EC must cover liability in question
Contra Proferentem Rule
- where there is ambiguity in EC, the construction adopted is the one which is least favourable to the party relying on EC.
𝐇𝐨𝐥𝐥𝐢𝐞𝐫 𝐯 𝐑𝐚𝐦𝐛𝐥𝐞𝐫 𝐌𝐨𝐭𝐨𝐫𝐬 (𝐀𝐌𝐂) 𝐋𝐭𝐝
where EC was not sufficiently clear and unambiguous enough since EC could be interpreted to exclude liability for fire damage; with or without negligence.

Main purpose rule:
To exclude liability arising out of a fundamental breach, clear words are needed.
clear -> howsoever, whatsoever, in any circumstances

𝐏𝐡𝐨𝐭𝐨 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐯 𝐒𝐞𝐜𝐮𝐫𝐢𝐜𝐨𝐫 𝐓𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭 𝐋𝐭𝐝
security guards were hired to protect the building but they lit a fire & ended up burning the building. Fundamental breach!

Question 25

Unusual/Overriding Factors

Answer 25

Overriding factors which may make EC ineffective:
1. misrepresentation about scope/effect of EC
𝐂𝐮𝐫𝐭𝐢𝐬 𝐯 𝐂𝐡𝐞𝐦𝐢𝐜𝐚𝐥 𝐂𝐥𝐞𝐚𝐧𝐢𝐧𝐠 & 𝐃𝐲𝐞𝐢𝐧𝐠 𝐂𝐨
- Written EC: “excluding any damage howsoever arising”
- Told orally: “excludes damages to beads & sequins”
2. Oral undertaking
𝐄𝐯𝐚𝐧𝐬 & 𝐒𝐨𝐧𝐬 𝐋𝐭𝐝 𝐯 𝐀𝐧𝐝𝐫𝐞𝐚 𝐌𝐞𝐫𝐳𝐚𝐫𝐢𝐨 𝐋𝐭𝐝
where an oral undertaking created a collateral contract which neutralises the written EC.
- A collateral contract is an exception to the Parol Evidence Rule

Question 26

Unfair Contract Terms Act (UCTA)

Answer 26

• UCTA regulates the effectiveness of ECs
• UCTA does not apply to all ECs, only to “business liability”
  s1(3): if the breach of obligation arises from things done in the course of his business, it is a biz liability

i) where there is a breach of duty to take reasonable care or exercise reasonable skill
[Negligence Liability]
- cannot exclude liability for personal injury or death s2(1)
- for other types of damage, can exclude liability if EC is reasonable s2(2) -> proceed to reasonableness test.

ii) where the innocent party is a consumer but party in breach is not a consumer
[Contractual Liability]
- can exclude liability if EC is reasonable s3

iii) where there is a written standard terms of business
[Contractual Liability, Standard Written Contract]
- can exclude liability if EC is reasonable s3

Question 27

Reasonableness Test s11(1) & s11(2)

Answer 27

very broad test
s11(1) term must be fair & reasonable in view or circumstances which
(i) were known to or
(ii) ought reasonably to have been known to or
(iii) contemplated by the parties at the time of making the contract

if any of the above can be shown, EC will pass the reasonableness test.

s11(2): Second Schedule - guidelines for reasonableness test

a) bargaining position
b) whether the customer received an inducement to accept EC
c) customer knew about or ought to reasonably have known of the EC / previous course of dealing
d) where compliance with some condition would be practicable.
e) whether goods were specifically ordered