Terms

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  • Created by: Rachel
  • Created on: 18-04-14 13:56
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  • Terms
    • PAROL EVIDENCE RULE
      • Record of transaction is embodied in document
        • GR: extrinsic (outside) evidence - generally not admissible
      • Provides CERTAINTY
        • bound by the writing
      • Used where a dispute arises after contract is made - what was said?
        • Party could be upset if the disputed term wasn't set out in contract
          • Extrinsic evidence thus can be admitted in different situations which fall outside the GR
      • EXCEPTIONS
        • Written agreement - wasn't the whole agreement
          • Written agreement wasn't intended to be the whole contract
          • Evans v Andrea Merzario 1976
        • Validity
          • Parol evidence may be given about validity of contract
            • eg: estb. presence/absence of consideration
        • Implied Terms
          • Where the contract is silent on a matter on which a term is normally implied by law
            • PE may be given to support/rebut usual implication
          • Burgess v Wickham
        • Operation of the Contract
          • PE can be used to show the contract doesn't yet operate or that it has cease to operate
          • Pym v Campbell
        • Evidence as to Parties
          • PE can be used to show in what capacities the parties contracted
        • Aid to Construction
          • Where the words of contract are clear
            • PE can't be used to explain their meaning - unless they have a special meaning by custom
              • PE CAN be used to explain words/phrases which are ambiguous/technical or don't make sense
        • To Prove Custom
          • Smith v Wilson
            • Evidence was admitted of a local custom to show that 1,000 rabbits meant 1,2000 rabbits
        • Rectification
          • document may fail in accurately recording the true agreement
          • Equity allows written contract to be rectified by PE
        • Collateral Contract
          • Although PE can't be used to vary/add terms of written contract - may be possible to show that parties made 2 related contracts
            • 1 written, 1 oral (collateral contract)
              • City & Westminster v Mudd
    • Representations & Terms
      • 1st step in determining terms of contract - esb. what the parties said/wrote
      • Statements made during course of neg. may be classed as representations or terms
        • if one turns out to be wrong - plaintiffs remedy depends on how the statement is classified
        • Representation
          • statement of fact made by one party which induces the other to enter into contract
          • If its incorrect - innocent party may sue for misrepresenation
        • Breach of a term
          • entitles injured party to claim damages
          • If been deprived substantially - can also reject contract
        • If statement isn't a term of the contract - possible it can be enfaced as a collateral contract
      • How can courts decide if a statement is a term or representation?
        • Test est. in Heilbut, Symons & Co v Buckleton 1913
          • Held: Intention is the overall guide as to if a statement is a term of contract
          • When deciding if a statement is a term or rep courts consider 4 factors
            • TIMING
              • Court considers lapse of time between MAKING STATEMENT and contracts CONCLUSION
                • If interval is short - statement is more likely to be a TERM
                • Routledge v Mckay
            • IMPORTANCE OF STATEMENT
              • Court will consider importance of statement
                • May be so important that if it hadn't been made - injured party wouldn't have entered in contract at all
                • Bannerman v White
            • SPECIAL KNOWLEDGE/SKILLS
              • Court will consider if maker of statement had specialist knowledge
                • OR
                  • if they were in a better position than the other party to verify the statements accuracy
                    • SPECIAL KNOWLEDGE/SKILLS
                      • Court will consider if maker of statement had specialist knowledge
                        • OR
                          • if they were in a better position than the other party to verify the statements accuracy
                            • Oscar Chess v Williams
                            • Dick Bentley Productions v Harold Smith Motors
                    • Oscar Chess v Williams
                    • Dick Bentley Productions v Harold Smith Motors
              • REDUCTION OF TERMS TO WRITING
                • Court will consider if statement was omitted in a later, formal contract in writing
                  • If written contract doesn't include statement - suggests that parties didn't intend statement to be a contractual term
                  • Routledge v McKay
        • Traditionally terms have been divided into 2 categories
          • Conditions
            • Major term which is vital to main purpose of contract
              • If term is described in contract as a condition - isn't conclusive
                • Schüler v Wickman
            • Breach of a condition - entitles injured party to reject contract and claim damages
              • Injured party may also choose to go on with contract despite breach and recover damages
            • Poussard v Spiers
          • Warranties
            • Less important term
            • Breach of warranty - give injured party right to claim damages
            • Bettini v Gye
          • Intermediate Terms
            • May be impossible to classify term in advance as a condition or warranty
              • May need to see consequence of a breach
                • If breach of terms results in severe loss & damage - injured party can repudiate contract
                • If breach - minor loss - injured party - damages
                  • These intermediate terms - innominate terms
                    • Hong Kong Fir Shipping v Kawaski
      • IMPLIED TERMS
        • In most contract primary obligation of parties are contained in express terms
          • There are various circumstances where extra terms may be implied into agreement
        • Terms implied by CUSTOM
          • Terms may have been negotiated against background of customs of a particular locality/trade
            • Parties automatically assume their contract will be subject to these customs - and don't deal  with this specifically in contract
          • Hutton v Warren
        • Terms implied by the COURT
          • Intention of Parties/Terms implied as Fact
            • Courts will be prepared to imply term into contract to give effect to obvious intention of the party
            • Sometimes the point of issue had been overlooked or parties failed to express their intention clearly
            • The Moorcock
          • Relationship between Parties/Terms implied by Law
            • In certain relationships and contracts, the law seeks to impose a model or standardised set of terms as a form of regulation
            • Such terms arise from the relationship between the parties will be implied by law
            • Liverpool City Council v Irwin
        • Terms implied by STATUTE
          • Sale of Goods Act 1979 s.12, 13, 14, 15
          • Supply of Goods & Services Act 1982 s.13, 14, 15

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