Terms of a contract

• Terms can be express or implied
• Express terms are terms that are actually agreed by the parties

  themselves.
• Implied terms, are terms that you have not explicit but incorporated by the law
• Conditions– go to the heart of the agreement. If broken,

  contract is over (Poussard v Spiers)
• Warranties– less important, any breach results in damages

  awarded but contract continues (Bettini v Gye)
• Innominate terms – unclear whether they are a condition or a

  warranty. Look at the effects of a breach – Hong Kong Fir
• Terms implied into a contract by common law

  1. Business efficiency / Officious bystander test

  • Business efficiency – Is the term necessary to make business sense? (The Moorcock)

  • Officious bystander test – If a bystander was there, would they have suggested the term. So, the

  term must be obvious for both parties!

  (Shell UK)
• Terms implied into a contract by common law:

  2. By custom / prior dealings of the parties

  ▪ By Custom– much of English law is based on custom so this can be evidence of the types of terms

  that should be in the contract. Hutton v Warren,
• Terms implied into a contract by common law:


  ▪ By prior dealing- Prior conduct of the parties may indicate terms to be implied -( Hillas v Arcos)
• Terms implied by statute

  Consumer Rights Act 2015


  This Act is designed to protect the consumer as they are

  seen as the weaker party

  The Act covers the rights of consumers for contracts

  regarding goods and services.
• The Consumer Rights Act 2015- Provides 3 key protections to consumers if they enter any contract for goods

  1. That the goods will be of satisfactory quality – section 9
  2. That the goods will be fit for purpose– section 10
  3. That the goods will be as described
• Section 9

  Goods must be of SATISFACTORY QUALITY

  What would a reasonable person consider to be satisfactory given the

  price, description and other circumstances. (objective test)

  Satisfactory quality includes:

  • their state and condition
  • fitness for purpose
• Section 10:

  Goods must be FIT FOR PURPOSE

  • The consumer must have relied on the skill and judgment of the
  • trader and it must have been reasonable for them to do this.
• Section 11

  Goods must be AS DESCRIBED

  (Moore & Co Ltd)
• Section 20 = reject
• Section 23: Repair/replace
• Section 24: Reduce/reject
• Consumer Rights Act 2015: Contracts for SERVICES


  Section 49- That the service will be performed with reasonable

  care and skill

  Section 52- That the service will be performed within a

  reasonable time
• Section 55 – REPEAT

  The right to require repeat performance

  The repeat performance must be done within a reasonable time and without

  significant inconvenience to the consumer.

  ➢The trader must bear any necessary costs
• Section 56 – REDUCE

  The right to a price reduction

  The refund must be given within 14 days.
• Common law controls on Exclusion Clauses-

  Construction

  Any ambiguity in terms of the meaning of the clause will be read

  against the party who placed the clause in the contract, this is

  known as the contra proferentem rule. This prevents terms being

  given too wide a meaning – White v Warrick

  Clear words in the exclusion clause must be used. Term must be

  prominent and clear – Thornton v Shoe Lane
• Common law controls on Exclusion Clauses-

  Valid Incorporation

  ➢By signature (if you sign a document you are legally

  bound by it)

  ➢By notice (if you have been told about the exclusion

  clause)

  ➢By a previous course of dealing
• Signature: Sign something, bound by it. (Curtis v Chemical Cleaning)
• Common law controls on Exclusion Clauses

  Incorporation- Notice

  the greater the effort should be to bring it to the parties attention before the contract is made known as the “red hand rule”.

  Olley v Marlborough Court house
• Common law controls on Exclusion Clauses

  Incorporation- previous dealing

  McCutchensen v David McBryne
• Unfair Contract Terms Act 1977

  ❑Section 2 (1) - a person cannot exclude liability for death or personal injury

  caused by negligence.

  ❑Section 2 (2) – in the case of other loss or damage, a person cannot exclude their liability for negligence

  ❑Section 11 (5) – the person who relies on the clause must show it is reasonable in all the circumstances Warren v Trueprin
• Unfair Contract Terms Act 1977


  Section 3 –imposes a reasonableness test: (Smith v Eric S Bush)
• Consumer Rights and Exclusion Clauses

  Section 31 Consumer Rights Act 2015

  A trader can NEVER exclude or limit liability with respect to

  s.9 (satisfactory quality), s.10 (fit for purpose), or s.11 (as

  described)
• Section 57 Consumer Rights Act 2015

  A trader can NEVER exclude or limit liability with respect to

  s.49 (care & skill), s.52 (reasonable time