INCORPORATION OF TERMS


rules for incorporation of terms

  • ao1- terms must be prominent, clear and available at the time of contracting THORTON V SHOE LANE PARKING.

  • ao3- protects consumers from ‘hidden’ terms, but creates a high burden on businesses to ensure their terms are prominent

  • ao1- any harsh or unusual terms must be made clear INTERFOTO V STILETTO VISUAL PROGRAMMES

  • ao3- the ‘red hand rule’ created by lord denning, prevents stronger parties from exploiting smaller ones. the downside is legal uncertainty, what one judge considers ‘unusual’ another might consider ‘standard industry pratice’ making it hard for businesses to predict if their terms will hold up in court

rules for incorporation of pre-contractual statements as terms of the contract

  • ao1: a statement is more likely to be incorporated as a term if it is: of a particular importance (BANNERMAN V WHITE); where the party making the statement has more knowledge (SCHAWEL V READE, OSCAR CHESS V WILLIAMS)

  • ao3: protects the reasonable expectations of the parties, if a statement is so vital that the contract wouldn’t exist without it, it should be a term. it prevents parties from lying to secure a deal then hiding behind a written contract.

  • ao3:

when terms will be implied into a contract

  • ao1: through the cra 2015 which implies terms that goods must be satisfactory quality (s9), fit for purpose (s10), and as described (s11)

  • ao3: statutory clarity. it provides a “Safety net” for consumers, ensuring they aren’t left with faulty goods regardless of what the contract says. it simplifies the law, making it more accesible than the previous sales of goods act.

  • through common law implies terms if required for business efficacy- THE MOORCOCK, or the officious bystander test SHIRLAW V SOUTHERN FOUNDRIES

  • ao3: the ‘business efficacy’ test and ‘officious bystander’ test are vital tools for judicial flexibility. they allow courts to fill gaps that the parties forgot. however, some argue this is judicial activism- courts should not be ‘rewriting’ contracts for people.

the rules for incorporation of terms by course of dealings

  • explain that a term will be incorporated by course of dealings if its use is regular and consistent- even if it comes after acceptance - KENDALL V LILLICO

  • ao3: in business, deals are often done over the phone r in a hurry. allowing terms to be incorporated via past conduct prevents a ‘rogue’ party from escaping their usual obligations on a technicality.

  • explain that this is less likely to be the case where one party acts as a consumer HOLLIER V RAMBLER MOTORS

  • ao3: the courts refusal to easily imply terms against a consumer shows a protective judicial stance. it recognises that a consumer doesnt have the legal resources of a garage.

  • explain that this will be more likely if the parties are both in the same industry BRITISH CRANE HIRE V IPSWICH PLANT HIRE

  • ao3: between two experts in the same tarde, the law rightly assumes they know the “rules of the game”. this reduces the need for long, expensive legal drafting for every single transaction.