Contractual Terms

Question 1

Define a Term

Answer 1

A Term is part of a contract, forming obligations that can be enforced. If breached, a party can claim for breach of contract.Terms can be:
Expressed - Clearly agreed by parties (verbally or in writing)
Implied - Inserted by courts, statute, customs.

Question 2

Define Representation

Answer 2

A statement made to encourage the other party to enter into the contract.
It is not part of the contract, but the other party may sue if it is found to be false. This is called misrepresentation.

Question 3

Define Statement of Opinion

Answer 3

Does not form part of a contract and is not a representation. Boasts not intented to be taken seriously. Example: “Red bull gives you wings.”

Question 4

Give a Case for statement of opinion showing how it doesn’t form a contractual term nor a representation

Answer 4

Dimmock v Hallet - A statement that the land was “fertile and improveable” was not to be taken seriously. However, the closer the boast is to being factual, the more likely it is a term.

Question 5

Give a case showing how the seriousness of the boast can lead to a term in the contract

Answer 5

Carlill v Carbolic Smokeball - the claim that the company would compensate anyone using their products was seen as a term due to the company depositing money to show their seriousness.

Question 6

Give a case showing that a statement being made by an expert can amount to misrepresentation

Answer 6

Esso v Marden - Esso claimed the station was likely to dispense 200,000 gallons of petrol per year. Found to only sell 78,000 gallons per year. Tenant couldn’t afford to pay rent to Esso. Tenant claimed for misrepresentation.

Question 7

How do the courts establish whether a statement is a term of the contract and give a case for each.

Answer 7

Importance of the statement - If the statement is very important to the party relying on it.
Case: Couchman v Hill - Buyer asked if cow was pregnant. Seller said no. Buyer made it clear he would not buy if she was.
Special Skill or Knowledge - If the person making the statement has greater expertise than the other party
Case: Dick Bentley v Harold Smith motors - Car dealer falsely claimed a car has done fewer miles. Dealer was the expert. The statement was a term.

Question 8

How do the courts establish whether a statement is a representation and give a case for each.

Answer 8

Verification - If the person making the statement tells the other to verify, its unliekly to be a term
Case: Ecay v Godfrey - Seller said boat was “seaworthy” but also advised the buyer to get a survey.
Time - The longer the delay between the statement and when the contract is made, the less likely it is a term.
Case: Routledge v Mckay - a motorbike was described as a certain year. There was a week’s delay bbetween the statement and the contract. Representation due to the time gap and wasnt in writing.

Question 9

Give a case for Express terms showing how a signed contract is binding even if not read.

Answer 9

L’Estrange v Graucob - Claimant signed a document with an exclusion clause. She was bound by it, signature showed agreement.

Question 10

Give a case for express terms showing the integrity of written agreements

Answer 10

Goss v Lord Nugnet - Oral evidence cannot override a written contract. This protects the integrity of written agreements.

Question 11

What does the court need to establish to decide whether Oral Terms or additional clauses can be included in Written Contract

Answer 11

• Nature of Document: Document that a reasonable would see as containing legal terms
• Was the Term Brought to the Party’s attention: - Terms must be clearly referred to
• Was the Term included at the Time of the Contract: Terms must be communicated before or at the time of contract formation
• Course of dealings: Regular pattern of past contracts

Question 12

Give a Case for Nature of Document

Answer 12

Parker v South Eastern Railway - Ticket with terms on the back = Contractual document

Question 13

Give a Case for a term being brought to the party’s attention

Answer 13

Thornton v Shoe Lane Parking - A contract is made when the ticket is issued, so terms shown after aren’t part of the contract. Unusual terms must be clearly highlighted as Lord Denning says “with a big red hand pointing to it.”

Question 14

Give a case for if the term is included at the time of Contract

Answer 14

Olley v Marlborough Court Hotel - Term was displayed after contract formed at reception. Not Incorporated

Question 15

Give a Case for Course of Dealings (not Frequent)

Answer 15

Hollier v Rambler Motors - 3-4 transactions over 5 years. Not regular enough to incorporate an exclusion clause.

Question 16

Give a Case for Course of Dealings (Frequent)

Answer 16

British Crane Hire v Ipswich Plant hire - Both parties had dealt previously using the same standard terms.
Although terms weren’t signed this time, they were common in the industry.
Held: Terms were incorporated through prior dealings and shared trade understanding.