terms of the contract

what are puffs?

-advertising slogans

what is a representation?

-statements made to persuade another party into a contract.-

-if false, claimant can sue for misrepresentation but not for breach of contract

what are the terms of contract?

-obligations in a contract, if breached, claimant can seek damages

what are terms of a contract?

-outline the obligations of contract

what is a condition in a contract?

-A condition in a contract is an event or circumstance that must occur before a party’s obligation kicks in, or that terminates an obligation already in effect.

-a single breach entitles party not in breach to treat the contract as terminated.

terms of the contract that give the right to terminate AND claim damages upon breach of the condition

what is a warranty in a contract?

-A warranty in a contract is a legally enforceable promise about a product’s quality, condition, or performance

what are nominate terms?

-flexible terms that change depending on the severity of the breach

describe the case of Oscar chess v Williams 1957

mrs Williams had a morris motor car and her son wanted to get a new car. He wants to sell  old car to Oscar chess so inquires about price. Mr Lad, who had sometimes taken lifts in car, told the son the trade in value of car- £270. A higher purchase arrangement- goes from higher price to purchase. Mr Lad gets told the brand of the car is false- someone must have changed the registration. Said car was only worth roughly £115. Was this term of contract or misrepresentation? Found that it was not term of contract.

describe the case of Bannerman v White 1861-

- mr bannerman is buying hops (crop) and wants to buy a whole farm of this crop- 300 acres of land for £16,000. Assured its not treated with sulphur so agrees to buy all the hops. Turns out some of them had been sulphur treated. 5 acres out of 300 had got sulphur which defendant had mixed up with other crops. View was taken that it was a breach of contract- so much emphasis was placed at the time of contract- condition precedent of contract- there would have been no contract if there had been sulphur on plants.

describe the case of Glaholm v Hays

ship was chartered, agreed that vessel should continue to Triesse port- starting point was London. Ship was to sail no later than 4^th feb, which it did anyway. Buyer got sick of waiting so cancelled order. Held that 4^th feb last sailing date was condition precedent- whole contract depends on that= Hays was not obligated to perform contract

what are express terms

things said

what are implied terms

-by statute, common law, local custom or trade usage, from prior course of dealing and in fact (one contract).

-Implied terms often fill in gaps where things have not been written down or agreed verbally. But they are still part of the contract. 

-are provisions that are not expressly stated in a contract but are legally considered part of the agreement to ensure it functions properly and fairly.

describe the case of Liverpool City Council v Irwin

house of lords case, common law. Rent strike in a set of flats- maisonettes- intended for families. Lifts began to stop working, stair lights didn’t always work- due to vandalism. Also a fault with lavatory systems- residents went on strike. Council responds with eviction notices. Tenants say council is  in breach-they should look after houses  (council). Council argued that their only role is to supply housing, not look after it.  Terms must be implied by common law. Found that there was an implied term in common law that reasonable care would be taken to maintain the means of access.

describe the case of Belize v Belize Telecom

The Belize government established a company to take over the country’s telecommunications services. The articles of association provided the holder of the ‘special’ share who also owned 37.5% of the share capital, could appoint directors. Belize Telecom (BT) purchased the ‘special’ share, the requisite share capital and appointed directors. BT then went into financial difficulties and ceased to hold the 37.5% share. The articles made no provision for the removal of these appointed directors, and the attorney-general sought a declaration that a term should be implied into the articles that such appointed directors should vacate office.

BT argued that since the articles were silent as to the removal of the appointed directors, they were irremovable, unless they chose to resign. BT contended the court had no power to introduce new terms into the articles of association.

