Express Terms

Question 1

What are express terms?

Answer 1

• Specific terms that have been explicitly agreed upon by the parties to a contract and are clearly stated within the contractual document
• Can be in written, oral or electronic form and sets out the primary obligations, rights and expectations of each party.

Question 2

Strengths of Express terms

Answer 2

• Clarity and Certainty
• Reducing misunderstandings e.g. disputes arising
• Enforceability- legally binding offering protection in case of a breach

Question 3

2 types of Express terms

Answer 3

1. Orally agreed and are not just representations
2. Written into the contract

Question 4

What is a Representation?

Answer 4

Statement/words of fact that are used before the contract is entered and is not part of a contract. If false, therw could be an action in misrepresentation.

Question 5

What is a Term?

Answer 5

Obligations of the parties that are part of the contract. They are often seen as an expression of willingness by both parties to be bound by the obligation in it. If term is breached, the claimant can claim for breach of contract.

Question 6

How to decide whether an oral statement is a representation or a term?

Answer 6

• To be a term of a contract, it must be incorporated into the contract.
• The courts have developed some guidelines:
  1. Importance of the statement
  2. Knowledge and Skill
  3. Timing of the statement
  4. Reduction of terms in writing
  5. Incorporation by signature
  6. The ‘parol evidence’ rule

Question 7

Importance of the statement

Answer 7

• If individual relying on the statement makes it clear that the statement was of such importance that they wouldn’t have contracted without that guarantee then the presumption is that the statement is a term
• Also if one party asks for specific details about the agreement, this can also be taken to indicate the importance to be attcahed to the answer.
• CL: Bannerman v White- Buyer didn’t want hops that had been treated with sulphur. The seller mistakenly thought that his hops hadn’t been treated with sulphur and made a false statement. Court held the flase statemnt regarding sulphur amounted to a term as buyer wouldn’t have entered the contract had it not been for the statement. Contract had therefore been breached.

Question 8

Knowledge and Skill

Answer 8

• If the individual making the statement has a specialist skill or knowledge of the contractual subject matteror claims to have such knowledge, the presumption is that the statement is more likely to be a term.
• CL: Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd-*A car dealer gave a false statement as to the mileage of a Bentley. *(Where the representor possesses superior knowledge and skill, it’s more likely that the statement is a term)
• CL: Oscar Chess Ltd v Williams- During a port exchange, a private car owner falsely but honestly stated the age of the car to the dealer. (Where the claimant[dealer] is in a position to verify the truth of a statement, it’s more likely to be a representation)
• (If representor has less knowledge, it’s more likely to be a representation)

Question 9

Timing of the statement

Answer 9

• the longer the time lapse between the making of the statement and the entering of the contract, the more likely it’ll just be a representation.
• CL: Routledge v Mckay-Concerned the private sale of a motorbike. Both parties were private sellers with no expert knowledge. Sellers believed the motorbike had been manufactured in 1942 but it was actually in 1930. The statement about the date wasn’t a term because there was a long timelapse between the making of this statement, and the conclusion of the contract.

Question 10

Reduction of terms in writing

Answer 10

• If an oral agreement is partly reduced into a written agreement, the courts have to decide whether the written agreement alone should represent the contract or whether the contract should be regarded as partly written/partly oral.
• the exclusion of an oral statement from the document tends to suggest that it was not intended to form a contractual term
• CL: Birch v Paramount Estates(Liverpool) Ltd- The C.O.A held that an assurance “as good as the show house” to be so central to the agreement that it had been incorporated in the contract.

Question 11

Guidelines for Written Terms

Answer 11

1. Incorporation by signature
2. The ‘parol evidence’ rule

Question 12

Incorporation by Signature

Answer 12

• If a person signs a document, they will be bound by the terms of that contract whether or not they’ve read it.
• Only the person whom is sought liable under the terms of the contract, or their agent, need sign the document.

Question 13

The ‘parol evidence’ rule

Answer 13

• Any oral or other evidence that the party introduces to show that the actual agreement should not be accepted is inadmissible if it’s used to add to the contract, to vary it or to contradict the terms contained in it.
  The rule is justified on two bases:
  1. If the contract is in written form, then it is logical for it to contain all the terms. Anything omitted was not intended to be included.
  2. To do otherwise would create uncertainty.
• The problem with the rule is that there are inevitably many contracts that are poorly written and partly oral. In such cases, both elements of the agreement need considering to give an accurate and true picture of the position. As a result, the rule has exceptions:
• There is evidence of custom or trade usage(Smith v Wilson)
• Oral evidence can be adduced to show that the contract would not be operative until some specified event (Pym v Campbell)
• A party can quote evidence to show that the contract was not binding e.g. incapacity, lack of consideration or mistake.
• The written document is being used to show that there was a prior oral agreement but does so inaccurately.
• There is a collateral agreement, which is a contract where consideration is provided by making another contract.