CONTRACTUAL TERMS
Distinction between representation and term of contract
Express and implied terms
Way in which terms are implied into contract under common law
Operation of statutory implied terms
Puff= boastful statement made in advertising no liability as puffs considered not taken seriously
Misrepresentation= statement that induces a party to enter a contract (but does not form part of
it) liability needs proof of fault
Term= promise or undertaking that becomes part of contract itself liability (breach of contract)
right to sue
Repudiation= bringing an end to the contract end of obligations
Incorporation of express terms
Contract in writing: if in writing than terms taken as terms rather than representations,
statements made before contract are considered mere representations (otherwise parties would
put in writing) courts consider intention of parties, as contract could be intended to be partly in
writing and partly oral
oJ Evans and Son (Portsmouth) Ltd v Andrea Mezario Ltd (1976)
Claimants contracted with defendants to make transport arrangements for carriage of goods
to England. A clause in contract stated shipper ‘reserves to itself complete freedom in
respect... the procedure to be followed in the handling and transportation of goods’, however
there was verbal agreement which D promised they would transport the claimants’ cargo
below deck, but container was shipped to England on deck; container fell off the deck and
machine lost overboard claimants claimed damages for loss of machine held it was oral
promise that was incorporated in contract, which contract part oral and written
Contract is signed: parties considered to be in agreement with everything even if not read it
oL’Estrange v Graucob (1934)
Mrs L’Estrange owned a café, ordered a cigarette machine from the manufacturers which was
faulty – which had signed, contained a clause stating ‘any express or implied condition,
statement or warranty, statutory or otherwise not stated is excluded L’Estrange claimed for
breach implied by Sale of Goods Act 1893 that goods unfit for purpose, claimed did not see
clause before claim failed when signed, apart from fraud or misrepresentation, are bound
whether document is read or not
Importance of statement: greater the importance of a statement, the more likely it will be
considered as a term if party would not enter contract without statement, then more likely a
term to give effect to intention
oBannerman v White (1861): D was purchaser of hops, before contract formed purchaser stated
‘if treated with sulphur, I am not interested in even knowing the price of them’, seller stated
(wrongly) they had not been treated with sulphur, when purchaser discovered it had been he
repudiated contract seller sued on basis that discussions were in preliminary stages and not
part of contract held statement was so important to purchaser and it had become term of
contract when breached
Reliance on specialist knowledge and skill: when one part relies on statement made with
specialist knowledge or skill of other party in deciding to enter a contract, then statement may be
considered a term
oDick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965]: claimant wanted a ‘well
vetted’ Bentley, D claimed that a car had done 20k miles since being fitted with new engine and
gearbox, but done actually 100k, claimant found out after purchased car held statement of
mileage was a term, which relied on specialist knowledge of dealer which was major factor to
enter a contract
1
, oOscar Chess Ltd v Williams (1956): similar case were an erroneous (but honest) mistake was
made by a private seller (with no expertise or skill), which statement held not a term of contract
Timing of statement: where significant lapse in time between statement and formation of
contract, courts can consider it as a representation rather than term
oRoutledge v Mckay (1954): motorcycle was first registered in 1939, new registration document
issued which stated wrongly as 1941; the then owner in 1949 was unaware of inaccuracy and
sold it was a 1961 motorcycle; buyer brought it with written contract that did not stipulate
age discovered true age sued held lapse of time too great to infer contract was formed
based on statement of age, and was not incorporated as term
Parole evidence rule
Parole evidence rule= States where a contract is in writing, extrinsic evidence (whether written
or oral) is inadmissible to add, vary or contradict terms common law shows written contract
should contain everything that was agreed, which anything not in contract is not intended to be
included even when there is oral or written matters e.g. earlier drafts which suggests otherwise
Exceptions to parol evidence rule
oWhere written agreement not intended to be whole contract parol evidence is admissible – J
Evans & Son
oParol evidence may be given to determine validity of contract
oParol evidence can be used to show contract does not yet operate, or ceased to operate
oParol evidence can be used to show in what capacities parties contracted
oParol evidence can be used to explain words/ phrases which are ambiguous, or if taken literally
makes no sense
oParol evidence can be used to show written document did not record accurately agreement,
enabling the equitable remedy of rectification
oParol evidence can be used to show parties made 2 related contracts, one written other oral
(i.e. collateral)
City & Westminister Properties v Mudd (1959): P promised to allow D live in a business
premises D leased from P even though the lease document restricted residential (sleeping)
rights on the premises; On that understanding, before D signed he was clear he would not sign
any lease if could not have residential (sleep-in?) privileges held there was 1 contract,
without residential privileges
Classification of terms: terms that are incorporated fall in 3 categories
Conditions: breach of condition entitles claimant to repudiate contract and/or claim damages –
Poussard
Warranties: Breach of warranty entitles claimant to claim damages only, not repudiate - Bettini
Innominate terms: courts consider consequences of breach, then decide remedy – Hong Kong Fir
Conditions: fundamental part of contract most important terms breach could mean essential
part of contract failed breach of condition allows to access range of contractual remedies (look
at REMEDIES)
oClaimant can due for damages and repudiate own obligations under contract become free of
own duties
oPoussard v Spiers and Pond (1876): actress under contract to appear as lead in operetta, was ill
and unable to attend performance role was given to someone else sued for breach of
contract held actress claim as she was lead performer with crucial importance, which failure
to attend was breach, producers entitled to repudiate and terminate contract
