Contract Law: Terms and Classifications

Introduction to Contract Terms

• Every contract contains terms detailing what the parties have agreed upon.

Express Terms

• Terms specifically agreed upon by the parties are known as express terms.

Implied Terms

• Terms implied by law, either by the courts or an Act of Parliament.

Hutton v Warren

• A farmer was granted compensation for work done on fields before tenancy termination, as it was common practice.

Term Classification

• Terms are classified by importance: conditions, warranties, and innominate terms.

Terms vs Representations

• Terms are part of the contract, representations induce entry but aren't part of it.
• Breach of term leads to breach of contract claim.
• False representation leads to misrepresentation claim.

Factors Courts Consider

• Courts consider the previously mentioned factors to determine if a statement is a term or representation.
• Importance of the statement is taken into account.
• Specialist knowledge/skill of the maker is considered.
• Time lag between statement and contract is factored in.
• Whether it is a written contract is used in the decision.

Key Definitions

• A 'puff' is a boastful advertising statement with no legal standing. Example: 'Carlsberg, probably the best lager in the world’.
• A representation is a statement inducing a contract party but not part of it.
• A term is a promise/undertaking that becomes part of the contract.

Legal Consequences Based on Classification

• Legal consequences for false pre-contractual statements depend on classification even if both representations and terms induced the formation of the contract.
• Puffs attach no liability as they are considered not to have been taken seriously.
• Representations attach liability like misrepresentation, needing proof to pursue.
• Terms attach liability like breach of contract, giving an automatic right to sue.

Incorporating Terms

• Statements must be incorporated and become part of the contract to become a term.
• Statements in a written contract are usually terms.
• Statements before the contract are representations since they weren't included in writing.
• Courts still consider the parties' intent if the contract is partly written and partly oral.
• Whether a statement is in the contract depends on the specific factors.

Oral Statements: Importance

• The more important the statement, the more likely it is a term that would determine party actions when entering the contract.

Bannerman v White

• A hop purchaser stated they weren't interested in sulphur-treated hops and was assured they weren't, this was a term.

Couchman v Hill

• An auction catalogue/auctioneer stating a heifer wasn't pregnant, led to a term as it was important.

Schawel v Reade

• A horse seller stating a horse was sound was a contractual term, relying on the seller's word.

Reliance on Specialist Knowledge & Skill

• When a statement made with specialist knowledge is key, the statement becomes a term.

Dick Bentley Productions v Harold Smith

• A car dealer claiming a Bentley had done 20,000 miles since a new engine when it was actually 100,000 miles as it was considered a term.
• Erroneous statements from private sellers are not considered a term due to their lack of expertise (Oscar Chess Ltd v Williams)

The Timing of the Statement

• Longer time between statement & contract formation makes it more likely to be considered a representation,.

Routledge v McKay

• An incorrect motorcycle registration year stated before a written contract wasn't a term due to the time lapse.

Written Contracts

• Courts assume that written contracts include all intended terms (Routledge v McKay).
• Unwritten contracts are more complex.

Advice/Ability to Verify the Statement:

• Statements where the other party is advised to seek confirmation indicate it is likely a representation.
• Assertions presented as fact that cannot be verified is a term.

Clarity of the Statement

• Vague and unclear statements are unlikely to be contractual terms.

Disclaimers

• Disclaimers usually indicate a statement is not part of the contractual term.

Express Terms

• Words agreed upon by parties incorporated in the contract whether written or verbal.
• Incorporation decides the terms, interpretation (construction) defines their meaning.
• Express terms cover price, requirements, performance, obligations and can include exclusion clauses.

Express Terms - Written Notice & Signed Documents

• Signing a written agreement means agreeing to its contents, even without reading it.

L'Estrange v Graucob

• Buying a vending machine and signing a contract, meant the terms still applied even without reading the small print.
• Note, such judgements would be subject to consumer protection laws today.

Grogan v Robin Meredith Plant Hire

• Signing a timesheet with additional contract terms at the bottom of the sheet that weren't read, was not included in the contract.
• Signing this document did not mean being bound by the terms.
• The document was not the kind a reasonable person would think contained contained contractual terms.

Neocleous v Rees

• Using electronic signatures in emails for land rights transfers can still be a binding contract.
• An electronic signature was found to be ‘authenticating intent’, which meant the contract was then enforceable.

Curtis v Chemical Cleaning

• A dry cleaner misrepresenting the exclusion clause's effect cannot rely on it, even with a signed form.

