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TERMS - Coggle Diagram
TERMS
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Types of statements
Statements made by the parties during negotiations leading up to a contract can be divided into three groups:
- Mere puffs = statements of no legal significance.
- Statements of fact or law which the parties do not intend to be binding = representations
- Statements of fact which the parties intend to be binding = terms
IF statement is term + unfulfilled = breach of contract + claim for damages
IF statement is representation + untrue = misrepresentation + remedy
Distinguishing term and representation1. Did parties intend statement to be binding?
- Consider: importance, timing, reduction of contract in writing, special knowledge or skill of person making it, assumption of responsibility
- YES = statement is term
NO = representation or mere puff
Statement made during negotiations to induce other party to enter into the contract = termUNLESS rebutted if unreasonable for party to be bound
2. Timing
IF statement was made at the time of contracting = more likely to be term than if it was made at early stage of negotiations.
IF there is a delay between making the statement + parties entering into contract = less likely to be term
3. Reduction of the contract into writing
If written contract contains statement = more likely to be a term
4. Special knowledge or skill
IF party who made statement had special knowledge compared to other party = will favour other party
5. Assumption of responsibility
IF vendor expressly accepts responsibility for soundness of the sale item = more likely to be a term
1. The importance of the statement
IF injured party considered it so important that it would not have entered into the contract but for that statement = term
IMPLIED TERMS
NOT communicated but binding to same extent as express term
There are 2 types:
1. Terms implied in fact
2. Terms implied as a matter of law
1. Terms implied in factGive effect to the presumed but unexpressed intentions of the parties
- IF parties express clear provision in contract = court will not imply term to the contrary.
There are 3 types
a. Trade or professional customs
Term implied on the grounds of a custom > implication based on assumption that it was the intention of the parties to be bound by well-known customs of a particular trade
b. A course of dealing between the parties
Term may be implied on basis that parties have dealt with each other on many regular occasions over a long period of time
c. Business efficacy
Term may be implied to give 'business efficacy' = without it arrangement would be unworkable that sensible people could not be supposed to have entered into it.
Implying terms in fact > ask what reasonable person would understand contract to mean NOT subjective intentions of parties.
No implication of term that reasonable commission would be paid
2. Terms implied as a matter of law
Courts or statute require it, regardless of the intention of the parties.
Can be implied at common law = to give effect to legal duties which arise as a matter of policy out of contractual relationships
Can be applied by statute = as obligations on seller / supplier via Sale of Goods Act 1979, Consumer Rights Act 2015 and Supply of Goods and Services Act 1982
a. Sale of Goods Act 1979Implies a various terms
- DO NOT APPLY to consumer contracts as defined in the Consumer Rights Act 2015
1. Implied terms as to title – s 12
- Implication that seller has right to sell goods
2. Correspondence with description – s13
- Implication that goods described with certain characteristics correspond with that description
3. Satisfactory quality – s14(2)
- Implication that goods supplied under the contract meet standard that reasonable person would regard as satisfactory conidering: fitness for purposes / Appearance + finish / Freedom from minor defects / Safety / Durability
- EXCEPT IF = defect is drawn to buyer's attention before contract was made / buyer examines goods before the contract is made
- Breach = breach of consition
4. Fitness for a particular purpose – s14(3)
- Implication that goods sold in course of business + buyer, expressly or by implication, makes known to seller OR purchase price is payable by instalments, any particular purpose for which goods will be used = they will be fir for that purpose
- EXCEPT IF = buyer does not rely / unreasonable for him to rely on the seller's skill or judgment
- Breach = breach of consition
5. Sale by sample – s15
- Implication that in sale by sample = bulk will correspond with sample quality AND goods will be free from defect making quality unsatisfactory not be apparent on reasonable examination
- Breach = breach of consition
IF condition is breached
- IF breach is so slight that it would be unreasonable for buyer to reject the goods + repudiate the contract = treat breach as a breach of warranty ONLY entitle buyer to damages
