Types of term

Question 1

What are the two types of term?

Answer 1

Express terms and implied terms

Question 2

What is an express term?

Answer 2

• Can be made orally, in writing or a mix of both.
  o Where they are made orally the judge will find out what words were used exactly, looking at the evidence, and whether these words were representations or terms.
  o Representations are words used before the contract is drawn up.
• Express terms are ones agreed on by the parties at the time of the contract being formed.
  o When it is in writing it is easier to determine the express terms, whereas negotiations can be made orally before the contract. It is important to determine what is a term to the contract and what isn’t.

Question 3

What are the indicators of intention that prove if something is a term to a contract?

Answer 3

1. Timing
2. Importance
3. Reduction to Writing ‘Parol Evidence’
4. Skill and Knowledge
5. Verification

Question 4

What does timing refer to?

Answer 4

If there is a significant gap between the making of the statement and the contract the courts will be reluctant to incorporate the statement.

Question 5

Routledge v McKay (1954)

Answer 5

Facts: The date of a motorcycle was given as 1941 when instead of 1939. A week after the statement was made the buyer agreed to buy.

Held: This was not an oral representation of a term to the contract as the year was clearly not critical to the buyer or he would not have waited a week after statement was made.

Question 6

What does importance refer to?

Answer 6

A statement that is likely to be a term if its importance would have led the buyer not to enter the contract if it was not included.

Question 7

Bannerman v White (1861)

Answer 7

Facts: A buyer said he would only buy hops if they had not been treated with sulphur. The seller assured him they had not.

Held: This oral representation was a term to the contract. The untrue statement was therefore held important so the buyer could sue for breach of contract.

Question 8

What does reduction to writing refer to?

Answer 8

If an oral agreement is partly reduced to a written one the court must decide whether the written agreement alone should represent the contract or if it should be a combination of the two.

Question 9

Birch v Paramount Estates (Liverpool) Ltd (1956)

Answer 9

Facts: A couple bought a new house after being told that their house would be ‘as good as the show house’. Their house wasn’t, but it wasn’t in the contract as so.

Held: This was considered a term to the contract as this departed from the general rule as the statement was so central to agreement, it was a term. They could sue for breach of contract.

Question 10

What does skill and knowledge refer to?

Answer 10

If the seller has specific expertise in the are the courts are willing to accept that statements made by them can be relied on.

Question 11

Oscar Chess Ltd v Williams (1957)

Answer 11

Facts: The buyers were a car dealers. The seller described the car as a 1948 model (as it said in the car’s log book). It turned out to be a 1939.

Held: This was not a term to the contract as W relied on the log book and had no relevant skill or knowledge above the buyers.

Question 12

Dick Bentley Productions v Harold Smith (Motors) Ltd (1965)

Answer 12

Facts: The sellers dealt in prestige cars and recommended a car to Dick Bentley. The sellers stated a car had done 20,000 miles, but in fact, it had done 100,000 miles.

Held: This representation was a term to the contract because the seller had special skill or knowledge over the buyer. The buyer could sue for breach of contract.

Question 13

What does verification refer to?

Answer 13

This is where the seller assures the accuracy of a statement/representation.

Question 14

Schawel v Reade (1913)

Answer 14

Facts: S was interested in buying a horse for stud purposes. R assured S that the horse ‘was sound’ and had been checked by a vet. S bought horse. Horse wasn’t sound.

Held: The statement of soundness was a term to the contract as S had been assured by R.

Question 15

Ecay v Godfrey (1947)

Answer 15

Facts: G sold a boat to E, stating that the boat was sound to his knowledge, but advised E to have it surveyed. The boat was defective.

Held: This statement of soundness was not a term to the contract as G’s statement was not sufficiently emphatic and the advice to have the boat surveyed demonstrated reluctance to rely.

Question 16

What is an implied term?

Answer 16

In general, all of the terms will have been expressed by the parties but in some cases the law needs to fill in the gaps that have been made

Question 17

In what 3 ways can terms be implied?

Answer 17

• By statute
• By custom
• By the courts

Question 18

Implied terms:

By custom

Answer 18

If something has happened in a particular way for a prolonged period of time, it can become a custom

Question 19

Hutton v Warren [1836]

Answer 19

Facts: It was “custom and practice” that when someone’s lease on a farm ended, the farmer would be paid for their time and cost of seed which had been planted but not yet grown

Held: The custom was incorporated into the lease and had to be paid

Question 20

Implied terms:

By the courts

Answer 20

A contract can be rendered meaningless or unworkable without the inclusion of a certain term. If the parties have failed to include it expressly in the agreement the court can add it in to make it workable.

Question 21

Moorcock [1889]

Answer 21

Facts: A contract allowed the owner of a ship to moor his boat to load and unload. There was no express term about the depth of the water. At low tide, the boat was too big so it was grounded and damaged. The owner of the ship argued it was implied that the water would be deep enough in order to “make the contract work”

Held: There was an implied undertaking that the boat would not be damaged

Question 22

What is innocent misrepresentation?

Answer 22

Misrepresentation that is neither fraudulent nor negligent

Question 23

When does innocent misrepresentation apply?