Chapter 9 Express Terms Notes

Introduction [9.10]

• Part II of contract law focuses on the content of a contract, specifically the agreed-upon terms that establish the rights and obligations of each party.
• Contractual terms define the specifics of the agreement, such as the goods, quality, delivery, and price.
• Breach of contract occurs when agreed terms aren't met, giving the aggrieved party a cause of action for damages and potentially contract termination if a significant term (condition) is breached.

Identifying and Construing Terms [9.20]

• Contractual terms involve a two-stage process:
  • Identification: Determining what terms were agreed upon.
  • Construction: Interpreting the meaning of those terms.
• Identification of terms involves determining the source and method of incorporation (signed document, notice, course of dealings).
• Construction of terms involves applying rules of construction to the language used in the contract.

Express vs. Implied Terms [9.30]

• Terms are categorized as:
  • Express Terms: Explicitly stated by the parties.
  • Implied Terms: Deemed to be implicitly agreed upon.
• Courts imply terms by fact, law, custom, or usage.
• Statutes like the Australian Consumer Law (ACL) provide consumer guarantees.

Pre-Contractual Statements [9.40-9.50]

• Statements during negotiations can be oral or written (signed/unsigned).
• Contracts can be wholly oral, written, or a combination.
• Some contracts require written form and signature.
• Written agreements offer clarity and proof of terms.
• Parties may require that modifications be in writing and signed.
• Not all pre-contractual statements are binding terms, those must be promissory to have contractual effect.
• Pufferies (exaggerated advertising talk) do not have contractual effect.

Representations vs. Terms [9.60]

• Mere Representation: Not contractually binding, but may allow rescission for misrepresentation (restoring parties to original positions, without damages).
• Terms: Binding promises or warranties; breach leads to damages, and potentially termination if an important term is breached.

Factors Determining if a Statement is a Term [9.60]

• Objective Test: Would a reasonable person consider the statement promissory?
• There is no single test. Relevant factors include:
  • Words and Language Used
  • Relative Knowledge and Expertise of the person making the statement
  • Importance of the Statement
  • Timing of the Statement
  • Agreements Reduced to Writing

Ellul and Ellul v Oakes [9.70]

• Facts: Oakes (vendor) incorrectly indicated property was sewered on a listing form. Purchasers (Ellul) sued for breach of warranty.
• Issue: Was the statement a term of the contract?
• Held: Yes, it was a warranty and the purchasers were entitled to damages.
• Key Points: Representation to induce purchase succeeded, creating a prima facie case. Court considers the statement's:
  • Timing (interval before agreement)
  • Importance to parties
  • Inclusion in written contract
  • Maker's position to ascertain accuracy

Words Used [9.80]

• Objective determination of intent based on language.
• Promissory words (promise, guarantee, warrant) indicate a term.
• Imprecise, explanatory, or opinion-based words do not.

JJ Savage & Sons v Blakney [9.90]

• Facts: Savage estimated boat speed; Blakney purchased, but the contract didn't specify speed. The boat was slower than the estimate. Blakney sued for breach.
• Issue: Was the speed estimate a term?
• Held: No,