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Terms - Coggle Diagram
Terms
Implied terms
Implied by fact
Business efficacy test - A term must be necessary to give the contract 'business effect', otherwise it will not be implied - Luxor Ltd v Cooper [1941] (Lord Wright)
--(1) Based on parties' likely intention (It must be so obvious...), (2) business efficacy test
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Implied by custom
This is when there is a "universal application" of a term in a particular business or transaction or market/trade/business custom -- either nationally or locally (Implicitly)
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Implied 'bona fide'
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However, Yam Seng v ITC [2013], found that in context of a “longer term relation between the parties”, it was necessary that there be a “substantial commitment”, for contractual business efficacy = Bona fide was implied
In Walford v Miles [1992], 'a duty to negotiate in good faith' was rejected.
Terms are implied for construction and interpretation, "filling in the gaps"
Classification of terms
Conditions
Intention
L. Schuler v Wickman Machine Tools [1973] --The court will not always readily accept the parties' wording
These are very important terms -- "a substantial ingredient in the identity of the thing sold” -- (Couchman v Hill [1947], Scott LJ)
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Cases
Foussard v Spiers and Pond [1876] - An opera singer (on a 3month contract) missed 'opening night' + the next four nights. Held - Her performance have was a 'condition' (as opening night is the most important performance)
Warranties
Cases
Bettini v Gye [1875-76] - Bettini (performer) was to perform from March-July, and be in town 6 days before rehearsals. Held: His arrival 2 days before is a 'warranty' because this term wasn't at the "heart of the contract"
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Innominate terms
These are hybrid terms which are neither conditions nor warranties. They consider the "consequences" of the breach
Cases
Bunge [1981] — Innominate terms should only be used when impossible to classify as Condition/Warranty w/ reference to the Term itself
Hong Kong v Kawasaki [1962] - A ship being out of service for 20 weeks of a 2 year contract was not "sufficient deprivation", so interpretation viewed it 'akin to a warranty' (i.e. could claim damages)
Express terms
These are terms which are agreed specifically by the contracting parties and those set out in the contract in writing or orally.
Signature = Assent to the terms of a contract, even if the party hasn't read it, unless fraud (L’Estrange v E. Graucob Ltd [1934]) or misleading (Curtis v Chemical, 1951)
Reasonable man - Interpretated based on what a party with all the background knowledge, in the context of 'business common sense' would have thought
What it is not
Mere "Puffs"
This is an exaggerated statement that no reasonable person would believe to be true. They have no legal status
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Cases
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An opinion (from an uninformed seller to an informed buyer) is generally a 'mere puff' - Bissett v Wilkinson [1927]
Representations
This is a factual statement that induces a person to enter into the contract, but does not form part of the contract.
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General
Definition: Any statements made that form a part of the contract (The promises in pre-contractual statements, which will be a part of a contract if one is formed)
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Parol evidence rule
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Cases
—Prenn v Simmonds [1971]
Extrinsic evidence may be admitted to explain the background, but not to demonstrate the parties’ subjective intentions.
J. Evans v Merzario [1976]
—Where a written contract wasn’t intended to set out all the terms on which the parties had actually agreed, extrinsic evidence is admissible
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