Contractual terms

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Representations and terms

Before a contract is formed, the parteis will make various statements during negotiations. These statements may form a part of the contract so it is important to be ble to distinguish between contractual terms and other statements.

  • Puffs- boastful statement in advertising. --Representation- statement which induces the party to enter into a contract but not part from it. -- Term- promise/understanding which becomes part of the contract itself. 
  • The difference between a representation and term is found by looking at the 1.intention of the parties. 2. if the statements were intended to raise expectations of which the contract should uphold. 
  • The question put foward in Helibut Symons and Co v Buckleton was that if there was evidnce of an intention by one or both of the parties that there should be a contractual liability in respect of the acuracy of the statement? 
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What tests to use to find out if there was any con

Was the contract in writing?

  • A contract in writing usually constitutes for a term rather than a representation. Statments which are made before the contract are usually representations The courts will still consider the intetion of the parties however in case they were intended to be partly writtern and partly oral. 
  • -- J Evans and Son v Andrea Mezario- Claimaints contracted with defendants o make the transport arrangements for the carriage of goods to England. A clause in the contract said the shipper 'reserves to itself complete freedom in respect of...the procedure to be followed in the handling and trasportation of the goods'. However, there was a verbal agreement the D's would transport the claimaints cargo below deck. Due to an oversight on the part of the defendants, a container was shipped to England on deck. The ship met a swell which caused the container to fall off the deck and the machine was lost overboard. 
  • -- The claimants claimed damages against the defendants for the loss of the machine, alleging that the carraige of the container on deck had been a breach of the contract of the carriage. 
  • H: The oral promise was incorporated in the contract. Roskill LJ- the contract was partly oral , partly written and partly by conduct and in those circumsntances- the court was entitled to look at all the evidence to determine the bargain struck between the parties. It followed that the defendants were liable for breach of the oral promise. 
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Was the contract signed? Imp of statement?

  • If the written agreement is signed, the parties are considered to be in agreement with everything it contains even if they have not read it. 
  • L'Estrange v Graucob
  • -- Mrs. L'Estrange owned a cafe and she ordered a cigarette machine from the manufcatureres which was faulty. The contract, which she had signed contained a clause stating that any express/implied conditions/statement/warranty/ is hereby excluded.' L'Estrange claimed for breach of term implied by the SGA 1893 and the goods were unfit for purpose. She also claimed that she hadn't seen the clause so she had no knowledge of the contents. 
  • H: Claim failed- Scrutton LJ said that when a document with a contractual term is signed, then then unless there is fraud or MR- the party signing it is bound to it and it is wholly immaterial whether or not they read the document. 
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How important was the statement?

  • The importance of a statement:

The greater the importnance attached to a particular statement, by one party the more likely it is to be seen as a term. If the party wouldn't have entered into the contract unless that statement hadn't been made- the statement is highly lkely to be seen as a term. 

-- Bannerman v White: The D's bought hops. Before the contract was made, the purchaser said that 'if they have been treated with sulphur, I am not interested in even knowing the price of them'. The seller WRONGLY stateed that they had not been so treated. When the purchaser discovered this, he repudiated the contracter. The seller sued on the basis that the discussions were before the contract and not part of it. 

--- H: The seller failed. The court held that the statement was so important to the purchaser that it became a term of the contract that had been breached. 

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Reliance on specialist knowledge and skill

  • When one party relies on a statement made with the specialist knowledge/skill of the other party in deciding whether or not to enter into a contract, then the statement may be considered to be a term of the contract. 
  • -- Dick Bentley Productions v Harold Smith- C asked the D's to give a 'well vetted' Bentley, the D's claimed that a particular car had done 20k miles since being fitted with a new engine and gear box. In fact, it had done 100k miles which the claimant found out about after buying the car. 
  • H: The statement about milage was held to be a term of the contract. The claimant had relied on specialist knowledge of the dealer in making the statement which was a major factor in his decision to enter the contract.

However, in similar cases where an erronous but honest statement to the vehcile's age was made by a private seller with no special knowledge- the statement was not considered to be a term of the contract. 

Timing of the statement:

- Where there is a significant lapse of time between the statement made and the formation of the k- courts are more likely to consider the statement as a representation than a term. 

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The Parol Evidence Rule

  • This rule states that where a contract has been reduced to writing, extrinsic evidence is inadmisible to add to, vary, or contradict is terms. In other words, at common law, a written contract is presumed to contain everything upon which the parites agreed and anything that is not embodied in the contract is considered to be never included.
  • The Law Comission recommends that the rule should be abolished, but by 1986 said it did not stops the courts accepting parol evidence if this was consistent with the intention of the parties. 
  • Exceptions to this rule:
  • -- If the written agreement was not intended to be the whole contract on which the parties had actually agreed, parol evidence is admissible. (J Evans & Sons)
  • Parol evidence may be given to determine the validity of the contract
  • Parol E rule can be used to show in what capacities the parties have contracted 
  • Parol E rule can be used to expalin words or phrases which are ambigous or if taken literally, make no sense 
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The different types of terms

Conditions:

- These terms go to the root of the contract

- If breached, you have full acess to contractual remedies

--- Poussard v Spiers- an actress was under a contract to appear as the lead in an opertta. She was taken ill and unable to attend the first performance. Her role was given to the understud ay and when she recovered she sued for breach of contract. H: Claim failed. The court said as the lead performer, she was of crucial importance to the sucess of the production- this was therefore a condition of the contract which she breached by failing to attend the first performance. The producers were therefore able to repudiate the contract.

Warranties:

  • A warranty is a contractual term of lesser importance than a condition. A breach of a warranty is less significant than a breach of condition. It doesn't go to the root of the contract. 
  • The remedies availaibe are limited to damages only. The injured party does nt have the same right to repudiate the contract and consider themselves discharged. -- Bettini v Gye- singer replaced- after not going to rehearsels. H: Success. 
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