Contract 3: Terms

Question 1

How can terms be included in a contract?

Answer 1

Express Terms
- expressly agreed between parties
- can be incorporated if not in writing

Implied Terms
- implied by statute, courts or custom and usage

Question 2

What is considered when deciding if something is a term of representation?

Answer 2

courts to consider intentions of party viewed objectively (reasonable person test) taking into account:

1. Form
   - if contract was written out why was term oral (more likely rep.)
2. Important
   - to person who made it (would they have entered contract if it wasn’t for the statement)?
3. Stage of Negotiation
   - if at time of contract more likely term
   - if during negotiations them rep.
4. Specialist Knowledge
   - If seller makes a factual statement that should be within the scope of their knowledge, intending the buyer will act on that statement, more likely to viewed as term
   - Statement of belief of which they have no direct knowledge then representation

Question 3

What are the types of terms?

Answer 3

Condition
- Term so fundamental that it is goes to the root of the contract
- If breached contract does not work

Warranty
- Term that is incidental or collateral to main terms of contract

Innominate
- Term where it is unclear at the outset whether it is a condition or warranty
- If after breach innocent party loses substantially the whole of the benefit of the contract then treated as condition

Question 4

What is the effect of breaching different types of terms?

Answer 4

Condition
- Repudiatory breach
- Innocent party has option to terminate the contract and claim damages for loss
- Can choose to affirm it but will lose right to terminate and claim damages

Warranty
- Cannot terminate / only damages

Question 5

What is the effect of a party not performing obligation on time?

Answer 5

Depends if time is of the essence
- must be specified; or
- presumed for commercial contracts for delivery of goods if time has been agreed

Breach
- of condition if time is of the essence
- of warranty if time is NOT of the essence

Question 6

When will an express term for part of the contract?

Answer 6

Term will only form part of the contract (written or oral) if parties have reasonable notice of it
- Eg. Prices on a menu (incorporated)

Question 7

What is the Parol Evidence Rule?

Answer 7

If contract is in writing presumption that external evidence cannot add to, subtract from, contradict or vary the terms

Exception
- implied terms
- collateral contracts
- court finds contract is part oral part writing

Question 8

What is the effect of Sale of Goods Act 1979?

Answer 8

Implied terms whenever goods are sold that:
- Seller has title to goods in question
- Goods match any description applied to them by the seller
- Goods be of satisfactory quality
- Goods be fit for any particular purpose made known to the seller by the buyer

Question 9

Are terms implied by Sale of Goods act conditions or warranties?

Answer 9

• Typically, conditions
• However, if breach is so slight that it would be unreasonable for buyer to reject goods, the breach is treated as breach of warranty

Question 10

Can implied terms under Sale of Goods Act be excluded?

Answer 10

• Cannot exclude implied term for title (has to own it duh)
• Other implied terms can be excluded if it is reasonable

Question 11

What is the effect of the Supply of Goods and Services Act 1982? Condition vs Warranty?

Answer 11

Implied terms for B2B and private sales for services and goods supplied in relation to the service

• Supplier will carry out the service within reasonable time (if no time is agreed) and with reasonable care and skill (innominate)
• Goods same as SGA

Question 12

Can implied terms under Supply of Goods and Services Act be excluded?

Answer 12

Subject to UCTA reasonableness test

Question 13

What are the effects of the Consumer Rights Act 2015?

Answer 13

Applies to B2C contracts

Goods
- Goods should match their description and be of satisfactory quality and fit for purpose

Services
- Services should be carries out with reasonable care and skill
- Completed in accordance with any information which the consumer relies on (eg. Price quotations)
- Completed for a reasonable price (if not price has been agreed)
- Competed within a reasonable time (in not timescale has been agreed)

Question 14

How can CRA implied terms to excluded?

Answer 14

They can’t

Question 15

What is the meaning of satisfactory quality in SGA?

Answer 15

Goods must be:
- fit for purpose for which such goods are generally used;
- free from minor defects;
- safe and durable.

Exception
- for defects brought to buyers attention or which would have been obvious if buyer had inspected goods

Question 16

When might the court imply terms into contract?

Answer 16

1. If it is necessary to give business efficacy
   - so to make contract work in way parties intended (obvious by-stander test)
2. if there is the a industry standard
   - can be implied by custom and usage
   - unless excluded on contradicts express term
3. through course of dealing
   - if can show it is regular and consistent

Question 17

If agreements are incomplete or terms are vague when will the court enforce contract?

Answer 17

Will get involved:
- contract provides mechanism for resolving uncertainty
- contract for future performance over a period of time and leave matter to be adjusted
- if uncertain terms can be severed
-

Question 18

If agreements are incomplete or terms are vague when will the court NOT enforce contract?

Answer 18

Not if:
- court is unable to conclude intentions of parties
- eg “agreement to agree”