Contents of a Contract

Question 1

Circumstances where the court may imply a term into a contract

Answer 1

1. Custom or trade usage (both in same trade / area)
2. Consistent course of dealings
3. Necessary to make a contract commercially viable (business efficacy test)
4. So obvious parties intended it (both must be in agreement) (officious bystander test)

Question 2

What is the business efficacy test

Answer 2

A term will be implied if…
Necessary to make contract commercially viable

Question 3

What is the officious bystander test?

Answer 3

Term will be implied if…
So obvious goes without saying the parties intended it.

Both must agree to term

Question 4

Who does the SGA 1979 apply to?

Answer 4

1. b2b
2. c2c
3. c2b

Only sale by description applies to consumers (not quality / purpose)

Question 5

Who does SGSA 1982 apply to?

Answer 5

b2b

Question 6

Who does the CRA 2015 apply to?

Answer 6

t2c

Question 7

What are the statutory implied terms?

Answer 7

1. comply with description
2. satisfactory quality
3. fit for purpose
4. reasonable skill and care
5. reasonable time (if not otherwise agreed)
6. reasonable price (if not otherwise agreed)

Question 8

When is the class of term relevent?

Answer 8

Obligations are unfinished

Question 9

What statutory implied terms are conditions (strict liability)

Answer 9

1. correspondence with description
2. satisfactory quality
3. fit for purpose

Question 10

What statutory implied terms are innominate?

Answer 10

1. reasonable skill and care
2. reasonable time
3. reasonable price

Question 11

When will the court imply a term due to previous course of dealings?

Answer 11

1. consistent (same terms + signed)
2. course (high number + regular basis)

Question 12

What is the test to determine whether a term is a condition or warranty?

Answer 12

Whether a reasonable person would think the parties intended the term to be a condition / warranty at the time the contract was made

classification in contract can be rebutted

Question 13

Remedies for breach of a condition

Answer 13

1. Termination (only if future obligations)
2. Damages

Question 14

What is an innominate term?

Answer 14

• Cannot be classified at outset as wide spectrum of possible breaches
• parties wait and see consequence of breach
• condition if effect deprives innocent party of substantially whole benefit of contract

Question 15

When is an innominate term a condition?

Answer 15

Breach deprives innocent party of substantially whole benefit of the contract

Question 16

3 conditions

When is the term that goods must comply with description implied by statute?

CRA / SGSA / SGA

Answer 16

1. b2b (SGA or SGSA), c2b or c2c (SGA) or t2c (CRA)
2. Buyer relies on a description
3. Reasonable to rely on description

Question 17

When are the conditions that goods must be of satisfactory quality / fit for purpose implied by statute?

SGA / SGSA / CRA

Answer 17

Sold in the course of a business (b2b or t2c only)

Never if a consumer is selling

Question 18

3 exceptions

What are the exceptions to the GR that goods must be of satisfactory quality?

Answer 18

Before the contract is made…
1. Defect is specifically drawn to buyer’s attention; or
2. Buyer examined goods and should have noticed defect; or
3. Buyer was supplied a sample and defect was present.

Question 19

When can a buyer rely on ‘fit for purpose’ if not using for intended purpose?

Answer 19

1. Sold in course of business
2. Buyer makes purpose known to supplier
3. Reasonable to rely on supplier’s skill / knoweldge

Question 20

What are the statutory remedies under SGA for breach of statutory condition?

e.g. Compliance with description, satisfactory quality, fit for purpose

Answer 20

1. Terminate + reject goods + full refund; or
2. Affirm + keep goods + damages; or
3. Damages only

Cannot terminate if fails to reject in reasonable time or minor defect

Question 21

When is termination unavailable as a remedy under the SGA?

Answer 21

1. Buyer accepts goods + does not reject in reasonable time; or
2. breach is very small (e.g. goods still usable)

Burden is on seller prove that minor breach

Question 22

When will reasonable time and sum be implied?

Answer 22

No express agreement in contract

Question 23

Can liability be excluded or restricted for breach of statutory condition?

e.g. by description, satifactory quality, fit for purpose

Answer 23

1. If b2b: UCTA (yes, if reasonable)
2. if t2c: CRA (no)

Question 24

Statutory remedies for breach of statutory condition under CRA?

