Terms

Question 1

What is the Difference between a Term and a Representation?

Answer 1

Terms:

• Statements of Fact the Parties intend to be Binding.
• Breach of a Term is Breach of Contract.

Representations:

• Statements of Fact or Law, made to Induce Agreement, that the Parties do not intend to be Binding.
• Breach of a Representation is Misrepresentation.

If a Representation is Codified into the Contract, it also becomes a Term.

Question 2

How does the Court Distinguish between Terms and Representations?

Answer 2

By asking what a reasonable person would believe the Parties intended given:

• The timing of the Statement.
• The importance of the Statement.
• Whether the Statement was Codified.
• Whether the Speaker had special skill or knowledge.
• Whether the Speaker assumes responsibility for the Statement’s truth.

A Statement is more likely to be a Term if these conditions are present.

‘Timing’ refers to the Statement’s proximity to Contract — the greater, the likelier it is a Term.

Question 3

How can an Express Term be Incorporated into a Contract?

Answer 3

• Notice.
• Conduct.
• Codification into the signed, written Contract.

Other means are also viable, e.g. oral agreement or written correspondence, provided the Parties display an intention to be bound.

The same factors distinguishing Terms from Representations are relevant for assessing Incorporation.

Question 4

How can an Express Term be Incorporated by Notice?

Answer 4

A Party takes reasonable steps to bring the Term to its Counterparty’s attention. For example:

• A Party makes clear reference to the contents of a separate document.

Beware that the more onerous the Term, the clearer and stronger the Notice must be.

Question 5

How can an Express Term be Incorporated by Course of Conduct?

Answer 5

The Parties have consistently included it in previous Transactions, forming a regular history of dealing.

Question 6

How can an Express Term be Incorporated by Codification?

Answer 6

By merely including it in the Contract, since Signatories are bound by the entirety of a Contract, unless:

• It was not intended to have legal effect; or
• The meaning of a given Term was misrepresented.

Question 7

How can an Implied Term be Incorporated into a Contract?

Answer 7

• Implication by Law.
• Implication by Fact.

That said, beware the existence of a general Presumption against Implied Terms.

A valid Exemption Clause can prevent Implication altogether.

Question 8

How can a Term be Implied by Law?

Answer 8

• By Statute.
• By Common Law.

Question 9

When is a Term Implied by Statute?

Answer 9

When a given Contract falls within a given Statute’s purview.

Question 10

When is a Term Implied by Common Law?

Answer 10

When a given Contract falls within the Common Law’s purview.

Question 11

How can a Term be Implied by Fact?

Answer 11

• Obviousness.
• Business Efficacy.
• Course of Dealing.
• Professional Custom.

All of these Tests are applied Objectively.

Question 12

When is a Term Implied by Obviousness?

Answer 12

When it is so obvious that both Parties would have agreed to it, had it been suggested at Formation.

Question 13

When is a Term Implied by Business Efficacy?

Answer 13

When it is absolutely necessary to make the Contract functional given its intended purpose(s).

Question 14

When is a Term Implied by Course of Dealing?

Answer 14

When the Parties have regularly dealt on a consistent set of Terms.

Question 15

When is a Term Implied by Professional Custom?

Answer 15

When a Trade or Profession’s well-established customs include the Term in dealings.

Question 16

What is the Scope of the Sale of Goods Act (“SOGA”) 1979?

Answer 16

Any Contract for the Sale of Goods.

This does not apply to Consumer Contracts as defined by CRA 2015.

Question 17

Which Terms are Implied by the Sale of Goods Act 1979?

Answer 17

§12 — Title (Condition):

• The Seller must have the right to sell the Goods.

§13 — Correspondence with Description (Condition):

• The Goods must correspond with the Seller’s description.

§14(2) — Satisfactory Quality (Condition):

• Goods sold in the course of business must be of satisfactory quality (i.e. reasonable considering the price, description, etc.).
• Actual or Constructive Notice of Defects notwithstanding.

§14(3) — Fitness for Purpose (Condition):

• The Goods must be fit for the Buyer’s purposes if it made them known to the Seller, expressly or impliedly; unless
• The Buyer did not rely on the Seller’s judgement, or it would have been unreasonable for it do so.

§15 — Correspondence with Sample (Condition):

• The Sample and Goods must correspond in quality.
• The Goods must be free of any Defects that a reasonable inspection of the Sample would not reveal.

These Terms are also Implied into any:

• Contract for the Hire of Goods; or
• Contract for the Transfer of Property in Goods.

As defined in SGSA 1982.

Question 18

What is the Consequence of Breaching an Implied Term under the Sale of Goods Act 1979?

Answer 18

The Buyer is entitled:

• To Terminate or Affirm the Contract; and
• To claim Damages.

However, if the Breach is so slight that rejection is unreasonable:

• The Condition is reduced to a Warranty; and
• The Buyer is only entitled to claim Damages.

Question 19

What is the Difference between a Condition and a Warranty?

Answer 19

• Conditions go to the Root of the Contract, as per the Parties’ Intentions at Formation; whereas
• Warranties do not.

Question 20

What is the Scope of the Supply of Goods and Services Act (“SGSA”) 1982?

Answer 20

Any Contract for the Supply of Services, including alongside the Sale of Goods.

This does not apply to Consumer Contracts as defined by CRA 2015.

Question 21

Which Terms are Implied by the Supply of Goods and Services Act 1982?

