Unit 3

Question 1

Express terms of agreement

Answer 1

Terms specifically agreed by both parties, either orally or in writing.

Question 2

Implied Terms

Answer 2

Provisions read into a contract not expressly agreed upon by the parties.

Question 3

Implied Terms - Reasons for Implication

Answer 3

Parties’ failure to expressly agree (shared background, obvious points).
Previous consistent dealings.
Points not considered by parties (but not due to mere carelessness).
To protect a party (often statutory).

Question 4

Express Terms: Form & Freedom

Answer 4

Can be written or oral (written preferred). Parties generally free to agree to any terms (subject to restrictions).

Question 5

Implied by Local Custom or Trade Usage

Answer 5

Based on what usually happens in a specific locality or business. Won’t be implied if it contradicts an express term.
Case: Hutton v Warren (tenant farmer allowance)

Question 6

Implied by Previous Course of Dealings

Answer 6

Terms used in consistent prior contracts may be implied into the current one. Can apply to various terms.
Case: Spurling J Ltd v Bradshaw (exemption clause on receipt)

Question 7

Implied by Courts - Presumed Intention (Business Efficacy Test)

Answer 7

Term implied if necessary to make the contract work commercially or give it business sense. Not enough if merely reasonable or improves contract.
Case: The Moorcock (safety of berth)

Question 8

Implied by Courts - Presumed Intention (Officious Bystander Test)

Answer 8

Term implied if so obvious that an officious bystander suggesting it during negotiations would elicit an immediate “Oh, of course” from both parties. Stringent test.
Case: Shirlaw v Southern Foundries Ltd

Question 9

Implied by Courts: Type of Contract

Answer 9

For common contract types (e.g., tenancy, employment), courts may imply typical provisions unless expressly excluded. Sale of goods mainly statutory.
Case: Liverpool City Council v Irwin (council’s maintenance of common areas)

Question 10

Terms Implied by Statute

Answer 10

Provisions read into contracts by law to provide protection and regulate transactions. Key Acts: SGA 1979, SGSA 1982, CRA 2015.

Question 11

Sale of Goods Act 1979 (SGA 1979) - Scope Post CRA 2015

Answer 11

No longer applies to B2C sales. Primarily applies to:
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Consumer-to-business (C2B)

(NOT TRADER 2 CONSUMER)

Question 12

SGA 1979: Conditions vs. Warranties

Answer 12

Implies conditions (major terms - termination possible) and warranties (minor terms - damages usually only remedy).

Question 13

SGA s. 13(1): Correspondence with Description

Answer 13

Implied condition that goods will correspond with the description in a sale by description. Applies to all seller types. Buyer must have relied on description and must be reasonable for them to. Strict liability.
Cases: Harlingdon & Leinster v Hull, Beale v Taylor

Question 14

SGA s. 14(2): Satisfactory Quality

Answer 14

Implied condition that goods are of satisfactory quality where seller sells in the course of a business (B2B, C2B) to a commercial buyer. Strict liability. The seller may have recourse against their own supplier if the defect originated further up the supply chain.

Question 15

SGA s. 14(3): Fitness for Purpose

Answer 15

Implied condition that goods are reasonably fit for buyer’s known purpose (express or implied) where seller sells in the course of a business (B2B, C2B) to commercial buyer. If the purpose is special or unusual, it should be expressly communicated.
The implied term does not apply if it is unreasonable for the buyer to rely on the seller’s skill or judgment. Strict liability.

Question 16

SGA Remedies for Breach of ss. 13 & 14 (General)

Answer 16

Buyer can usually terminate contract and reject goods (even for minor breach), plus claim damages. Can also affirm contract and just claim damages.

Question 17

SGA Loss of Right to Reject: Acceptance

Answer 17

Right lost if buyer has accepted goods (s. 11(4)). Acceptance includes retaining goods beyond reasonable time without rejection (s. 35). Reasonable time for examination IS A QUESTION OF FACT by jury. The nature and complexity of the goods are relevant.

Question 18

SGA Loss of Right to Reject: Slight Breach

Answer 18

Right lost if breach of s. 13 or s. 14 is so slight that rejection is unreasonable. Remedy limited to damages. Seller bears burden of proof.

Question 19

SGSA 1982: Contract Types

Answer 19

Generally applies to non-consumer contracts for services and work & materials (B2B, C2C, C2B).
Service Contracts: Only service provided (e.g., commercial cleaning).

Work & Materials Contracts: Predominantly work, includes goods (e.g., building, vehicle servicing).

Question 20

Work and Materials rights under SGSA:

Answer 20

Right to Transfer Property - Implied condition that transferor has right to transfer ownership. s. 2(1)

s. 3: Correspondence with Description. Implied condition that goods supplied by description will correspond.

s. 4(2): Satisfactory Quality. (goods supplied in course of business) Implied condition that goods will be of satisfactory quality.

s. 4(5): Fitness for Purpose. goods supplied in course of business, buyer’s known purpose & reasonable reliance) Implied condition that goods will be fit for that purpose.

