contract terms: express v implied terms

Question 1

what is an implied term?

Answer 1

Implied terms are not explicitly stated in a contract but the court implies that they are present by considering common law and statute law. They fill the gaps in the contract.`

Question 2

what is an express term?

Answer 2

Express terms are those which have been explicitly communicated between the parties orally or in writing. he intention of the parties is clear and there is little discussion to be had of these.

Question 3

what are the ways that a term can be implied through?

Answer 3

1. through the facts of the case
2. through custom or trade useage
3. through statute law

Question 4

how are terms implied by the courts as fact?

Answer 4

contracts tend to state the key terms needed for the contract to work. however, to decide whether an implied term should be included in the contract, the court use:

1. the business efficacy test
2. the officious bystander test

Question 5

what is the business efficacy test? what is the case study?

Answer 5

the question asked: is the term necessary to make the contract effective?

The Moorcock 1889
Ds owned a wharf with a jetty on the River Thames. They agreed to dock a ship and unload cargoes at the wharf. Both parties were aware at the time of contracting that this could involve the vessel being there at low tide, and that then the ship would rest on the bottom.
When the ship grounded it broke up on a ridge of rock. Ds stated there was no term covering this. The court implied a term that the ship would be at a safe mooring and that the ship would not be damaged when it settled at low tide.

Question 6

what is the officious bystander test? what is the case study used?

Answer 6

the question asked: would the parties have agreed to the term if they had thought about it? (is the term so obvious that it goes without saying)

Shirlaw v Southern Foundaries Ltd (1939)
sf employed c and his contract said he’d be employed for ten years. sf was taken over and had their ‘articles of association’ changed. this change said they could remove managing directors if needed. c was then fired and sued. his contract said he should be employed for 10 years, and therefore the new articles did not affect it.

Question 7

what principle in the officious bystander test is confirmed by shell v lostock garage?

Answer 7

however, the terms will not be implied if the parties would never have agreed to it if they had thought about it

Shell UK Ltd v Lostock Garage (1977)
Shell sold petrol and oil to Lostock, who agreed to buy these products only from Shell. Shell later sold petrol to other garages at lower prices as part of a price war. This forced Lostock to sell at a loss. Lostock argued there was a term in the contract that Shell would not abnormally discriminate against it. This argument failed as Shell would never have agreed to such a term.

Question 8

what is the general rule in implied terms, related to a reasonable person’s understanding? what case study is used?

Answer 8

Generally, implied terms are what a reasonable person would have understood to be the intention of both parties in the context of the contract

Egan v Static Control Components (2004)

Question 9

what is the case for terms implied by custom?

Answer 9

Hutton v Warren (1836)
Local custom meant that at the end of an agricultural lease, a tenant farmer was entitled to an allowance for labour on the land. The court decided that the terms of the lease must be viewed in the light of the custom.

Question 10

what is the case for terms implied by prior dealings?

Answer 10

Hillas v Arcos 1932
c agreed to buy from d in 1930 ‘22k standards of softwood goods of fair specification over the season’. clause 9 of the contract gave c an option to buy a further 100k standards during the season 1931 at 5% discount. c sought to exercise the option on 22 Dec 1930, but d could not perform as they had already sold the supply. d argued that the option agreement was not binding. the court decided that, while the option clause lacked specific detail, it was implied that it would be on the same terms as the previous contract.

Question 11

what statute are statutory implied terms found in?

Answer 11

In B2B contracts terms may be implied by Acts such as the Sale of Goods Act 1979 and the Sale of Goods and Services Act 1982

In a contract between a business (trader) and a consumer, terms are implied by the Consumer Rights Act 2015 (This is what we will be focussing on)

Question 12

what contracts does cra 2015 apply to?

Answer 12

Sale
Hire
Hire-purchase
Other contracts for the transfer of goods

Question 13

what is s9 CRA?

Answer 13

Section 9 – the right of satisfactory quality

Satisfactory quality is the standard that a reasonable person would consider satisfactory taking into account: any description of the goods, the price or other consideration for the goods, all other relevant circumstances.

what are examples of considerations?: the fitness for all the purposes for which goods of that kind are usually supplied and their durability, appearance and finish of the goods, freedom from minor defects of the goods, the safety of the goods.

Question 14

what does s9 cra not apply to?

Answer 14

With respect to defects specifically drawn to the consumer’s attention before the contract is made

Where the consumer examines the goods before the contract is made in relation to any defect that the examination would have revealed, or

Where goods have been sold after inspection of a sample and the defect would have been apparent on a reasonable

Question 15

what is s10 cra?

Answer 15

Section 10 – the right of fitness for particular purpose

If, before the contract is made, the consumer makes known to the trader (expressly or by implication) any particular purpose for which the consumer is contracting goods.

In these circumstances, there is an implied term that the goods are reasonably fit for purpose, whether or not that is a purpose for which goods of that kind are usually supplied.