Chapleton v Barry UDC

• Stating that a deck chair ticket was considered a receipt with no contractual terms.
• The Exclusion clauses were therefore not part of the contract.
• Collecting the chair would amount to acceptance.

Thornton v Shoe Lane Parking

• The ticket was dispensed after the acceptance took place and therefore, The clause to pay for the parking, was not incorporated into the contract.

Express Terms - Harsh Terms

• The law requires onerous or harsh terms to be clearly brought to the parties' attention.

Interfoto v Stiletto Visual

• Claiming high holding fees for the product had a term not incorporated due to insufficient notice.
• Onerous terms require greater measures to bring it to other party's attention.

Blu Sky v Be Caring Ltd

• Blu-Sky was an unenforcable case due to the cancellation clause not being in the main agreement.
• The terms must be brought to attention, be 'fairly and reasonably' brought to attention before entering a contact.

Express Terms - Tickets

• The conditions must be reasonable to the person, and that condition should exist.

Parker v SE Railway

• The court thought the judge's direction was incorrect and the question to the jury ought to have considered was whether the defendant gave the claimant reasonable notice that the condition existed.

Thompson v LMS Railway

• The court decided the clause was incorporated and a reasonable traveler would see it.
• It is not a requirement to ensure every traveler must notice the clause, just to make it visible for the average person.

Implied Terms

• Nearly all, if not all, contracts have some implied terms, in addition to the expressed terms.
• They can be set into the contract by courts due to obvious reasons.
• Or by statute that gives rights to one party, such as the Consumer Rights Act 2015.

Terms implied by the courts/common law

• Can stem from the business in question or prior dealings between parties.
• Commonly applied in contracts due to obvious need by the court.

Custom and Prior Dealings

• Implied into categories, such as employment contracts.

Lady Hale stated in Societe Generale, London Branch v Geys (2012)

• Are implied into a class of contractual relationship. Such as that between landlord/tenant or employer/employee because courts have implied the term as a necessary incident.

Prior dealings -

• If the same term appears in the contract must be consistent, must be regular and ongoing.
• Accepted even after acceptance.

Kendall v Lillico

• A term will be incorporated by prior dealings if its use is ongoing.

Hollier v Rambler motor

• If the party is a customer it is less likely to be the case.

McCutcheon v MacBrayn

• No consistency, the defendant was held liable to pay for damages.

More likely if the parties are in the same industry

• Both parties were in the plant hire business.

Hillas v Arcos

• Previous contract with the same agreements, the option clause lacked detail it was implied that it would be detailed on the same terms (Previous contract).

Business Efficacy' Test and Official Bystander Test

• The 'business efficacy' test means a suggested term will be implied if it is necessary to give business efficacy to the contract.

Moorcock

• The claimant sued on dock as there was no expressed term relating to the ship, court decided they were liable for the implied agreement term.

Officious Bystander' test

The contract is so obvious that during casual observer suggests action they would respond "Of course".

Shirlaw v Southern Foundries

• Claimant dismissed as they were told they were dismissed as general workers and there was a breahc of employment contract.
• Ask court to use 'Official bystander" test and court did imply the term.

Terms will not be implied if. . .

• The parties never thought to agree to it: Shell UK v Lostock Garage
• Lostock argued Shell was discriminating against those under contracts.

Marks & Spencer v BNP Paribas

• Confirmed Moorcock and Shirraw and clarified the law.
• Reasonableness is to be judged objectively following along with to what the 'notional reasonable' would agree to.
• Fairness and acceptability to the parties are not enough to imply a term.

Whether a term being expressed through - If the case satisfies other requirements it would prove it's reasonably and equitable. Only one test needs to be satisfied either business efficacy or officious bystander test.

Business Judgment

Suggest for business efficacy, lord sumption suggests that it may be more helpful to see that a term can only be applied if it the term and the contract would lack commercial.

Barton v Morris 2023 SC

• Unilateral offer to pay £1.2m if a claimant introduced a buyer and had a verbal contract with a seller declining a fee to claimant.
• Supreme court was still imply to the claimant that would not be deliberately so. Supreme court said there could be no reduced fee because it would undermine an expressed term because that needed to be the official bystander test and spring vs national stevedores. Underlined for business efficacy test.

Terms implied by statue

• Terms are placed implied due to statues or regulations.
• Stated by parties even if they intended to include them.

Law implies in the Consumer Rights Act 2015

• Protects consumers against the unfair. Prevent companies excluding liability for negilcance terms automatically go into consumer contracts
• Terms are included in every contact by the consumer rights act 2015.
• The statute only supplies traders under the contract.Alternate legislation exists for other contracts.

