Terms and representations

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  • Contractual Terms
    • What is a term?
      • Failure to fulfil a term is a breach of contract.
        • A breach of contract results in a remedy which matches the party's 'expectation interest'.
        • Where the breach is one of a condition, the contract may be set aside.
      • There are three tests for determining whether something is a term.
        • Verification. A statement is not likely to be a term if a party has to check whether it is true. In Schawel v Reade, the buyer relied on the statement without verification and so it was held to be a term that the horse was 'sound'.
        • Importance. Would the buyer have entered the contract if the statement had not been made? Bannerman v White - the buyer would not have bought the hops if he had known that they had been treated with sulphur.
        • Special knowledge. If the person making the statement has special knowledge, their statement will be seen as a term. In Oscar Chess v Williams a statement as to the car's age was not held to be a term because the buyers were car dealers.
    • What is a representation?
      • This might be a statement of opinion or 'mere puff'.
        • A representation is unlikely to be incorporated into a contract. In Ecay v Godfrey, a seller of a boat said that it was sound, but that the buyer should have it surveyed to check. This was therefore a representation.
        • A representation can become a term as in Pennsylvania Shipping Co where the representation merged in the higher contractual right'.
      • Damages are available for a misrepresentation. These are calculated based on the loss the misrep has caused.


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