Business Law - Topic 3

Express terms

expressed in a written or oral form in the contract

The Parol Evidence Rule

prevents parties from introducing anything that contradicts already agreed to contracts.

City Westminster v Mudd

tenant signed an agreement saying he couldn't sleep in a flat, but was orally promised that he wouldn;t be removed for sleeping, the landlord was unable to remove him because of the collateral warranty

Collateral warranty

if a party has signed a written contract as a result of an oral promise made to him shortly before the contract is formed, or at the time when the contract is formed, but the promises have to be clearly stated

Happy v Wai Kee

if a contract says it is 'final' then the court will only use written terms in the decision

Implied terms

neither written nor orally made but implied by the law

Sale of Goods Ordinance

implied terms of merchantable quality, fit for their purpose, corresponding to the description and sample

Supply of Services Ordinance

implied terms of care and skill

Wong v Kwan

customer drowned while on tour from a travel service; the travel agency was liable by reason of negligence of its subcontractor

Chea v Kwan

if the contract states they are only responsible for arranging contractors, then they aren't liable for the negligence of said contractors

Common law

precedent, judicial review, neutral judge, flexibility, role of judges

Li v Xuan

common law principles establish that certain terms are essential for performance. In this case the landlord had a duty to repair structural problems

Damages

money compensation covering the loss of innocent party

Rescission

cancellation of the contract and restoring the original position of the parties, such as a refund

HK v Kawaski

Where the consequence of breach of contract is serious: damages + rescission, and where the consequence of breach of contract is trivial: damages only

Exemption Clause

excluding or limiting the liability of sellers or service providers

Signature test

if a party has signed a document with an exemption clause, they are bound even if they didn't read or the words are small

Curtis v Chemical Cleaning

misrepresentation by a staff member meant the customer was entitled to compensation

Olley v Marlborough

timing test- exemption clause was ineffective because the customers saw it after the contract was formed

Reasonable notice test

If the party relying on the exemption clause has done reasonable steps to draw the attention of the innocent party to it at the time of the formation of the contract, the latter should know it and will be bound by it

Thompson v London

the passenger didn't object to the terms on the ticket and was bound by it; however, in cases where the terms were illegible, such as when the words were scratched off, then the exemption clause will be ineffective

McCutcheon v David

Prior consistent dealings with exemption clause then it becomes implied in the contract

Did the innocent party know the exemption clause or could he have known it?

Is the bargaining power of the parties equal

a very important factor, an ordinary businessman versus a bank which used an exemption clause he clause was ruled invalid as the bargaining power of the parties was unequal