Express terms v Representations (Contract terms)- FS Flashcards
(19 cards)
Contractual Terms
The contents of a contract which establish the rights and obligations of the parties. Terms can be express or implied.
What are express terms in a contract?
Statements that the parties intended to be legally binding, made orally, in writing, or both, and form part of the contract.
What are implied terms?
Terms not expressly stated by the parties but imposed by law, custom, or the courts to ensure the contract functions effectively
Three Categories of Pre-Contractual Statements
- Mere Puff – Exaggerated claims with no legal significance
- Representation – Induces entry into a contract but is not binding
- Term – A statement intended to be binding
What is a ‘mere puff’ in contract law?
A statement that is obviously exaggerated and not meant to be taken literally or legally binding (e.g., advertising slogans).
What is a representation in contract law?
A non-binding statement of fact or law made to induce another party to enter into a contract.
What is a term in contract law?
A binding statement that forms part of the contract and gives rise to a contractual obligation.
What are the remedies for breach of a term vs. a representation?
- Breach of Term: Damages, rescission, and possibly termination.
- False Representation: Rescission and damages under misrepresentation principles.
What legal test is used to classify a statement as a term or representation?
The objective test: What would a reasonable person conclude about the intention behind the statement, considering the context?
Factors Used by Courts to Determine a Term vs. Representation
- Importance of the statement
- Timing of the statement
- Whether the contract was reduced to writing
- Special knowledge or skill of the party making the statement
- Assumption of responsibility
- Prevention of inspection
- Entire agreement clauses
How does the ‘importance of the statement’ affect its classification?
If a party relied heavily on a statement and would not have contracted without it, it is likely a term.
Why is timing important when classifying a statement?
A statement made at the time of contracting is more likely to be a term than one made earlier.
What is the effect of reducing a contract to writing on pre-contractual statements?
If a written contract excludes a prior statement, the court may treat that statement as a representation only, not a term.
How does special knowledge affect classification?
If the party making the statement has specialist knowledge compared to the other, the statement is more likely to be a term.
What is the significance of assumption of responsibility?
If a party takes responsibility for the truth of a statement or prevents verification, the statement is more likely a term.
What is the legal consequence when a seller prevents inspection of goods?
It strengthens the classification of the seller’s statement as a term due to the reliance placed by the buyer.
Entire Agreement Clause
A clause in a written contract that states it contains the complete and exclusive terms of the agreement, preventing reliance on prior oral statements.
Can a statement be both a term and a representation?
Yes. A statement can function as both, allowing claims for breach of contract and misrepresentation.
When will a court infer a statement is a term despite not being written?
If the context and conduct of the parties suggest it was intended to be binding, the court may infer it is a term.