Answer 24

Within 30 days of delivery / installation:
* rejection + full refund

Within 6 months of delivery / installation:
* repair or replacement; or
* price reduction OR rejection + partial refund (only if repair / replacement is inappropriate)

EXCEPTIONS:
* if perishable: time limit as long as goods can be expected to last
* no remedy after 30 days if seller can prove goods conformed with contract on day of delivery

Question 25

Statutory remedies under CRA for breach of * reasonable care; or * express term

Answer 25

1. repeat performance (if reasonable); or 2. price reduction 3. damages for breach of express term

Question 26

Statutory remedy under CRA for breach of: * implied terms reasonable time and price * express term relating to time

Answer 26

Price reduction

Question 27

When is a clause incorporated?

Answer 27

1. Signature (*unless illegible OR misrep OR unusual or onerous + not drawn to attention OR mistake*) 2. Notice (contractual in nature + C knows of clause OR D took reasonable steps to alert C) 3. consistent course of dealings (same terms + signed + regular + frequent)

Question 28

# 3 exceptions Exceptions to the GR that a signed contractual document incorporates a clause?

Answer 28

1. clause is illegible (*more than regrettably small)* ; or 2. effect is described inaccurately + C reasonably relied on misrep (e.g. consumers not businesses); or 3. unusual and onerous + not fairly drawn to C's attention

Question 29

Conditions for terms in an unsigned document to be incorporated? | e.g. notice / ticket

Answer 29

1. contractual document (reasonable person would expect to contain terms) 2. C knows of clause OR D takes reasonable steps to bring it to C's notice 3. C knows of clause before contract is finalised UNLESS consistent course of dealings

Question 30

Contra proferentem rule?

Answer 30

Court will interpret an ambigious clause in favour of C

Question 31

Coverage / construction rule for exemption clauses?

Answer 31

clause must cover: 1. breach 2. loss / damage 3. remedy

Question 32

What conditions must be satisfied for an exemption clause to be enforceable?

Answer 32

1. Incorporated 2. Construction 3. Reasonable / Fair (if implied term OR express term in standard T&Cs OR express term in consumer contract) | An express term in bespoke b2b contract does not need to be reasonable

Question 33

When will an exemption clause be automatically void?

Answer 33

Excludes liability for death or personal injury

Question 34

Can liability be excluded for breach of an express term in b2b contract (not T&Cs)?

Answer 34

Yes provided incorporation and construction conditions satisfied. | No need to satisfy reasonableness test in UCTA

Question 35

UCTA reasonableness test

Answer 35

Was the clause reasonable to include at the time the contract was made? | Burden is on person seeking to rely on clause to prove reasonable

Question 36

Who must prove an exemption clause is reasonable?

Answer 36

person seeking to rely on it (benefit from it)

Question 37

Factors the court will take into account when considering whether an exemption clause is reasonable?

Answer 37

1. strength of bargaining position (*size, age and experience*) 2. ability to bear loss (*resources*) 3. inducement (*price reduction*) abiilty to enter similar contract without exemption clause 4. reasonable to expect C to comply with condition? (*how long for defect to emerge / perishable?*) 5. Special order 6. Best placed to insure 7. Difficulty of task 8. Practical consequences (*invalid if loss bourne by taxpayer / D stands to profit*) 9. Knew of existence (*clear / previous dealings*)

Question 38

When is UCTA not applicable?

Answer 38

1. t2c contract 2. contract of insurance 3. contract relating to creation, transfer or termination of an interest in land

Question 39

When is UCTA applicable?

Answer 39

1. Negligent breach 2. breach of statutory implied term 3. breach of express term in standard T&Cs

Question 40

When is an exclusion clause under CRA void?

Answer 40

**Statutory conditions** (as described, fit for purpose, quality) * excludes or restricts liability **Reasonable skill** * excludes liability * restricts liability + prevents C from obtaining remedy **Death and personal injury** * Excludes liability **Any statutory term** * makes enforcement subject to restrictive or onerous condition * Puts C at a disadvantage for pursuing right / remedy * excludes or restricts rules of evidence or procedure **Express terms** * Causes a significant imbalance to the detriment of consumer (i.e. unfair) **Loss resulting from property damage** 1. Were parties of equal bargaining power? 2. Difficulty of task 3. Best placed to insure?

Question 41

Can a 3rd party be protected by an exemption clause | i.e. be sued personally?

Answer 41

GR: An exemption clause cannot protect a 3rd party EXCEPTION: A 3rd party can rely on an exemption clause if: 1. named OR member of class OR answers particular description; and 2. express benefit or purports to confer benefit + nothing to contrary; and 3. exemption clause is valid (incorporated, construction + reasonable (if applicable))