Express and Implied Terms

Question 1

What are terms?

Answer 1

Terms are the subject matter of the contact. As these are specifically agreed, these become part of the contract.

Question 2

What happens when a term is not carried out?

Answer 2

If a term is not carried out, the term is breached.

Question 3

What is a representation?

Answer 3

Representations are things discussed during negotiations which are not included in the final terms of the contract.

Question 4

What happens when a representation is untrue?

Answer 4

If a representation is untrue, this is misrepresentation rather than breach.

Question 5

What will the courts take into account when deciding if a statement is a term or representation?

Answer 5

• The importance attached to the statement.
• Specialist skill and knowledge of the person making the statement.
• The time elapsed between the statement and the contract being made
• Whether there is a written statement

Question 6

Explain ‘the importance attached to the statement’.

Answer 6

If the statement is so important that a party would not have entered the contract without it, then it is a term (Couchman v Hill)

Question 7

What are the cases for ‘specialist skill and knowledge of the person making the statement’?

Answer 7

Oscar Chess v Williams.
Dick Bentley Productions v Harold Smith (Motors)

Question 8

Explain ‘the time elapsed between the statement and the contract being made’.

Answer 8

The longer the time elapsed between the statement and the contract, the less likely the statement is to be a term (Routledge v Mckay)

Question 9

Explain ‘whether there is a written statement’.

Answer 9

The courts presume that everything the parties wanted to include as a term is put in the contract.

Question 10

What are express terms?

Answer 10

Express terms are those agreed by the parties when the contract is made. These can be written or oral.

Question 11

What are implied terms?

Answer 11

Implied terms are those which do not appear in the contract but exist due to statute, the courts or customs.

Question 12

What are the three ways terms can be implied by common law?

Answer 12

Business efficacy
Custom
Previous Course of Dealings

Question 13

What is business efficacy?

Answer 13

A term will be implied into a contract if it is necessary to make the contract work on a business-like basis.

Question 14

What are the elements of two part test for business efficacy?

Answer 14

• Is the term necessary to make the contract effective? (The Moorcock)
• If the parties to a contract had thought about it, would they have agreed that the suggested term was obviously going to be included in the contract?

Question 15

What does it mean for the term to be necessary to make the contract effective?

Answer 15

Lord Sumpton in Marks and Spencer v BNP Paribas - ‘a term can only be implied, if without the term, the contract would lack commercial and practical coherence.’

Question 16

What are the cases for if the parties to a contract had thought about it, would they have agreed that the suggested term was obviously going to be included in the contract?

Answer 16

Shell UK Ltd v Lostock Garage Ltd - if the parties to a contract had thought about it, would they have agreed that the suggested term was obviously going to be included in the contract?

Shirlow v Southern Foundries- would an ‘officious bystander’ watching the agreement have suggested the term be included and received the reply ‘Oh, of course’?

Question 17

What is a custom?

Answer 17

If something has happened over a long period of time, it becomes customary.

If a custom is to be implied into a contract, it must help to support the purpose of the contract and not contradict express terms. (Hutton v Warren)

Question 18

What are previous course of dealings?

Answer 18

The prior conduct of the parties may indicate terms to be implied. (Hillas v Arcos)