2
Distinction between representation and term of contract
Express and implied terms
Way in which terms are implied into contract under common law
Operation of statutory implied terms
Puff= boastful statement made in advertising no liability as puffs considered not taken seriously
Misrepresentation= statement that induces a party to enter a contract (but does not form part of
it) liability needs proof of fault
Term= promise or undertaking that becomes part of contract itself liability (breach of contract)
right to sue
Repudiation= bringing an end to the contract end of obligations
Incorporation of express terms
Contract in writing: if in writing than terms taken as terms rather than representations,
statements made before contract are considered mere representations (otherwise parties would
put in writing) courts consider intention of parties, as contract could be intended to be partly in
writing and partly oral
oJ Evans and Son (Portsmouth) Ltd v Andrea Mezario Ltd (1976)
Claimants contracted with defendants to make transport arrangements for carriage of goods
to England. A clause in contract stated shipper ‘reserves to itself complete freedom in
respect... the procedure to be followed in the handling and transportation of goods’, however
there was verbal agreement which D promised they would transport the claimants’ cargo
below deck, but container was shipped to England on deck; container fell off the deck and
machine lost overboard claimants claimed damages for loss of machine held it was oral
promise that was incorporated in contract, which contract part oral and written
Contract is signed: parties considered to be in agreement with everything even if not read it
oL’Estrange v Graucob (1934)
Mrs L’Estrange owned a café, ordered a cigarette machine from the manufacturers which was
faulty – which had signed, contained a clause stating ‘any express or implied condition,
statement or warranty, statutory or otherwise not stated is excluded L’Estrange claimed for
breach implied by Sale of Goods Act 1893 that goods unfit for purpose, claimed did not see
clause before claim failed when signed, apart from fraud or misrepresentation, are bound
whether document is read or not
Importance of statement: greater the importance of a statement, the more likely it will be
considered as a term if party would not enter contract without statement, then more likely a
term to give effect to intention
oBannerman v White (1861): D was purchaser of hops, before contract formed purchaser stated
‘if treated with sulphur, I am not interested in even knowing the price of them’, seller stated
(wrongly) they had not been treated with sulphur, when purchaser discovered it had been he
repudiated contract seller sued on basis that discussions were in preliminary stages and not
part of contract held statement was so important to purchaser and it had become term of
contract when breached
Reliance on specialist knowledge and skill: when one part relies on statement made with
specialist knowledge or skill of other party in deciding to enter a contract, then statement may be
considered a term
oDick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965]: claimant wanted a ‘well
vetted’ Bentley, D claimed that a car had done 20k miles since being fitted with new engine and
gearbox, but done actually 100k, claimant found out after purchased car held statement of
mileage was a term, which relied on specialist knowledge of dealer which was major factor to
enter a contract
1
, oOscar Chess Ltd v Williams (1956): similar case were an erroneous (but honest) mistake was
made by a private seller (with no expertise or skill), which statement held not a term of contract
Timing of statement: where significant lapse in time between statement and formation of
contract, courts can consider it as a representation rather than term
oRoutledge v Mckay (1954): motorcycle was first registered in 1939, new registration document
issued which stated wrongly as 1941; the then owner in 1949 was unaware of inaccuracy and
sold it was a 1961 motorcycle; buyer brought it with written contract that did not stipulate
age discovered true age sued held lapse of time too great to infer contract was formed
based on statement of age, and was not incorporated as term
Parole evidence rule
Parole evidence rule= States where a contract is in writing, extrinsic evidence (whether written
or oral) is inadmissible to add, vary or contradict terms common law shows written contract
should contain everything that was agreed, which anything not in contract is not intended to be
included even when there is oral or written matters e.g. earlier drafts which suggests otherwise
Exceptions to parol evidence rule
oWhere written agreement not intended to be whole contract parol evidence is admissible – J
Evans & Son
oParol evidence may be given to determine validity of contract
oParol evidence can be used to show contract does not yet operate, or ceased to operate
oParol evidence can be used to show in what capacities parties contracted
oParol evidence can be used to explain words/ phrases which are ambiguous, or if taken literally
makes no sense
oParol evidence can be used to show written document did not record accurately agreement,
enabling the equitable remedy of rectification
oParol evidence can be used to show parties made 2 related contracts, one written other oral
(i.e. collateral)
City & Westminister Properties v Mudd (1959): P promised to allow D live in a business
premises D leased from P even though the lease document restricted residential (sleeping)
rights on the premises; On that understanding, before D signed he was clear he would not sign
any lease if could not have residential (sleep-in?) privileges held there was 1 contract,
without residential privileges
Classification of terms: terms that are incorporated fall in 3 categories
Conditions: breach of condition entitles claimant to repudiate contract and/or claim damages –
Poussard
Warranties: Breach of warranty entitles claimant to claim damages only, not repudiate - Bettini
Innominate terms: courts consider consequences of breach, then decide remedy – Hong Kong Fir
Conditions: fundamental part of contract most important terms breach could mean essential
part of contract failed breach of condition allows to access range of contractual remedies (look
at REMEDIES)
oClaimant can due for damages and repudiate own obligations under contract become free of
own duties
oPoussard v Spiers and Pond (1876): actress under contract to appear as lead in operetta, was ill
and unable to attend performance role was given to someone else sued for breach of
contract held actress claim as she was lead performer with crucial importance, which failure
to attend was breach, producers entitled to repudiate and terminate contract
2
