Contract Law: Express Terms, Incorporation, and Offer & Acceptance

Vocabulary practice flashcards covering express contract terms, classification of terms, methods of incorporation, remedies, and the principles of offer, acceptance, and invitation to treat.

Express Terms

Contractual terms that are clearly and intentionally stated by words or behaviour, communicated in an offer, agreed upon, and objectively received, as opposed to implied terms.

Representation

A statement made during pre-contractual negotiations where there is no evidence of an intention by either party to assume contractual liability for its accuracy, such as when a speaker passes on information from elsewhere without personal knowledge.

Misrepresentation

A false statement of fact made by one party to another that induces the recipient to enter into a contract.

Intelligent Bystander Test

The objective standard articulated by Lord Denning in Oscar Chess [1957] to determine whether a statement was intended as a binding warranty based on the parties' words and conduct rather than their subjective thoughts.

Condition

A vital term of a contract, the breach of which gives the innocent party the right to terminate the contract going forward and claim damages.

Warranty

In its technical contractual sense, a subsidiary term distinct from a vital term, the breach of which gives rise to damages but not to a right to terminate the contract.

Innominate Term

An intermediate contractual term where the right to terminate depends on the nature and gravity of the consequences resulting from the breach (e.g., Hongkong Fir Shipping [1962]).

Termination

A contractual remedy whereby a contract is brought to an end from that point going forward, ensuring that no further obligations can flow from it.

Anticipatory Breach

A situation where a party repudiates the contract by making it clear in advance of the due date that they will not or cannot perform, entitling the innocent party to terminate immediately (e.g., Hochster v Dela Tour (1853)).

Incorporation by Signature

The rule that signing a document provides objective evidence par excellence of an intention to be bound by its terms, irrespective of whether the document was read or subjectively intended (L'Estrange v F Graucob Ltd [1943]).

Parol Evidence Rule

The presumption that a signed, written document contains all the terms of an agreement, placing the burden of proof on any party seeking to incorporate additional oral elements.

Incorporation by Notice

The incorporation of terms based on whether reasonable and timely notice was provided before or at the time of contract formation, requiring greater prominence for particularly onerous or rights-destructive terms.

Incorporation by Course of Dealing

The inclusion of contractual terms based on a sufficiently regular and consistent history of prior transactions between the same parties (e.g., Henry Kendall Ltd v. William Lillico [1969]).

Incorporation by Trade Practice

The incorporation of standard terms where both parties operate in the same commercial trade with equal bargaining power and are aware that such conditions are habitually imposed in that sector (British Crane Hire v Ipswich Crane Hire [1975]).

Offer

A clear expression of willingness to contract on specified terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.

Invitation to Treat

A preliminary statement or display—such as a price list, catalogue, or goods placed on shop shelves—that merely invites negotiations or tenders rather than expressing an immediate willingness to be bound (e.g., Grainger and Sons v. Gough [1896]; Pharmaceutical Society case).

Acceptance

A final and unqualified assent to all the terms of an offer, which must generally be communicated to the offeror for a contract to be formed.

Entores Principle

The rule governing instantaneous communications establishing that acceptance must be received by the offeror; however, if the offeree reasonably believes acceptance arrived and the failure to receive it is due to the offeror's fault (such as failing to ask for repetition), the offeror is bound.

Breach of Contract

Occurs when a party fails to perform their obligations under a valid contract without a lawful excuse.