Terms of contracts

Question 1

What cases are examples of Business efficacy?

Answer 1

The Moorcock (1889)
Thorney Park Gold v Myers Catering (2015)
Arnold v Britton & Others (2015)
Marks & Spencer Plc v BNP Parabas Securities Trust Co (2015)

Question 2

The Moorcock (1889)

Answer 2

The claimant booked mooring space for his ship at the defendant’s wharf. The space was unsuitable at low tide due to uneven ground and rocks on the riverbed and the ship was damaged. It was held that it was implied in the contract that the space booked would be suitable/safe for mooring.

Question 3

Thorney Park Gold v Myers Catering (2015)

Answer 3

It was not clear from the way the term was written if a 4-month notice period could be given within. the three years of the contract or if the 4 months’ notice period could only be given at the end of the three-year period. It was held that the latter interpretation was the correct one. Otherwise, the business would not be given the space and time needed to establish itself. To allow early termination would be likely to defeat the object of the contract which was to allow both parties to develop and invest in a viable business development.

Question 4

Arnold v Britton & Others (2015)

Answer 4

The Supreme Cour advised that if the wording of the contract is clear then effect should be given to it and the courts should not conclude that the parties meant something different. I.e., it is up to the parties to create any terms and the court shouldn’t be concerned if these terms create a bad bargain for one party.

Question 5

Marks & Spencer Plc v BNP Parabas Securities Trust Co (2015)

Answer 5

Where the Supreme Court said a term should not be implied into a contract merely because the court believed that the parties would have included it if it had been suggested to them. A term should only be implied if the contract lacks commercial or practical coherence without it. I.e., the court has not power to improve a contract.

Question 6

What case is an example of trade custom and practice?

Answer 6

Hutton v Warren (1836)

Question 7

Hutton v Warren (1836)

Answer 7

A landlord gave the tenant farmer notice to quit his tenancy, but insisted he farmed the land during the period of notice. The tenant requested an allowance for seed and his labour as he would have left the farm before harvest. There was no mention of an allowance in the tenancy contract. The court implied into the tenancy contract the trade custom relating to seed and labour. This stated that, when a tenant is given notice to quit, he is bound to work the land during his notice period, but trade custom permits him to claim a fair allowance for seed and labour.

Question 8

What case is an example of conditions?

Answer 8

Poussard v Spiers & Pond (1876)

Question 9

Poussard v Spiers & Pond (1876)

Answer 9

An actress who was employed for one season could not make the opening night due to illness. It was held that her presence on the opening night was crucial to the performance of the contract and her employer was entitled to terminate the contract. By not being able to perform she had breached a condition of her contract.

Question 10

What case is an example of Warranties?

Answer 10

Bettini v Gye (1876)

Question 11

Bettini v Gye (1876)

Answer 11

A singer failed to turn up for the first three of the six rehearsal days. This was held to be a minor breach as no performances were missed and she could still make half the rehearsal days.

Question 12

What cases are examples of Innominate terms?

Answer 12

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962)
Cehave (The Hansa Nord) (1975)
Reardon Smith Line v Hansen-Tangen (1976)

Question 13

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962)

Answer 13

A ship was out of use for 20 weeks of the 24 months it was hired for. It was held that this breach was not serious enough to bring the contract to an end. It was still available for 18 out of 24 months.

Question 14

Cehave (The Hansa Nord) (1975)

Answer 14

A contract for the sale of citrus pulp pellets provided that the pellets were to be delivered in ‘good condition’. The pellets were damaged, and the buyers rejected them. It was held the terms of the contract stating that ‘the shipment to be in good condition’ was not a condition or a warranty but was an innominate term, in this case the breach of the term was not so serious that it could not be dealt with by an award of damages; therefore, the buyers had not been justified in refusing the delivery of goods.

Question 15

Reardon Smith Line v Hansen-Tangen (1976)

Answer 15

A ship was built at a different shipyard to that stated in the contract. It was held to be an innominate term, there was no damage, and the contract did not come to an end.

Question 16

What cases are examples of ineffective notice?

