Unit 3

Question 1

What is an express term?

Answer 1

Terms which both parties have expressly agreed to..

– Can be pre-contractual statements made during negotiations or

– Agreed terms written into the contract.

Question 2

How can terms be implied?

Answer 2

1) Fact

2) Law

Question 3

How are terms implied by fact?

Answer 3

Where the course of dealings between the parties have been sufficiently regular and consistent.

Question 4

What is the test for determining whether a term has been implied by conduct?

Answer 4

Officious bystander test – An officious bystander, when asked the question, would have dismissed it with “of of course”

Question 5

Three types of terms are…

Answer 5

1) Condition – Goes to the root of the contract

2) Warranty – Lesser importance, does not go to root of contract

3) Innonimate term

– Court will ask “does the breach deprive the innocent party of substantially the whole benefit of the contract”? If yes – Condition. If no – Warranty.

Question 6

Where there has been a breach of condition what is available to the party?

Answer 6

1) Affirming or terminating the future performance of the contract

2) Obtaining damages for any additional loss suffered.

Question 7

What is the effect of breach of warranty?

Answer 7

Claimant can only sue for damages.

Question 8

What is the effect of breach of an innonimate term?

Answer 8

Serious breach of innominate terms = If the breach deprives the innocent party of substantially the whole benefit of the contract, the innocent party has a right of election of affirming or terminating future performance of contract and/or obtaining damages for any additional loss suffered (exactly the same as conditions)

Normal innominate terms = if the breach does not deprive the innocent party of substantially the whole benefit of the contract, then only damages are available (exactly as for warranties)

Question 9

What are the key terms of the CRA 2015?

Answer 9

a) A “short term right to reject” goods and return them for a full refund within 30 days (the trader can agree to more than 30 days, but not less) (ss.20 & 22); or

b) A longer term right to have the goods repaired or replaced (s. 23); and finally

c) A right to a price reduction or to reject the goods if the repair/replacement fails after the first attempt, less a deduction for the use the consumer has had if the rejection is made after 6 months (or at any time for vehicles) (ss. 20 & 24).

Question 10

How do we determine the validity of exemption clauses?

Answer 10

ICU

Incorporation

Construction

Unfair terms

Question 11

How can incorporation occur?

Answer 11

1) Signature

2) Reasonable notice

3) Consistent and regular dealings

Question 12

Rules on signature for incorporation..

Answer 12

• signature is binding even where the claimant has not read the contract or does not know what terms mean.
• signature only does not bind where there has been fraudulent misrep.

Question 13

What are the rules for an exclusion clause to be incorporated by reasonable notice?

Answer 13

1) The proferens must take reasonable steps to bring them to the other party’s notice

2) Notice must be given at the time of or before contracting

3) Onerous clauses require greater notice (big red hand)

Question 14

What is enough for consistent and regular dealings?

Answer 14

– 3 or 4 times a month for 3 years was enough

– 3 or 4 times in 5 years was not enough

– where the claimant did not always sign a liability waiver, it was not consistent.

Question 15

What is the general rule on construction for an exemption clause?

Answer 15

The meaning of the exemption clause must cover the alleged breach of contract / loss / damage.

Question 16

What is the contra proferentem rule?

Answer 16

If there is an ambiguity in an exemption clause it will be construed against the proferense

Question 17

What type of contract does UCTA apply to?

Answer 17

Business to business.

Question 18

What is s 2(1) UCTA?

Answer 18

Businesses cannot exclude liability for negligence that results in death or personal injury.

Question 19

What is S 2(2) UCTA?

Answer 19

Businesses can only exclude liability for any other loss or damage resulting from negligence, if the clause passes the reasonableness test.

Question 20

What is S 3 UCTA?

Answer 20

Where a business is contracting on their standard written terms of business, that business can only exclude or restrict liability for breach of a general contract term, not one implied by SGA or SGSA) if the clause passes the reaosnableness test.

Question 21

What is the reasonableness test for exemption clauses (UCTA)? Sch 11.

Answer 21

• Reasonableness test = a non-exhaustive list of guidelines, such as:
• Strength of bargaining positions (I.e., – big corporations against small?)
• Inducements,
• Insurance – Does one party have the ability to take out insurance?
• Knowledge,
• Special orders (i.e., when something’s made to order, more likely to be able to rely on an exemption clause, e.g., it’s harder to refund)

Note – The burden of proving that the clause is reasonable rests upon the proferens (s. 11(5)).

Question 22

Under B2C contracts, what limitations are never effective?

Answer 22

1– Clauses excluding terms implied by statute are not effective.

2. Death or personal injury resulting from negligence.

Question 23

Under the CRA, any form of exclusion (except for implied by statute) is effective if they are fair. What is the fairness test?

Answer 23

A term in unfair if it is:

– contrary to good faith and;

– causes a significant imbalance in the parties’ rights to the detriment of the consumer.

Note: Any judgement should consider all the circumstances when the term was agreed, the other terms and the nature of the subject matter of the contract (s.62(5)).

Question 24

Does the CRA 2015 place a general requirement for terms to be prominent & transparent?

Answer 24

Yes.

Question 25

Can a consumer choose to rely on an unfair term against the trader?

Answer 25

Yes. But a trader cannot enforce an unfair term.

Question 26

Are onerous terms allowed under the CRA?

Answer 26

Likely to be unreasonable and so unenforceable.

Question 27

What is the difference between a term and a representation?

Answer 27

Term = statement of fact which the parties intend to be binding

Representation = Statement of fact which the parties do not intend to be binding.

– The amount of assumption of responsibility of the statement may make it a term or a representation.

Question 28

List of the key provisions under the Sale of Goods Act 1979

Answer 28

s. 12 = Trader holds the title to the goods and is entitled to sell them.

s. 13 = goods will correspond with the description. This may still apply even where the goods have been inspected by the claimant prior to the purchase.

s. 15 = Implied goods will match any sample provided and will be free of defects that would not be apparent on a reasonable examination of the sample.

s. 14(2) = Goods are of a satisfactory quality which includes being generally fit for purpose. “satisfactory quality” = what a reasonable person would consider as being satisfactory.

s 14(3) = Goods are reasonably fit for purpose.

Question 29

List key provisions under the Sale of Goods and Services Act

Answer 29

s 13 = where the supplier is acting in the course of business, the supplier will carry out the service with reasonable care and skill

s 14 = in the absence of an express term, the service will be carried out within a reasonable time.

s 15 = where consideration is not dealt with in the contract, the party will pay a reasonable price.

Question 30

When does a consumer have a right to repeat-performance by a trader (under CRA 2015)?

Answer 30

Non-conforming services (Services which do not satisfy the specifications) – A consumer can require the trader to repeat performance (s. 55 CRA 2015) and where repeat performance is impossible or not done in a reasonable time, the consumer has a right to a price reduction (s. 56).

Question 31

If a person signed a contract, and an exemption clause appears after the moment of signing (e.g., on a wall at an exit, or in a hotel room), is the exemption clause incorporated?

Answer 31

No.
o Olley v Marlborough Court Hotel – Contract formed at hotel reception desk; signs in room were too late to incorporate the exemption clause.

o Thornton v Show Lane Parking – a ticket machine gave terms after sale and, unlike a personal vendor, these could not be protested, so terms were not incorporated.