06 - Contract Terms

Question 1

Define “terms” of a contract

Answer 1

Any statement forming part of a contract, any term broken can bring actions

Question 2

Define “representations” in terms of a contract

Answer 2

A statement made by one party to the other which is to induce them into signing the contract, this does not form part of the contract but if if proven untrue can bring actions for misrepresentation

Question 3

What will a court look at when deciding if something is a term or representation?

Answer 3

• When it was made, if it was long before the contract, it is less likely to be a term and more likely to be a representation
• the importance of the statement

Question 4

What are the three types of terms?

Answer 4

• Condition
• Warranty
• Innominate terms

Question 5

What is a condition?

Answer 5

A major term of a contract, which form the essence of the contract and why is was made. Breach of a condition allows the other party to repudiate (reject) the contract or continue with and and claim damages

Question 6

What is a warranty?

Answer 6

A less vital term than a condition, but still an important term of the contract. Breach of warranty entitles other party to damages but not to reject the contract completely

Question 7

What are innominate terms?

Answer 7

is a contractual term that, when breached, does not automatically allow the injured party to terminate the contract; instead, the remedy depends on the severity of the breach’s effect. If the breach is serious enough to deprive the injured party of substantially the whole benefit of the contract, it’s treated as a breach of a condition, allowing termination. If the breach is less significant, it’s treated as a breach of a warranty, and the remedy is limited to damages.

Question 8

What is an express term?

Answer 8

A term that is expressly stated in the contract

Question 9

What is an implied term?

Answer 9

A term deemed to form part of a contract although not expressly stated

Question 10

What thee ways can terms be implied?

Answer 10

• By statute
• By custom
• By the courts

Question 11

What is an exclusion clause?

Answer 11

A contract term that seeks to exclude or limit the parties legal liability for specific breaches or events, such as defected goods or negligence

Question 12

What are the three levels of protection with exclusion clauses?

Answer 12

• Common law, applies to all contracts between any parties
• Unfair contract terms act, applies to contracts where both parties are in business
• Consumer rights act, applies to contracts where one party is a human consumer and another is a trader or business

Question 13

What is the “contra proferentem” rule?

Answer 13

If there is any ambiguity in an exclusion clause, the courts will construe it a way that is unfavourable to the party that included/relied on it

Question 14

What is the repugnancy rule?

Answer 14

When courts strike out exclusion clauses that contradict the main purpose of the contract

Question 15

What is the doctrine for fundamental breach?

Answer 15

An exclusion clause may be allowed even if it is a fundamental breach of contract, provided it is reasonable. For example, if a company trains an employee properly, any actions taken by the employee that are the opposite of the training cannot be claimed against