- Burden of proving that the breach is slight is on seller
Seller's liability under ss12, 13, 14 and 15 SGA can be excluded / restricted by agreement of the parties subject to Unfair Contract Terms Act
b. Supply of Goods and Services Act 1982Implies various terms on following contracts
- DO NOT APPLY to consumer contracts as defined in the Consumer Rights Act 2015
1. Contracts for the transfer of property in goods
- In contract where one person transfers / agrees to transfer to another the property in goods > same terms for contracts for sale of goods are implied
- EXCEPT FOR: contract of sale of goods / hire purchase agreement / where property in goods is transferred in exchange for trading stamps / transfer made by deed where there is no consideration other than presumed consideration / contract operating as security
2. Contracts for the hire of goods
- In contract where one person bails goods to another by hire > terms implied are: right to transfer possession / hire by description / quality or fitness / hire is by sample
- EXCEPT FOR: hire purchase agreement / where goods are bailed in exchange for trading stamps
3. Contracts for the supply of services
a. Care and skill: supplier will carry out service with reasonable care and skill
b. Time of performance: where time for service to be carried out is not fixed by contract = supplier will carry out service within reasonable time
c. Consideration: where consideration is not determined by contract = party contracting with supplier will pay reasonable charge
Contracts for transfer of goods/ hire of goods / supply of services > supplier may vary implied terms subject to Unfair Contract Terms Act
a. Consumer Rights Act 2015Consumer = acting for purposes outside their tradeTrader = acting for purposes relating to their tradePart 1: consumer contracts for goods, digital content, and services
Part II regulates unfair terms (in consumer contracts).
Part III is of a miscellaneous and general nature.
- Breach of terms = not contract end
Remedies available for each sit alongside ones under general law
1. Contracts for goodsGoods should be:- satisfactory quality
- fit for purpose consumer makes known to trader
- if sold by description should match itRemedies for non-conforming goodsa. The short term right to reject
- Available to the consumer for 30 days from time: ownership has passed + goods have been delivered + if trader is required to install them when trader has notified the consumer the required steps have been taken
b. The right to repair or replacement
- NOT available if impossible or disproportionate
c. The right to price reduction or final right to reject
Consumer is not entitled to both, the remedy may only be exercised where:
- after 1 repair / replacement = goods do not conform OR
- consumer cannot require repair / replacement as it is impossible / disproportionate OR
- consumer has required trader to repair / replace, but the trader doesn't do w/in reasonable time + w/out significant inconvenience to the consumer IF final right to reject is exercised within 6 months (from time ownership has passed etc) = full refund + no deduction for use BUT NOT applicable to motor vehicles / goods specified by statutory order.
2. Contracts for digital contentDigital content should be:- satisfactory quality (reasonable person standard)
- reasonably fit for purpose
- if sold by description should match itRemedies for non-conforming digital content (even w/in 6 months after it was supplied)a. The right to repair or replacement
- W/in reasonable time + w/out significant inconvenience to the consumer
- NOT available if impossible or disproportionate
b. The right to price reduction
-consumer has required trader to repair / replace, but the trader doesn't do w/in reasonable time + w/out significant inconvenience to the consumer
- Full refund w/in 14 daysIF trader supplies non-compliant digital content + which causes damage to a device or to other content of consumer + damage is due to trader's lack of reasonable care and skill = consumer is entitled to repair / compensatory payment
3. Contracts for servicesServices should be:- performed with reasonable care and skill
- if no price is agreed > reasonable price to be paid
- if no time is fixed > provided in reasonable time
- anything said / written to consumer, by trader about trader / service = term if consumer takes it into account when deciding to enter into contract OR when making any decision about service after entering into contract
Remedies for non-conforming servicesa. The right to require repeat performance
- W/in reasonable time + w/out significant inconvenience to the consumer
- NOT available if impossible
b. The right to price reduction
- Repeating performance is impossible OR trader has failed to provide repeat performance w/in reasonable time + w/out significant inconvenience to the consumer