CONTRACT TERMS
INTRODUCTION
⇒ The terms within a contract delineate the rights and obligations of the involved
parties.
⇒ Breaching a term can give rise to a cause of action.
DISTINCTION BETWEEN A TERM AND A REPRESENTATION ⇒ Terms are binding and
constitute a contractual obligation, whereas representations lack binding force and
are typically non-contractual.
⇒ Consequently, breaching a representation does not warrant a cause of action for
breach of contract; instead, the innocent party can only seek remedies for
misrepresentation.
THE "GUIDING FACTORS" AND "PRESUMPTIONS" IN DISTINGUISHING A TERM
FROM A REPRESENTATION ⇒ Determining whether a statement constitutes a term
or a representation hinges on the objective intention of the parties; if the statement
was intended to form part of the agreement, it qualifies as a term.
⇒ The court considers the following "guiding factors" and "presumptions":
1. Has the statement been reduced to writing?
2. Does one party possess specialist skill or knowledge?
3. The importance attributed to the statement.
4. Is there a lapse in time between the statement and the formation of the contract?
5. HAS THE STATEMENT BEEN REDUCED TO WRITING? ⇒ A written statement is more
likely to be regarded as a term.
⇒ If the statement is signed, it serves as stronger evidence that it constitutes a term
(L’Estrange v F Graucob 1934).
⇒ Parole evidence rule: Parties attempting to introduce oral evidence to challenge
the intention of the statement being a term are restricted by the parole evidence
rule. If the statement is in writing, the court deems that to be the intention, and oral
statements cannot be considered terms.
2. DOES ONE PARTY HAVE SPECIALIST SKILL OR KNOWLEDGE? ⇒ If a party relies on a
specialist statement when entering a contract, that statement may be deemed a
term. For instance, if Party A makes a statement based on their professional
INTRODUCTION
⇒ The terms within a contract delineate the rights and obligations of the involved
parties.
⇒ Breaching a term can give rise to a cause of action.
DISTINCTION BETWEEN A TERM AND A REPRESENTATION ⇒ Terms are binding and
constitute a contractual obligation, whereas representations lack binding force and
are typically non-contractual.
⇒ Consequently, breaching a representation does not warrant a cause of action for
breach of contract; instead, the innocent party can only seek remedies for
misrepresentation.
THE "GUIDING FACTORS" AND "PRESUMPTIONS" IN DISTINGUISHING A TERM
FROM A REPRESENTATION ⇒ Determining whether a statement constitutes a term
or a representation hinges on the objective intention of the parties; if the statement
was intended to form part of the agreement, it qualifies as a term.
⇒ The court considers the following "guiding factors" and "presumptions":
1. Has the statement been reduced to writing?
2. Does one party possess specialist skill or knowledge?
3. The importance attributed to the statement.
4. Is there a lapse in time between the statement and the formation of the contract?
5. HAS THE STATEMENT BEEN REDUCED TO WRITING? ⇒ A written statement is more
likely to be regarded as a term.
⇒ If the statement is signed, it serves as stronger evidence that it constitutes a term
(L’Estrange v F Graucob 1934).
⇒ Parole evidence rule: Parties attempting to introduce oral evidence to challenge
the intention of the statement being a term are restricted by the parole evidence
rule. If the statement is in writing, the court deems that to be the intention, and oral
statements cannot be considered terms.
2. DOES ONE PARTY HAVE SPECIALIST SKILL OR KNOWLEDGE? ⇒ If a party relies on a
specialist statement when entering a contract, that statement may be deemed a
term. For instance, if Party A makes a statement based on their professional
