Terms and exemption clauses
Both case law (court) and statute law (parliament)
Classification
Nature of term itself (consequences of breach)
o Conditions – Major term in a contract (root)
Must be pointed out to the other party before the formation of the contract
is completed
Remedy – Could result in the ending of the contract
Election – innocent party choose what happens next (sues for damagesSa or
terminating contract)
Poussard v Spiers – actress missed opening night – breach of condition
entitled employer to terminate the contract.
o Warranties – Minor, breach of which entitles the innocent party to damages
Remedy – Sue for damages, CAN NOT end the contract
Bettini v Gye – singer failed to turn up for rehearsal – breach of warranty.
o Innominate (Intermediate) terms (unclassified) – Term capable of giving rise to a
variety of breaches of different degrees of seriousness so the remedy will not be
determined until the actual breach occurs and the consequences are known
Through the source (where they come from, how they become part of the contract)
o Express terms (exemption clause) – A contractual term included in the contract by
the parties
Try and remove liability/ responsibility from seller
Freedom of contract
Presumes equality of bargaining power
BUT Standard form contracts B2C
‘Small print’ clauses
SO, Subject to a degree of control
Judicial control
Parliamentary intervention
o Implied terms – Term not specified by the parties to the contract, but may be
implied into it by statute or common law
Terms implied at common law protect against exploitation of the more
vulnerable party
Business efficacy: Obvious common sense but unspoken intention of the
contracting parties
If the contract lacks a very obvious term
Sales of Goods Act 1979 (B2B)
Implying certain terms concerning standard and quality of goods
Consumer rights act 2015 (B2C)
More on innominate terms
Not all terms clearly and immediately identifiable as conditions or warranties
Express intention of the party is of most importance
Use of words ‘conditions’ and ‘warranty’ is of evidential value
If party has statutory right to terminate the contract if a term is breached, the term is a
condition
Both case law (court) and statute law (parliament)
Classification
Nature of term itself (consequences of breach)
o Conditions – Major term in a contract (root)
Must be pointed out to the other party before the formation of the contract
is completed
Remedy – Could result in the ending of the contract
Election – innocent party choose what happens next (sues for damagesSa or
terminating contract)
Poussard v Spiers – actress missed opening night – breach of condition
entitled employer to terminate the contract.
o Warranties – Minor, breach of which entitles the innocent party to damages
Remedy – Sue for damages, CAN NOT end the contract
Bettini v Gye – singer failed to turn up for rehearsal – breach of warranty.
o Innominate (Intermediate) terms (unclassified) – Term capable of giving rise to a
variety of breaches of different degrees of seriousness so the remedy will not be
determined until the actual breach occurs and the consequences are known
Through the source (where they come from, how they become part of the contract)
o Express terms (exemption clause) – A contractual term included in the contract by
the parties
Try and remove liability/ responsibility from seller
Freedom of contract
Presumes equality of bargaining power
BUT Standard form contracts B2C
‘Small print’ clauses
SO, Subject to a degree of control
Judicial control
Parliamentary intervention
o Implied terms – Term not specified by the parties to the contract, but may be
implied into it by statute or common law
Terms implied at common law protect against exploitation of the more
vulnerable party
Business efficacy: Obvious common sense but unspoken intention of the
contracting parties
If the contract lacks a very obvious term
Sales of Goods Act 1979 (B2B)
Implying certain terms concerning standard and quality of goods
Consumer rights act 2015 (B2C)
More on innominate terms
Not all terms clearly and immediately identifiable as conditions or warranties
Express intention of the party is of most importance
Use of words ‘conditions’ and ‘warranty’ is of evidential value
If party has statutory right to terminate the contract if a term is breached, the term is a
condition
