Contract Law: Express and Implied Terms

Contents of a Contract

• This chapter explains express and implied contract terms, their classification, and their connection to breach of contract remedies.
• It will also cover the use of common law and statutes to regulate exemption clauses in business and consumer contracts.
• The chapter aims to provide a well-structured framework for advising clients about such clauses.
• Contractual terms define each party's obligations and are crucial when disagreements arise.
• Breach of these terms can lead to lawsuits, with remedies, such as monetary compensation ("damages").
• Chapter will cover express terms, implied terms and exemption Clauses, which exclude/limit liability for breach or restrict available rights/remedies.

Identifying Express Contract Terms

• Express terms are those specifically agreed upon by all parties involved in a contract.
• Terms can be written or oral, but written documentation is preferable to avoid any ambiguity.
• Parties to a contract are generally free to agree to any terms they choose.
• Parties may disagree on whether statements made during negotiations are terms of the contract or simply representations.

Implied Terms of a Contract

• Implied terms are not expressly stated but are understood to be part of the agreement.
• Implying terms can occur during court litigation or through legislation.
• Sometimes parties might not explicitly agree on all contract terms because they assume things based on their shared backgrounds.
• Prior consistent dealings can lead parties to assume that new contracts contain the same terms.

Terms Implied by Courts

• Courts may imply terms based on local customs or trade usages if those customs exist and are commonly applied.
• Hutton v Warren (1836) set a precedent where an outgoing tenant farmer was entitled to an allowance for seed and labor, implied due to local custom and not contradicted in the lease.
• Terms based on trade usage cannot be implied if provisions exist that contradict the custom.
• Previous consistent dealings are another way the terms are implied.
• In Spurling v Bradshaw [1956], an exemption clause in a receipt was considered a contract term due to previous consistent dealings.
• Terms may be implied into a contract based on the presumed intentions of the parties using the 'business efficacy' and 'officious bystander' tests.
• The 'business efficacy' test was defined in The Moorcock (1889), where a wharf owner was liable for damages to a ship because they were expected to ensure berth safety.
• Terms are implied to make the contract commercially practical, the 'officious bystander' test dictates terms that are obvious and intended by all parties.
• Shirlaw v Southern Foundries Ltd [1939] emphasized that the business efficacy test should be stringent.
• Where contracts frequently occur, the courts may imply standard provisions unless otherwise specified.
• In Liverpool City Council v Irwin and Another [1977], HL affirmed that landlords must take reasonable care of common areas despite the absence of explicit terms.
• Terms may be implied by custom/trade usage, previous dealings, business efficacy, and the contract type.

Statutory Terms

• The The Sale of Goods Act (SGA) 1979, the Supply of Goods and Services Act (SGSA) 1982 and the Consumer Rights Act (CRA) 2015 imply terms into contracts.
• These Acts apply to contracts for the sale of goods and contracts for the supply of services and work and materials.
• Sale of Goods Act (SGA) 1979 implies terms into contracts.
• After the CRA 2015, SGA 1979 applies only to contracts not involving a trader and consumer.

Terms Implied by the Sale of Goods Act 1979

• The Sale of Goods Act 1979 outlines implied terms as conditions, meaning they are major contractual terms.
• Example: Section 13(1) implies a term for correspondence with description where goods must match their description.
• Section 14 implies that sellers must provide goods of satisfactory quality(s 14(2) and fitness for purpose (s 14(3).
• Section 14(2) and 14 (3) apply only if the seller sells to a commercial buyer in the course of business.
• Where the buyer's purpose is made apparent to the seller, Section 14(3) of SGA applies.
• Breach of s 14(2) and s 14(3) imposes strict liability, meaning the buyer does not need prove fault to show liability.
• In sales by description per Section 13, there's a condition stating that goods must align with their given description.
• Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1991] shows for s 13 to apply, buyers must depend on and reasonably trust the description provided.
• Beal v Taylor [1967] shows s 13 covers when a buyer relies on a description, even with inspection.
• To determine if remedies apply through s13 or s14, Tom, as a decorator buying a defective van, could reject returning it getting compensation.
• However, the right to reject goods can be lost by buyer accepting them, retaining goods beyond a reasonable time.
• According to SGA 1979, s 15A, the right to reject lost goods is lost if breach is so slight that rejection is unreasonably.
• Section 13 means contract for sale of goods, there must be a condition goods coincide to their depiction.
• Section 14(2) provides products sold through business are of acceptable quality.
• Remedies, such as goods rejections are not, available where the breach is too minor or goods are kept unreasonably long.

