Terms of a Contract Flashcards
terms of a contract
what the parties have agreed between themselves and define the extent and limit of their respective obligations
representations
pre contractual statements are during negotiations
may be relied on but not included in the final contract
if a representation is broken
misrepresentation
if a term is broken
breach of contract
to decide if a statement is a representation:
1) the importance attached to the representation (Couchman v Hill)
2) special knowledge or skill of the party making the representation (Oscar Chess v Williams), (Dick Bently v Harold Smith Motors)
3) time between representation and formation of contract (Routledge v McKay)
4) if statement included in agreement in writing (Routledge v McKay)
- IF rest of agreement is in writing also
types of terms
express
implied
express terms
the terms of a contract that are expressly agreed between parties and are stated in contract (verbal or written)
implied terms
the law implied terms until a contract even is they don’t appear on the agreement of in the negotiations
why might a term be implied
(1) implied by fact: court trying to give effect to intention of parties even though the intentions weren’t expressed
(2) implied by law: law requires certain obligations to be included even if parties haven’t agreed on them
terms implied by fact
(1) give business efficacy to a commercial agreement
(2) terms implied by custom or habit
(3) terms implied because of prior conduct of contracting parties
(4) terms implied by statute
(1) give business efficacy to a commercial agreement
term necessary to make the contract work on a business like basis
test: The Moorcock:
(1) is term needed to make contract effective?
(2) if the parties had thought of it would they have agreed it was obviously going to be in the contract
(2) terms implied by custom or habit
such a term would exist as a matter of custom (Hutton v Warren)
(3) terms implied because of prior conduct of contracting parties
where parties have a prior history of dealing on particular terms, if not included in a later contract they may be implied if dealing with otherwise similar terms (Hillas v Arcos)
test for if a term would be implied
officious bystander test: “something so obvious that it goes without saying” “oh of course”
terms implied by statute
terms which parliament has decided should be included in all contracts of a particular type
The Consumer Rights Act 2015
The Sale of Goods Act 1979
Supply of Goods & Services Act 1982
types of terms
condition
warranty
innominate term
condition
term that goes to the heart of the contract
breach of condition has serious consequences
innocent party can claim damages and has choice of ending or continuing contract
Poussard v Spiers & Pond
warranty
minor term of contract
breach of warranty has only trivial loss, but main purpose of contract still achieved
innocent party can claim damages but has to continue with contract
Bettini v Gye
deciding if condition or warranty:
as well as importance of term and impact of the breach, court considers:
(1) intention of parties at time contract was made, although wording is not necessarily conclusive (Schuler v Wickman)
(2) certain terms in major commercial contracts always classified in same way as business people need certainty (The Mihalis Angelos)
(3) terms implied by legislation, eg for sale of goods
- The Sale of Goods Act 1979
- Supply of Goods & Services Act 1982
innominate (indeterminate) terms
difficult to tell if condition or warranty and could be breached seriously or trivially
court looks at consequences
serious result - condition
not serious result - warranty
Hong Kong Fir v KKK
