W6 Terms Flashcards
What is a breach of contract?
Breach of a term duly incorporated into the contract
What is not a term of a contract?
Mere puff
Representations that have not been incorporated into terms
How do you determine a breach of contract?
1) Is there a contract?
2) What are its terms? Which are expressed, which are implied, how are they incorporated?
3) Was there a breach? Which term was breached and how?
4) What category of term was breached? Condition, warranty, or innominate?
5) What are the remedies?
6) Are there any defences?
7) Conclusion
How can express terms be incorporated?
Timing - Routledge v Makay
Importance - Bannerman v White
Specialist knowledge/expertise - Dick Bentley v Harold Smith Motors
Checks - Schawel v Reade
Routledge v Makay
Facts: Buyer told seller about a motorbike - 1942 model. A week later, agreed to sell, turned out it was a 1930 model. Buyer argued age was a contractual term. Court said no - too much time elapsed between statement and contracting (timing). Court also influenced by the fact that during the sale, it was recorded in writing, and the written document didn’t mention the age (no signifier of importance).
Significance: Terms - incorporated by timing
Bannerman v White
Facts: Buyer was a hops-seller in London. Seller was a hops-producer in Kent. Buyer circulated a notice to their suppliers advising them to stop using sulphur. When contracting for this particular sale, Buyer told seller they wouldn’t contract if the hops for sale had been treated with sulphur. Seller assured them no sulphur had been used, as there hadn’t been any mould so hadn’t needed to use it. Statement made again when sample was produced. Sale happened - some hops had been treated with sulphur (5 acres out of 300). Sulphured and unsulpherd hops had been mixed together, so buyer rejected the whole lot upon delivery. Buyer argued breach of contract, court agreed - clear importance due to reiteration. Seller hadn’t knowingly made a misrepresentation, but did breach the contract, and the sulphur was a condition of the contract. In determining whether it was a warranty only or a condition as well, the judge compared it to a contract for peas where beans were delivered instead.
Significance: Terms - incorporated by importance. Sale by sample.
Dick Bentley v Harold Smith Motors
Facts:Bentley buying a car. At some point, someone had dialled back the odometer. The court argued the buyer was less able to determine the true mileage, seller (car dealer) was the expert, and mileage was an express term of the contract.
Significance: Terms - Incorporated by specialist knowledge/expertise
Schawel v Reade
Facts: Horse for sale for stud purposes. Buyer asked to check if it was sound for stud purposes; seller said “I assure you it’s fine, no need to check”. Court ruled that seller was adopting the risk in the truth of the statement, statement became a contractual promise.
Significance: Terms - incorporated by checks/overriding oral assurance
Hopkins v Tanqueray
Facts: Sale of a horse at auction. Day before, buyer was looking him over and seller said “I assure you, he is perfectly sound”. Bought the horse at the auction the next day. Was unsound, tried to sue seller for breach of warranty. Court found that as the representation was made the day before (not during the auction process and thereby not to all potential buyers) it was not a warranty and not part of the contract. Also no ICLR at that time.
Significance: Terms - incorporated by checks, timing, and ICLR.
What is the parol evidence rule?
Rule of evidence determining what a court can consider.
If a contract is a written contract, then extrinsic evidence is inadmissible. - Jacobs v Batavia
Jacobs v Batavia
Facts: Sale of profit sharing deposit notes. Prospectus made a statement about how and when they’d be paid out, stating that the seller would set aside enough money upon sale of the whole trust to pay off the profit shares. Then failed to notify buyer when trust was sold and that his rights had become exercisable. Court found that the prospectus formed part of the contract and statements made in it were binding.
Significance: Example of parole evidence rule and incorporation by reference.
What are the exceptions to the parol evidence rule?
Contracts not wholly written - J Evans v Merzario
Collateral Contracts - City of Westminster v Mudd
Onerous terms - Interphoto v Stiletto
How do entire agreement clauses affect the parol evidence rule?
