Contractual Terms Flashcards by Emma Tucker

Express terms

terms made by the parties, by which they intend to be bound. A contract can have terms agreed in writing, or agreed orally, or a mixture of the 2.

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Implied terms

they have not been agreed upon orally or in writing but the law deems that they exist

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A statement may be regarded as a term of the contract if it can be shown that

the injured party considered it so important that it would not have entered into the contract but for that statement

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What factors should be considered to determine whether parties intended a statement to be binding?

Importance of the statement
Timing of the statement
Reduction of the contract into writing
Special knowledge of the skill of the person making the statement
Assumption of responsibility

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If a statement is both a term and a representation, what legal action can be taken?

action for breach of contract and misrepresentation

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A party can express an intention to be bound by something they have not

read or understood

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If the document signed was not one which was intended to have any contractual effect, then the terms within it

will not form part of the contract

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terms will form part of the contract if reasonable steps have been taken to

bring them to the claimant’s attention

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where a clause is particularly onerous, what is the threshold for it to have been brought to the attention of the contracting party?

it should be ‘printed in red ink, with a red hand pointing to it, or something equally startling’ to give sufficient notice

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Signature is

binding

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For clauses to be incorporated after a course of dealing, they must have been (2)

consistent and regular

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Why was a course of dealing not found in Hollier v Rambler Motors?

3-4 transactions over a period of five years was held to be insufficiently regular to establish a course of dealing.

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Entire agreement clauses

provides that a particular document or set of documents constitutes the entire agreement between the parties and supersedes any previous understandings and/or arrangements between them, whether oral or written.

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Entire agreement clauses typically exclude

misrepresentation

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When implying terms in fact, one must ask what the reasonable person

would understand the contract to mean rather than enquiring as to the subjective intentions of the parties

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Since the intro of the CRA 2015, the SRA 1979 is now mostly relevant only to

B2B contracts - CRA 2015 governs B2C

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S 15(a) Sale of Goods Act - Remedies for breach of condition

Section 15A provides that if the breach is so slight that it would be unreasonable for the buyer to reject the goods and repudiate the contract, the breach should be treated as a breach of warranty, which will only entitle the buyer to claim damages.

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What must the seller prove to rely on s 15(a) Sale of Goods Act?

that the breach is so slight and therefore unreasonable for the buyer to reject the goods

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Terms implied into a contract by the SGA 1979

title: the seller has the right to sell the goods (s 12)
the goods will comply with their description (s 13)
the goods will be of satisfactory quality (s 14(2))
the goods will be suitable for any purpose made known to the seller (s.14(3))
the goods will comply with any sample (s 15)

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Can the seller restrict the s 12 SGA 1979 undertaking as to title to the goods?

No! Cannot be restricted or limited in accordance with UCTA 1977

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Which implied terms of the SGA 1979 can be limited or excluded?

the implied undertakings as to description, quality, fitness for purpose or sample contained in ss13-15 of the SGA can be excluded / restricted subject to the requirement of reasonableness.

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When are goods of satisfactory quality? (s 14(2) SGA 1979)

“they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances”

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Factors for determining whether goods are of satisfactory quality

Fitness for all the purposes for which goods of the kind in question are commonly supplied;
Appearance and finish;
Freedom from minor defects;
Safety; and
Durability.

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breach of the satisfactory quality term is a

breach of condition

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S.15A Sale of Goods Act provides that if the breach is so slight that it would be unreasonable for the buyer to reject the goods and repudiate the contract, the breach should be treated as a

breach of warranty, which will only entitle the buyer to claim damages

a seller's liability under ss12, 13, 14 and 15 of the SGA 1979 can be excluded and/or restricted by agreement of the parties, subject to

the Unfair Contract Terms Act 1977 (UCTA)

Under s6(1A) UCTA, the implied undertakings as to description, quality, fitness for purpose or sample contained in ss13-15 of the SGA can be excluded / restricted subject to the

requirement of reasonableness

The Supply of Goods and Services Act 1982 (SGSA) implies terms into

contracts for the hire of goods and goods supplied as part of a supply of services (B2B)

s 12 Sale of Goods Act implies that the seller has

title - the right to sell the goods

Implied terms of a B2B contract for the hire of goods (SGSA)

- the right to transfer possession - implied terms where hire is by description - implied terms about quality or fitness - implied terms where hire is by sample

Implied terms of a B2B contract for the supply of services (SGSA)

the supplier will carry out the service with: - reasonable care and skill - within a reasonable time - the buyer will pay a reasonable charge

Supply of Goods and Services Act does not apply to

consumer contracts - applies to B2B only

contracts between a consumer and a business entered into prior to 1 October 2015 are governed by

the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982 and the Unfair Contract Terms Act 1977

