contents of a contract

Question 1

why may terms be implied into a contract rather than expressed?

Answer 1

party may not expressly agree with all the terms- can be because share similar background so make certain assumptions which they don’t bother to spell out because it is obvious/they have consistent dealings so assume their latest contract has similar provisions/protect one of the parties

Question 2

what are the two ways terms can be implied?

Answer 2

by the courts or by statute

Question 3

what are the types of ways courts can imply terms?

Answer 3

local custom/trade usage, previous course of dealings between parties, to reflect the presumed intention of the parties, because of type of contract

Question 4

explain terms implied by local custom or trade usage

Answer 4

the contract is formed against a background of common assumptions based on what usually happens in that locality or in that line of business (unless there is a provision in the contract which contradicts a custom)

Question 5

explain terms implied by a previous course of dealings between the parties

Answer 5

Terms that have been consistently applied in past relationships between the parties may be considered to be implied in the current contract.

Question 6

explain terms implied by the courts to reflect the presumed intention of the parties

Answer 6

two tests: business efficacy (contract makes business sense) and officious bystander

Question 7

what case shows business efficacy test

Answer 7

The Moorcock 1889- D court should consider whether a term is necessary to make the contract work commercially- not enough that term would be reasonable to imply in the sense that it would improve it

Question 8

what did MacKinnon LJ say in Shirlaw v Southern Foundries Ltd about the officious bystander test?

Answer 8

a term would only be implied if the point was so obvious that it went without saying that was what the parties intended

Question 9

explain terms implied by the courts because of the type of contract

Answer 9

court identifies provisions which are typical of the kind of contract and say tehse are implied terms unless the party makes contrary provisions- common contracts e.g. tenancy agreements, employment contracts

Question 10

how can terms by implied by statute?

Answer 10

sales of goods act, supply of goods and services act, consumer rights act

Question 11

what is sales of goods act?

Answer 11

doesn’t apply to contracts for the sale of goods made between trader and consumer- only business to business, consumer to consumer or consumer to business

Question 12

what is a condition?

Answer 12

major term of a contract (as opposed to a warranty which is a minor term)

Question 13

what is section 13 of SGA?

Answer 13

where there is a contract for sale of goods by description, s 13 implies a condition that the goods will correspond to their description

Question 14

what is section 14 (2) of SGA?

Answer 14

where the seller is selling in the course of a business, s 14 (2) implies a condition that the goods supplied will be of satisfactory quality

Question 15

what is section 14 (3) of SGA?

Answer 15

where seller is in course of business and the buyer expressly or by implication makes known a particular purpose for which the goods are being bought, it implies a condition that the goods supplied are reasonably fit for that purpose

Question 16

what are remedies for breaches of SGA?

Answer 16

reject goods and recover money (not applicable if breach is so slight it would be unreasonable or if the buyer has accepted the goods) or they can keep goods and claim damages if suffered loss

Question 17

what is Sales of Goods and Services Act?

Answer 17

implies terms into a contract for services and contracts for work and materials that are not made between a trader and consumer

Question 18

what are the two types of business to business contracts

Answer 18

work and materials/services

Question 19

what are work and materials contracts

Answer 19

necessarily involve the supply of goods e.g. building offices or sports stadium

Question 20

what are services contracts?

Answer 20

supplier simply contracting to provide a service e.g. cleaning

Question 21

when are s 4(2) and s 4(5) of Supply of Goods and services Act applicable?

Answer 21

when foods are supplied in the course of a business

Question 22

what are innominate terms?

Answer 22

impose no strict liability

Question 23

what is the Consumer Rights Act?

Answer 23

to consolidate and clarify the law relating to the rights of consumers and protection of their interests

Question 24

what does part 1 of the consumers rights act deal with?

Answer 24

consumer contracts for goods, digital content and services

Question 25

what does the CRA apply to?

Answer 25

sales contracts between trader and consumer (sales of goods and any contract where goods are supplied and paid for as part of the contract

Question 26

explain terms implied into sales contracts

Answer 26

ss 9-11= similar to those in SGA and SGSA i.e. satisfactory quality, fit for purpose and are as described, but NOT as conditions but as statutory rights

Question 27

what are the consumers rights if the trader is in breach of ss 9-11 of the CRA?

Answer 27

short term right to reject and get full refund, right to repair or replacement, right to a price reduction or the final right to reject and get a partial refund to reflect the consumer’s use of goods

Question 28

does the CRA apply to services contracts?

Answer 28

any contract for a trader to supply to a service/work to a consumer

Question 29

explain implied terms in a services contract

Answer 29

carried out with reasonable care and skill, if no price has been fixed a reasonable price will be paid, where no performance has been foxed the work will be performed in a reasonable time- these are statutory rights NOT conditions

Question 30

explain consumers rights to enforce terms about services

Answer 30

s 54 of CRA provides that where a service/work does not confrom tp the contract, consumer has right to require repeat performance or a price reduction (for breaches of time and care and skill) or the right to just a price reduction (reasonabel time)

Question 31

what happens if a court decide a term is a warranty?

