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Pre-Contractual
Statement (Standard Form agreement
mass-produced…
Pre-Contractual
Statement
Pre-contractual Representation
(statement of existing fact)
- A statement one party make by word or conduct to induce contract formation
- NOT form part of contract nor impose any obligation
- If statement is false -> one pt make misrepresentation
Factual statement (actionable as misrepresentation)
- Stm stated as a fact e.g I bought the car for 100
- Expert opinion
- Describe present intent e.g "I don't intend to sell to X" to persuade Y to buy
- Stm of legal consequences e.g state zoning approval has been granted
:star: Deceived pt must prove that false stm induce the contract
:check: 2 remedies
Rescission
cancel contract and restore pts to pre-K state, i.e remedy: X could seek rescission
- often coincide with order for Restitution: return of money, land or goods (chap 12 - Unjust Enrichment)
(e.g mua bán hàng ko đạt yêu cầu, 2 bên trả lại hàng và tiền)
- Rescission may be denied if
- Affirmation: misled pt intend to carrty out contract or act as if (e.g biết hàng sai vẫn đặt mua tiếp)
- Restitution is impossible (e.g hàng mua đã xài ko trả lại dc)
- affect 3rd pt (e.g You-buy a mall-then lease to tenant)
Damages in Tort: money for losses from negligence or fraud. i.e remedy: X could seek damage in Tort, based on the dif in value between ... and ...
Misre. type
Innocent misre.
- A statement made honestly, carefully without knowledge of the fact that is is false [or misleading silence]
- Inducing contract
- Remedy: Rescission, possibly Restitution (?only if there is a substantial dif between what victim bargain for and what obtain actually)
Negligent misre
- A stm made honestly but carelessly or unreasonably [or misleading silence]
- Inducing contract, ?cause a loss not always sufficiently remedied by rescission
- Remedy: Rescission of contract, possibly Restitution, Damage in Tort (chap 6)
Fraudulent misre.
- Make a stm that they know is false or have no reason to believe is true [or misleading silence)
- Inducing contract, ?cause a loss not always sufficiently remedied by rescission
- Remedy: Rescission of contract, possibly Restitution, Damage in Tort (chap 5 - tort of deceit)
:check:Silence as Misrepresentation when
- Silence distort previous assertion
- stm is a half-truth
- contract require a duty of utmost good faith i.e make full disclosure of material facts (was X's failure to disclose medical history a breach of his duty of utmost good faith and therefore a misre through silence)
(e.g insurance customer must disclose illness)
- special relationship between parties
(e.g employer - employee)
- statute require disclosure
- facts are actively concealed
(e.g car vendor hide evidence of damage)
Non-factual statement
(NOT actionable as misrepresentation)
- Personal opinion, base on speculation, the car is worth 100
- Describe future intent
- Stm of law e.g zoning law not applied to this property -> pt B should be able to figure out itself
Contractual Term
(promise of future performance)
- A statement is CT only if it included in the agreement as a enforceable obligation
- A statement is intented by both pts
- If statement is false -> one pt is in breach of contract (remedy - chap 12 - compensatory damage)
:check:Express Term
- A stm (oral or written) that a reasonable person would believe was intended to create enforceable obligation
Proof
- Oral agreement: difficult to prove the term
- :check:Parol Evidence rule: oral evidence cannot vary written terms, i.e not enforceable, exceptions:
- to fix a mistake in contractual document
- to prove contract is never formed or defective
- to resolve ambiguities in the document
- to show that a document does not contain complete agreement
- establish a collateral contract: a separate agreement (pt A make in exchange for pt B's entry into the main contract e.g contract goods with normal quality + contract with specific quality)
Interpretation word of Express Term
- Literal approach: use ordinary meaning
- Contextual approach: use pt presumed intention and their circumstance
- Golden rule of interpretation: word will be give plain, ordinary meaning unless it result in absurdity
- Contra proferentem rule: ensure the meaning least favorable to the author will prevail (exist)
Implied Term
arise by law
Implied by Court
is necessary when
- It's an obvious consequence of the agreement
- Or It is required for the purpose of business effectiveness
e.g Court imply term that goods must be returned in same condition in lease contract, or require employer to provide reasonable notice before dismissing employee, even if agreement expressly say that employee can be dismissed without notice
Implied by Statue
- A statutory term will NOT apply if pt expressly exclude it
e.g Consumer Protection Law imply goods being sold are new and unused, unless otherwise described
Standard Form agreement
mass-produced document
drafted by pt who offer term
on a "take it or leave it" basis
e.g bank
- Downside: may lack
"the meeting of the minds"
Ticket contract
- Pt A may try to print certain term, including exclusion clause, on the back of a ticket issued to pt B
- Enforcement depend on notice: pt B must be given reasonable notice, based on reasonable person perspective
Signed form
- General rule: ppl who sign are bound by all terms expressed in agreement
- A judge may apply an exception if the customer is required to quickly sign without having a reasonable opportunity to study the terms: pt A is responsible for proving that pt B was given reasonable notice of terms, OR unusual terms without reasonable notice
Boilerplate clause
- A standard provision
that can be reused
- Standard form agreement
often include some boilerplate clauses
Exclusion clause (Waiver)
- a contractual term to protect one party from legal liability
- Will NOT be enforced if it is unreasonable i.e cannot be so broad that rob the contract value, shud be draft as narrowly as possible
e.g security contract exclude liability for fire, theft ...
- is perfectly legitimate if 3 things fulfilled:
- Term must be draft in clear language, otherwise it will be given the least favorable meaning to its author
- pt B must be given reasonable notice and its effect
- pt B agree with exclusion clause (via signature)
Force Majeure clause
- To protect pts when part of contract cannot be performed due to unpredictable event beyond their control
- Should be draft as broadly as possible
Confidentiality clause
- Prevent disclosure of certain agreement info to 3rd party
- Draft narrowly, need to be clear what type of info
Arbitration clause
- Outline who should act to resolve a dispute and what method of arbitration (not litigation) should be used
Jurisdiction clause
- Pre-determine the locale of court and whose law will apply when dispute
Entire Agreement clause
- A provision stating that the entire agreement is contained within 4 corners of the contract
- Parol evidence rule is superseded
How to manage risk ?
- Use standard form that has been test over a period
- Use clear, plain, unambiguous language
- Give reasonable notice of unusual term
- Require customers' initials in a box next to unusual term
Puff
- Exaggerated or unsustainable claim
- (Statement not inducing K)
- No consequence if false
-
:check:Misrepresentation
- A false stm of an existing fact
- Material stm inducing K formation
- Negligent misre: made carelessly or unreasonably
- Fraudulent misre: known to be false
:lock: Phan tich
- "...." was a half truth / fraudulent misre
- Insurance K has to be made in utmost good faith
- X failed to fully disclose medical history
- Y must prove: stm was one of fact (exper opi), it induced Y to enter into K
-
:lock: Phan tich
- K has a writing requirement ..., X' stm was oral, contrary to that writing
- The Parol Evidence rule can be used to: modify the writing req, take into account X' instruction
- X' instruction is a collateral contract inducing X into the main K
- Y was in breach of contract
-