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Term
Terms are the content of the agreement, what both paries agree to do during the offer and acceptance. Both parties must carry out their obligations under the contract.
Representation
When parties are negotiating a contract, they are likely to make several statements. However not every statement made during negotiations will be a contractual term. Problems arise after the contract is made and a party wishes to relay on a matter discussed before the agreement, the courts will have to decide whether the issue is a term or merely a representation
Importance of distinction
The distinction is important as it will determine the remedies available (what they can sue for) A term of a contact allows the individual to bring an action. If the courts decide it is a representation they cannot bring an action for contrat but can for misrepresentation.
Factors
The courts look at it objectively to determine the difference and consider five factors:
The importance attached to the representation
Special knowledge or skill of the person making the statement
Any time lag between making the statement and making a contract
Whether there is a written contract
If there is any invitation to verify the statement
The importance attached to the representation
If either party attaches great importance to a statement made during negotiations will, then it is more likely to be considered a term. for instance, if it can be shown that the person to whom the statement was made would not have entered the contract if it has not been made then it is more likely to be viewed as a term.
Churchman v Hill (term)
Bannerman v White (term)
Bannerman v White
Court held it was a term
Churchman v Hill
Court held it was a term
Special knowledge or skill of the person making the statement
If one party makes a specific statement and due to their level of expertise the other party relies upon it, this is more likely to become a term of the contract (it can work both ways)
Oscar Chess v Williams
Court held it was a representation
Dick Bentley v Harold Smith Motors
Court held it was a term
Any time lag between making the statement and making the contract
The courts will look at the timing of statement. The greater the lapse of time between the statement being formed, the greater the presumption that the statement will be a representation. This is fair because people can’t be held to their statement’s weeks or months later- but it will of course depend on the facts of the case. If a written contract is made later than the statement and doesn’t refer to the statement, then it is unlikely to be a term because it is presumed that any relèvent statements would be written down in the contract.
Rutledge v Mackay
Court held it was a representation
Whether there is a written contrat
As in Rutledge, if the parties have taken the time and trouble to put the contract into written form then the court presumes everything they wanted is in the written contrat
If there was any invitation to verify the statement
If the maker of the statement invites the other party to verify the truth of the statement then this could provide evidence that the party did not intent the statement to form a term of the contract because they are telling the other party they are not sure and they should go and find out for themselves.
Ecay v Godfrey
Court held it was a representation
