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Terms & Exemption Clauses (Classification (Condition (Termination and…
Terms & Exemption Clauses
Incorporation
Implied
In fact
Will not imply a term contrary to express term (
Trollope Colls v North West Regional Hospital Board
)
Consider
Trade/professional customs
Gives effect to trade custom (
British Crane Hire v Ipswich Plant
)
Can be expressly excluded
Course of dealing between parties
Where parties have followed a consistent and regular pattern may imply term to that effect (
McCutcheon v MacBrayne; Hollier v Ramblers Motors
)
Business efficacy
Term implied to allow contract to be efficacious (
The Moorcock
)
Officious bystander test (
Shirlaw v Southern Foundries
)
Cannot imply a term that one party was unaware of being sought after (
Spring v National Amalgamated Stevedores and Dockers Society
)
Self-interest and cooperation
Will not imply terms to enforce a reliance on cooperation from other party, particularly where it affects economic interests (
Suisse Atlantique Sciete d'Armament Maritime v Rotterdamsche Kolen Centrale
)
As a matter of law
Common Law
Terms necessary for type of contract
e.g. lease like contracts (
Liverpool City Council v Irwin
)
Statute
SGA 1979
s. 12- Implied terms as to title
s. 13- Correspondence with description
Even displayed goods can be sold by description (
Grant v Australian Knitting Mills Ltd
)
Does a particular item in a description constitute a substantial ingredient of item being sold (
Reardon Smith Line Ltd v Hansen Tangen
)
Advertisment can constitute description (
Beale v Taylor
)
s. 14(2)- satisfactory quality
Can be self-evident fitness for purpose (
Priest v Last; Grant v Australian Knitting Mills Ltd
)
Durability entails a continuing warranty that the goods will be fir for purpose a reasonable time after delivery (
Lambert v Lewis
)
s. 14(3)- fitness for a particular purpose
Unless unreasonable to rely on skill/judgment of the seller as in
Balmoral Group Ltd v Borealis Ltd
s. 15- Sale by sample
SGSA 1982
s. 13- Reasonable care and skill
s. 14- Carried out in a reasonable time
s. 15- Consideration not determined in contract implies payment of a reasonable charge
Express
Is it a term or rep?
Importance of statement
Injured party considered it so important that they would not have entered into the contract but for that statement (
Bannerman v White
)
Timing
The shorter the delay between the statement and entering into the contract, the more likely it is to be a term (
Routledge v McKay
)
Reduction of contract into writing
If contract is reduced to writing and the previous statement was not included as a term it is exceptionally unlikely that the statement will be classed a term (
Routledge v McKay; Inntrepreneur Pub Co v East Crown c.f. Birch v Paramount Estates
)
Special knowledge or skill
Where the party who made the statement had exclusive access to information or special knowledge compared with the other party, this is likely to be taken into the latter's favour (
Oscar Chess Ltd v Williams c.f. Dick Bentley v Harold Smith
)
Assumption of responsibility
A statement may become a term of the contract where the vendor expressly accepts the responsibility for the soundness of the sale item in question (
Schwael v Reade c.f. Hopkins v Tanqueray
)
Parol Evidence Rule
Extrinsic evidence, oral or otherwise, may not be adduced which seeks to add, vary or contradict terms of a written contract (
Jacobs v Batavia & General Plantations Trust
)
Exceptions
Part written/part oral contracts
Where written agreement is not whole agreement the PER does not apply (
J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd
)
Collateral contracts
Two contracts: written (PER applies) and oral (PER does not apply) (
Heilbut Symons & Co v Buckleton
)
N.B. consideration for oral promise is entering into written agreement
Not necessarily the same parties for both contracts (
Shanklin Pier v Detel Products
)
Oral can contradict written (
City and Westminster Properties v Mudd
)
Entire agreement clauses
Attempt to remove chance of claims that previous negotiations are terms (
Inntrepreneur Pub Co v East Crown
)
Resisted where seen as an attempt to avoid liability for misrep (
Axa Sun Life Services plc v Campbell Martin Ltd and others
)
Onerous or unusual terms
Where a term is particularly onerous or unusual, and would not generally be known to other party, must show it has been fairly and reasonably brought to the attention of the other party (
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd
)
Classification
Condition
Term runs to the root of the contract (
Poussard v Spiers
)
Termination and damages available
Right of election (
Santa Clara
)
Warranty
Term does not run to the root of the contract (
Bettini v Gye
)
Innominate term
Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd
test
Does the breach of the term deprive the party of substantially the whole benefit of the contract?
