Contract terms

What is a term?

Terms of a contract are its contents and represent what the parties agree to do or to give under it, the obligations that they owe.

Terms of a contract can be expressed or implied; expressed terms are what the parties have expressly agreed upon whereas implied terms are what the law will imply into a contract whether or not the parties agree.

Representations are pre-contractual statements, these may be made to induce the party to enter the contract but are not terms as they are not incorporated into the contract itself.

Some per-contractual statements attach no liability and have no legal significance, such as…

Trade puffs e.g. 'probably the best larger in the world'

Opinions – Bissett v Wilkinson - sheep case

Mere Representations – Esso Petroleum Co Ltd v Marden (1976) - how many gallons of petrol?

It is a term or a statement?... ask yourself...

1.       How important is the representation – Couchman v Hill - (heffer)

2.       Does the party have an expertise? – Oscar Chess td v Williams ( there was attatched liability as it was a misrepresentation)

3.       What was the time difference between the statement and the contract? – Routledge v McKay

4.       Is the agreement in writing?

So why may terms be implied? (terms implied by fact reflecting the wishes of the parties)

1.       For business efficacy – The Moorcock (1889) - WHARF

2.       Terms implied by custom – Hutton v Warren - local custom

3.       To reflect prior conduct of parties – Hillas v Arcos (1932) - timber

Terms implied by law (implied irrespective of the wishes, some by common law and some by statute) this is because the courts and parliament want to regulate such agreements. The courts may imply a term because it is felt that it is the type of term that should naturally be incorporated into a contract of that type.

 -         Liverpool City Council v Irvin (1976)

SALE OF GOODS ACT  1979

2 (1) – THERE MUST BE A TRANSFER OF PROPERTY IN GOODS FOR A PRICE

S 13 – Wherethere is a sale by description the goods must comply with the description

MEANING : Condition is implied into all sales of goods, private or commercial

APLICATION: Beale v Taylor Moore v Landaurer

REMEDIES: As a condition is breached, buyer can repudiate &/ or claim damages but It may be a warrenty if it is a minor breach and the buyer is not a consumer s15 (A) SGA applies.

S14 (2) – Where goods are sold in the course of a business they must be of satisfactory quality

MEANING: The goods meet the standard that a reasonable man would regard as satisfactory –

APLICATION: Bartlett v Sidney Marcus (1965)

REMEDIES: Condition breached: buyer can repudiate &/or claim damages. If 15 (A) applies non consumer buyer only claims damages

S14 (3) – Where goods are sold in the course of a business they must be fit for their purpose – will not apply if the buyer does not rely on the skill or judgment of the seller or it was unreasonable for the byer to rely on the skill and judgment of the seller.

MEANING: Buyer must expressly/impliedly make known the purpose for buying goods AND Buyer must be relying on seller’s skill

APLICATION: Griffiths v Peter Conway , Jewson v Boyhan

REMEDIES: Condition breached: buyer can repudiate & or claim damages, If 15 (A) applies non consumer buyer only claims damages

There are three types of terms ...

Conditions - these are terms which are fundemental to a contract. If a condition is breached the victim may repudiate the contract and or sue for damages. (Poussard v Spiers)

Warranties - these are minor terms of a contract, if a waranty is breached the victim may only sue for damages. The contract does not come to an end, the victim is still under an obligation to continue with the contract. (Bettini v Gye)

Innominate - The court will look at the consequence os the breah to decide if it is a condition or a warranty. It is the seriousness of the breach of terms not the importance of the terms that determines whether the breach justifies termination.