WEEK 5 Flashcards
Terms of a contract
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
Express terms
Those actually sated (orally or in writing)
Implied terms - terms may be implied by:
Statute e.g. Sale of Goods Act 1979 stipulating quality of goods
Trade customs
The courts
Condition term
Fundamental term of the contract
Warranty
Minor term of the contract
Innominate term
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
Pre-Contractual statements
Trader’s hype or puff
A representation
A terms of the contract
Determining a term from a representation
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
Exemption clauses
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
Validity of exemption clauses
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)
Terms that may be regarded as unfair (and therefore invalid)
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
Vitiating Factors
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
What makes a statement ‘actionable misrepresentation’?
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
Types of misrepresentation
Fraudulent
Negligent
Innocent
Fraudulent misrepresentation
Where the party makes a false statement that they know is not true
Negligent misrepresentation
A false statement made by a person who believes that it is true, but has no reasonable grounds for that belief
Innocent misrepresentation
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 .
Types of contract mistakes
1- common mistake
2 - Mutual mistake
3 - Unilateral mistake
Duress
Where a threat of unlawful violence or imprisonment is made in order to induce the other party into entering into the contract
Economic Duress
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
Undue influence
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
Illegality
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
