Contract Law Basics: Terms and Representations

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Questions and Answers

What distinguishes a collateral contract from other terms of a contract?

  • It must be written down.
  • It can only be made in writing.
  • It is always a condition.
  • It is a separate but related contract. (correct)

Which of the following statements is NOT true regarding terms of a contract?

  • All representations are considered terms. (correct)
  • Terms can be either express or implied.
  • Terms are binding provisions.
  • Implied terms are not explicitly stated.

Which factor is NOT used to distinguish between a representation and a term?

  • The formalities of the written contract.
  • When the statement is made.
  • The importance of the statement.
  • The legal consequence of the statement. (correct)

Which of the following best describes implied terms in a contract?

<p>Terms inferred by law or custom. (B)</p> Signup and view all the answers

Which of these terms is a type of condition in a contract?

<p>Innominate Term (A)</p> Signup and view all the answers

What is the primary purpose of the parol evidence rule?

<p>To prevent the introduction of additional terms to a written contract. (A)</p> Signup and view all the answers

Which of the following is true concerning conditions and warranties?

<p>Conditions have more severe consequences than warranties upon breach. (D)</p> Signup and view all the answers

Which of the following does NOT typically result from a representation made during negotiations?

<p>It is a binding term in the contract. (A)</p> Signup and view all the answers

How does the timing of a statement relate to its binding nature?

<p>A statement made shortly before the contract is concluded is more likely to be binding. (B)</p> Signup and view all the answers

What did the case of Bannerman v White establish regarding the importance of statements?

<p>The more important a statement is, the more likely it is to be considered a term. (D)</p> Signup and view all the answers

In the presence of a written contract, what does the exclusion of a statement indicate?

<p>The statement is more likely a representation. (B)</p> Signup and view all the answers

When assessing the knowledge and expertise of the statement maker, what is a critical comparison?

<p>Between the maker and the person who receives the statement. (A)</p> Signup and view all the answers

In the case of Dick Bentley Productions Ltd v Harold Smith Motors Ltd, what was the misrepresentation about?

<p>The car's mileage. (C)</p> Signup and view all the answers

What conclusion can be drawn when a statement is made by an expert and is received by someone with lesser knowledge?

<p>The statement is likely considered a term. (C)</p> Signup and view all the answers

What principle can be derived from the case of Routledge v McKay concerning unlisted components in a contract?

<p>The absence of a detail suggests it's a representation. (C)</p> Signup and view all the answers

How does the duration between the statement and contract influence its classification?

<p>Shorter durations suggest it is likely a term. (B)</p> Signup and view all the answers

Flashcards

Time between statement and contract

The length of time between the statement and the contract's conclusion.

Long time gap = representation

The longer the gap, the more likely the statement is a mere representation and not a binding term.

Short time gap = term

The shorter the gap, the more likely the statement is a term and legally binding.

Importance of the statement

The significance of the statement in influencing the decision to enter the contract.

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Important statement = term

A highly important statement is more likely to be considered a term and thus binding.

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Inclusion in written contract

The presence of the statement in a written contract.

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Exclusion from contract = representation

If a statement is excluded from a written contract, it's more likely to be a representation and not a binding term.

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Maker's knowledge and expertise

The knowledge and expertise of the person making the statement.

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Terms of Contracts

Statements made during contract negotiations that are legally binding and become part of the contract.

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Representations

Statements made during contract negotiations that are not legally binding. They might influence the decision to enter a contract, but they are not part of it.

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Collateral Contracts

A separate contract that is created alongside the main contract. It's usually made orally and guarantees something specific related to the main contract.

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Condition

A term in a contract that is so important that if it's breached, the innocent party can end the contract and seek damages.

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Warranty

A term in a contract that is less important than a condition. If breached, the innocent party can seek damages but cannot end the contract.

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Innominate Term

A term in a contract where the seriousness of a breach isn't immediately clear. The court will decide whether the breach is serious enough to allow the innocent party to end the contract.

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Implied Term

A term in a contract that's not explicitly stated by the parties but is implied by law or custom.

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Exemption Clauses

A clause in a contract that aims to limit or exclude the liability of one party. They can be tricky to enforce.

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Study Notes

Contract Contents - Introduction

  • Contract negotiations are common
  • Are statements made during negotiations part of the contract?
    • Yes, if they are terms (binding)
    • No, if they're mere representations (not binding)
  • There are collateral contracts
    • Distinct, separate contracts related but not part of the main contract.
    • Are oral, not written terms of the main contract

Pre-Contractual Statements

  • Terms vs. Representations
    • Terms are binding promises
  • Collateral Contracts
    • Separate contracts from the primary one, related to it but not part of it.
    • Usually oral, distinct from primary contract provisions.

Classifications of Contract Terms

  • Conditions
    • Essential terms; breach allows termination of contract
  • Warranties
    • Less important promises; breach only allows claim for damages
  • Innominate terms
    • Importance of breach depends on the specific consequences.

Method to Distinguish Terms and Representations

  • When the statement is made:
    • Longer time between statement and contract - likely a representation.
    • Shorter time between statement and contract - likely a term.
  • Importance of the statement:
    • More important statement - more likely a term.
  • Inclusion in the written contract:
    • If excluded from a written contract - more likely a representation
  • Knowledge and Expertise of the maker:
    • Maker has higher knowledge - more likely a term
    • Maker has lower knowledge - more likely a representation

Case Examples

  • Routledge v McKay (1954):
    • Statement about car age made weeks before sale
    • Considered a representation because of the time gap
  • Bannerman v White (1861):
    • Crucial question about sulphur use in hops
    • Considered a term because it was critical to the agreement.
  • Dick Bentley Productions v Harold Smith Motors [1965]:
    • Statement about car mileage by car dealer.
    • Considered a term because the dealer should have known the correct mileage.
  • Oscar Chess v Williams [1957]:
    • Non-dealer selling car relying on registration book for age
    • Considered a representation because of the seller's lack of specialized knowledge.

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