The term was successfully implied into the contract. When considering whether terms are implied, the court cannot imply terms simply to make a contract more reasonable or more efficient

describe the case of Dick Bentley V Harold Smith

Mr B was a film producer- asks his advisor to find a good, clean Bentley- said it had done only 20,000 miles. Turns out the mileage is completely wrong- warranty. When a statement is made to induce party into contract, and plays a part in doing so, that is then intended to be a term of the contract. Intended to induce is key. Bentley was able to claim damages for misrepresentation

describe the case of L'Estrange v Graucob

Harriet L’estrange ran a café and lived above the café. She decides to get a vending machine for cigarettes. She approaches Graucob and has a meeting with sale staff. She signs an order form. She did not however read the small print. The machine didn’t work properly but she was paying instalments for this machine. She eventually wants to give it back and get back her money. Ends up in the local county court. Then ends up in divisional court. Terms included excluding all implied terms. She claims she never read the contract- court says it doesn’t matter as she still signed the contact- bound by contract.

describe the case of Olley v. Marlborough Court Hotel

Husband and wife check in to hotel- Mrs Olley leaves her fur coat in room and it is stolen. There is a notice saying that all valuables must be left with manager otherwise valuables are not liable. However, the notice needed to be incorporated at the right time eg. At the front desk, visible.

describe the case of Chapelton v Barry UDC

deck chairs- chapelton sits and chair falls through- he sues council. There is a notice up saying they will not be responsible for any injuries, notice was where the chairs were stacked. It was held that it was not such a document to find these terms on- no one would expect to find contractual terms on the back of notice.

describe the case of Parker v. South Eastern Railway

Mr parker leaves his luggage at left luggage office, pays fee and is given a ticket to be able to reclaim it- it has gone when he goes to reclaim it- back of ticket said they were only liable to up to 10 pounds- he lost.

describe the case of Thompson v. L.M.S. Railway Co

miss Thompson gets an excursion ticket, exclusion of personal injuries. She gets herself injured, note that she is illiterate. She sues however defendants win- judge said that ticket was not expensive enough to be liable for personal injuries.

what is incorporation

the process of making certain contractual terms legally binding, even if they are not explicitly written in the main contract.

describe the case of Photo Production v. Securicor

Photo Production Ltd and Securicor had a contract for the provision of security services by the latter to the former.  One Securicor’s staff, Mr Musgrove, decided to warm himself while providing these security services on Photo Production’s premises, and he did so by starting a fire. The fire spread and burned down Photo Production’s factory, causing them damage amounting to £615,000.

Photo Production sued Securicor, who however defended by pointing to an exclusion clause in the contract which stated that Securicor would “under no circumstances be responsible for any injurious act or default by any employee. . . unless such act or default could have been foreseen and avoided by the exercise of due diligence on the part of [Securicor].”

Photo Production in turn asserted that Mr Musgrove’s actions as agent of Securicor constituted a fundamental breach of the contract, and therefore invalidated it along with the exclusion clause.

The exclusion clause did on the facts, cover the damage in question and therefore Securicor were not liable for the damage

Thornton v. Shoe Lane Parking

Mr Thornton suffers a bad injury from Shoe lan parking. Car would be robotically inserted and recovered into this car park. There are prominent notices in the car park excluding liability of personal injury. Machine gave ticket- as soon as he paid for ticket- contract is formed. cannot incorporate new terms onto ticket

describe the case of Dunlop v. New Garage & Motor Co

The Claimant (C) manufactured and supplied goods to the Respondents (R) who were dealers and under an agreement C prohibited R from selling than their list price sold an item under the list price, hence C bought a claim in the breach of contract and wanted R to pay a sum of 5l. R argued that the clause that C had relied upon was penalty clause and therefore could not be enforced

describe the case of Parking Eye v. Beavis

Mr Beavis parked in a car park associated with a shopping centre- 2hour limit parking, 4 hours if using gym. He is fined- by parking he is entering into a contract.

what is the function of terms of the contract?

lay down the expectations of the contracts obligations, to then be able to determine if the obligations have been breached

what happens when a statement forms a term of the contract

there is an automatic right to damages for its breach

what happens   if the words are a representation turns out to be untrue.

there is no automatic right to damages

what is the difference between a warranty and representation

·       A warranty is a term of the contract, as opposed to a representation which is not part of the contract. A warranty constitutes a promise or guarantee which, if broken, automatically entitles the other party to damages to make good the promise.