Yes
No
Terms implied by SGA 1979 are classified in statute
Timing clauses are not immediately conditions
If 'time is of the essence' then condition (
Bunge Corporation v Tradax
)
Can make timing clause a condition by serving notice that time has become 'of the essence' (
Charles Rickards Ltd v Oppenhaim
)
Classification by parties not always decisive (
Schuler v Wickman Machine Tool Sales
)
Exemption clauses
Incorporation
Signature
Signature binds (
L'Estrange v Graucob
)
Exceptions
Overriding oral assurance
Orally misrepresented meaning of clause to other party (
Curtis v Chemical Cleaning and Dyeing Co; Axa Sun Life Services plc v Campbell Martin Ltd and others
)
Nature of document
If document signed does not have contractual effect (
Grogan v Robin Meredith Plant Hire
)
Non est factum
If signed through fundamental mistake, of no fault of their own, common law remedy of non est factum may make contract void (
Saunders v Anglia Building Society
)
Course of dealing
Must be shown that course of dealing has been:
Consistent (
McCutcheon v David MacBrayne)
Regular (
Hollier v Rambler Motors
c.f
. Harry Kendall & Sons v WIlliam Lillico & Sons Ltd
)
TIming
Notice must be given before or at time of contracting (
Olley v Marlborough Court Hotel
c.f.
Thornton v Shoe Lane Parking
)
Cannot be incorporated through a document not reasonably expected to have contractual force (
Chapelton v Barry Urban District Council
)
Notice
Must show took reasonable steps to bring clause to attention of other party (
Parker v South Eastern Railway Co
)
More onerous/unusual clauses require higher degree of notice (
Thornton v Shoe Lane Parking; Spurling v Bradshaw
)
If clause rendered illegible then is unlikely to be incorporated (
Sugar v London, Midland & Scottish Railway
)
If clause is not immediately visible must clearly direct to it (
Thompson v London, Midland & Scottish Railway c.f. Henderson v Stevenson
)
Cannot deliberately attempt to give notice by method it is known the other party cannot understand (
Harvey v Ventilatorenfabrik Oelde GmbH
)
Construction
Contra proferentum (
Andrew Brothers (Bournemouth) Ltd v Singer & Co
)
Applied with less rigour where clause merely limits liability as opposed to excludes (
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co
)
Very limited role in commercial contracts negotiated between parties of equal bargaining power (
Persimmon Home Ltd v Over Arup & Partners Ltd
)
Exemption clauses for negligence
Canada Steamship Lines v R
test
Does the clause expressly mention negligence or a close synonym? (
Monarch Airlines v London Luton Airport
)
Yes
Allow clause (subject to UCTA)
No
Are the words used wide enough to include negligence?
Yes
Are they too wide? Could the clause be meant to provide protection from some other head of liability? (
White v John Warwick; Caledonia Ltd v Orbit Valve Co plc
c.f.
Alderslade v Hendon Laundry
2 more items...
No
No exclusion of liability for negligence
Statutory Controls
UCTA 1977
Exemption clauses which have no effect
Exempting liability for death or personal injury resulting from negligence (s 2(1) UCTA 1977)
Negligence (s 1(1) UCTA 1977):
Any obligation, arising from express or implied terms, to take reasonable care or exercise reasonable skill in performance
Any common law duty to tae reasonable care or exercise reasonable skill
Common duty of care imposed by OLA 1957
Exempting liability for breach of statutory implied terms about title to goods (s 6(1) UCTA 1977)
Exemption clauses which are effective only if deemed reasonable
Exempting liability for breach of statutory implied terms about quality of goods (s 6(1A)(a) UCTA 1977)
Exempting liability arising in contract
Exclude or restrict liability for breach of contract (s 3(2)(a) UCTA 1977)
Claim to be entitled to render contractual performance substantially different from that which was reasonably expected (s 3(2)(b)(i) UCTA 1977)
Even where standard terms were subject to negotiations as long as mostly unchanged (
St Albans City Council v International Computers Ltd
c.f.
The Flamar Pride
Even if limitation clauses are from a party's standard terms even if negotiated or come from another party (
Commercial Management (Investments) Ltd v Mitchell Design and Construct Ltd
)
Claim to be entitled to render no performance at all regarding whole or part of the contract (s 3(2)(b)(ii) UCTA 1977)
Reasonableness test set out in s 11 and sch 2
Equality of bargaining power important (
Watford Electronics Ltd v Sanderson CFL Ltd
)
Exempting liability for loss resulting from negligence (s 2(2) UCTA 1977)