They apply it in the strictest sense. - Intrepreneur Pub v East Crown
City of Westminster v Mudd
Facts: Mudd leased a shop from Westminster, occasionally slept in the shop. Lease up for renewal, new lease included provision preventing building being used for residential purposes/prohibiting sleep there. He asked about it, they said they wouldn’t enforce it. Later, they try to boot him for breach of contract. Court found a unilateral offer had been made “if you renew, we won’t enforce that provision”, which he accepted by signing.
Significance: Collateral contract (exception to parol evidence) and unilateral contract
Interphoto v Stiletto
Facts: Interphoto was a pic library, leased transparencies to Stiletto with a late return fee. Stiletto returned them a month late - about £4k of late fees. Court said if a provision of a contract is particularly harsh, then the requirement is that it must be pointed out with particular care. There is a duty (proportionate to how onerous it is) for the writing party to draw it to the attention of the reviewing party
Significance: Parol evidence and onerous terms
Inntrepreneur Pub v East Crown
Facts: Beer exclusivity agreement between pub and brewer. Verbal agreement to eventually let him out of it. “Entire agreement” clause in the contract made the parol evidence rule apply in the strictest sense. Court agreed with words on the page.
Significance: Parol evidence and entire agreement clauses - no overriding oral assurance in this case
How can terms be implied?
By law - e.g. in statute or common law as necessary terms
In fact - gives business efficacy to a contract
Liverpool CC v Irwin
Facts: Block of flats owned by local authority. Leases stated tenants are required to maintain their own flats. Nothing stating who had the obligation to maintain communal areas. Tenants argued it was landlord’s responsibility. Denning said a term can be implied if reasonable to do so. Denning was overruled in HoL - reasonability is not a high enough threshold. Only impose an implied term if it is necessary for the contract, i.e. if contract will fail without it. If contract fails/doesn’t exist for a different reason, then you can ignore this.
Significance: Term implied in law. Only impose an implied term if it is necessary for the contract, i.e. if contract will fail without it.
The Moorcock
Facts: Ship owner and dock owner agreed to moor the ship at a dock. When tide went out, ship sank down and rested on seabed, refloated when tide came back in. Dock had a rocky seabed, ship was damaged. Court said a reasonable bystander would say that the dock being a safe berth for a ship was an obviously implied term of the contract.
Significance: Term implied in fact
British Crane Hire v Ipswich Plant
Facts: Two crane companies had a partnership agreement, leased a crane to then lease to a customer, customer sank it. Obligation to extract the crane was unclear between owner vs lessor. Generally customer has obligation to ensure to return the machine. Taken as a convention.
Significance: Term implied in fact
McCutcheon v McBrayne
Facts: Trying to ship a car to island in the Hebrides. Car owner had done this before, typically is asked to sign a disclaimer by the ferry. In this instance, wasn’t asked to sign a disclaimer. Car fell off the ferry, ferry said they weren’t responsible because of disclaimer, owner said he hadn’t signed one in this instance. Court argued if you do repeated business on same consistent terms, then those terms can be implied unless expressly repealed.
Significance: Term implied in fact
Sale of Goods Act 1979
Implies terms related to:
s.12 Title
s.13 Description
s.14 Quality and fitness for purpose
s.15 Sample
Most of which are conditions
Arcos v Ronaasen
Facts: Sale of wooden staves. On delivery, some were a fraction off the size. Buyer didn’t care, but due to market changes, could now get them cheaper elsewhere. Rejected the goods.
Significance: Example of sale by description being a condition, and the risks involved. S15A of Sale of Goods Act added as a response to stop people playing the market.
Godley v Perry
Facts: Toy catapult. One in shop worked, the one delivered fell apart.
Significance: Example of sale by sample.
Supply of Goods and Services Act 1982
Implies terms related to:
s.13 Reasonable care and skill
s.14 Within a reasonable time
s.15 To pay reasonable consideration
What are the three categories of terms?
Conditions - Poussard v Spiers
Warranties - Bettini v Gye
Innominate - Hong Kong Fir