·       A warranty gives the right to contractual damages where there has been a breach whereas a representation does not.

what is the parol evidence rule

a written contract cannot be supplemented by oral terms; the written document is final

what does the admissibility of oral statements depend on

whether a written document was intended to form all the terms of the contract (in which case the oral statements are irrelevant) or whether the written contract formed only part of the contract (in which case the oral statements may form terms of the contract if they were intended to do so).

what are entire agreement clauses

the written contract is intended to contain all the terms and that oral statements are not to be given effect to.

what are collateral warranties

A contract under which a party involved in the works warrants to a third party beneficiary that it has fulfilled its obligations under its underlying building contract. Collateral warranties are terms created in secondary contracts when it is not possible or appropriate to insert the term into the main contract

what are terms implied by fact

terms actually intended but not expressed

what are terms implied by law

implied not because they are intended by the parties but inserted by the courts or legislature because they think it is a good idea

what is the objective test for how courts will construe a contract

   looking at how the document would have been understood by a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time of the contract

what is the second sense definition of a warranty

the word warranty is also used to describe a term of a contract that is not a condition and gives the right to damages but not termination upon breach of the warranty

what is an innomimate term

   is a third type of term, neither a condition nor a warranty—it is a kind of intermediate or hybrid term because sometimes its breach gives a right to termination and sometimes it only gives a right to damages, depending on how serious the consequences of the breach are.

it is an attempt to avoid, in appropriate situations, the rigidity of the twofold distinction between conditions and warranties

what does the term termination refer to

   refers to the situation where the innocent party chooses to bring the contract to an end either for breach of condition or for serious breach of an innominate term. This means that the innocent party can refuse to accept any further performance from the party in breach and, often even more crucially, can refuse to continue to perform its own side of the bargain (including refusing to pay the price.

what are time clauses

where the specific time/date of contract matters; where a contract has a specific deadline.

what does the right to elect mean

the choice of the innocent party of whether or not to terminate the contract

why can delaying the termination of a contract cause delays for the innocent party

a delay can be treated as evidence of an intention to affirm the contract so that the right to terminate is thereby lost AND even if the delay is not treated as evidence of affirmation, events during the delay may mean that there is no right to terminate in response to the breach by the time the election to terminate is sought to be exercised.

describe the case of Schuler AG v. Wickman Machine Tool Sales Ltd [1974]

Schuler were a company engaged in the manufacture of types of tools. They had contracted with Wickman, who had sole rights to sell Schuler products in the UK. The contract included a term which stated that Wickman must send a sales person to every single company of car makers on a specific list on a weekly basis.

They did not manage to adhere to that part of the contract (which was argued by Schuler to be a condition of the contract since Clause 7b of the contract expressly stated that this was a condition).

Wickman was not making all the visits so Schuler saught to terminate the contract.

The courts held that Clause 7b was a warranty and not a condition and that simply calling a term a condition did not necessarily make it so. Therefore Schuler was not entitled to terminate the contract without giving notice and allowing Wickman to remedy the situation

describe the case of Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd, ‘The Hong Kong Fir’

Ship owners let the vessel, Hongkong fir, to charterers for a period of 24 months. Clause 1 of the contract obliged the owners to deliver a “seaworthy” vessel and Clause 3 further obliged them to maintain the vessel’s seaworthiness and good condition. Upon initial delivery, the vessel’s machinery was described to be in ‘reasonably good condition,’ yet required constant maintenance due to its age. The vessel owner’s chief engineer was inefficient and incompetent, and the vessel suffered numerous breakdowns and delays. The charterer’s repudiated the contract, alleging a breach of the obligations to deliver and maintain a seaworthy vessel.

