Terms of CONTRACT( Express terms)

Question 1

What are the terms of a contract

Answer 1

Terms of a contract are duties and obligations that each party assumes under their agreement.

Question 2

What are standard contract terms

Answer 2

Standard contract terms are pre-existing contract terms which are repeatedly use for different agreements.

Question 3

What are boilerplate clauses

Answer 3

Boilerplate clauses are terms not directly related to the subject matter, but are frequently included to determine the general rules on contractual liability.

Question 4

What does express term consist of ?

Answer 4

Express terms include oral and written statements.

Question 5

how does the courts assist Oral statements

Answer 5

Statements made in negotiations are either representations, which is a statement that may have encouraged one party to make the contract, but is not itself part of it, or terms, which is a promise that is part of the contract. If proved to be untrue, representations give rise to misrepresentation, and terms to breach of contract

Question 6

(1.Importance of the statement)

Answer 6

A statement is likely to be seen as a term if the injured party has made the other party aware that
had it not been for that statement, they would not have entered into the contract.

Question 7

Bannerman v White (1861)(Importance of the statement)

Answer 7

In Bannerman v White (1861) White was considering buying hops from Bannerman, and
asked whether they had been treated with sulphur, adding that if they had, he would not even
bother to ask the price. Bannerman said there had been no such treatment (believing this
to be the truth) and, after negotiations, a contract of sale was made. Later though, it was
discovered that sulphur had been used on some of the hops – 5 acres out of 300 – and
when Bannerman sued for the price, White claimed that Bannerman’s statement had been
a term of the contract, and Bannerman had breached that contract, so he was justified in
refusing to pay. The court agreed that the statement about the sulphur was indeed a term of
the contract.

Question 8

2. (Special knowledge and skill)

Answer 8

A statement is more likely a term if it was made by someone who has expert knowledge and skill that is relevant to the subject, compared to an amateur with no special expertise.

Question 9

Dick Bentley Production Ltd v Harold Smith (Motors) . (Special knowledge and skill) Ltd

Answer 9

The car dealer stated that the car had its engine replaced and only done 20,000 miles. It was found that it had done almost 100,000 miles. The court held that the dealer’s statement was a term.

Question 10

Oscar Chess v Williams(Special knowledge and skill)

Answer 10

A private individual stated that the car was 1948 model based on the registration book. It was discovered that the book had been altered and it was in fact a 1939 model, which was only worth £175. It was held that the seller was a private individual who had innocently trusted the registration book, but the buyers were experienced car dealers. Hence, the statement was not a term.

Question 11

3. (Timing of the statement)

Answer 11

A statement is less likely to be seen as a term, the more time that elapses between the statement being made and the contract being concluded.

Question 12

Routledge v McKay (Timing of the statement)

Answer 12

The defendant stated that the motorbike was a 1942 model. A written contract that did not mention the age was drawn up a week later. The motorbike turned out to be 1930 model. It was held that interval was too long and the statement was not a term.

Question 13

Schawel v Reade (Timing of the statement)

Answer 13

he seller told the buyer he need not look for anything and the horse is perfectly sound. The buyer did not make any further checks and the sale was made 3 weeks later. It was held that the importance of the seller’s statement suggested it was a term, despite the length of time.

Question 14

Agreements in writing

Answer 14

Where the parties put their eventual contract in writing, any statement that appears in the written
contract will usually be regarded as a term. Any statement made before the written contract but
not included in it is likely to be regarded as a representation, on the grounds that if the parties
draw up a written contract which leaves out an earlier statement, it is likely that they did not regard
that statement as an important one. The fact that the contract in Routledge (above) was made
in writing, and did not include the date of the motorbike’s manufacture, was seen as significant
by the court.

Question 15

Duffy v Newcastle United Football Co Ltd( Agreements in writing)

Answer 15

Season ticket holders were guaranteed a seat for ten years. Under the written terms of the bond, 9(b) stated that NUFC shall provide the holder with an alternative seat when the seat is no longer available. The court held that the promotional material and media comments did not constitute terms, but representations. There was nothing in the Club’s literature which amounted to a binding representation that the claimant would have an absolute right to the seats for the lifetime of the bond.

