Chapter 8
What is a term?
8.1 What is a term?
Contract consists of a no. of terms
Not everything that is said or written during the course of negotiations constitutes a term of
the contract.
Unlikely that all answers to q’s to the seller would be regarded as terms of the contract.
Some answers could be treated as mere statements of opinion or ‘mere puffs’-> have no
legal effect.
Principle distinction between a term and a mere representation is significant as if it is a term,
then risk of breach of contract (which is a more costly remedy) but if it is a representation,
then risk of misrepresentation.
Whether a state is a term or merely representation depends on the intention with which the
statement was made-> courts have adopted an objective approach to intention.
No one principle is decisive; in every case the court must assess the relative importance of
each principle (Heilbut, Symons & Co v Buckleton [1913] AC 30, 50-51)
8.2 Verification
A statement is unlikely to be a term of the contract if the maker of the statement asks the
other party to verify its truth (Ecay v Godfrey (1947) 80 LI LR 286)
If one party acts in reliance upon this statement then the courts are likely to determine that
it is a term of the contract (Schawel v Reade [1913] 2 IR 64)
8.3 Importance
‘But for’.
A statement is likely to be a term of the contract where it is of such importance to the
person to whom it is made that, had it not been made, he would not have entered into the
contract.
Couchman v Hill [1947] KB 554-> held that it was a term of the contract due to the
importance attached to it by the claimant.
8.4 Special Knowledge
If the maker of a statement has some special knowledge or skill compared to the other
party, the statement may be held to be a contractual term-> inequality of bargaining power.
On the other hand, it the parties’ degrees of knowledge are equal or if the person to whom
the statement is made has the greater knowledge are equal or if the person whom the
statement is made has greater knowledge, the statement may be held to be a mere
representation.
Oscar Chess Ltd v Williams [1957] 1 WLR 370-> was held that the defendant’s statement as
to the age of the car was not a term but a mere representation. The claimants, who were car
dealers, were in at least as good a position of the defendant to know the true age of the car.
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623-> held that the
defendants’ statement as to the car mileage was a term of the contract; the defendants
being car dealers were in a better position than the claimant to know whether their
statement was true.
What is a term?
8.1 What is a term?
Contract consists of a no. of terms
Not everything that is said or written during the course of negotiations constitutes a term of
the contract.
Unlikely that all answers to q’s to the seller would be regarded as terms of the contract.
Some answers could be treated as mere statements of opinion or ‘mere puffs’-> have no
legal effect.
Principle distinction between a term and a mere representation is significant as if it is a term,
then risk of breach of contract (which is a more costly remedy) but if it is a representation,
then risk of misrepresentation.
Whether a state is a term or merely representation depends on the intention with which the
statement was made-> courts have adopted an objective approach to intention.
No one principle is decisive; in every case the court must assess the relative importance of
each principle (Heilbut, Symons & Co v Buckleton [1913] AC 30, 50-51)
8.2 Verification
A statement is unlikely to be a term of the contract if the maker of the statement asks the
other party to verify its truth (Ecay v Godfrey (1947) 80 LI LR 286)
If one party acts in reliance upon this statement then the courts are likely to determine that
it is a term of the contract (Schawel v Reade [1913] 2 IR 64)
8.3 Importance
‘But for’.
A statement is likely to be a term of the contract where it is of such importance to the
person to whom it is made that, had it not been made, he would not have entered into the
contract.
Couchman v Hill [1947] KB 554-> held that it was a term of the contract due to the
importance attached to it by the claimant.
8.4 Special Knowledge
If the maker of a statement has some special knowledge or skill compared to the other
party, the statement may be held to be a contractual term-> inequality of bargaining power.
On the other hand, it the parties’ degrees of knowledge are equal or if the person to whom
the statement is made has the greater knowledge are equal or if the person whom the
statement is made has greater knowledge, the statement may be held to be a mere
representation.
Oscar Chess Ltd v Williams [1957] 1 WLR 370-> was held that the defendant’s statement as
to the age of the car was not a term but a mere representation. The claimants, who were car
dealers, were in at least as good a position of the defendant to know the true age of the car.
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623-> held that the
defendants’ statement as to the car mileage was a term of the contract; the defendants
being car dealers were in a better position than the claimant to know whether their
statement was true.
