Contract law
Types of Terms
Condition - A condition is a term of the contract that is so significant that it goes to the heart
of the transaction
- A condition is a term that, if breached, gives the aggrieved party the right either to
terminate the contract, (repudiation) )or affirm it. In addition, the aggrieved party can
also claim damages.
Warranty - A warranty in contract law is a promise or assurance made by one party to
another.
- A warranty is a term that, if breached, does not give the aggrieved party the right to
terminate the contract; it gives rise only to a right to claim damages.
Bettini v Gye (1876)
Innominate Term - In contract law, an innominate term is a contractual term that cannot be
classified as a condition or warranty.
- In between, there are innominate terms, where the remedy for breach will depend on
the effect of that breach at the time it happens.
- If there is a substantial effect on the aggrieved party, it will likely be a fundamental
term that gives the right to that party to terminate the contract (and claim damages).
If not, that party may only claim damages.
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962)
Express and Implied Terms
Express term
- These are clear terms which have been specifically agreed to by both parties
Implied term
- These are not expressly discussed between parties but are terms that both parties
would have intended to be included
Is It A Term, Or Just a Mere Representation
If a statement is a term, there will be a breach of contract
If a statement is merely a representation, there will be a claim for misrepresentation
The importance attached to the statement
Couchman v Hill (1947)
- The more importance attached to the statement the more likely it will be classed as a
term
Special knowledge or skill of the person making the statement
Oscar Chess v Williams (1957)
- Higher skill and knowledge that someone has the more likely their statement will be
classed as a term
, Contract law
Any time lag between the statement and the contract
Routledge v Mackay (1954)
- The longer the time between the statement and the contract the more likely it will be
classed as a representation
Whether there is a written contract
Routledge v Mackay (1954)
- If the statement is written down the more likely it will be classed as a term
Terms implied through common law:
Terms implied through business efficacy and the officious bystander test
- The courts will imply a term into a contract if the term is necessary to make sure that
the contract works on a business-like basis/
There is a two-part test for this:
1. Is the term necessary to make the contract effective? (Business Efficacy)
The Moorcock (1889)
2. Would the parties to the contract have agreed that the suggested term was obviously
going to be in the contract (Officious Bystander Test)
Shell UK Ltd v Lodstock Garage Ltd (1977)
Terms implied through custom:
Local customs will be implied in contracts
Hutton v Warren (1836)
Terms implied by prior dealings between the parties:
Prior conduct of the parties may indicate terms to the implied
Hillas v Arcos (1932)
Types of Terms
Condition - A condition is a term of the contract that is so significant that it goes to the heart
of the transaction
- A condition is a term that, if breached, gives the aggrieved party the right either to
terminate the contract, (repudiation) )or affirm it. In addition, the aggrieved party can
also claim damages.
Warranty - A warranty in contract law is a promise or assurance made by one party to
another.
- A warranty is a term that, if breached, does not give the aggrieved party the right to
terminate the contract; it gives rise only to a right to claim damages.
Bettini v Gye (1876)
Innominate Term - In contract law, an innominate term is a contractual term that cannot be
classified as a condition or warranty.
- In between, there are innominate terms, where the remedy for breach will depend on
the effect of that breach at the time it happens.
- If there is a substantial effect on the aggrieved party, it will likely be a fundamental
term that gives the right to that party to terminate the contract (and claim damages).
If not, that party may only claim damages.
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962)
Express and Implied Terms
Express term
- These are clear terms which have been specifically agreed to by both parties
Implied term
- These are not expressly discussed between parties but are terms that both parties
would have intended to be included
Is It A Term, Or Just a Mere Representation
If a statement is a term, there will be a breach of contract
If a statement is merely a representation, there will be a claim for misrepresentation
The importance attached to the statement
Couchman v Hill (1947)
- The more importance attached to the statement the more likely it will be classed as a
term
Special knowledge or skill of the person making the statement
Oscar Chess v Williams (1957)
- Higher skill and knowledge that someone has the more likely their statement will be
classed as a term
, Contract law
Any time lag between the statement and the contract
Routledge v Mackay (1954)
- The longer the time between the statement and the contract the more likely it will be
classed as a representation
Whether there is a written contract
Routledge v Mackay (1954)
- If the statement is written down the more likely it will be classed as a term
Terms implied through common law:
Terms implied through business efficacy and the officious bystander test
- The courts will imply a term into a contract if the term is necessary to make sure that
the contract works on a business-like basis/
There is a two-part test for this:
1. Is the term necessary to make the contract effective? (Business Efficacy)
The Moorcock (1889)
2. Would the parties to the contract have agreed that the suggested term was obviously
going to be in the contract (Officious Bystander Test)
Shell UK Ltd v Lodstock Garage Ltd (1977)
Terms implied through custom:
Local customs will be implied in contracts
Hutton v Warren (1836)
Terms implied by prior dealings between the parties:
Prior conduct of the parties may indicate terms to the implied
Hillas v Arcos (1932)
