Terms

Question 1

What are the difference between express and implied terms?

Answer 1

Express = statements made by parties by which they intend to be bound (writing/oral/mixture)

Implied = not formed by parties but law otherwise deems they exist (because courts/law require this)

Terms = contents of contract defining rights/obligations arising from it

Question 2

What is the difference between mere puffs, representations, and terms?

Answer 2

• Mere puff = statement of no legal significance
• Representation = statements of fact or law which parties do not intend to be binding
• Terms = statements of fact which parties intend to be binding

Question 3

What is the difference between representations and terms not being fulfilled?

Answer 3

Term not fulfilled = breach of contract; innocent parties claim damages/remedies

Representation not fulfilled = misrepresentation - not breach but party can still obtain remedy

Question 4

What is the test for deciding whether parties intended to be bound by a statement made by them?

I.e. representation or term

Answer 4

Objective: what would a reasonable person understand to be the intention of the parties having regard to the circumstances

Question 5

Where a statement is made during negotiations for the purpose of inducing other party into contract, what does this prima facie create?

Answer 5

A prima facie ground for inferring that statement was intended to be a binding term of contract

Question 6

How can a prima facie ground of a binding term be rebutted?

Answer 6

If party making statement can show it would not be reasonable to hold them bound by it

Question 7

What factors are considered when court decides if parties intended a statement to be binding?

Answer 7

• The importance of the statement
• Timing of the statement
• Reduction of contract into writing
• Special knowledge/skill of person making it
• Assumption of responsibility

Question 8

How will importance of the statement help to determine whether it is a term?

Answer 8

If it can be shown that injured party considered it so important that it would have entered contract but for that statement

Bannerman - D said ‘if they have been treated with sulphur, I am not interested’ - D enquired if samples contained suphur and P said they did not - small amount of crop had been treated with sulphur - D treated contract as repudiated and court held it was a term

Question 9

How will timing of the statement help to determine whether it is a term?

Made at time of contracting v delay

Answer 9

• If statement made at time of contracting = more likely to be a term of contract than if made at earlier stage in negotiations
• Delay between making statement and entering contract = less likely to be a term

Routledge - seller told buyer in good faith that motorcylce was a 1941 or 1942 model and one week later entered into a contrwact of sale (written memorandum did not mention year of model) - bike was 1930 and buyer sued for breach - CoA held that lapse of time between statement and entering into contract meant statement re year was representation and not a term

Question 10

How will reduction of contract into writing help to determine whether it is a term? Is this decisive?

Answer 10

If considered a term, parties would have ensured inclusion in written agreement

Not necessarily decisive!

Routledge - fact that motorcylce was a 1941 or 1942 model was not included in written memorandum

Question 11

How will special knowledge/skill help to determine whether it is a term?

Answer 11

Where the party making statement had exclusive access to information/knowledge cf with other party, likely to be considered in latter’s favour

Oscar Chess - seller of car who had no knowledge of cars gave wrong date of car when they sold it to a car dealer - even though seller made the statement it was held to be a representation as the skills lied with the buyer

Dick Bentley - car dealer got mileage on car wrong, and this was held to be a term having sold it to the buyer

Question 12

How will special assumption of responsibility/further checks help to determine whether it is a term?

Answer 12

Where vendor expressly accepts responsibility for soundness of sale item in question (to potentially deter checking by buyer) - statement may become term

Advising buyer to have it checked would have opposite effect

Schawel - seller of horse said the buyer did not need to look for anything because the horse was sound in every way - as seller represented horse was fit for sale and purchaser acted on this, the statement was deemed to be a term of contract

Question 13

What is the process of ascertaining express terms of contract?

I.e. who is the observer and what will they think

Answer 13

A search to ascertain what an objective observer would think parties intended to be bound by

Question 14

In what 4 ways is intention to be bound demonstrated?

Express terms

Answer 14

1. A signed written contract (in almost all cases signing of a contrac)
2. Incorporation by notice
3. Incorporation by course of dealing
4. Other ways of agreeing express terms provided parties adequately express intention

Question 15

Will parties intend to be bound by a signed written document even if they have not read the terms/understand what they mean?

Answer 15

Yes

Question 16

What are the exceptions to a written contract in ascertaining terms?

Intended…orally…

I.e. exceptions to the fact that parties intend to be bound by a signed written document even if they have not read/understood terms

Answer 16

• If document signed was not one intended to have contractual effect (e.g. document acknowledging receipt of goods; post-contractual document)
• A party has orally misrepresented meaning of clause to other party

Question 17

What is needed for terms to be incorporated by notice?

