Unit 4 - Contract Terms and Vitiating Factors Flashcards
What are the three types of term which may be found in a contract?
Express terms, terms implied by fact and terms implied by statute
What is a representation i/r/t contract terms?
Statements made before the contract which may or may not be considered a term.
What is a “puff” i/r/t contract terms?
A statement made for the purpose of advertisement which is not understood by either part to be legally binding
What is the four point test to determine when a matter previously discussed is considered a term?
- How important was the representation?
- Did one party rely on the skill of the party making the representation?
- In a written agreement, was this signed?
- Were the parties aware of the term?
Case - showing the significance of a representation’s importance to a party i/r/t contract terms
Birch v Paramount Estates (Liverpool) Ltd (1956) - show house
Case - showing importance of reliance on skill i/r/t contract terms
Oscar Chess Ltd v Williams (1957) - amateur carseller
Why are terms implied into contract?
In order to prevent the contract from having to cover every single eventuality.
Case - showing importance of implied terms in contract
Grant v Australian Knitting Mills Ltd (1936) - chemical underwear
What are the three types of terms implied by fact, and how do they differ?
- Terms implied through custom - where common practices over a long period allow an enforceable implied term
- Terms implied through common trade practices - specific to the industry and how that commonly operates
- Terms implied to preserve business efficacy - presumed that agreement is intended to be effective
Case - showing term implied to preserve business efficacy
The Moorcock (1889) - low tide jetty
What is the “officious bystander” rule and in which case did it originate?
The rule that a term may be implied if it is undeniable that the parties would have agreed to it at the time. Shirlaw v Southern Foundaries Ltd (1939)
What are the three types of term found in a contract and how do they differ?
- Conditions, which are fundamental to the contract and a breach will allow the injured party to reject the contract.
- Warranties, which are ancillary and a breach will allow the injured party to claim damages but not to reject the contract
- Innominate terms, where the court will decide which of the above categories the term falls into
Case - example of a contract being rejected due to a breach of a condition
Poussard v Spiers and Pond (1876) - ill operasinger
Which Act of Parliament implies specific terms i/r/t consumer contracts?
Consumer Rights Act 2015
Which Section of the relevant Act describes the implied term for satisfactory quality in a contract to supply goods? Describe in more details what this term implies.
Section 9. This is an objective test as to whether the quality would be considered satisfactory, taking into account their description and price.
Which Section of the relevant Act describes the implied term for fitness for particular purpose in a contract to supply goods? Describe in more details what this term implies.
Section 10. This makes clear that, in the event that the consumer relies on the opinion of the trader, the goods must be fit for the purpose which the consumer requires them, even if this is not the intended purpose of the goods.
Which Section of the relevant Act describes the implied term of description of goods in a contract to supply goods? Describe in more details what this term implies.
Section 11. This confirms that goods must match the description given of them when purchased.
Which Section of the relevant Act details the remedy of short-term right to reject in a contract to supply goods? Describe this remedy in more details.
Section 20. The customer has 30 days from the purchase to reject the goods and end the contract.
Which Section of the relevant Act details the remedy of right to repair or replacement in a contract to supply goods? Describe this remedy in more details.
Section 23. The trader must repair or replace the item within a reasonable time while bearing all costs, unless doing so would be impossible.
Which Section of the relevant Act details the remedy of right to price reduction or final right to reject in a contract to supply goods? Describe this remedy in more details.
Section 24. The consumer has a right to a partial or full refund of the goods if appropriate. They are entitled to this after one repair or one replacement if the goods still do not conform.
Which Section of the relevant Act details the implied term for reasonable care and skill in a contract to supply services?
Section 49.
Which Section of the relevant Act details the implied term for performance within a reasonable time in a contract to supply services? How is “reasonable time” defined?
Section 52. What is a “reasonable time” is a question of fact in each case.
Which Section of the relevant Act details the remedy of right to repeat performance in a contract to supply services? Describe this remedy in more details.
Section 55. The trader must perform the contract again to satisfy its performance, while confirming with the original contract.
Which Section of the relevant Act details the remedy of right to price reduction in a contract to supply services? Describe this remedy in more details.
Section 56. This may be a partial or full price reduction.
What is an exclusion/exemption clause?