Answer 21

§13 — Care and Skill (Innominate):

• In the course of business, the Supplier must execute the Service with reasonable care and skill.

§14 — Time of Performance (Innominate):

• If a deadline is unspecified, the Supplier must complete the Service within a reasonable time.

§15 — Consideration (Innominate):

• If a price is unspecified, the Supplier must charge a reasonable price.

An Innominate Term is one that cannot be clearly classified as a Condition or Warranty; and whose Remedy depends on the nature and impact of the Breach.

Question 22

What is an Innominate Term?

Answer 22

• A Term that cannot be clearly classified as a Condition or Warranty; and
• Whose Remedy depends on the nature and impact of the Breach.

Question 23

When will an Innominate Term be deemed a Condition?

Answer 23

If it deprives the Victim of, substantially, their whole benefit under the Contract.

Regarding Time as a Term, if it is Of The Essence, it is a Condition, and if it is not, a Party can serve Notice making it so.

Question 24

What is the Consequence of Breaching an Implied Term under the Supply of Goods and Services Act 1982?

Answer 24

If the Breach is serious, Buyer is entitled:

• To Terminate or Affirm the Contract; and
• To claim Damages.

If the Breach is slight, Buyer is only entitled:

• To claim Damages.

Question 25

What is the Scope of the Consumer Rights Act ("**CRA**") 2015?

Answer 25

**Any Contract** for the **Supply of Goods**, **Services**, or **Digital Content** to **Consumers**. ## Footnote '**Digital Content**' is **anything produced and supplied** in **digital form**.

Question 26

Which Terms are Implied into Contracts for Goods by the Consumer Rights Act 2015?

Answer 26

**§9 — Satisfactory Quality (Condition):** * Goods sold must be of satisfactory quality (i.e. reasonable considering the price, description, etc.). * Actual or Constructive Notice of Defects notwithstanding. **§10 — Fitness for Purpose (Condition):** * The Goods must be fit for the Buyer's purposes if it made them known to the Seller, expressly or impliedly; unless * The Buyer did not rely on the Seller's judgement, or it would have been unreasonable for it do so. **§11 — Correspondence with Description (Condition):** * The Goods must correspond with the Seller's description, including any packaging or advertising.

Question 27

What is the Consequence of Breaching an Implied Term in a Contract for Goods under the Consumer Rights Act 2015?

Answer 27

**§22 — Initial Right to Reject:** * The Buyer can reject the Goods within 30 Days of physical transfer of Ownership; and * A Full Refund must be given without undue delay. **§23 — Right to Repair or Replacement:** * The Buyer can request Repair or Replacement, unless it would be impossible or disproportionate in cost relative to other available Remedies. * Repair or Replacement must be executed within a reasonable time and without significantly inconveniencing the Buyer. **§24 — Right to Discount or Final Right to Reject:** * If the Goods are still unsatisfactory after one Repair or Replacement, assuming either are possible; * The Buyer can request a Discount or exercise its Right to Reject, as described above.

Question 28

Which Terms are Implied into Contracts for Digital Content by the Consumer Rights Act 2015?

Answer 28

**§34 — Satisfactory Quality (Condition):** * Content sold must be of satisfactory quality (i.e. reasonable considering the price, description, etc.). * Actual or Constructive Notice of Defects notwithstanding. **§35 — Fitness for Purpose (Condition):** * The Goods must be fit for the Buyer's purposes if it made them known to the Seller, expressly or impliedly; unless * The Buyer did not rely on the Seller's judgement, or it would have been unreasonable for it do so. **§36 — Correspondence with Description (Condition):** * The Goods must correspond with the Seller's description, including any packaging or advertising.

Question 29

What is the Consequence of Breaching an Implied Term in a Contract for Digital Content under the Consumer Rights Act 2015?

Answer 29

**§43 — Right to Repair or Replacement:** * The Buyer can request Repair or Replacement, unless it would be impossible or disproportionate in cost relative to other available Remedies. * Repair or Replacement must be executed within a reasonable time and without significantly inconveniencing the Buyer. **§44 — Right to a Discount:** * If Repair or Replacement are impossible, ineffective, or unreasonably delayed, the Buyer can request a Discount. **§45 — Right to a Full Refund:** * If the Content is still unsatisfactory, the Buyer can request a Full Refund within 14 Days of the Seller's acquiesence. **§46 — Compensation for Damage to Devices:** * If the Content damages the Buyer's device(s), the Seller must either Repair the harm or compensate the Buyer.

Question 30

Which Terms are Implied into Contracts for Services by the Consumer Rights Act 2015?

Answer 30

**§49 — Care and Skill:** * The Supplier must execute the Service with reasonable care and skill. **§51 — Consideration:** * If a price is unspecified, the Supplier must charge a reasonable price. **§52 — Time of Performance:** * If a deadline is unspecified, the Supplier must complete the Service within a reasonable time.

Question 31

What is the Consequence of Breaching an Implied Term in a Contract for Services under the Consumer Rights Act 2015?

Answer 31

**§55 — Right to Repeated Performance:** * The Buyer can request a Repeated Performance, in satisfaction of the Contract's Terms. * Repetition must be executed within a reasonable time and without significantly inconveniencing the Buyer. **§56 — Right to a Discount:** * If Repeated Performance is impossible, ineffective, or unreasonably delayed, the Buyer can request a Discount.

Question 32

What is the Core Exemption under the Consumer Rights Act?