Contract: Contract Terms Flashcards
(80 cards)
What distinguishes an express term from a representation or mere puff?
Express terms are statements intended to be binding parts of a contract; representations induce the contract without binding effect; mere puffs are sales talk with no legal effect.
What test does the court apply to determine whether a statement is an express term?
An objective test: would a reasonable person, considering all circumstances (importance, timing, written reduction, skill, assumption of responsibility), understand the parties intended the statement to be binding?
List five factors the court considers when deciding if a statement is a term or a representation.
(1) Importance attached to the statement by the parties; (2) Timing of the statement relative to contract formation; (3) Whether the contract was reduced to writing (and the statement omitted); (4) Special knowledge or skill of the person making the statement; (5) Whether the speaker assumed responsibility such that the listener relied on that assurance.
What was decided in Bannerman v White regarding importance of a statement?
Because the buyer made clear he would not have entered the contract if the hops were treated with sulphur, that assurance became a term, allowing him to repudiate when it was untrue.
What principle emerged from Routledge v McKay on timing and written reduction?
A statement one week before contracting, omitted from the written memorandum, was a representation rather than a term because of the lapse of time and the final written agreement’s silence on that point.
How does special knowledge or skill affect classification of a statement?
If the speaker has specialist knowledge (e.g., a car dealer) and the listener relies on that expertise, the statement is more likely to be an express term (Dick Bentley v Harold Smith) than if the speaker lacks expertise (Oscar Chess v Williams).
In Schawel v Reade, why was the seller’s assurance of the horse’s fitness a term?
The seller expressly told the buyer not to inspect and represented the horse was sound for stud, thereby assuming responsibility and inducing reliance, making his statement a binding term.
What did Ecay v Godfrey illustrate about assumption of responsibility?
Because the seller advised the buyer to obtain a survey before purchase, it showed no intention to make his “soundness” statement binding; it remained a mere representation.
What are the four primary methods for identifying express terms?
(1) A signed written contract; (2) Incorporation by notice; (3) Incorporation by a regular course of dealing; (4) Other means of agreement (e.g., clear verbal or email exchange).
Why does signing a written contract usually bind all its terms?
Because signature indicates objective intention to be bound by everything in the document, even if the signer does not read or understand it (L’Estrange v Graucob), unless the document was never intended to be contractual (Grogan v Meredith).
What must reasonable notice achieve to incorporate terms by notice?
Reasonable notice must bring the terms (especially onerous ones) to the other party’s attention before or at the moment of contracting (Parker v South Eastern Railway; Thornton v Shoe Lane Parking).
How did Thornton v Shoe Lane Parking define when notice comes too late?
The contract was formed when money was inserted into the machine, so terms printed on the ticket issued afterward could not be incorporated because notice occurred only after contracting.
When might a signed ticket not bind its printed terms?
If the ticket was not intended to have contractual effect (e.g., a receipt), then its printed terms are not binding (Chapleton v Barry UDC).
How can a term be incorporated by a regular course of dealing?
If parties consistently include the same terms in repeated dealings over time, even if a particular contract omits them, courts will imply those terms as part of the presumed intention (Henry Kendall v Lillico).
Why did McCutcheon v MacBrayne and Hollier v Rambler Motors fail to imply terms by course of dealing?
Because previous dealings were inconsistent (sometimes requiring signature, sometimes not) or too infrequent (three or four transactions in five years) to establish a regular course.
What are terms implied in fact, and how are they identified?
Terms implied in fact reflect the unexpressed but presumed intentions of the parties, based on trade customs, business efficacy (“officious bystander” test), or a course of dealing, provided they are obvious, necessary, and not contradictory to express terms.
What does the business efficacy test require for implying a term in fact?
That without the term, the contract would be so unworkable no reasonable person would have entered it; the term must be so obvious that “it goes without saying” (The Moorcock; Shirlaw v Southern Foundries).
What distinguishes terms implied in law from terms implied in fact?
Terms implied in law are imposed by courts or statute as a matter of policy in certain categories of contracts (e.g., landlord–tenant), regardless of parties’ intentions, whereas terms implied in fact depend on presumed intentions.
Name three statutes that imply terms into contracts by law.
Sale of Goods Act 1979, Supply of Goods and Services Act 1982, Consumer Rights Act 2015.
Under the Sale of Goods Act 1979, what does s12(1) imply?
That the seller has the right to sell the goods (implied condition of title).
What implied term does s13(1) SGA 1979 create?
That goods sold by description will correspond with that description (implied condition).
According to s14(2) SGA 1979, when are goods of satisfactory quality?
If they meet the standard that a reasonable person would regard as satisfactory, considering description, price, and all relevant circumstances, including fitness for common purposes, appearance, freedom from defects, safety, and durability (s14(2B)).
When does s14(3) SGA 1979 impose an implied term for fitness for particular purpose?
When the buyer makes known to the seller the specific purpose, and the buyer relies on the seller’s skill or judgment, the goods must be reasonably fit for that purpose, unless reliance is unreasonable or buyer does not rely.
What conditions arise under s15(2) SGA 1979 in a sale by sample?
(a) Bulk must correspond with the sample in quality; (b) goods must be free from defects not apparent on reasonable examination of the sample (both implied conditions).
