Terms of a contract

Question 1

What is an oral statement

Answer 1

a negotiation dicussed word to word.
- enforceable

Question 2

how can you tell when an oral statement is a term?

Answer 2

importance of the statement to the parties can indicate if it is crucial to both parties. both parties mus understand.
- Bannerman v White 1861
if the maker of the statement holds itself out as having special knowledge and skill, the statement is more likely to be held as a term.
- Oscar Chess v Williams 1957
if the statement is made to a party with special knowledge it is more likely to be held to be a representation.

Question 3

what is a collateral warranty

Answer 3

A collateral warranty creates a contractual link between the third party and the contractor or professional consultant. A collateral warranty is a contract that sits alongside the underlying contract, such as a building contract or consultant appointment, and grants rights to a third party which can be sued upon.
- implied promise
illustrated in Esso Petroleum Ltd v Mardon 1976

Question 4

can a written term be incorporated into an oral contract

Answer 4

yes by 4 different ways;
1. signing a document
2. giving reasonable notice
3. previous dealings
4. through trade practice

Question 5

what is the general rule regarding signture rule?

Answer 5

• if you sign a document you are bound by the terms, whether you have read it or not.
  L’Estrange v F Graucob Ltd. [1934]
• today the type of exclusion casue found in this case would be subject to a test of reasonableness under the unfair contract terms act 1977 section 7

Question 6

what are the exceptions to the signature rule?

Answer 6

1. if the meaning of a document has been misrepresented before it is signed, you are only bound by what you were told- Curtis v Chemical Cleaning and Dyeing Co Ltd [1951]

Question 6

what is the general rule regarding reasonable notice?

Answer 6

• unsigned terms can be part if there is a reasonable notice of the terms.
• the reasonable steps must have been taken to give notice of the terms.
• can be assessed is to simply ask if the reasonable person would have had notice. actual notice is not required, just reasonable notice.
  —Parker v South Eastern Railway (1877)

Question 7

What are the key points regarding reasonable notice?

Answer 7

1. reasonable notice only needs reference to existence of terms- Thompson v London 1930
2. reference of terms can be valid on a website-(Impala Warehousing & Logistics (Shanghai) Ltd v Wanxiang Resources (Singapore) Pte Ltd [2015]
3. scratch cards are valid despite only stating terms and conditions apply - O’Brian v MGN 2001
4. a term cannot ve incorporated after it contract formed - Thornton v Shoe Lane Parking 1971
5. it must be given before or at the time the contract is made- Olley V Marlborough 1949

Question 8

what is the significance of Chapleton v Barry 1940?

Answer 8

terms must be on a contractual document. A receipt does not have a contractual effect.

Question 9

What do really onerous and unusual terms requirw

Answer 9

even more notice.
RED HAND RULE
- Interfoto Picture Library v Stiletto Visuaul Programmes 1988

Question 10

what is the general rule regarding incorporation by previous dealings and trade practice?

Answer 10

• necessary to have ‘consistent’ and ‘requent’ course of dealing
• both parties reasonable belive that their unusual terms have been incorporated
• McCutcheon v David MacBrayne 1964

Question 11

what is the general rule for incorporation by custom

Answer 11

widely accepted course of dealing with something
-British Crane Hire Corporation v Ipswich Plant Hire Ltd. [1975] QB 303

Question 12

what is the parol evidence rule

Answer 12

evidence outside the written contract cannot be used to add to or change what is written.

Question 13

what is the exception to the parol evidence rule

Answer 13

1. COLLATERAL CONTRACTS
   - if the circumstances show an intention for an oral statement to be a term along with the terms on a document, it will allow an ora; statement o contradict or add to what is.
   City And Westminster Properties Ltd v Mudd [1959] Ch 129
2. where there is intention for a contract to be a combination od both oral and in writing.
   - can be enforced- Evans v Andrea merzario

Question 14

what is an entire agreement clause?

Answer 14

it is the method that prevents anything outside the document (oral) being part of the contract.
- I.E- written contract could expressly state that the document represents entire agreement
- expresses intention for parol evidence rule to apply
- Inntrepreneur Pub Co v East Crown Ltd [2000] 2 Lloyds Rep 611

Question 15

can an entire agreement clause prevent liability for misrepresentations

Answer 15

no
- because a basic ‘entire agreement’ clause only stops the oral statements being contractual as terms. to exclude liability for false representations, more specific wording is needed.

