week 5 express and impress terms Flashcards
(24 cards)
What is a impress and express term
An express term is one which the parties have expressly agreed will form part of their contract.
An implied term is one which the parties have not agreed between them, but which the court is willing to add into the contract (ie. to imply into the contract) in certain limited situations.
Distinguish between terms and representations
Timing:
The closer a statement is made to the time of contract formation, the more likely it is a term (→ Bannerman v White).
Importance:
If the truth of the statement is crucial to the deal, it is more likely to be a term (Couchman v Hill).
Knowledge and Expertise:
Where the maker has special skill/knowledge and the other relies on it → likely a term (Dick Bentley).
Contrast with Oscar Chess where the speaker lacked expertise.
Written Agreement:
If the statement isn’t included in the final written contract → suggests it was not intended as a term (Routledge v McKay).
Verification Advice:
If the speaker suggests independent verification, it’s likely not a term (Ecay v Godfrey).
If the speaker discourages verification, it may be a term (Hopkins v Tanqueray).
How to tell if terms have been successfully incorporated into a contract
1) Is the document containing the additional terms (ie. the terms that a party is arguing are incorporated into the contract) itself contractual in nature?
tickets with contracts of carriaage generally considered contractual
2) Has sufficient notice been given of the terms?
red hand test spurling Ltd V bradshaw
The ‘red hand’ test (from Lord Denning in Spurling Ltd. v Bradshaw [1956] 1 W.L.R. 461): “the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.”
Montgomery Litho v Maxwell 2000 SC 56
3) When was notice given
Before the contract is concluded for the terms in the notice to be incorporated a notice provided after the contract is concluded will be ineffective
tickets incorporated into terms
Tickets can incorporate terms, but only if proper notice is given before contract formation.
Cases:
Parker v South Eastern Railway Co – upheld ticket terms if properly brought to attention.
Thornton v Shoe Lane Parking – contract concluded at the moment of using the machine, so ticket terms printed afterward were ineffective.
ation.
can incorporation provid notice
Slide 14 – Incorporation: Notices & Prior Dealings
Notices may incorporate terms if presented clearly and in time (e.g. Olley v Marlborough Court Hotel).
Previous dealings may lead to incorporation if terms were used consistently in the past.
McCutcheon v MacBrayne – no consistent course of dealing, so terms not incorporated.
British Crane Hire v Ipswich Plant Hire – prior dealings and equal bargaining power supported incorporation.
Acceptance of express terms
– Incorporation: Signature & Acceptance
Signed documents usually bind the signer to terms, even if unread (L’Estrange v Graucob), unless:
The terms are particularly unusual or onerous and not brought to attention (Montgomery Litho v Maxwell).
Other acceptance methods:
Shrink-wrap contracts – opening packaging implies acceptance (Beta Computers).
Click-wrap agreements – clicking to accept online terms is generally binding.
Two catagories of Implied terms
Terms implied in law
Implied into contracts of a particular class such as sale,hire or employment unless the parties say otherwise
Terms implied by statute (ie. obligations under ss12-15 of the Sale of Goods Act 1979, Supply of Goods and Services Act 1982, or the Consumer Rights Act 2015)
Terms implied by common law (often duties, such as solicitor duty of care to client)
Terms implied by custom and usage.
B) Terms implied in fact – ie. terms which are implied into this particular contract, on the basis that the parties would have agreed the term if they had actually considered the matter during negotiations.
Key provision for impress terms
Sale of goods act 1979
S13(1) contracts of sale by description, implied term that goods will correspond with the description
S14(2): “Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.”
S14(3): Where seller sells goods in course of business and buyer makes it known that they are buying for a particular purpose, there is an implied term that the goods will be reasonably fit for that particular purpose.
S15(2) in contract for sale by sample, implied term that (a) bulk of goods will comply with the sample, and (b) goods will be “free from any defect, [making their quality unsatisfactory] , which would not be apparent on reasonable examination of the sample”.
KEY PROVISION for impress temrs
Consumer Rights Act 2015, Part 1
The 2015 Act applies to certain contracts between a trader and a consumer (
Contracts involving consumers are subject to wide ranging implied terms, including:
s9: goods to be of satisfactory quality
s10: goods to be fit for particular purpose;
s13/14: goods to match a sample or model
[s19-24 provides statutory regime of remedies where goods don’t comply with one of the above including short term right to reject the goods, right to repair or replacement and right to a price reduction or the final right to reject]
s49: services to be performed with reasonable care and skill
s51 is the parties don’t agree a price, implied term that the consumer must pay a reasonable price for the service, and no more.
s52: if the parties don’t agree a time for the service to be performed, implied term that the trader must perform the service within a reasonable time.
Terms implied by common law
-Duty to perform within a reasonable time applied generally in all contracts, absent any express contrary provision (Burnside v Promontoria (Chestnut) Ltd [2017] CSOH 157
-Insurance companies to repair a car within a reasonable time (Davidson v Guardian Royal Exchange Assurance 1979 S.C. 192.)
-When a landlord has a power to veto a new tenant or sub-tenant, a term has often been implied term that they will do so reasonably (see e.g. Scottish Tourist Board v Deanpark Ltd, 1998 S.L.T. 1121; Burgerking Ltd v Rachel Charitable Trust 2006 S.L.T. 224). It may be that this is now considered a term implied in common law to all such contracts.
