Contract: Terms

Question 1

What is a breach of contract?

Answer 1

Breach of a term duly incorporated into the contract

Question 2

What is not a term of a contract?

Answer 2

Mere puff
Representations that have not been incorporated into terms

Question 3

How do you determine a breach of contract?

Answer 3

1) Is there a contract?
2) What are its terms? Which are expressed, which are implied, how are they incorporated?
3) Was there a breach? Which term was breached and how?
4) What category of term was breached? Condition, warranty, or innominate?
5) What are the remedies?
6) Are there any defences?
7) Conclusion

Question 4

How can express terms be incorporated?

Answer 4

Timing - Routledge v Makay
Importance - Bannerman v White
Specialist knowledge/expertise - Dick Bentley v Harold Smith Motors
Checks - Schawel v Reade

Question 5

What is the parol evidence rule?

Answer 5

Rule of evidence determining what a court can consider.
If a contract is a written contract, then extrinsic evidence is inadmissible. - Jacobs v Batavia

Question 6

What are the exceptions to the parol evidence rule?

Answer 6

Contracts not wholly written - J Evans v Merzario
Collateral Contracts - City of Westminster v Mudd
Onerous terms - Interphoto v Stiletto

Question 7

How do entire agreement clauses affect the parol evidence rule?

Answer 7

They apply it in the strictest sense. - Intrepreneur Pub v East Crown

Question 8

How can terms be implied?

Answer 8

By law - e.g. in statute or common law as necessary terms

In fact - gives business efficacy to a contract

Question 9

Sale of Goods Act 1979

Answer 9

Implies terms related to:
s.12 Title
s.13 Description
s.14 Quality and fitness for purpose
s.15 Sample
Most of which are conditions

Question 10

Supply of Goods and Services Act 1982

Answer 10

Implies terms related to:
s.13 Reasonable care and skill
s.14 Within a reasonable time
s.15 To pay reasonable consideration

Question 11

What are the three categories of terms?

Answer 11

Conditions - Poussard v Spiers
Warranties - Bettini v Gye
Innominate - Hong Kong Fir

Question 12

A parties’ express intention is generally a _______

Answer 12

Condition - Lombard North v Butterworth

Question 13

Examples of conditions set by common law precedent

Answer 13

Expected readiness to load - The Mihalis Angelos
Time of performance - Bunge v Tradax

Question 14

What is the effect of a breach of condition?

Answer 14

Innocent party has the right of election to either:
End contract and claim damages or
Affirm contract and claim damages

Question 15

What is the effect of a warranty breach?

Answer 15

Contract remains, but damages stemming from breach are recoverable.

Question 16

What is the effect of a breach of an innominate term?

Answer 16

Wait and see - dependent on effect of breach.
Careful not to wrongfully repudiate (Hong Kong Fir)

Question 17

What is a condition?

Answer 17

A term which goes to the root of the contract.

Question 18

What is a warranty?

Answer 18

Important, but less important than a condition.

Question 19

What is an innominate term?

Answer 19

A term that is unclear as to whether it’s a condition or warranty, e.g. those implied by Supply of Goods and Services Act

Question 20

How is an innominate term determined to be a condition?

Answer 20

Court will consider (Hong Kong Fir):
- The harm done by the breach
- Does it deprive the innocent party of substantially the whole benefit of the contract?
- Did the innocent party jump the gone and wrongfully repudiate?

Question 21

Implies terms related to:
s.12 Title
s.13 Description
s.14 Quality and fitness for purpose
s.15 Sample
Most of which are conditions

Answer 21

Sale of Goods Act 1979

Question 22

Implies terms related to:
s.13 Reasonable care and skill
s.14 Within a reasonable time
s.15 To pay reasonable consideration

Answer 22

Supply of Goods and Services Act 1982

Question 23

When does signature not validly incorporate a term?

