Statements during negociations
-Puffs
-Representations (statements that induce someone to enter the contract but are not part of the contract itself)
-Terms in a contract
Bannerman v White
Sale of hops by sample. W asked if B used sulphur, adding that they were not interested otherwise. Bsaid that no sulphur had been used. Upon inspection, sulphur was used in 1.75% of crop provided, but they were all mixed up.
Was W entitled to repudiate the contract (breach of a condition/term in a contract)?
Yes. The seller made a false, non-fraudulent
misrepresentation. As W entered into the contract entirely on the faith of that representation, the contract could be repudiated.
Couchman v Hill
C bought from H at an auction a heifer. C wanted an “unserved” one (not yet had a calf). The auction catalogue stated that vendors were not liable in case of errors for the auctioned goods. Before buying, C got oral confirmation from H that the heifer was unserved. This was not the case.
Was the statement that the heifer was “unserved” a mere representation or a binding term of the contract?
Contractual term. C made it clear that it was of
fundamental importance; he inquired specifically; H had superior knowledge.
City and Westminster Properties
CWP rented a shop to M. M used to sleep there. When the contract was renewed, CWP included a clause that prevented M from sleeping there. M refused to sign until he was given reassurances that CWM would not enforce it. CWP tried to enforce the clause.
Is there an oral collateral contract between the
parties that prevent CWP from relying on the
letter of the lease agreement?
Yes. It is a necessary incident to assume that M
signed the written lease in consideration of the
oral agreement excepting to it.
Poussard V Spiers & Pond
the actress signed a contract with a theatre for a full season but was unable to take part in the first week
HELD: this was a condition, the theatre was entitled to cancel the contract.
Bettini v Gye
the actress signed a contract which stated that she must arrive for rehearsal 6 days before performance. She only arrived 3 days before.
HELD: this was a warranty, however the theatre could have claimed compensation if it suffered loss of this action.
The Hongkong Fir
contract of 2 years to rent a ship. At the start, the ship had engines problems, because of this the ship could not be used properly for 7 months.
The people hiring it tried to cancel the contract saying the ship was not seaworthy.
Court: the ship owners did break the contract but being “seaworthy” was not a condition nor a warranty. It is an innominate term.
An innominate term
is not fixed in advance, the court looks at the effect of the breach after it happens. It is an important term but it is important will be measured on how badly it has been broken. The seriousness of the breach IS decisive. terms that remain unclassified until a breach has occurred.
Statements during negociations
Bunge V Tradax Export
: T bought from B 15000 tons of soya bean meal. T had to give at least one full calendar months’ notice telling B which port the goods should be delivered to. T gave the notice 5 days late. B cancelled the contract.
Court: the timing requirement was a condition because this was a commercial contract. It says that time is of essence in mercantile contracts.
Pre contractual statements can be incorporated in the contract by
: 1)”importance attached test”: if one party made it very clear that this statement was very important to them when agreeing to the contract.
2)”collateral contract device”: if a party says “if you enter the main contact I promise x” and the other party relies on this affirmation to sign the law treats this as a separate contract supporting the main one.
Contractual statement can be incorporated in a contract by:
1)signature 2)reasonable notice (terms were printed clearly, hidden or late terms do not bind) 3)consistent course of dealing (the party have dealt with each other before or presence of similar terms) 4) common understanding of the parties (even if it is not written down)
new things about signature in a contract
Signed clauses/contract are binding unless the signature was obtained with fraud or misrepresentation
Courts are less sympathetic with business professional (they expect them to read contracts, understand risks and protect their own interest even better than a random person)
This law is softened by modern law under the Consumer Rights Act 2015
Not all signed document are contractual, the court does the reasonable test to verify if it must be binding.
Chapelton v Barry Urban DC:
Chapelton hired a deck chair on the beach. He took a chair from a pile, paid the fee, received a ticker, on the back of the ticker ther was a clause saying the council accepted no liability. The chair collapsed and he was injured , he sued the council. The council argued that the exclusion clause was on the ticket so its part on the contract.
Court:The exclusion was not incorporated, the contract was made before the ticket was given+ the ticket looked like a receipt a reasonable would not have think that it is a contract.+ No reasonable notice was given.
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd:
IPL ran a photo library, SVP ordered transparencies. IPL sent then with a delivery note containing many standard terms in small print. One of them said that is the transparencies were not retuned on time a high fee would be charged. SVP forgot to return them, IPL asled 3,783£ for late return. SVP refused to pay
Court: the clause was not incorporated because it was unusal, unreasonably hars and financially extreme.
If a term is unusual the party must take extra steps to bring the other party’s attentiobn. (here wasn’t de the cas, wasn’t highlighted, SVP wasn’t warned, the clause was written in small print)
Olley v Marlborough Court Hotel
Mr and Mrs Olley booked a romm at M hotel. They paid at reception when they arrived. They paid at reception. When going to their room they saw a notice on the wall saying the hotel was not responsible for stolen or damaged property. Their belongings were stolen. They sued the hotel.
Court: the term was not incorporated so the hotel was responsible. Because the contract was formed at the reception, the notice was seen after, a term cannot be added after a contract is already made.
how contract terms can be incorporated by notice
If a document is given after the contract is already made then it should only contain what has already been said. So any written terms are not automatically part of the contract. They are is reasonable notice was given before or at the time the contract was formed
The terms and conditions can be incorporated by reference as long as the reference is clear and the customer has access to it
Terms and conditions must be accessible by the customer before or at the moment they agree (they must have a real opportunity to read the terms).
If a term is unusual, harsh, financially heavy, extra notice is required
McCutcheon v David MacBrayne Ltd
Mccutcheon regularly used a ferry to transport his car. Sometimes he was asked to sign a form containing an exclusion clause (no liability os the car is lost). The other times he wasn’t asked to sign anything. The ferry sank, the car was lost but it was a trip where he had not signed any documents.
Court: the exclusion clause was no incorporated because there was no consistent pattern.
Petrotrade Inc v Texaco Ltd
: they were making oil contracts they were making negociation on the phone then receiving a telex confirming the deal including an exclusion clause, a no set-off clause. This happened five time before. A dispute arose, petrotrade argued that the clauses were not part of the contract
Court:the clause were incorporated because consistent and predictable pattern
Hillas & Co v Arcos
H agreed to buy timber from in 1930.
The contract also gave H an option to buy more timber in 1931.
The 1931 clause was vague:
It said how much timber
But did not say the price.
H tried to exercise the option in 1931.
Arcos refused, saying the clause was too vague to be enforceable
court:Even if a term is vague, the court will enforce it if it can be clarified by reference to the parties’ previous dealings and commercial practice.
incorporation by course of dealing
If two businesses have been contracting with each other many times using the same standard terms, the law assumes:
They both know and accept those terms — even if they are not written out every time.
So the terms can be implied into later contracts. However, the practice needs to be sufficiently consistent.
