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Distinguishing types of statements in contracts

Question:

Discuss About The Customers To Take Such Statements As True?

No, “OFFICE PRO X9 is an amazing chair, and the best on the market” was not a term of this contract. Not all statements of negotiation are deemed to be contractual terms. Some could be a trader’s puff which is mere boast, often meant to advertise a product and the law does not expect the customers to take such statements as true.[1] The other one is a representation. These are pre-contractual statements which could convert into a term depending on the actions of the client.[2] If a representation turns out to be untrue, and that statement changed the position of the customer, that representation would result in a term hence remedies would be awarded if the untrue statement caused harm to the client. Terms are actual statements that go to the root of the contract. Failure to comply with terms results to a breach.

In distinguishing these statements, the court employs four factors. One of them is the importance of such statement to the contracting parties.[3] Where the statement acts as important to the decision of either of the parties, that statement becomes a contractual term. A case of this is the situation of Ecay v Godfrey [1947].[4] The claimant purchased a boat from the defendant. The claimant assured that the boat was fine though he recommended an examination. Later the review discovered that the boat had some faults. The court ruled that the defendant statement was a representation and the claimant was supposed to rely on examinations.

The next distinguishing factor is the time duration between the pre-contractual statement and the contract. Long interval means the statement was representation while short interval means the statement was a term. A case if this scenario is Routledge v Mckay.[5] On 23rd October, the defendant told the claimant that the bike was a 1942 model when it was a 1942 model. They signed an agreement on 30th which didn’t refer the motorbike date. The court ruled that the “1942 model” statement was a pre-contractual statement, but not a term.

The of the parole evidence rule. In this rule, parties cannot alter a written contract with oral statements.[6] So where there is a documentation of an oral statement, that statement becomes a contractual term. The last one is the parties’ expertise. When one party that has specialist skills makes the statement, and the other party relies on that statement, then the court is more likely to take that as a contractual term.[7] Following these explanations, “OFFICE PRO X9 is an amazing chair and/or the best on the market” fits to be a sales puff or a trader’s exaggerated opinion. Question 2:

The importance of the parties' expertise in making statements

Yes, it was a term that the OFFICE PRO X9 provides sufficient lower-back support to allow Peter to work the whole day comfortably. As explained in question one, anything said by the contracting party which has special knowledge is probably a term.[8] The main reason is that the customer will be using that party’s statement to decide on whether to buy the item or to leave it. Notably, this statement can happen in two ways. One is a direct statement from the dealer.

The other one is a response to the question asked by the customer with the intention of seeking clarification or making the dealer understand what the customer wants. This facts in this case are similar to the case of Dick Bentley Productions v. Harold Smith Motors [1965][9]. In this case, a customer (Claimant) asked the dealer (Defendant) to bring a 'stable Bentley car'. The dealer brought a car claiming that it had done low mileage since the replacement of the engine and gearbox. However, this turned out to be untrue. The court found that the statement of the mileage was a term. The fact is when the customer asks the dealer to provide something with particular features, it then shows that the customer is relying on the dealer’s expertise. That is why the statement “provides sufficient lower-back support to allow Peter to work the whole day comfortably” would also be a term.

In an analysis, “the OFFICE PRO X9 provides sufficient lower-back support to allow Peter to work the whole day comfortably” is an express term, and in the category of pre-contractual statement.

Contractual terms are fundamentally the wordings that form the provision parts of the contract. Each contractual term brings about to a contractual obligation which failure to fulfil results to a breach. In most cases, contracts may not state all the terms expressly. The main reason is that some terms do not hold much legal gravity since they are outside the main objectives of a contract.