Question 16

what is the four corners approach

Answer 16

the TRADITIONAL APPROACH
the court would interpret the contract based on what was stated within 4 corners.
- problem with this approach is that it ignores key wider contexts
Lovell and Christmas Ltd v Wall (1911)

Question 17

what is the modern ‘contextual’ approach to interpreting a contract

Answer 17

make use of background facts and contexts to reflect commercial common sense.
- focus on what a reasonable person in the same circumstances would have intended
- Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (ICS)

Question 18

What did Lord Hoffman claim was the 5 basic principles of interpretation

Answer 18

1. meaning is based on how reasonable person would have understood the contract
2. ‘background’ includes all facts this reasonable person could have known.
3. evidence of previous negotiations cannot be used as background
   4.the literal meaning of the words used is not the same as what would be understood by a reasonable person with the background context.
4. language mistakes it cant be assumed, but if it doesn’t reflect commercial common sense, an alternative should apply.
   [has been criticised for creating uncertainty]

Question 19

What does Lord Hoffman mean by ‘background’

Answer 19

absolutely anything that could affect how a reasonable person would understand the contract

Question 20

What is the reason for Lord Hoffman excluding ‘previous dealings’ when interpreting a contract

Answer 20

Prenn v Simmons 1971
- ‘drenched in suvjectivity’
could cause confusion

Question 21

what does commercial common sense actually mean?

Answer 21

• not defined limits
  -whether the contract is consistent with the purpose and intentions of both contracting parties

Question 22

What is an implied term

Answer 22

terms not expressed by parties, not in the contract and not orally stated.
- expressed tears that are simply assumed and they are just as enforceable as express terms.

Question 23

what does caveat emptor mean

Answer 23

let the buyer beware

Question 24

what are the different ways in which terms can be applied

Answer 24

• by legislation
• by courts/case law
• by custom/trade usage

Question 25

how can a term be implied

Answer 25

gives effect to the presumed intention of the parties

Question 26

What does the sale of goods act 1979 section 12 demonstrate in regards to implied terms by legislation

Answer 26

SECTION 12- implied that the seller has right to sell goods
- APPLIED TO CONTRACT BETWEEN BUSINESSES AND THOSE BETWEEN PRIVATE PARTIES.

Question 27

what does he Sale of Goods Act 1979 section 13 demonstrate

Answer 27

that the goods will correspond with the description
( for example buying goods through internet)
- does not relate to quality- Ashington Piggeries Ltd v Christopher Hill Ltd [1972] under section 13 its not a breach

Question 28

what does sale of goods section 14 demonstrate

Answer 28

implies the quality go goods supplied under the contract are of satisfactory quality
(2A)- goods are satisfactory if they meet standard that a reasonable person would regard as satisfactory.
(2B)- quality includes the following
(a)- fitness for all the purposes for which goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(e) durability

Question 29

What does section 15 of the Sale of Goods act 1979 state.

Answer 29

implies a term where the sample will be the same quality as goods provided

Question 30

where are implied terms regarding consumer contracts held

Answer 30

Consumer rights act 2015
- contracts between trader and consumer

Question 31

what is the significance of the consumer rights act 2015

Answer 31

sets out basic rules which govern how consumers buy and how businesses sell to them in the UK

Question 31

what is the significance of the consumer rights act 2015

Answer 31

sets out basic rules which govern how consumers buy and how businesses sell to them in the UK

Question 32

what is meant by implied terms by the courts

Answer 32

courts have the ability to imply terms into the contract by either
1. fact
2. law

Question 33

how are terms implied by fact imposed.

Answer 33

based on particular facts of a given case
- one offs based on the apparent intentions of the parties.
- fillings an obvious gap.
based on facts of case
give effect to what the parties must have intended.

Question 34

what is the busines efficacy test

Answer 34

from the Moorcock 1889
- a term can be implied if the term was necessary to give the contract business efficacy. would the contract make business sense without it?

Question 35

what is the officious bystander test

Answer 35

from Shirlaw v southern foundries 1926
- a term can be implied if it is really obvious to both parties, so obvious that it goes without saying.

Question 36

how is a term implied through law

Answer 36

terms are implied by the courts in any contract of a certain type like employment or tenancy. implied as a default.

Question 37

how can terms be implied by custom or usage

Answer 37

• implied due to the usual business occurrences.
• Hutton v warren 1836
  the question to ask is whether the reasonable person in the position of the parties would have known of the custom.