Terms in a contract are obligations which the parties must perform. They can be written or verbal.
There are three categories’ conditions, warranties and innominate terms. Conditions are the main
terms in a contract and if breached the contract gets repudiated. Warranties are minor terms in a
contract and if broken the claimant can receive damages only. Innominate terms do not fall in either
category, but they are terms that the judges have to look up the definitions of words in order to
determine the intentions of the parties. The difference between a term and representation is also
profound as representations are verbal statement made before the contract is formed and becomes
legally binding. Expressed terms are written in the contract clearly where implied terms are just
presumed to be there. Finally, exclusion clauses are elements that allow the trader to completely
remove liability from loss or breach of contract and limitation clauses restrict liability for breach of
contract.
The law on terms is unfair and unclear dur to how implied terms can be applied. Using a statute,
passing the bystander test and ensuring business efficacy. There should be certainty and any terms
that may lead to a termination of the contract must be added as expressed terms. This is a fairer way
to create contracts. On the other hand the Consumer Rights Act was created to ensure customers
get clarity and fair treatment by traders regarding their purchases of goods or services. This statute
provides remedies customers can use when there has been a breach of contract. They are S23 and
S24 allowing them to reive a refund or a replacement of the product.
Parties should be able to choose what the contracts is about; however, courts sometimes intervene
and decide for them. They determine if a term is a warranty or a condition. This concludes that
courts ignore the initial intentions parties had and use statutes to determine definitions of certain
words. On the other hand, courts don’t want to depart from the freedom principle. Therefore, they
are hesitant to imply terms that may implicate the contract seen in Kong v Kawasaki.
If a condition is breached, then a contract will end imminently whereas if a warranty is breached the
party can only claim damages. This means that the claimant will be trapped in a contract with a party
that breached their contract which is unfair and inflexible. Minor breach of a condition can lead to a
termination however a major breach of warranty cannot. On the other hand it used to be really easy
to distinguish between the different types of terms until the innominate terms were introduced.
They are terms that require the judge of the case to look up the definition of the word in order to
determine the parties intentions. This is an advantage as the outcome can easily in the claimant’s
favour.
The strict approach towards exclusion clauses can be seen as problematic for those who provide
goods and services. The traders cannot afford any protection. The arguments is that when a party
signs a contract with the knowledge that an exclusion clause is there the court should honour that
and not void them in certain scenarios. However the rule of incorporation ensures that exclusion
clauses are mor fair by requiring a notice to be given or otherwise the EC cannot be applied. This
provides protection for the customer and ensures the trader does not avoid any liability. A way to
regulate EC’s is to use the whole contract and all the terms included to determine the obligation
within it.
Overall the law on the incorporation of terms is fair as the courts try to favour claimants or interpret
terms of the contract taking into consideration both parties intentions. It can also be argued that the
bystander test and the business efficacy test are confusing therefore they could be removed and the
parties will have to set out their intentions more clearly. The CRA is clear and sets out fair remedies
and rights that the consumer is entitles to. The statute has been strong in providing clarity and
fairness in applying the terms of a contract.
There are three categories’ conditions, warranties and innominate terms. Conditions are the main
terms in a contract and if breached the contract gets repudiated. Warranties are minor terms in a
contract and if broken the claimant can receive damages only. Innominate terms do not fall in either
category, but they are terms that the judges have to look up the definitions of words in order to
determine the intentions of the parties. The difference between a term and representation is also
profound as representations are verbal statement made before the contract is formed and becomes
legally binding. Expressed terms are written in the contract clearly where implied terms are just
presumed to be there. Finally, exclusion clauses are elements that allow the trader to completely
remove liability from loss or breach of contract and limitation clauses restrict liability for breach of
contract.
The law on terms is unfair and unclear dur to how implied terms can be applied. Using a statute,
passing the bystander test and ensuring business efficacy. There should be certainty and any terms
that may lead to a termination of the contract must be added as expressed terms. This is a fairer way
to create contracts. On the other hand the Consumer Rights Act was created to ensure customers
get clarity and fair treatment by traders regarding their purchases of goods or services. This statute
provides remedies customers can use when there has been a breach of contract. They are S23 and
S24 allowing them to reive a refund or a replacement of the product.
Parties should be able to choose what the contracts is about; however, courts sometimes intervene
and decide for them. They determine if a term is a warranty or a condition. This concludes that
courts ignore the initial intentions parties had and use statutes to determine definitions of certain
words. On the other hand, courts don’t want to depart from the freedom principle. Therefore, they
are hesitant to imply terms that may implicate the contract seen in Kong v Kawasaki.
If a condition is breached, then a contract will end imminently whereas if a warranty is breached the
party can only claim damages. This means that the claimant will be trapped in a contract with a party
that breached their contract which is unfair and inflexible. Minor breach of a condition can lead to a
termination however a major breach of warranty cannot. On the other hand it used to be really easy
to distinguish between the different types of terms until the innominate terms were introduced.
They are terms that require the judge of the case to look up the definition of the word in order to
determine the parties intentions. This is an advantage as the outcome can easily in the claimant’s
favour.
The strict approach towards exclusion clauses can be seen as problematic for those who provide
goods and services. The traders cannot afford any protection. The arguments is that when a party
signs a contract with the knowledge that an exclusion clause is there the court should honour that
and not void them in certain scenarios. However the rule of incorporation ensures that exclusion
clauses are mor fair by requiring a notice to be given or otherwise the EC cannot be applied. This
provides protection for the customer and ensures the trader does not avoid any liability. A way to
regulate EC’s is to use the whole contract and all the terms included to determine the obligation
within it.
Overall the law on the incorporation of terms is fair as the courts try to favour claimants or interpret
terms of the contract taking into consideration both parties intentions. It can also be argued that the
bystander test and the business efficacy test are confusing therefore they could be removed and the
parties will have to set out their intentions more clearly. The CRA is clear and sets out fair remedies
and rights that the consumer is entitles to. The statute has been strong in providing clarity and
fairness in applying the terms of a contract.