Answer 16

Oiley v Marlborough Court Hotel (1949)
Thornton v Shoe Lane Parking (1971)
Chapelton v Barry UDC (1940)

Question 17

Oiley v Marlborough Court Hotel (1949)

Answer 17

A notice on the back of Mrs Oiley’s bedroom door stated the hotel would not be liable for the theft of property from guests. Mrs Oiley suffered when her clothes and jewellery were stolen from her room. It was held the clause excluding liability was ineffective as Mrs Oiley only had notice of the clause after the contract had been made.

Question 18

Thornton v Shoe Lane Parking (1971)

Answer 18

A notice inside a car park stated that the proprietors would not be liable for injuries to customers. The same notice was also printed on the ticket dispensed from the machine at the entrance to the car park. It was held that the clause did not form part of the contract. The contract was made when the customer drew up to the ticket machine and put his money into the machine. The ticket was therefore dispensed after the contract had been concluded and the clause was not seen before or at the time.

Question 19

Chapelton v Barry UDC (1940)

Answer 19

The claimant wished to hire a deckchair. He took one from a pile and read the notice which said to pay the attendant when asked. He paid the attendant and was issued with a ticket which had an exclusion clause printed on the back. The claimant was injured when the deckchair collapsed. It was held that the ticket was a receipt, not a contractual document which he received after the contract had been made so the clause was not incorporated into the contract. The notice was the offer and taking the deckchair was acceptance.

Question 20

What cases are examples of previous dealings?

Answer 20

Kendall v Lillco (1968)
Mccutcheon v David Mcbrayne Ltd (1964)

Question 21

Kendall v Lillco (1968)

Answer 21

The parties contracted over 100 time over a three-year period and always on the same terms contained in a sale note. One delivery, not accompanied by the sales note, was defective and the buyer claimed the seller was not protected by the exemption clause. It was held that the buyer had adequate notice, since the notification had been supplied consistently throughout the long course of previous dealings.

Question 22

Mccutcheon v David Mcbrayne Ltd (1964)

Answer 22

The defendant had shipped his car on several occasions on the defendant’s ferry. Sometimes he was asked to sign a risk note which contained an exemption clause. On one occasion the ferry sank, and the claimant’s car was lost. It was held that the clause did not provide any protection against liability as the previous dealings between the parties had not been consistent enough.

Question 23

What case is an example of sufficiency notice?

Answer 23

Interfolo Picture Library v Silletto Productions (1988)

Question 24

Interfolo Picture Library v Silletto Productions (1988)

Answer 24

A contract for the hire of photographic transparencies included a clause stating that, if the transparencies were not returned on time, there was a penalty payable of £5 for each transparency per day. The claimants were 14 days late returning 47 transparencies. It was held that reasonable steps had not been taken to bring the onerous nature of this term to the other side’s attention and, consequently, the term was not part of the contract.

Question 25

What case is an example of if a party signs a document without reading it?

Answer 25

L’Estrange v Graucob (1934)

Question 26

L’Estrange v Graucob (1934)

Answer 26

The claimant signed an agreement for a cigarette machine for her café. She did not read the terms but was nonetheless bound by an exemption clause in the contract.

Question 27

What case is an example of a term is misinterpreted by the party seeking to rely on it?

Answer 27

Curtis v Chemical Cleaning Co (1951)

Question 28

Curtis v Chemical Cleaning Co (1951)

Answer 28

The claimant took her wedding dress to the dry cleaners. She was asked to sign a note excluding the cleaners from liability for damage to the dress. She questioned the clause and was told it was to protect the company in case any sequins or beads were damaged. The dress was badly stained, and the defendant tried to rely on the clause. It was held the clause was ineffective as the scope of the clause had been misinterpreted by the dry cleaner.

Question 29

What case is an example of an exemption clause must be clear and unambiguous?

Answer 29

Andrews v Singer (1934)

Question 30

Andrews v Singer (1934)

Answer 30

The claimants agreed to buy ‘new Singers cars’ from the defendant. The contract stated that the defendant would not be liable for any terms implied by the statue for breach of a condition of warranty. One of the cars was second-hand and the defendant sought to rely on the clause. He failed the exemption clause only covered implied terms and the term that all cars had to be new was an express term.