Contract Law: Terms vs. Representations

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Questions and Answers

What distinguishes terms from representations in a contract?

Terms are always written, while representations are only spoken.

Terms are only conditions, while representations can be warranties.

Terms are binding provisions of a contract, while representations are not. (correct)

Terms cannot be implied, while representations can.

What is a collateral contract?

A separate contract that is written and includes all terms.

A contract that supersedes the main contract.

An oral statement made before a written contract that is binding. (correct)

A contract that includes implied terms only.

Which of the following describes an implied term in a contract?

A term explicitly stated by the parties.

A condition that must be met for the contract to be enforceable.

A term that is only valid if it is included in writing.

A term inferred by law or custom rather than explicitly stated. (correct)

Which of the following is NOT a classification of terms in a contract?

Affirmations Signup and view all the answers

When determining whether a statement is a term or representation, which factor is considered?

The timing of the statement made. Signup and view all the answers

What type of terms can be included in a contract according to the classifications provided?

Warranty and conditions Signup and view all the answers

Which statement best describes the parol evidence rule?

It prohibits the use of oral statements to modify a written contract. Signup and view all the answers

Which of the following statements is true regarding terms of a contract?

Implied terms are derived from law or custom. Signup and view all the answers

What does a longer time between a statement and the conclusion of a contract indicate?

The statement is likely a representation. Signup and view all the answers

In the case of Bannerman v White, why was the statement regarding sulphur usage considered important?

It affected the price of the hops. Signup and view all the answers

What does the exclusion of a statement from a written contract usually suggest?

The statement is likely a representation. Signup and view all the answers

What factor is crucial when evaluating the nature of a statement made in a contract?

The knowledge and expertise of the statement maker. Signup and view all the answers

In Dick Bentley Productions Ltd v Harold Smith Motors Ltd, what was the issue with the mileage statement?

The actual mileage was significantly higher than represented. Signup and view all the answers

What does it indicate when the maker of a statement has greater expertise than the receiver?

The statement is likely a term. Signup and view all the answers

Which of the following statements is true regarding the relationship between the time a statement is made and legal enforceability?

The timing indicates whether the statement is a term or a representation. Signup and view all the answers

What would a buyer likely do if they were informed that sulphur had been used in the hop treatment after having already agreed on the price?

Ask for a refund or renegotiate the price. Signup and view all the answers

Study Notes

Contents of Contract - Introduction

Contract negotiations are common
Are statements made during negotiations part of the contract?
Yes, if it is a term
No, if it is a representation
Collateral contracts: specific statements that become a separate contract
Oral statements binding before written contracts
Terms vs. Collateral contracts -- key differences
Method for distinguishing terms and representations

Pre-Contractual Statements

Statements before a finalized contract
Representational vs. terms
Key differences for determining if a statement is a term or representation
- When the statement was made
- Its importance
- Inclusion into the final written contract
- Knowledge and expertise of the maker

Terms vs. Representations

When the statement was made:
- Statements made closer to the contract are more likely to be terms
- Statements further away are more likely representations
Importance of the statement:
- More significant statements likely terms
- Less significant statements likely representations
- Example: Bannerman v White - statement about sulphur use crucial for the deal
Inclusion in written contract:
- Omitted statements likely representations
- Included statements are more likely terms
- Example: Routledge v McKay - model year omission was not a contract term
Knowledge and expertise of maker:
- Makers with greater knowledge/expertise likely to give binding terms, lack of knowledge/expertise leans towards representations
Examples:
- Dick Bentley Productions Ltd v. Harold Smith Motors Ltd - statement about car mileage was crucial to the contract, implying a term.
- Oscar Chess Ltd v. Williams - information in the logbook (seller lack of expertise) was not a significant contract term.

Parol Evidence Rule (Exceptions)

Rule generally prevents evidence that contradicts a written contract
Exceptions when the rule does not apply.

Terms of the Contract

Classifications of terms (conditions, warranties, innominate)
Implied terms (inferred by law or custom)
Exemption clauses (limiting liability)

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Description

This quiz explores the nuances of contract law, specifically focusing on the differences between terms and representations in contract negotiations. Participants will learn how pre-contractual statements can impact the final agreement and the criteria for distinguishing between terms and collateral contracts. Test your understanding of these legal principles!