S5: Terms and Misrepresentation Flashcards
Classification of a term or representation
This can impact the course of action an innocent party can take. If something goes wrong, it’ll affect the remedies that the innocent party is able to claim or whether they are entitled to a remedy at all.
The two different courses of action
Breach of Contract
Misrepresentation
Questions for the court
- Is a statement a term of the contract, or merely a representation ?
- If the statement is a term, is it a condition, a warranty or an innominate term ?
- Can any other terms be implied into the contract in fact or in law ?
Mere Puffs
A statement of opinion or ‘puffs’ that have no legal effect
Mere puffs or Representation aren’t part of the contract
Terms
A statement made that forms part of the contract
Whether a statement is a contractual term, or a representation depends on the intention with which the statement was made
Crest Nicholson Ltd v Akaria Investment Ltd
Sir John Chadwick stated- “When seeking to ascertain parties intention under the terms of a contract which both accept has been made…the question is ‘what did the parties intend by word used in agreement which they made?”
Key principles of Terms and Representations
- Verification - If a statement that has been made prior to contract and was verified by another source by one of the parties, then it’s more likely to be treated as a term of the contract than as a representation.
- Whether the statement was written down- It makes it more certain and therefore more likely that one of the parties intended that the statement becomes a term of the contract in the future.
- Importance- It will be more likely to be treated as a term of the contract.
- Specialist knowledge- The statement will be considered as a term of the contract as opposed to representation.
- Time Lapse- The longer the amount of time between the statement being made and the contract being created, the less likely it is that the term of the statement will be treated as a term of the contract and more likely to be treated as a representation.
Key Cases for Terms
Schawel v Reade [1913]- courts concluded that the statement should be treated of the contract and their basis on the fact that Reid had made it clear that she could rely on his word, and he’d actually dissuaded hm from consulting a veterinarian.
Bannerman v White [1965]- courts found that the statement made by the seller was in fact a term of the contract
Key Cases for Representations
Ecay v Godfrey (1947)- court concluded that the defendant’s remarks should be treated as a representation and not as a term of the contract.
Routledge v McKay [1954]- courts stated that the statement was in fact a representation and not a contractual term
Conditions
A term on ‘a substantial ingredient in the identity of the [thing sold]’
- Important Term
- Breach of a condition permits the injured party to:
1. Affirm the contract and claim damages; or
2. Terminate the contract and claim damages
Key case for Conditons
Poussard v Spiers [1876] – breach of conditions in her contract and she had right to terminate the contract and to claim damages for any losses they’ve suffered.
Warranty
- A term of a contract as opposed to representation
- A less important term than a condition
- When breached, it allows the injured party to:
1. Claim damages only;
2. Claimant can’t terminate the contract;
Key Case for Warranties
Bettini v Gye (1875-76)- contract was breached and ended and so couldn’t terminate the contract
Innominate Terms
- A hybrid term, neither a condition nor a warranty
- It is categorized by considering the consequences of the breach
- Sometimes its breach gives rise to a termination and sometimes it gives rise only to damages
Key Case for Innominate Terms
Hong Kong Fir Shipping Ltd v Kawaski Kisen Ltd [1962]- The Court held that the term was not a condition but an innominate term. The breach of an innominate term requires an assessment of the consequences to determine whether it deprives the other party of substantially the whole benefit of the contract.
Expressed and Implied Terms
- Expressed terms are those terms which are agreed specifically by the contracting parties and those set out in the contract in writing or orally, even both…
- Implied terms are those terms which are not specifically agreed by the parties but are those which are read into (added to = implied) the contracts by the courts, by custom, or by statute…
The Parol Evidence Rule
- If a contract is written, then there is no difficulty in ascertaining its express terms of the contract.
- The Parol Evidence Rule states that if a contract is written then that writing is the whole contract and the parties cannot adduce extrinsic evidence, and especially oral evidence, to ‘add to, vary or contradict the writing’ (Henderson v Arthur [1907] 1 KB 10)
- Extrinsic evidence can also include written matter such as draft contracts and correspondence…
The Parol Evidence Rule in relation to expressed terms
- It has been argued that contractual certainty can be achieved at the expense of justice, since it may be clear that certain terms have been agreed but have not been included in the written document. How does contract law deal with this in order to ensure justice?
- It creates a list of exceptions to the Parol Evidence Rule! … which are not going to deal with here.
- An oral statement may also create a collateral contract (aka a collateral warranty) – De Lassalle v Guildford (1901); Shanklin Pier Ltd v Detel Products Ltd (1951)
Express Terms: Written Contracts and the Importance of signature
Key Cases?
- L’Estrange v E. Graucob Ltd [1934] 2 KB 394 at 403 – Signature Rule:
- Lord Justice Scruton stated when a document containing contractual terms is signed, the party signing it is bound and it is wholly immaterial whether to read the document or not.
- Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 805 - L’Estrange does not apply where the party claiming to be bound was misled
- Electronic Communications - Signature include Electronic Signature (Elec. Comm Act 2000, s.7)
- MWB v Rock Advertising (2018): a written contract which states that variations need to be in writing, an oral variation cannot be effective.
How can terms be implied ?
By Fact
By Custom
By Law
By Fact- key case
Attorney General of Belize v Belize Telecom Ltd [2009]
By Custom- key cases?
Liverpool City Council v Irwin [1977]- Courts concluded council hadn’t breached a term even though it was implied into the contract / Hutton v Warren (1836)/ Smith v Wilson (1832) “…goes without saying, some terms not expressed but necessary to give the transaction such business efficacy as the parties must’ve intended”- Luxor Ltd v Cooper [1941]
By Law- key cases ?
Regulatory Obligations- Timeload v British Telecommunications (1995)
Policy Considerations- Scally v Southern Health & Social Services Board
Statute- e.g., CRA 2015 s.9: Goods to be of a satisfactory quality
Misrepresentation
Something that hovers at the edge but is on the outside of the contractual agreement between parties
