WEEK 5

Question 1

Terms of a contract

Answer 1

The terms of a contract are the contents of a contract, and state the parties’ legal duties and obligations to each other

Terms may be oral, written review or even implied

Failure to comply with an obligation could result in the wronged party to claim damages or treat the contract as ended

Question 2

Express terms

Answer 2

Those actually sated (orally or in writing)

Question 3

Implied terms - terms may be implied by:

Answer 3

Statute e.g. Sale of Goods Act 1979 stipulating quality of goods

Trade customs

The courts

Question 4

Condition term

Answer 4

Fundamental term of the contract

Question 5

Warranty

Answer 5

Minor term of the contract

Question 6

Innominate term

Answer 6

Terms that cannot be assigned into either category (also known as intermediate terms)
Depends on the seriousness of the breach and how much benefit has been lost as to whether the contract can be ended

E.g. a term stating that a car “must be roadworthy” can be breached in a multitude of ways, some much more serious than others

Question 7

Pre-Contractual statements

Answer 7

Trader’s hype or puff
A representation
A terms of the contract

Question 8

Determining a term from a representation

Answer 8

Objective test which factors:

The importance of the statement to both parties
Interval of time between statement and contract
Whether the statement is oral or written
Knowledge and skill of the party making statement

Question 9

Exemption clauses

Answer 9

A contract may contain stated clauses that attempt to exclude or limit liabilities to the other party

Exemption clause – attempt to exclude all legal liability e.g. a car park contract excluding legal liability for theft or damage while parked in the car park

Limitation clause – attempt to limit legal liability e.g. airline’s contract may limit a claim for lost or damaged baggage to £100

Question 10

Validity of exemption clauses

Answer 10

For the exemption clause to be valid, it must:

Be incorporated into the contract, instead of being added afterwards

Be clear and non-ambiguous

Comply with relevant statutes, including Unfair Contract Terms Act 1977 (if a B2B contract) and Consumer Rights Act 2015 (if a B2C contract)

Question 11

Terms that may be regarded as unfair (and therefore invalid)

Answer 11

Terms that excludes liability for death or personal injury
Terms requiring consumer, who fails to fulfil their obligations, to pay a disproportionately high sum to the trader
A term making the contract binding on the consumer, but allows the seller to avoid performance

Question 12

Vitiating Factors

Answer 12

Contract may have all the necessary elements previously discussed, but may still not be binding because it has invalidating factors

These are also known as vitiating factors

See diagram for possible factors that can invalidate a contract

Question 13

What makes a statement ‘actionable misrepresentation’?

Answer 13

1 – Statement is made (could be oral, written or by conduct)
2 – Statement must be false
3 – Statement must be presented as a fact
4 – The statement must have induced the other party to enter into the contract

Question 14

Types of misrepresentation

Answer 14

Fraudulent
Negligent
Innocent

Question 15

Fraudulent misrepresentation

Answer 15

Where the party makes a false statement that they know is not true

Question 16

Negligent misrepresentation

Answer 16

A false statement made by a person who believes that it is true, but has no reasonable grounds for that belief

Question 17

Innocent misrepresentation

Answer 17

A false statement made by a person who has an honest and reasonable belief in its truth. The belief must be present when the statement is made right up to the time of the contract .

Question 18

Types of contract mistakes

Answer 18

1- common mistake
2 - Mutual mistake
3 - Unilateral mistake

Question 19

Duress

Answer 19

Where a threat of unlawful violence or imprisonment is made in order to induce the other party into entering into the contract

Question 20

Economic Duress

Answer 20

Where a contract has been agreed to after extortion from one of the parties

The innocent party must show that:
Illegitimate threats or pressure was applied by other party
Pressure was significant in making them agree to contract
They had no practical choice but to agree

Question 21

Undue influence

Answer 21

This covers situations where some form of improper pressure has been put on a person to enter into a contract

To prove actual undue influence, victim must prove they entered into contract as result of genuine intimidation

Courts apply a subjective test based on what the victims believe

Question 22

Illegality

Answer 22

Contract may be illegal because:

its purpose is illegal e.g. a contract to sell contraband medicine

or the manner in which the contract is to be performed is illegal e.g. a contract to manufacture clothing using slave workers