Answer 17

Reasonable steps have been taken to bring them to C’s attention

Persistence with transaction suggests intention to be bound

Question 18

What constitutes ‘reasonable steps’ for incorporation by notice? What does not?

Answer 18

• Reasonable: By reference to a different document (e.g. ticket referring to terms contained in railway table)
• Unreasonable: Notice not referred to clearly (e.g. not on front of document) or clause illegible

Question 19

How can an onerous express term be incorporated by notice?

Answer 19

By clearly bringing to other party’s attention (‘something startling’; red hand rule)

Question 20

How are onerous terms treated in a document containing contractual terms where a party signs it?

Answer 20

Party bound by onerous terms even if offending clause is onerous

Question 21

If a term is being incorporated by notice, when must reasonable notice be given? What happens if not given then?

Answer 21

Before or at the time of contracting - will not amount to binding term if communicated only after contract made (e.g. reasonable notice not given until it is stated on the ticket which has been purchased)

Thornton - C returned to car in car park after buying ticket and going about business and was then severely injured while attempting to put belongings in car - D claimed ticket (bought by C when entering car park) was contractual document and it incorporated a condition exempting them from liability for injurty to customer occurring when motor vehicle is in car park - court held contract was formed before machine produced ticket and conditions referred to on ticket (or later) were not incorporated into the contract - NB did not matter that he did not read after buying it; court acknowledged no one actually does this

Question 22

If a term is incorporated by a document, when will the incorporation not be effective?

Answer 22

Where the document giving notice was not intended to have contractual effect

Chapleton - C hired deck chair and was given a ticket which containd additional terms; held not to be binding because an observer would only have understood this to be a receipt

Question 23

When will a term be incorporated by a course of dealing?

Answer 23

Where course of dealing has been consistent over a period of time and regular (i.e. not a few occasions over a number of years)

McCutcheon - attempt to incorporate by course of dealing unsuccessful because written terms relied upon had not been consistently incorporated in the past (sometimes, signed for, sometimes not)

Question 24

What is an entire agreement clause? What will it not be effective for?

Answer 24

A clause providing that a particular (set of) document(s) constitutes the entire agreement of the parties

Would not be effective for misrepresentation liability

Question 25

When will verbal statements be considered to have formed part of the contracts?

Answer 25

Where they are important and made near to the time the contract was written

If the parties intended

Question 26

What is a term implied in fact?

I.e. what are they based on?

3

Answer 26

• Trade/professional customs: based on assumption that parties intended to be bound by well-known customs of particular trade
• A course of dealing between the parties: consistent pattern over many occasions over long period of time
• Business efficacy: without implied term, arrangement would be so unworkable that it would not have been entered into

Question 27

For a term implied for business efficacy, does this mean a term will be implied to transform agreement into business-like arrangement?

Answer 27

No - only implied if it is something so obvious to relevant parties (they would respond ‘oh, of course!’

Question 28

What is a term implied as a matter of law? Will they always operate?

I.e. what are they based on?

Answer 28

Terms implied by statute: statutory implied terms operate irrespective of intention of parties unless valid exemption clause

I.e. Sale of Goods Act, Consumer Rights Act

Question 29

What are the 5 implied terms under SoGA 1979?

NB implied terms here do not apply to consumer contracts post-2015, only still apply for B2B

Answer 29

• S12 - Title: seller has right to sell
• S13 - Correspondence with description (characteristics, specification)
• S14(2) - Satisfactory Quality - standard of a reasonable person taking account of description, price and circumstances
• S14(3) - Fit for particular purpose
• S15 - The bulk of goods must correspond with the sample: goods free from any defect which would not be apparent on reasonable examination of sample

Question 30

What factors are taken into account under ‘satisfactory quality’? What is the exception?

Answer 30

• Fitness for purposes for which goods are commonly supplied
• Appearance and finish
• Freedom from minor defects
• Safety; and
• Durability

Exception: regards defects specifically drawn to buyer’s attention before contract made/if buyer examines goods before contract made

I.e. can exclude implied trem of satisfactory quality

Question 31

What happens - re fitness for a particular purpose - where the buyer makes known expressly/by implication to seller any particular purpose for which goods are being bought?

Answer 31

There will be an implied term of fitness for purpose whether or not that purpose is the purpose for which the goods are commonly supplied

Bar where it is unreasonable to rely on seller

Question 32

What will a breach of the implied terms under SoGA amount to? What is the exception?

Not including implied terms as to title!