A clause which seeks to exclude one party from liability for breach of contract or from tort
What is the two point common law control of exclusion clauses?
- Was the clause incorporated into the contract?
2. Does the clause protect the party from damage rather than seeking to gain undue advanatge?
Case - showing that an exclusion clause not incorporated into the contract is only binding if the consumer knew before agreeing
Chapelton v Barry UDC (1940) - deck chair
What is the Latin term for the court’s approach to constructing exclusion clauses?
Contra proferentum - any ambiguity must be interpreted against the drafting party
Case - example of clause construction being held against the draftee
Hollier v Rambler Motors (AMC) Ltd (1972) - garage fire
Which Act of Parliament deals with exclusion clauses in consumer/business relationships?
Unfair Contract Terms Act 1977
Which Section of the relevant Act voids exclusion clauses which exempt liability for death or personal injury caused by negligence?
Section 2(1).
Which Section of the relevant Act voids exclusion clauses which exempt liability for negligence, unless deemed reasonable?
Section 2(2).
Which Section of the relevant Act voids exclusion clauses which exempt liability for breach, unless deemed reasonable?
Section 3.
How is “reasonable” defined with regards to the Act of Parliament dealing with exclusion clauses in consumer/business relationships?
In a subjective test stating it ought to have been reasonable to the contemplation of the parties when the Contract was made.
Which Section of the Consumer Rights Act 2015 disallows exclusion clauses which exempt the implied terms in a right to supply goods?
Section 31.
Which Section of the Consumers Rights Act 2015 disallows exclusion clauses which exempt the implied term of reasonable care and skill in a contract to supply services?
Section 57.
Which Section of the Consumer Rights Act 2015 disallows exclusion clauses which exempt liability for death or personal injury caused by negligence? What does the Section state regarding the implied voluntary risk of the consumer in regards to other forms of negligence?
Section 65. The consumer is not taken to have voluntarily agreed to the risk because they agreed to or knew about the term or notice.
What is a vitiating factor? What are the two most common types?
A factor which renders a contract null and void. Misrepresentation and economic duress.
What is the definition of a misrepresentation i/r/t vitiating factors?
The party entering into an agreement on the basis of facts which are untrue.
Case - showing that opinion cannot be a misrepresentation i/r/t vitiating factors
Bissett v Wilkinson (1927) - sheep field
Case - showing that expression of future intent cannot be a misrepresentation i/r/t vitiating factors
Edgington v Fitzmaurice (1885) - repair debts
Case - showing that misrepresentation can occur through conduct rather than statement
Spice Girls Ltd v Aprilia World Service BV (2002) - Ginger scooter
What are the three types of misrepresentation? How do they differ?
- Fraudulent misrepresentation - knowing, deliberately or carelessly misleading
- Negligent misrepresentation - actionable in the event of financial loss where a duty of care is owed.
- Innocent misrepresentation - no knowledge of falsehood
Case - showing example of fraudulent misrepresentation by carelessness
Derry v Peek (1889) - steam trams
Case - example of negligence in misstatement leading to pure economic loss.
Hedley Byrne and Co Ltd v Heller and Partners Ltd (1963) - pure economic loss misstatement
What are the remedies available for all three types of misrepresentation?
Fraudulent - reparations of all damage and subsequent loss, and loss of profit. Contract may be disaffirmed. Potential for a claim under the tort of deceit.
Negligent - damages based on foreseeable loss
Innocent - There is no automatic right to damages but the court may use their discretion. Rescission is possible.
What is economic duress i/r/t vitiating factors?
One party has made threats of a economic nature to form or change an agreement.
To what decree is the level of duress required for economic duress to become a vitiating factor? In what case was this defined?
“Such coercion that the other party was deprived of free consent and agreement” - the Siboen and the Sibotre (1976) - ship renegotiation
What are the four points the courts will consider in determing the validity of a claim of economic duress? In what case was this defined?
- Did the injured party protest?
- Was there an alternative course open to the injured party?
- Were the injured party independently advised?
- Did the injured party take steps to avoid duress?
Pau On v Lau Yiu Long (1980) - subsidiaries
What remedy is available for economic duress?
The contract is made voidable and the injured party must attempt rescission as soon as possible. Remedies for damage lie in the tort of intimidation.