Question 21

SGSA innominate terms for both work/ service contracts:

Answer 21

s. 13: Care and Skill - in course of business) Implied innominate term that work/service will be carried out with reasonable care and skill. (not strict liability).

s. 14: Time for Performance - in course of business, no agreed time) Implied innominate term that work will be done within a reasonable time. no strict liability

s. 15: Consideration (Price) - Implied innominate term that a reasonable sum will be charged if no price agreed.

Question 22

CRA 2015: Purpose & Scope

Answer 22

Consolidates consumer rights. Part 1 covers consumer contracts for goods, digital content, and services (trader to consumer). ‘sales contracts’ (s. 5) between a trader and consumer. Sales contracts include straightforward sales of goods and contracts where goods are supplied as part of the contract (e.g., work and materials contracts)

Question 23

CRA 2015 consumer / trader definitions:

Answer 23

Trader: (Same definition as under SGA 1979 post-CRA) a person acting for purposes relating to their trade, business, craft or profession.
Consumer: an individual acting for purposes wholly or mainly outside their trade, business, craft or profession.

Question 24

CRA 2015 - Implied Terms (Goods) - s. 9, 10, 11

Answer 24

‘Statutory Rights’ in sales contracts:
s. 9: Satisfactory Quality
s. 10: Fitness for Particular Purpose
s. 11: Implies a term that goods will be as described.

Question 25

CRA 2015 - Consumer's Rights to Enforce Terms about Goods (s. 19)

Answer 25

If goods do not conform to the contract due to a breach of the implied terms (ss. 9-11), the consumer has a hierarchy of rights: Short-Term Right to Reject (ss. 20 & 22): The consumer can reject the goods and get a full refund. Generally 30 days after buying, delivery, and installation (if applicable), unless a shorter period is agreed. Perishable goods = reasonable time Right to Repair or Replacement (s. 23). If the short-term right to reject is lost, the consumer may require repair or replacement of the goods. This is the next step in the hierarchy. Right to a Price Reduction or Final Right to Reject (ss. 20 & 24): If repair or replacement is not possible, or is unsuccessful, the consumer has the right to a price reduction (keeping the goods) or the final right to reject (getting a partial refund to account for use).

Question 26

CRA 2015: Six-Month Presumption (Goods)

Answer 26

Other rights: If non-conformity within 6 months, presumed to have existed at delivery (excluding perishable goods & trader proof).

Question 27

CRA 2015: Implied Terms (Services)

Answer 27

'Statutory Rights' for consumer service contracts: s. 49: Reasonable Care and Skill s. 51: Reasonable Price (no fixed price) s. 52: Reasonable Time (no fixed time)

Question 28

CRA 2015: Enforcement (Services)

Answer 28

s 54 - If a service or work does not conform to the contract due to a breach of an express term related to performance or a breach of the implied term of reasonable care and skill (s. 49), the consumer has the right to: Require repeat performance (if reasonable). A price reduction. If the breach is of the implied term as to performance within a reasonable time (s. 52), the consumer simply has the right to an appropriate price reduction.

Question 29

Traditional: Determining Classification of conditions and warranties

Answer 29

Objective test at contract formation: Would a reasonable person consider the parties intended it as condition or warranty? Considers circumstances, whole contract, and labelling. Focus on importance at the time.

Question 30

Traditional: Breach of Condition

Answer 30

Innocent party can terminate the contract AND claim damages, even for minor breach.

Question 31

Traditional: Breach of Warranty

Answer 31

Innocent party cannot terminate, only sue for damages, even for serious breach.

Question 32

Disadvantages of Traditional Classification:

Answer 32

Potential unfairness as classification fixed at formation, regardless of breach severity. Lack of flexibility.

Question 33

Innominate (Intermediate) Terms

Answer 33

Consequences of breach depend on the effect of the breach at the time it occurs, not pre-classification. Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (seaworthiness clause)

Question 34

The Test for Innominate Terms:

Answer 34

The test is applied at the time of the breach. The court asks: Did the event (the breach) deprive the innocent party of substantially the whole benefit which it was intended they should obtain from the contract? If the breach does deprive the innocent party of substantially the whole benefit, the innocent party can terminate the contract and claim damages. If the breach does not deprive the innocent party of substantially the whole benefit, the innocent party is limited to claiming damages; they cannot terminate the contract.

Question 35

Innominate Terms: Scope

Answer 35

Not for all cases. Less suitable if parties expressly agreed on termination, statute classifies, or for very simple terms. Best for complex terms with variable breach effects. Both traditional and innominate exist. Court has discretion, subject to: Parties' clear intention (though interpreted). Statutory classification. Terms not statutorily classified often treated as innominate.