Supply of Goods and Services Act 1982 (SGSA)

• The SGSA 1982 generally applies to contracts for services, along with ones for work/materials that aren't trader to consumer.
• The Consumer Rights Act 2015 now covers trader to consumer contracts.
• Service contracts are where an individual is simply contracting out a service.
• SGSA 1982 governs commercial cleaning and delivering.
• For work and materials contracts, SGSA covers building or garage work.
• Implied terms for the work and supplies involved,
• If goods transferred do not correspond its depiction , there's implied condition to coincide with its depiction.
• Products sold in operation must meet acceptable standards.
• When product obtained in course of business and buyer informs supplier its goal , supplier reasonably relies on knowledge, products fit that reason.
• When work/service provided by business, there must be reasonable skill/care used, work in service, done through business must be done in reasonable time frame.
• Sum is charged , if not pre-arranged there implied arrangement its reasonable.
• The four sections stated (4.2),(4.5) ,only apply whenever merchandise sold done in course of conduct.
• Terms mentioned through ss 3/4 classified through circumstances.
• Ss 13 through 15 do not force strict, only those classified using phrase. Terms stated by ss 14 , 15 simply take action during insufficient state.
• In service supplies, only those 13 -15 classify whenever there classification's work in service

Consumer Rights Act 2015

• Consumer Rights Act (CRA) 2015 aims to strengthen consumer rights.
• Under CRA covers consumer contracts/goods, digital services.
• CRA 2015 applies to 'sales contracts,' between the trader/consumer(s 5), also covers supply contract
• Per CRA 2015 definition, 'trader' refers to operating for business/craft," while 'consumer' means performing trades.
• CRA 2015 largely mirror implied through ss thirteen and fourteen on 1979 also in sections three and four during '82 during SGSA.
• CRA 2015 (section nine states merchandise of fair standard, section 10 means is practical as is depicted

Enforcement of Consumer Rights

• Section 19 of CRA dictates if the products failed coincide with arrangements caused by breach , buyer hold short period which refund is applicable
• Consumer is permitted for replacement (s 23 ), consumer may seek some rate drop, ending rejection in obtaining proportional discount s 20 and 24.
• Goods fail confirm six month time, take date confirming as-is.
• Trader offer replace repeat(reasonable care/skill,(s 49),
• Consumer able take cost decrease

Classifying the Terms of a Contract

• All clauses specifying commitments from the parties whether express/implied, fall into three groups known conditions, warranties, or innominate terms.

Conditions versus Warranties

• A condition is a central part of whole contract, a warranty seen term as considerably of negligible importance.
• For condition or warranty, Court applies assessment based on neutral viewpoint from reasonable individuals position.
• Parties' actions, whole nature the agreement, take it all under consideration, weight which assigned using statement under condition or warranty terms.
• As term classified condition - contract unfulfilled parties can take approach cease future execution with seek payment for resulting damages. Whereas warrant, parties only entitled payment for inflicted injuries.
• Schuler v Wickman Machine Tool Sales Ltd [1974], the House of Lords indicated to intent word in legal sense.
• An advantage classification lies in the support through promoting legal clarity.

Innominate Terms

• Fair means, party may utilize breach for excuse ending as agreement also implies warranty, the damaged body unsuited with end process.
• Party can make agreement clear condition through its form.
• Also the enactment express clause of warranty through express clause in Act SGSA, sections 13/14.
• Parties classified intermediary known as In Hong Kong Fir Shipping Co Ltd, suggests classification cannot come too soon, time needed breach

The courts approach to classifying terms

• As a starting situation, if it is written in an accepted/contractual language it must regarded through an express term under conditions made clear.
• Where one lacks to clearly state they should be made reasonably, it is deemed warranty applies.
• Where terms implied by the Act ,13 or 14 classified circumstances, they stand under circumstances at hand.
• The Unfair Contact Term's Act (UCTA) states to control, to regulate limit.
• Exemptions are classified as excluding all total liability
• Clauses looking towards restricting term classified limit
• Standard terms read on what's been agreed to.
• To the validity of exemption clause, there has to be breach.

Section 2

• Terms applied, it's liable.
• Negligence or contracted liability.
• Business cannot exclude its liability. in the loss of life.
• For terms breach in the business of a express skill.

Unfair Contract Terms Act 1977

• Any act that limits on something that exempts them is in process of the UCTA, 1977.
• UCTA, section 3 applies in a standard form by which it restricts liability but for the action's express term for what written in the
• Example: in breach with express term, express has rely during exception, during its written.

The Reasonableness Test

• UCTA guidelines help judge fairness.
• Considerations include bargaining powers, inducements, and customer awareness.
• Limitation clauses are also subject to the guidelines and resources from those involved in it ,must to be covered through some process ,insurance.
• Stewart Gill versus Horatio Myer, was noted the whole term for nothing shall be set for fair just.
• Smith v Eric Bush, 2/2 applies just is effective in court for survey the house is reliable.
• Lord Griffiths identified parties can decide how much to provide, determine whether disclaimer valid:
• Equality bargaining, case counsel advice, difficult task.
• For what is involved with potential, monetary risk.

Consumer Rights Act 2015

• The CRA 2015 unites consumers safeguards into agreements and has influence in regards terms.
• Section thirty applies liability.
• Goods of appropriate high standards.

The Key Features

• To understand implied terms, distinction must know the difference with and those made direct
• Whether conditions, warranties or innominate is where its significance rest.
• What classification needed is where you make them applicable