CRA 2015 - terms in all contracts for goods

goods will be of satisfactory quality, fit for any particular purpose made known to the trader, and will comply with their description

CRA 2015 applies to B2C contracts entered on or after

1 October 2015

CRA 2015 defines a consumer as

an individual acting for purposes which are wholly/mainly outside of that individual’s trade, business, craft or profession

CRA 2015 - requirements for digital content

the content will be of satisfactory quality, fit for any particular purpose made known to the trader, and will comply with its description

CRA 2015 - contracts for services

the services will be performed with reasonable care and skill, provided in a reasonable time, and (where price has not been agreed) a reasonable price will be paid

Under CRA 2015, goods sold to a consumer which fail to meet requirements are regarded as

non-conforming

3 remedies available to the consumer for non-conforming goods

- The short term right to reject - The right to repair or replacement - The right to a price reduction or the final right to reject

terms of a contract can be classified as (3)

Conditions Warranties Innominate terms

When are the courts likely to find that a term is innominate?

- If the court cannot determine the parties' intention, or determines that their intention was that not every breach would lead to the right to terminate - if it is not possible to say in advance what the effect of the breach will be.

Under the Sale of Goods Act 1979, what is the classification of the implied term that goods will correspond with their description?

The term is classified as a condition, but it may be treated as a warranty if the breach is so slight that it would be unreasonable for the buyer to reject the goods

If a party breaches a condition, the innocent party has a right to

treat the contract as repudiated and may sue for damages immediately

Consequences if an innocent party affirms a contract after a breach of condition

they waive the right to repudiate but can still sue for damages

Remedy for breach of warranty

sue for damages (no right to repudiate)

The distinction between a condition and a warranty is that a condition is

an important term 'going to the root of the contract'

TEST for whether a term of the contract was always intended to be a condition

If the parties intended, at the time of contracting, that any breach of the relevant term could result in the innocent party terminating (Poussard v Spiers)

Starting point for the courts to determine the classification of terms before applying Hong Kong Fir test

Statute the parties' intentions Case law

Hong Kong Fir test to determinate if an innominate term is a condition or warranty

Does the breach deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract? - YES → the term will be treated as a condition and the innocent party is entitled to treat the contract as repudiated and claim damages. - NO → the innocent party is entitled to claim damages only

Implied terms under the SGA/SGSA etc. are generally treated as

conditions of a contract but may be treated as a warranty if the breach is so slight

When should you apply the Hong Kong Fir test?

to determine if an innominate term is a condition or warranty

Under s.13 SGSA 1982, where services are provided, there is an implied term that the supplier will carry out the service with

reasonable care and skill

If an implied term is not expressly classified as either a condition (fundamental term) or a warranty, how will the courts approach it?

The courts treat it as an innominate term, meaning: - The consequences of the breach determine the remedy available - If the breach is serious, it may entitle the innocent party to terminate the contract (treated as a condition). - If the consequences are minor, only damages may be awarded (treated as a warranty).

A party that has committed a breach of a condition is said to have committed a

repudiatory breach

If time is of the essence, lateness will amount to a

repudiatory breach entitling the other party to terminate the contract

A minor breach of an innominate nature will allow the innocent party to claim

damages only

How can parties to a written contract reduce the possibility of a claim that there are binding oral terms alongside the written terms?

The parties can include an ‘entire agreement’ clause in their written contract

A service that is carried out in the course of a business needs to meet what standard under the Supply of Goods and Services Act 1982?

Performed with reasonable care and skill

The Consumer Rights Act 2015 regulates contracts entered into by what people?

a trader and a consumer

What are the 2 remedies available to the consumer where a trader breaches the implied term that he must perform the services contract with reasonable care and skill?

the right to repeat performance and the right to a price reduction

Statements made by the parties during negotiations can be categorised as (3)

- mere puff - representations - terms of the contract

mere puff

statements of no legal significance made during negotiations

representations

statements made during negotiations which made induce the other side to enter the contract. This can give rise to an action misrepresentation.

If a party wrongly terminates a contract, they may themselves be in

breach of contract

Can you dismiss an employee if they do not carry out the agreed work with reasonable care and skill?

No, only if it is a very serious breach of the statutory implied term that the building work had to be performed with reasonable care and skill

If a term in a contract that has not been drafted by lawyers is specifically defined as a "condition" and is subsequently breached, can the innocent party terminate the contract?

No, the contract has not been drafted by a lawyer and the parties must have known the term would be breached at some time or another. Consequently, they could not have intended one breach to justify terminating the contract - Schuler v Wickman.

What term might the courts imply into an employment contract?

the employee has a duty to provide an honest and loyal service

Contractual Terms Flashcards

(68 cards)