Answer 32

Will be a breach of condition unless the breach is so slight it would be unreasonable for buyer to reject the goods and repudiate the contract - will be treated as a breach of warranty instead and will only entitle to buyer to claim damages

Question 33

On whom is the burden of proving that breach of implied term is so slight and therefore it is unreasonable to reject the goods?

Answer 33

Seller

Question 34

Can you contract out of all the implied terms under SoGA?

Answer 34

Implied undertaking as to title - no

Implied undertaking as to description, quality, fitness for purpose or sample - yes subject to reasonableness (this is significantly limited by UCTA)

Cf CRA implied terms - any attempt to exclude will not be binding on consumer

Question 35

The Supply of Goods and Services Act provides implied terms for what contracts?

Not consumer contracts! This is CRA

Answer 35

• Transfer of property in goods (ownership of goods changes hands; not sale of goods, a hire purchase agreement etc.)
• Hire of goods (A owns goods but B voluntarily has possession of goods; not hire purchase)
• Supply of services

Can vary terms subject to UCA

Implied terms for first two are broadly the same as those under SoGA

Question 36

What terms are implied in a supply of services agreement under the SGSA?

Answer 36

• Care and skill - service carried out with reasonable care and skill
• Time of performance - (where not fixed) within reasonable time
• Consideration - (where not agreed) party that is being supplied will pay a reasonable charge

Reasonable depends on circumstances

Question 37

What are contracts between consumer and business entered into prior to 1 October 2015 governed by?

Not the CRA!

Answer 37

Sale of Goods Act, Supply of Goods and Services Act, and the Unfair Contract Terms Act

After this - will be the CRA

Question 38

What is a ‘consumer’ and a ‘trader’ for the purposes of the Consumer Rights Act?

Answer 38

• Consumer = individual acting for purposes wholly/mainly outside of individual’s trade, business, craft or profession
• Trader = a person acting for purposes relating to that person’s trade, business craft or profession whether personally or through another person acting in trader’s name/on trader’s behalf

Question 39

What are the 3 implied terms for contract for goods/digital content under the Consumer Rights Act?

Answer 39

• Satisfactory quality (s9/s34)
• Reasonably fit for purpose (re goods; that consumer makes known) (s10/s35)
• Match description (s11/36)

Question 40

When would digital content meet the standard of satisfactory quality?

Answer 40

When it meets the standard a reasonable person would consider satisfactory having regard to matters of description and price together with all relevnat circumstances (e.g. public statement bout specific characteristiscs of digital content made by the trader)

Question 41

What are the implied terms for contracts for services under the Consumer Rights Act?

Answer 41

• Service performed with reasonable care and skill
• Reasonable price to be paid (where not fixed)
• Provided within reasonable time (where not fixed)

Question 42

If something is said or written to consumer by trader (/on behalf of trader) about the trader or service, is this an implied term?

Under CRA

Answer 42

Yes where taken into account by the consumer…

• When deciding to enter into contract
• When making any decision about the service after entering into contract

Question 43

How do remedies under the CRA operate within general contract law?

Answer 43

CRA remedies will sit alongside remedies which would be available to the consumer under general law

Unless otherwise stated

Question 44

What remedies are provided by the CRA for contracts for goods/digital content?

Sit alongside remedies available to consumer in law generally

Answer 44

• Short term right to reject
• Right to repair or replacement
• Right to price reduction or final right to reject (only for contracts for goods)

Question 45

How long is the short term right to reject available for the consumer and from when does it run?

Answer 45

For 30 days from:
1. When ownership passes (/possession transferred); and
2. The goods have been delivered; and
3. (If required) the trader has notified that they have completed installation

Question 46

When is the right to repair or replacement available?

Answer 46

Always unless it is:
1. Impossible
2. Disprorportionate (imposes unreasonable cost on trader relative to other remedies/interests of consumer)

Question 47

How does the right to a price reduction and final rejection work?

3 circumstances in which it is available

Answer 47

Only available where:
1. After one repair/replacement, the goods do not conform to contract; or
2. Consumer can require neither repair nor replacement (impossible or disproportionate); or
3. Consumer has required trader to repair/replace but trader is in breach of requirement to do so within a reasonable amount of time/without significant inconvenience to consumer

CANNOT HAVE BOTH

Question 48

In what amount of time must the final right to rejection be exercised to receive a full refund with no deduction for use?

Answer 48

6 months (from same date as with short term right to reject)

• Does not apply to motor vehicles

Question 49

Why are the implied terms set out in the CRA in a sense not conditions nor warranties?

Answer 49

Consumers cannot treat the contract as at an end as a result of a breach implied by s9, s10 or s11 save as to the extent set out in its remedies (i.e. final right to rejection etc.)