Answer 31

cannot terminate contract, btu can sue for damages

Question 31

what happens if a court decides a term is a condition (if the contract hasn’t been fully performed)?

Answer 31

innocent party have option of terminating the future performance of the cintract as well as obtaining damages

Question 32

what are exemption clauses?

Answer 32

seeks to exclude liability completely or to limit liability id a breach fo contract occurs or a tort is committed

Question 33

what is needed for an exemption clause to be relevant?

Answer 33

breach of contract or a tort must have been been committed

Question 34

how can exemption clauses be incorporated into a contract?

Answer 34

signature, notice, a previous consistent course of dealing

Question 35

who needs to have signed the contract for the clauses to be incorporated?

Answer 35

only claimant- not party relying on clauses

Question 35

explain incorporation by signature

Answer 35

if you sign a document then the clauses in that document will be incorporated as part of the contract even if you didn’t read them- L’Estrange v Graucob Ltd- small print but still incorporated

Question 36

what is incorporation of clauses by notice?

Answer 36

document must be contractual by nature, innocent party must know of the clause to the party relying on the clause must have taken reasonable steps to bring it to the other’s notice before the contract is finalised

Question 36

what are the 3 exemptions for incorporating clauses into a contract by signature?

Answer 36

illegibility, inaccurately described and claimant is relying on this description, unusual and onerous

Question 37

what would a court regard as reasonable steps to notify a party before a contract is finalised?

Answer 37

position of the clause on the document e.g. please turn over, prominence of the clause on the document, type and nature of the clause i.e. is it unusual or onerous?

Question 38

explain incorporation by a previous consistent course of dealing

Answer 38

dealing must be both consistent and amount to a ‘course’ of dealings i.e. a sufficient number of regular dealings

Question 39

explain the contra proferentum rule when interpreting exemption clauses

Answer 39

if clause is ambiguous or unclear the court will interpret the clause against the party relying on the clause (applies to all clauses that are ambiguous not just exemption)- Houghton v Trafalgar Insurance

Question 40

can exemption clauses cover the tort of negligence?

Answer 40

clear words needed to exclude liability for negligence but if wording is clear, the word ‘negligence’ doesn’t have to be used- Canada Steamship Lines v The King 1952

Question 41

can an exemption clause over a breach of contract?

Answer 41

a serious breach provided the clause is clearly worded- Photo Productions Ltd v Securior

Question 42

what is Unfair Contract Terms Act?

Answer 42

doesn’t apply to exemption clauses trader to consumer as they are governed by rules in CRA BUT UCTA applies to any clause excluding, limiting or otherwise restricting liability including a clause which makes liability subject to restrictive conditions

Question 43

under the UCTA, can exemption clause limit liability for negligent breach of contract?

Answer 43

if causes death it is void, if any other damages, valid if reasonable

Question 44

under the UCTA, can exemption clause limit liability for breach of express term of contract?

Answer 44

valid if reasonable

Question 45

under the UCTA, can exemption clause limit liability for breach of terms implied by ss 13 and 14 of SGA?

Answer 45

valid if reasonable

Question 45

under the UCTA, can exemption clause limit liability for ss 3 and 4 of SGSA?

Answer 45

valid if reasonable

Question 46

what is the UCTA reasonableness test?

Answer 46

exemption clause must have been a fair and reasonable one to include having regard to the circumstances which were known to the parties or within the contemplation of that parties when the contract was made

Question 47

for the reasonableness test, who has the burden of proof?

Answer 47

on party seeking to rely o the exemption clause to show it is reasonable

Question 48

what factors are involved in the reasonable test?

Answer 48

relative strength of the bargaining positions of the parties/did the customer receive an inducement to agree to the exemption clause/did customer know about it/compliance conditions/were the goods manufactured to special order?

Question 48

must the whole clause be reasonable?

Answer 48

court decided in Stewart Gill Ltd v Horatio Myer & Co Ltd that the clause was as a whole unreasonable

Question 49

what did Lord Griffith state should be considered in determining whether this disclaimer was reasonable?

Answer 49

were the parties of equal bargaining power? would it be reasonable/practicable to obtain the advice from an alternative source taking into account considerations of cost and time, how difficult if the task being undertaken for which liability is excluded? what are the practical consequences of the decision on reasonableness?

Question 50

when would a contract between a trader and consumer not be binding?

Answer 50

if it is unfair i.e. contrary to the requirement of good faith and causes a a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer

Question 51

what is the general rule about exemption clauses and third parties?

Answer 51

an exemption clause cannot protect a third party as the privity rule applies that only a party can rely on a clause in a contract

Question 52

what is the exemption to the rule that exemption clauses do not apply to third parties?

Answer 52

Contracts Act 1999- a third party can acquire rights if the contract expressly provides that they acquire a benefit or the term purports to confer a benefit on them