There are two essential classifications of contractual terms. These are implied and express terms.[10] Implied terms are those that none of the parties mention them either orally or in writing, but the law deems it that such terms exist to give a commercial contract a sense.[11] The main classifications in implied terms are those implied by the court or those implied by statute. Express terms are those terms which the parties agree to follow either orally or in writing. These terms may be pre-contractual statements.[12] These are statements that fall into different categories depending on their effects on the outcome of the contract. Another type of express term is the terms on display.[13] An example of these is instruction in a ticket produced by a ticket machine. Also, express terms can be incorporated terms resulting from a course of dealing. Express terms may also arise from a signed document, and lastly, express terms may result from the application of the parol evidence rule or where there is admissibility of extrinsic evidence.[14]

Classification of contractual terms: implied and express

With all these facts, it is then possible to see that the “the OFFICE PRO X9 provides sufficient lower-back support to allow Peter to work the whole day” comfortably would be classified as express term, and it would fall in the group of pre-contractual statements.

No, the exclusion clause, clause 10, will not prevent Peter from suing Forever Furniture for breach of contract. Exclusion clauses are one way in which contracting parties try to avoid the liabilities of the breach of a contract. Most companies unfairly enjoyed the power of this clause until 1977 when there was an enactment of Unfair Contract Terms Act 1977.[15] This act was meant to regulate the extent to which parties to a contract can rely on the exclusion clauses. In UCTA, the act provides that a party relying on the exclusion clause has the burden of demonstrating that the clause was in facts reasonable.[16] For one, the party relying on the clause must demonstrate that the clause is fair, and it is reasonable.

Secondly, the party relying on the clause must take into account all the circumstances of that clause and such circumstances should come to the knowledge of the other party.[17] The failure to meet these conditions would render the clause invalid. Thirdly, the clause should include the losses that the other party would be claiming. Failure to include them would render the clause invalid.

An example of the application of this law was in St Albans City and DC v International Computers Ltd [1996][18]. In this case, in this case, the defendant was to supply computer software to the defendant through their contract. The software was erroneous, and it caused a loss of £1.3 million to the claimant. The defendant company relied on a limitation clause that limited the liability to £100,000. However, the court found the limitation clause unreasonable.

Similarly, the limitation clause for Forever Furniture for would not succeed as it would be unfair to waive the liabilities caused by their misrepresentation.

References

Hunter, Richard J., "Compensation For Bystander Injuries In Strict Products Liability" (2016) 3(10) Advances in Social Sciences Research Journal https://10.14738/assrj.310.2239.

"Contractual Interpretation In Indian Evidence Act Jurisdictions: Compatibility With Modern Contextual Approach?" (2013) 13(1) Oxford University Commonwealth Law Journal https://dx.doi.org/10.5235/14729342.13.1.17

Castles, Margaret, "Expanding Justice Access In Australia" (2016) 41(2) Alternative Law Journal https://10.1177/1037969X1604100210

P Hough, Tracey and Kathrin Ku?hnel-Fitchen, Optimize Contract Law (Taylor & Francis, 2016)

Poole, Jill, Casebook On Contract Law (Oxford University Press, 12th ed, 2014)

Stone, Richard, Text, Cases And Materials On Contract Law (Routledge, 2nd ed, 2014)

Austen-Baker, Richard, Implied Terms In English Contract Law (Edward Elgar Pub., 2nd ed, 2017)

Klass, Gregory, Contract Law In The USA (Kluwer Law International, 2nd ed, 2010)

Lawson, R. G, Exclusion Clauses And Unfair Contract Terms (Sweet & Maxwell, 10th ed, 2011)

Routledge v Mckay [1954] 1 WLR 615 Court of Appeal

Ecay v Godfrey [1947] 80 Lloyds Rep 286

Dick Bentley Productions v. Harold Smith Motors [1965] 1 WLR 623

St Albans City and DC v International Computers Ltd [1996] EWCA Civ 1296

[1] Richard J. Hunter, "Compensation For Bystander Injuries In Strict Products Liability" (2016) 3(10) Advances in Social Sciences Research Journal <https://10.14738/assrj.310.2239.>.

[2] Tracey Hough and Kathrin Ku?hnel-Fitchen, Optimize Contract Law (Taylor & Francis, 2016).

[3] Jill Poole, Casebook On Contract Law (Oxford University Press, 12th ed, 2014).

[4] Ecay v Godfrey [1947] 80 Lloyds Rep 286

[5] 1 WLR 615 Court of Appeal

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