Contents of a contract

• Essentialia


  Terms that identify a contract as a specific contract - terms that must be present in a contract in order for it to be classified as a specific type of contract
• Essentialia of a lease


  • The object being leased
  • The length of the lease
  • The amount of rental payable
• Naturalia


  Terms that are implied into a special contract by the law - terms that the law automatically reads into specific types of contracts
• It is possible for parties to change naturalia terms by agreement
• Incidentalia


  Other terms that the parties have agreed to - terms which the parties have agreed to, but are neither essentialia or naturalia
• Express terms


  Terms which are put into words or given some physical form by the contracting parties - can be expressed in writing or verbally - an express term can also be the conduct of a contracting party
• Reducing a contract to writing is always advisable as it is easier to adduce evidence in the event of a dispute
• Parol evidence rule


  The written contract becomes the full record of the agreement - parties are not allowed to submit other external evidence, such as prior agreements
• Incorporation by reference


  It is possible to incorporate terms into a contract that are written down on a separate document by simply referring to that document in the primary contract
• Implied terms


  Contracting parties do not expressly agree to these terms, but are read into the contract either by the law or trade usage
• Terms implied by the law


  Since the law regards these terms as implied, it is not necessary for the contracting parties to agree to them expressly - however, if the parties do not want these terms to be a part of the contract, they can remove them by agreeing to vary the implied terms
• Terms implied by trade usage


  Trades and professions develop ways of doing their business, therefore there are terms that are well-known and universally understood as part of every contract in that trade - in a dispute about the application of these terms the court will require compelling evidence of the trade usage
• Tacit terms


  Sometimes parties don't think about or expressly agree on what their contract will say in a particular situation - parties may have intended to include a term but did not expressly include it because it seemed so obvious that the parties did not deem it necessary
• Officious bystander test


  If a contract needs a particular term for it to be effective, and the law believes that the particular term is obvious and that the parties would have agreed to it, the term will be read into the contract
• Imposed terms


  Terms that the parties are forced to include in their contracts, either by law or because one party will not enter the contract unless the term is included
• Terms imposed by law


  There is legislation that requires specific contracts to include certain terms - these are terms that the parties cannot change - they are part of the contract even if the parties did not agree to them
• Terms imposed by the parties


  Terms can be used by one or more contracting parties, such as in a written contract, where a party refuses to sign unless certain terms are included
• Caveat subscriptor


  A sign at the entrance of a parking lot "parking at owner's risk" or a note on the back of a drycleaning ticket, "the dry-cleaning company is not responsible for any loss or damage" - examples of unsigned contracts where one of the parties tries to impose a term on the other contracting party, but the second party does not sign the contract
• When the other contracting party has seen the term and agreed to it, then the term is part of the contract
• If the party claims not to have seen the term, the party will still be bound if the other contracting party took reasonable steps to bring the term to the customer's attention
• Factors used to determine if a party took reasonable steps to bring a term to the customer's attention (in the case of a ticket)

  • Timing - the customer must receive the ticket before the contract is concluded
  • Type of document - if the type of document is not one where a customer would reasonably expect to find terms, the owner or supplier must take steps to bring them to the attention of the customer
  • Location and timing - the notice must be prominently displayed at the entrance to the premises or at a place where the customer is able to see it before the conclusion of the contract
  • Legibility - the writing must be legible and conspicuous
• Plain meaning of the words


  The courts will try to give the words in a contract their ordinary-grammatical meaning - if a word has been used in a special way, the court will interpret it in that way - if the plain meaning is inconsistent with the context and purpose of the contract, the court will limit reliance on the plain meaning of the words
• Context


  The court will look at the meaning of a term in the context of the contract as a whole, and the circumstances surrounding the contract to determine the purpose - words cannot be interpreted separately from the context
• If a contract can be interpreted in 2 ways, the court will choose to interpret it in a way that upholds the contract
• The court will interpret a contract in a way that causes as little inconvenience as possible
• Contra proferentem rule


  If it is clear which party drafted the contract, then the court will interpret the term or contract in a way that works against the interests of the party who provided the wording
• Ultimately, the court's interpretation of the express terms must yield the intention of the contracting parties - if after all these factors are considered, the court still cannot interpret a term of a contract, that term will be void for vagueness