Act

• Does not cover goods sold via private individuals to Individuals

Different terms applied based for the different services that may entail from contracts with good services, sales and digital products

The consumer rights act 2015 outlines how you can be remedies. The claimant seeks too.

Outline Remedies Statute by Traders It is important to note for example, Scott ordered a new dryer and the device malfunctioned due to an existing electrical issue. This resulted in a small fire that has ruined some of his belongings and carpets. In order to reclaim the damages of damage made to his furniture in addition with claiming for his fire done under the 2015 act.

Supply of goods these include physical and digital products, software, installs.

Satisfactory Rights 9 - 11 in quality terms

It covers quality controls.Satisfactory quality is based on what a reasonable person would expect with appearance and safety. There are special characteristic with statement made trader label and it can be unsatisfactivity it the statements are drawn under for the contract

The consumer can not

Make a claim against a trader as the trader have changed their mid as the quality must unsatisfactory

Bartlett v Sidney Marcus Ltd.

• purchased second handed jaguar, told the claimant that the clutch was defective and it would be a small fix.

Fitness for Purpose 10

• The Goods be made or intended and must not for their purpose and action can be taken for breach of the term
• matter if it is no the purpose The goods are only applied for the consumer makes prior prior to purchase the term is is implied.

Hillas v Arcos

• Previous contract with the same agreements, the option clause lacked detail it was implied that it would be detailed on the same terms (Previous contract)
• Both parties were in the plant hire business.
• Vague contract

2 the business of Efficacy test and officious bystander tests

Suggest a new term if its necessary to give business if its business efficay to the contract to make business sense.

The claimant sued on dock as there was no expressed term relating to the ship, court decided they were liable for the implied agreement term.

Officious Bystander Test court

if a party to contract stated something that was so obvious, an outsider standing from the side would recognize what was going and reply of course'.

the contract only one test needs to be be

Reevore and landauer

Contract of goods were not marked as goods. The court decided the purchaser was not entitled to have the goods reject under the terms as descibed.

Beale v Taylor

Taylor advertised a car describing it as the 1961 herald convertible. He found the car faulty and filed claim damage of sale by prescription. The breach of the implied terms and the claimant was able to damages.

Goods are solid by description s long as they meet a particular. However, if the item is inspected by expert there will be new sales.

• Section 20* provides to rejects to not satisfy a refund for get a full refunds within the given 30 days. One of the retailer should. One should repairs them if the retailer delivers within the 30 days.

Terms incorporated into the contact fall into three categories.conditions, warranties, or innominate terms

Distinction is that it is used to breach and event.

Breaches conditions are that is entities the claimant to for reupidate contract damages

Warranty breach of warranty

follows the terms of a breach of warranty is followed the claim to not repudiate the contract

Innonimate terms a follow

The approach of breach allows the court to go forward the remedies. Hong Kong fir shipping

There are conditions

The said the route the the contract Therefore, the terms of the contract, it it follows will mean breach will be used The clause to consider its contract.

Poussard V Spiers

actress under the terms of contract and she would not be available . SHe was taken ill and taken to the operatta as she was unable .

The claimant can sue for damages well

and consider its contract obligations ceased its free from the contract.

• Warranties* . A terms a less important terms the main content should still continue after the breach .
• Limitations* It is difficult to handle and the conditions are decided by what parties intended what question whether that action

V Arcos

The contact and description was on the quality of wood

The description of the products was not on the original description. There was already nothing quality. These has lead to an introduction og

I nominate terms, in order words the court looks at the what the party

The approach to conditions

The the appropriate remedy, Hong Kong shipping

Hong Kong Shipping to Kuwasaki

The shipping contact requested a vessel . Had

A was was discovered that had many repaid from the claimants the of

Limitations of exclusions

There is 2 types of clauses - to limit any lability in any aspect of the contact clause. They can be apart of the documents to see if they the part of the contract so it will be the same to incorporation. Incoporation by

• The form* Should a any given exclusions of what can be reasonable expacted to document by claimant. Should contain by by and be transparent if something is unreasonable or onerous for example, would be needed in red ink.

By a precious course

And contact and contact is there is always a exclusion or limitation the claim is for if it does not meet terms from the parties

To a examination clause duly

Is that words will see if the the close covers the break and loss it occurred will will can be and and and and will. The will and and and it and.

Statutory regulation of of. Section 2 act

There is any act that is is is consumer rights act 2015 act rights and personal. By injury. By act. The by by and

Act rights