outcome- On the facts, the Court held that the seaworthiness and maintenance clause was not viewed as so fundamental so as to amount to a condition of the contract, but rather constitutes a term allowing damages. Secondly, the Court held that an innocent party cannot treat the contract as repudiated due to delays, however significant, if the breach falls short of a frustration of the contract rendering performance impossible. On the facts, the delays, albeit serious and repeated, did not amount to a frustration of contract that entitled repudiation of the contract, but merely a breach allowing for damages.

describe the case of Miller v. Hancock [1893]

claimant fell and tripped on stairs in some flats owned by the defendants- it was held that the defendants owed a duty of care, even though the claimant was not a tenant. rule- occupiers liabilty- landlords are responsible for maintaining safe routes

describe the case of Hollier v. Rambler Motors (AMC) Ltd [1972]

The defendant, a garage, had repaired the claimant’s car on four prior occasions over five years. The claimant signed a document on at least two of those occasions. The document was an invoice, which stated at the bottom that the defendant was not liable for damage to cars caused by fire on the premises.

The claimant took their car to be repaired. They made an oral contract with the defendant. They did not sign any documents. The car was damaged by a negligently-lit fire while on the defendant’s premises.

When the claimant sued the defendant for breach of contract, the defendant relied on the exclusion clause in the invoice document. The claimant denied that this clause was incorporated into the most recent contract.

The Court of Appeal held in favour of the claimant. For the clause to be incorporated into the present contract, there would need to be a consistent course of past dealing including that clause

describe the case of The Moorcock’ (1889)

Ship-owners contracted with the defendant wharfingers to discharge a ship at their jetty. The jetty extended into the River Thames where the ship must necessarily ground at low water. The river-bed adjacent to the jetty was not vested in the wharfingers, and they had no control over it. They had taken no steps to determine whether the space was safe for the ship and, on grounding, she suffered damage because of the uneven nature of the river-bed next to the jetty. The ship-owners claimed for breach of contract.

The ship-owners argued it must have been an implied term of the contract that the river-bed was safe, because the jetty could not be used at all without the vessel grounding at low water.

The ship owners were successful in their claim. The whole purpose of the contract was to use the jetty and the jetty could not be used without the vessel grounding.

Marks & Spencer plc v BNP Paribas Security Services [2015]

The parties entered into four commercial leases, drafted by specialist solicitors. The rent under these leases was payable ‘yearly and proportionately for any part of a year by equal quarterly instalments in advance’. The leases also contained a break clause. This allowed the tenant to end the lease on a particular day by giving six months’ notice.

The tenant gave notice under the break clause. They later paid a quarter of the upcoming year’s rent and the break premium. After the lease terminated, the tenant attempted to claim back the rent paid in advance for the quarter after the lease terminated. They argued that a term requiring this repayment should be implied into the lease.

court held that a term requiring a landlord to repay rent already paid in advance beyond the date of termination could not be implied into the lease in question.

describe the case of Canada Steamship Lines Ltd v. The King

In November 1940, Canada Steamship Lines Ltd (CSL) entered into a Crown lease for a twelve-year term, becoming the tenant of dock property on St Gabriel Basin, Lachine Canal, Montreal. The lease included a freight shed and contained clauses limiting CSL’s claims for damage to goods stored in the shed, while the Crown was responsible for maintaining the shed at its own expense.

In the process of maintaining the shed, a Crown employee accidentally burnt down the shed. This caused significant damage, including $40,714 worth of damage to the Claimant. The Claimant wished to sue the Defendant, but the Defendant asserted that no liability existed due to the exclusion clause.

It was held that the exclusion clause was ambiguous.

describe the case of Wall v. Rederiaktiebolaget Luggude [1915]

It was held that a shipowner could disregard a penalty clause and sue for the actual loss he suffered where it exceeded the amount of the penalty.