-Duty of care owed by solicitors, accountants and other professionals to their clients;
-Duty of builders to execute their work to a good and workmanlike fashion, with skill and care of a competent builder (McBryde, para 9.37
-Duty of mutual trust and confidence in employment contracts
Terms implied in fact
terms implied in fact are the classic example of the court trying to plug a gap in one particular contract,Idea that hte parties missed something when making the contract and that the court requires to imply a term to deal with a scenario that the express terms dont deal with
Three approaches the court have taken to imply a term
Objective approach based on what the parties would have agreed
‘Business Efficacy’ test
Term implied to be clear, certain and obvious (the ‘officious bystander’ test)
Approach one for implying a term
Objective approach
if the condition is such that every reasonable man, on the one part, would desire for his own protection to stipulate for the condition, and that no reasonable man, on the other part, would refuse to accede to it”. (Morton v. Muir Bros (1907)
Secondary approach to implying a term
The term will only be implied where it is necessary to make the contract work (to give it ‘business efficacy’)
“The Court will only hold a term or condition to be implied in a written contract if its nature is such that it must necessarily be implied to give the contract business efficacy” M’Whirter v Longmuir 1948 SC 577, per Lord Jamieson at 589
BUT when thinking about business efficacy, don’t stray too far from the intentions of the parties: “it is important not to lose sight of the fact that the implication arises from the presumed intention of the parties to the contract to give it such efficacy as they must both have intended it to have” (Crawford v Bruce, Lord President Hope at 531)
Lothian v Jenolite 1969 SC 111
North American and Continental Sales Inc v Bepi (Electronics) Ltd 1982 SLT 47
Third approach for terms implied in Fact and arguments for the approachs
The term to be implied must be clear, certain and obvious (the ‘officious bystander’ test)
All three tests overlap with each other
BP Refinery v Hastings Shire Council 1977 180 CLR 266 gave a summary of the approach to be taken (with a list of 5 conditions, including that both business efficacy and officious bystander must be satisfied, together with considerations of reasonableness and equity which have since been doubted - and are not necessarily relevant to Scots law.)
What can be inferred from all three tests
If you can show any of the three tests is satisfied, you can at least make an argument that a term should be implied in fact. Older case law suggests such an argument can succeed on just on ground, and the Scottish courts might still follow that approach.
If you can show all three of them are satisfied (which will often be the case due to their overlapping nature), it is very likely that a court will be satisfied that a term should be implied in fact.
Two main legislation for Unfair contract terms
Consumer contracts (Consumer Rights Act 2015 (CRA), Part 2); and
Exemption clauses (Unfair Contract Terms Act 1977 (UCTA))
S63 Of the consumer rights act
s63 introduces the ‘grey list’ – an indicative, non-exhaustive list of typical terms in consumer contracts that may be regarded as unfair.
-Allowing the trader to retain the consumer’s money if the consumer pulls out, but not the other way round;
-Forcing consumer to pay a disproportionately high sum if he fails to fulfil his obligations
-Allowing the trader to dissolve the contract on a discretionary basis, but not the other way round;
-Allowing the trader to terminate without reasonable notice and without serious grounds)
-Binding the consumer to terms that they have had no real opportunity to become acquainted with prior to conclusion of contract
So the key test is (a) does the actual term meet the definition of unfair (significant imbalance, detriment to consumer etc)?; and (b) is it, or something like it, on the grey list?
Consumer rights act 2015 part 2
A contract term (or notice) in a consumer contract will not be binding on the consumer if it is found to be unfair (s62(1) and (2)) – although the consumer can choose to rely on it if they so wish.
A term will be unfair if “contrary to the requirement of good faith it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer” (s62(4) and (6)).
Whilst the unfair term itself may be rendered non-binding, if the rest of the contract can continue to function without the unfair term, then the contract as whole will remain in place (s67).
Whats the key test for the consumer rights act
o the key test is (a) does the actual term meet the definition of unfair (significant imbalance, detriment to consumer etc)?; and (b) is it, or something like it, on the grey list?
Exemption clause
– clauses where a party tries to either completely exclude a liability which would otherwise arise (exclusion clause), or limit it to an agreed level (limitation clause). Example – a contractual clause which said “A will not be liable for any loss caused to B as a result of A’s negligence”.
Note that exemption clauses can be used to exclude/limit contractual liability, but also delictual liability (MacKay v Scottish Airways 1948 SC 254)
For consumer contracts, s65 completely bars traders from including terms which purport to exclude or restrict liability for death or personal injury resulting from negligence.
Unfair contract terms Act 1977
deals with situations where businesses are trying to include exemption clauses in non-consumer contracts (consumer contracts being covered instead by the CRA).
S25(1) defines business very widely
s15(2) sets out the types of contract which the controls apply to – a wide range including most types of contract, but crucially NOT contracts which create or transfer a real right in land (such as contract for sale of business premises), nor insurance contracts (s15(3)(i)).
UCTA applies to both limitation clauses and exclusion clauses (s17(1)).
UCTA rules
s16(1) where an exemption clause seeks to exclude or restrict liability for breach of duty [negligence]:
If the exclusion/restriction is in respect of death or personal injury, that clause is void.
In any other case (ie. cases of damage to property or economic loss), that clause will not have effect if it was not fair and reasonable to incorporate into the contract (or if it would not be fair and reasonable to allow the party to rely on it
s.24 of the unfair contract terms what does it set out
-The court will only consider the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties to the contract at the time the contract was made;
-The court can consider the factors listed in Schedule 2 (parties’ relative bargaining positions, any inducements to the customer to agree to the term, whether customer knew/ought to have known about the existence/extent of the term etc) – originally only for sections 20 and 21, but case law makes clear can be used when determining s16 and 17 as well.
-For limitation clauses which purport to restrict liability to a specified sum of money, the court will have regard to (i) the resources of the party relying on the clause to meet the liability; and (ii) how far it was open to that party to cover himself with insurance.