Question 16

(5. Strength of the statement)

Answer 16

A statement is more likely a term the more emphatically a statement was made (the stronger the inducement).

Question 17

Ecay v Godfrey(5. Strength of the statement)

Answer 17

The boat seller told the buyer that it was sound, but suggested that the buyer survey it. The court held that the statement was not a term. This can be contrasted with Schawel, where the obvious importance of the statement meant it was a term.

Question 18

The parol evidence rule

Answer 18

In general, the parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties’ agreement

Question 19

Henderson v Arthur (1907).( The parol evidence rule)

Answer 19

The claimant and the defendant were parties to a lease, which contained a covenant (a promise under seal) for the payment of rent quarterly in advance, although before the lease was drawn up, the parties
had agreed that the rent could in fact be paid in arrears. When the tenant was sued for not making
the payments in advance, he pointed out this prior oral agreement, but the Court of Appeal held that the terms of a prior oral agreement could not be substituted for the terms of a later formal contract concerning the same transaction. The written document effectively destroyed the previous oral agreement about the rent.

Question 20

There are a number of exceptions to the parol evidence rule, with the following being the main
ones:

Answer 20

1 Rectification
2 Partially written agreements
3 Implied terms
4 Operation of the contract
5 Evidence about the parties
6 Proving custom

Question 21

Rectification

Answer 21

Where a document is intended to record a previous oral agreement but fails to do that accurately,
evidence of the oral agreement will be admitted.

Question 22

(Partially written agreements)

Answer 22

Where there is a written document, but the parties clearly intended it to be qualified by other
written or oral statements, the parol evidence rule is again displaced.

Question 23

Couchman v Hill (1947),(Partially written agreements)

Answer 23

The defendant put up a heifer for auction. The auction sale catalogue described the heifer as ‘unserved’. It also stated that the sale would be subject to the auctioneers standard conditions, and that all lots must be taken regardless of any faults or errors of description. The standard conditions similarly stated that lots were sold ‘with all faults, imperfections and errors of description.’

The claimant asked both the defendant and the auctioneer to confirm that the heifer was unserved. Both answered ‘yes’. The claimant bought the heifer. It later turned out to be with calf. This was dangerous given the heifer’s young age. The heifer died as a result.

The claimant sued both the defendant and the auctioneer for breach of warranty. The defendant and auctioneer relied on the terms of the catalogue and standard conditions as excluding their liability for errors of description.

Question 24

Implied terms

Answer 24

The parol evidence rule only applies where a party seeks to use extrinsic evidence to alter the express terms of a contract. Where a contract is of a type that is usually subject to terms implied by law, parol evidence may be given to support, or to rebut, the usual implication

Question 25

Operation of the contract

Answer 25

The parol evidence rule does not apply to extrinsic evidence which shows that the written contract
was intended to come into operation, or to cease to operate, in the event of a particular circum-
stance.
In Pym v Campbell (1856) the parties drew up a written agreement concerning the sale ofa share in an invention. Evidence was admitted that one party had stipulated orally that the agreement should not become operative until an independent expert had approved the invention.

Question 26

Evidence about the parties

Answer 26

Extrinsic evidence can be used to show the capacities in which the parties were acting when they made their contract – for example, where a person has apparently contracted as a principal (seep. 281), parol evidence is admissible in order to prove that he or she really acted as agent for someone else.

Question 27

Proving custom

Answer 27

Where it is suggested that a term should be read in the light of local or trade custom, evidence of that custom is admissible to add to or explain a written agreement, though not to contradict it. Thus in Smith v Wilson (1832) evidence was admitted to the effect that, under local custom, 1,000 rabbits meant 1,200 rabbits – a sort of ‘bakers’ dozen’. The courts are now sometimes prepared to look at extrinsic evidence such as a custom to help them interpret a contract