Cant treat a contract as finished as a result of breach of implied terms

Same for digital content

Question 50

What are the 2 remedial options for a consumer where digital content does not conform with the implied terms?

Satisfactory quality, fitness for purpose, matching description

Answer 50

1. The right to repair or replacement (same as goods)
2. The right to price reduction (same as goods; only where consumer cannot require repair/replacement or trader has failed…)

Question 51

What is the effect of digital content no conforming to the contract at any time within six months beginning with the day it was supplied?

Answer 51

Taken to have not conformed to contract when it was supplied

Question 52

What is a ‘reasonable time’ in the context of a trader breaching the requirement to repair within a reasonable time?

Answer 52

Considered with regard to the nature of digital content together with purpose for which digital content was obtained/accessed

Question 53

What are the rules on refunds re digital content?

Answer 53

Consumer has right to receive refund within 14 days using same payment method used to pay for digital content without imposing fee on consumer

Question 54

What is the consumer entitled to where the digital content provided under a contract causes damage to a device/other digital content owned by a consumer?

Answer 54

Consumer entitled to repair/compensatory payment if the damage is of the kind that would not have occurred if the trader exercised reasonable care and skill

Question 55

What two remedies are provided by the CRA for contracts for services and what are the conditions of each?

Answer 55

1. The right to require repeat performance (within reasonable time and w/o significant inconvenience to consumer) but not if impossible; and
2. The right to a price reduction (only where repeat performance is impossible/where trader fails to provide repeat performance within reasonable time or inconvenience)

Question 56

What is the difference between a condition and a warranty in terms of their breach?

They are both types of term

Answer 56

Condition is breached = innocent party can terminatre contract and sue for damages (released from future obligations)

Warranty is breached = damages is the only remedy

Question 57

Where an innocent party does not exercise the right to elect to treat the contract at an end after breach of condition, what happens?

Answer 57

Contract remains in full force and effect but innocent party can still sue for damags re the breach

Question 58

How to tell if a term is a condition?

Answer 58

If a term goes to the ‘root of the contract’

If breach of relevant term could result in the innocent party terminating at time of contracting = term is a condition

Question 59

What is an innonimate term?

Answer 59

A term of an intermediate nature that is not a condition nor a warranty at the outset - can be breached in minor or significant ways and effectively be either (looks at consequences/seriousness of the breach)

Different from traditional approach: intentions at time of contracting

Hong Kong Fir Shipping - term that ship being hired was ‘in every way fitted for ordinary cargo service’ was held to be innonimate term; could be breached in variety of ways, ranging from minor to significant

Question 60

What is the test upon encountering an innominate term?

And deciding if it is a condition or warranty

Answer 60

If the breach deprives the innocent party of substantially the whole benefit which he should have obtained from the contract, it will be a condition and if no then a warranty.

An innominate term can be either condition or warranty

E.g. breach could be of minor significance or incredible significance; not obvious straight away

Question 61

What is the test for the classification of a term?

Answer 61

1. Starting position: consider whether term has been classified as a condition or a warranty by 1) statute, 2) previous decision, 3) root of contract, 4) innonimate term
2. If no answer - court will need to look at contract, subject matter and surrounding facts to determine whether parties intended for any breach of term to entitle innocent party to reminate contract (root of contract test)
3. If no answer - court likely to decide term is innonimate and apply that test

I think

Question 62

How does the classification of terms apply to implied terms in SoGA and CRA?

Answer 62

• S12-15 are conditions, but if slight and unreasonable, the court can ultimately treat them as warranties
• Terms implied by CRA are subject to rights of rejection etc. in certain circumstances - classification not of central importance

I.e. doesn’t really matter what they are classed as because their remedies are different to regular contract law

Question 63

When will a repudiatory breach have been committed? What can the innocent party do?

Answer 63

A party that has committed a breach of condition is said to have committed a repudiatory breach; innocent party has a right to treat contract as repudiated

I.e. they can terminate the contract

A party in breach of a condition commits a repudiatory breach

Question 64

What happens when a standard form clashes with specifically agreed terms?

Answer 64

The special terms will prevail - especially if standard form is inconsistent with the intention of the transaction as diclosed by the terms agreed

Question 65

Will time to complete the contract be a condition or warranty?

Answer 65

• Depends on intention of the parties
• Where time is ‘of the essence’ = lateness amounts to a repudiatory breach
• Time can become of the essence by innocent party serving notice on defaulting party stating that time is of the essence

Question 66

How is uncertainty of interpretation of a term resolved?

Answer 66

Against the person relying on the clause - contra proferentem; contracts interpreted against the person who stands to gain