Terms
- Created by: Rachel
- Created on: 18-04-14 13:56
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- Terms
- PAROL EVIDENCE RULE
- Record of transaction is embodied in document
- GR: extrinsic (outside) evidence - generally not admissible
- Provides CERTAINTY
- bound by the writing
- Used where a dispute arises after contract is made - what was said?
- Party could be upset if the disputed term wasn't set out in contract
- Extrinsic evidence thus can be admitted in different situations which fall outside the GR
- Party could be upset if the disputed term wasn't set out in contract
- EXCEPTIONS
- Written agreement - wasn't the whole agreement
- Written agreement wasn't intended to be the whole contract
- Evans v Andrea Merzario 1976
- Validity
- Parol evidence may be given about validity of contract
- eg: estb. presence/absence of consideration
- Parol evidence may be given about validity of contract
- Implied Terms
- Where the contract is silent on a matter on which a term is normally implied by law
- PE may be given to support/rebut usual implication
- Burgess v Wickham
- Where the contract is silent on a matter on which a term is normally implied by law
- Operation of the Contract
- PE can be used to show the contract doesn't yet operate or that it has cease to operate
- Pym v Campbell
- Evidence as to Parties
- PE can be used to show in what capacities the parties contracted
- Aid to Construction
- Where the words of contract are clear
- PE can't be used to explain their meaning - unless they have a special meaning by custom
- PE CAN be used to explain words/phrases which are ambiguous/technical or don't make sense
- PE can't be used to explain their meaning - unless they have a special meaning by custom
- Where the words of contract are clear
- To Prove Custom
- Smith v Wilson
- Evidence was admitted of a local custom to show that 1,000 rabbits meant 1,2000 rabbits
- Smith v Wilson
- Rectification
- document may fail in accurately recording the true agreement
- Equity allows written contract to be rectified by PE
- Collateral Contract
- Although PE can't be used to vary/add terms of written contract - may be possible to show that parties made 2 related contracts
- 1 written, 1 oral (collateral contract)
- City & Westminster v Mudd
- 1 written, 1 oral (collateral contract)
- Although PE can't be used to vary/add terms of written contract - may be possible to show that parties made 2 related contracts
- Written agreement - wasn't the whole agreement
- Record of transaction is embodied in document
- Representations & Terms
- 1st step in determining terms of contract - esb. what the parties said/wrote
- Statements made during course of neg. may be classed as representations or terms
- if one turns out to be wrong - plaintiffs remedy depends on how the statement is classified
- Representation
- statement of fact made by one party which induces the other to enter into contract
- If its incorrect - innocent party may sue for misrepresenation
- Breach of a term
- entitles injured party to claim damages
- If been deprived substantially - can also reject contract
- If statement isn't a term of the contract - possible it can be enfaced as a collateral contract
- How can courts decide if a statement is a term or representation?
- Test est. in Heilbut, Symons & Co v Buckleton 1913
- Held: Intention is the overall guide as to if a statement is a term of contract
- When deciding if a statement is a term or rep courts consider 4 factors
- TIMING
- Court considers lapse of time between MAKING STATEMENT and contracts CONCLUSION
- If interval is short - statement is more likely to be a TERM
- Routledge v Mckay
- Court considers lapse of time between MAKING STATEMENT and contracts CONCLUSION
- IMPORTANCE OF STATEMENT
- Court will consider importance of statement
- May be so important that if it hadn't been made - injured party wouldn't have entered in contract at all
- Bannerman v White
- Court will consider importance of statement
- SPECIAL KNOWLEDGE/SKILLS
- Court will consider if maker of statement had specialist knowledge
- OR
- if they were in a better position than the other party to verify the statements accuracy
- SPECIAL KNOWLEDGE/SKILLS
- Court will consider if maker of statement had specialist knowledge
- OR
- if they were in a better position than the other party to verify the statements accuracy
- Oscar Chess v Williams
- **** Bentley Productions v Harold Smith Motors
- if they were in a better position than the other party to verify the statements accuracy
- OR
- Court will consider if maker of statement had specialist knowledge
- SPECIAL KNOWLEDGE/SKILLS
- Oscar Chess v Williams
- **** Bentley Productions v Harold Smith Motors
- if they were in a better position than the other party to verify the statements accuracy
- OR
- Court will consider if maker of statement had specialist knowledge
- REDUCTION OF TERMS TO WRITING
- Court will consider if statement was omitted in a later, formal contract in writing
- If written contract doesn't include statement - suggests that parties didn't intend statement to be a contractual term
- Routledge v McKay
- Court will consider if statement was omitted in a later, formal contract in writing
- TIMING
- Test est. in Heilbut, Symons & Co v Buckleton 1913
- Traditionally terms have been divided into 2 categories
- Conditions
- Major term which is vital to main purpose of contract
- If term is described in contract as a condition - isn't conclusive
- Schüler v Wickman
- If term is described in contract as a condition - isn't conclusive
- Breach of a condition - entitles injured party to reject contract and claim damages
- Injured party may also choose to go on with contract despite breach and recover damages
- Poussard v Spiers
- Major term which is vital to main purpose of contract
- Warranties
- Less important term
- Breach of warranty - give injured party right to claim damages
- Bettini v Gye
- Intermediate Terms
- May be impossible to classify term in advance as a condition or warranty
- May need to see consequence of a breach
- If breach of terms results in severe loss & damage - injured party can repudiate contract
- If breach - minor loss - injured party - damages
- These intermediate terms - innominate terms
- Hong Kong Fir Shipping v Kawaski
- These intermediate terms - innominate terms
- May need to see consequence of a breach
- May be impossible to classify term in advance as a condition or warranty
- Conditions
- IMPLIED TERMS
- In most contract primary obligation of parties are contained in express terms
- There are various circumstances where extra terms may be implied into agreement
- Terms implied by CUSTOM
- Terms may have been negotiated against background of customs of a particular locality/trade
- Parties automatically assume their contract will be subject to these customs - and don't deal with this specifically in contract
- Hutton v Warren
- Terms may have been negotiated against background of customs of a particular locality/trade
- Terms implied by the COURT
- Intention of Parties/Terms implied as Fact
- Courts will be prepared to imply term into contract to give effect to obvious intention of the party
- Sometimes the point of issue had been overlooked or parties failed to express their intention clearly
- The Moorcock
- Relationship between Parties/Terms implied by Law
- In certain relationships and contracts, the law seeks to impose a model or standardised set of terms as a form of regulation
- Such terms arise from the relationship between the parties will be implied by law
- Liverpool City Council v Irwin
- Intention of Parties/Terms implied as Fact
- Terms implied by STATUTE
- Sale of Goods Act 1979 s.12, 13, 14, 15
- Supply of Goods & Services Act 1982 s.13, 14, 15
- In most contract primary obligation of parties are contained in express terms
- PAROL EVIDENCE RULE
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