Answer 23

Overriding oral assurance/oral misrepresentation of the meaning of the clause
Document is not intended to have contractual effect (e.g. a document acknowledging a receipt of goods will not form part of a contract)
Non est factum

Question 24

Rules for incorporating contract terms by notice

Answer 24

Must be reasonable effort to bring to the attention of the other party
More onerous the term, the more effort required
Must be given before or at the time of contracting
Document giving notice must be intended to have contractual effect

Question 25

What are the requirements for previous dealings to incorporate terms into a contract?

Answer 25

Consistently incorporated in the past Dealings must be regular and frequent

Question 26

When are terms implied to a contract for business efficacy?

Answer 26

When required to make the contract produce its intended objective. Only implied if otherwise so unworkable that sensible people would not have entered into it.

Question 27

What is satisfactory quality under SoGA?

Answer 27

Includes considerations for: Fitness fo all the purposes for which goods of the kind in question are commonly supplied (including any self-evident purposes) Appearance and finish Freedom from minor defects Safety Durability Above does not apply if defects were specifically drawn to the buyer’s attention before the contract was made, or if the buyer examines the goods before the contract is made and the examination should have revealed the defects.

Question 28

When does SoGA imply a "fitness for purpose" term?

Answer 28

If the purchaser has expressly or impliedly made known the purpose (unless buyer does not rely, or it would be unreasonable to rely, on the skill/judgment of the seller)

Question 29

Which SoGA implied term(s) cannot be excluded/restricted?

Answer 29

Title (s12)

Question 30

Can SoGA implied terms of correspondence to description, satisfactory quality, fitness for purpose, and correspondence with sample be excluded/restricted?

Answer 30

Yes subject to the reasonableness test

Question 31

What terms does SGSA imply into services contracts?

Answer 31

S13 – reasonable care and skill. Not defined as a condition or warranty – is an innominate term. S14 – service carried out within a reasonable time (if not fixed by the contract) S15 – pay reasonable consideration (if not determined by contract)

Question 32

Under the CRA, when are things said by the trader included as a term of the contract?

Answer 32

If taken into account by the consumer: - when deciding to enter into the contract - when making any decision about the service after entering the contract

Question 33

What remedies are provided to consumers re: goods by CRA?

Answer 33

S20: Short-term right to reject (30 days from when ownership passes/possession transfers/goods are delivered/goods are installed/required steps taken). Also applies when the trader is in breach of the implied right to supply. S23: Right to repair or replacement, unless impossible or disproportionate (re: cost to trader relative to other remedies and interests of the consumer) S24: Right to a price reduction or a final right to reject (can’t have both).

Question 34

When does the CRA's right to a price reduction or final right to reject apply?

Answer 34

If goods are still non-conforming after one repair/replacement, or Repair or replacement is impossible or disproportionate, or Trader fails to repair or replace the goods within a reasonable time and without significant inconvenience to the consumer. If right to reject is exercised within 6 months (same trigger as short term rejection right), then full refund is made with no deduction for use (with some statutory exceptions, e.g. cars).

Question 35

What remedies are available for non-conforming digital content under the CRA?

Answer 35

1) Right to repair or replacement, within a reasonable time and without significant inconvenience to the consumer (unless impossible or disproportionate) 2) Right to price reduction, where (1) is not available 3) Right to receive a refund of all money paid for digital content, to be given within 14 days using the same payment method that the consumer used to pay for the digital content, without imposing any fee in respect of the refund. 4) Right to repair or compensatory payment where: (a) trader supplies digital content to a consumer under a contract, (b) the digital content causes damage to a device or to other digital content, (c) the damaged device/content belongs to the consumer and (d) the damage is of a kind that would not have occurred if the trader had exercised reasonable care and skill

Question 36

What remedies are available to consumers under the CRA re: services contracts?

Answer 36

Right to require repeat performance, within a reasonable time and without significant inconvenience to the consumer, provided completion in conformity with the contract is possible. Right to a price reduction, where repeat performance is impossible or where the trader has failed to provide repeat performance within a reasonable time and without significant inconvenience Where services failed to be performed within a reasonable time, the only remedy is the right to a price reduction.