Question 16

what s10 cra principle is established in baldry v marshall 1925?

Answer 16

If the buyer is relying on the skill and judgement of the seller in buying the goods, and has expressed a particular purpose for which the goods are required, the implied conditions will be in the contract

Question 17

what s10 principle is established in grant v akm 1936?

Answer 17

There is no need to state a purpose where the goods are being bought for their normal use

Question 18

what s10 principle is establisihed in griffiths v peter conway ltd 1939?

Answer 18

where the purchaser has a particular sensitivity that is not known to the seller, then as long as the goods are fit for the normal purpose to most people, there will be no breach of the requirement

Question 19

what is s11 cra?

Answer 19

Section 11 – the right relating to the description

‘Every contract to supply goods by description is to be treated as including a term that the goods will match the description.’

The description can be implied e.g. when the goods are on display.

Question 20

what is the cra 2015 section summary?

Answer 20

terms for goods:
- s9 = the right relating to QUALITY
- s10 = the right relating to FITNESS FOR PURPOSE
- s9 = the right relating to DESCRIPTIONS

remedies for goods:
- s20 = short term right to REJECT
- s23 = right to REPAIR or REPLACEMENT
- s24 = right to a PRICE REDUCTION or FINAL REJECTION

terms for services:
- s49 = right to REASONABLE CARE and SKILL
- s52 = performance within a REASONABLE TIME

remedies for services:
- s55 = right to require REPEAT PERFORMANCE
- s56 = right to PRICE REDUCTION

Question 21

what are the details of the s20 cra refund?

Answer 21

The refund is payable within 14 days and the trader must bear any reasonable costs of returning the goods

The refund must be given using the same means of payment as the consumer used, unless the consumer expressly agrees otherwise

Question 22

what is s20 cra?

Answer 22

Section 20 – the short-term right to reject

This is the right to reject goods within 30 days. For perishable goods the period will be shorter.

Exercise of this right must be made clear to the trader by the consumer indicating to the trader that he or she is rejecting the goods and terminating the contract. The consumer is entitled to a full refund.

Question 22

how do the cra 2015 remedies for supply of goods work?

Answer 22

When a contract is breached, there are new rights available to a consumer. These rights are cumulative and are in addition to the usual remedies such as damages.

Question 23

what s11 cra principle is established in re moore and landauer 1921?

Answer 23

Where the supply of goods is by reference to a model seen or examined by the consumer, then the goods supplied must match the model. This includes the way in which goods are packaged

Question 24

what is s23 cra 2015?

Answer 24

Section 23 – the right to repair or replacement If the s20 right is not exercised by the consumer, they will have the right to repair or replacement under s23. A replacement would have to be identical, so if the same model is unavailable a replacement would be impossible

Question 25

what are the details of the s23 cra 2015 repair or replacement?

Answer 25

1. If the cost of repair or replacement is unreasonable or disproportionate, an alternative remedy must be provided 2. A trader must repair and replace within a reasonable time with limited inconvenience to the customer, bearing any necessary costs e.g. postage 3. The fault must be present at the time of the original delivery 4. The consumer cannot force a trader to repair or replace if it is unreasonable

Question 26

what is s24 cra 2015?

Answer 26

If s23 does not bring satisfaction, the consumer has the right to a price reduction or a final right to reject the goods and claim a refund under s24.   The trader can have only one attempt at repair or replacement for the consumer to have this right. Any refund is subject to a deduction for use. During the first six months any deduction for use is, at present, limited to motor vehicles.

Question 27

what is s49 cra 2015?

Answer 27

Section 49 – reasonable care and skill A contract to supply a service is to be treated as including a term that the trader must perform the service with reasonable care and skill e.g. if building work is being done

Question 28

what s49 principle is established in thake v maurice 1986?

Answer 28

There was an implied term that the surgeon would perform the operation service to the standard of care and skill of a competent surgeon. The evidence was that he had reached that level of care and skill so the claim was unsuccessful.

Question 29

what is s52 cra 2015?

Answer 29

Section 52 – performance within a reasonable time The service has to be performed within a reasonable time where the contract does not expressly fix the time frame. This right can be subject to a pre-contract representation, particularly for building work, as these are more likely to require detailed negotiation.

Question 30

what is s55 cra 2015?

Answer 30

Section 55 - the right to require repeat performance This right requires the trader to perform the service again, in accordance with the contract. If performance is not impossible, the trader must then provide it within a reasonable time and without significant inconvenience to the consumer. The trader must also bear any necessary costs incurred in doing so such as the cost of any labour or materials.

Question 31

what is s56 cra 2015?

Answer 31

Section 56 – the right to a price reduction This right is to reduce the price to the consumer by an appropriate amount for the trader’s failure to perform the contract. This may result in the trader giving a refund up to the full contract price. This remedy is only available in two situations: Where completion by repeat performance is impossible, or If the consumer has asked for repeat performance but the trader cannot do so in within a reasonable time and without significant interference to the consumer.