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0105terms And Standard Form Contract

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terms and standard form contract

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0105terms And Standard Form Contract

  1. 1. Terms and Standard Form  Contract
  2. 2. Terms • Terms in the contract are obligations that the Terms in the contract are obligations that the  contracting parties are to fulfill.  • Terms which are against the statutory Terms which are against the statutory  regulations may render the contract void • Terms that are legally unfair may be Terms that are legally unfair may be  unenforcible • It is therefore important that terms are to be It is therefore important that terms are to be  clearly understood by contracting parties  before they sign on the agreement. 
  3. 3. When terms are broken When terms are broken • When the terms in the agreement are broken When the terms in the agreement are broken  by a party, the other party may seek for  remedies through legal action.  remedies through legal action • When terms are broken, it may lead to impact  including lawsuits and ill feeling between  including lawsuits and ill feeling between parties. This may further lead to termination  of relationship between parties and both may  of relationship between parties and both may incur expenses for costly legal tussles. 
  4. 4. Representation and Representation and terms • Statements made during the process of made during the process of  negotiation that leads to formation of a  contract can be either contract can be either – A representation,  something said before the  contract – A term in the contract                           • Representation Not written in the contract Representation – Not written in the contract • Terms – Written in the contract            Pg 104
  5. 5. Remedies • Different remedies are available depending on Different remedies are available depending on  whether  – A term is broken; or ; – A representation is untrue ‐ misrepresentation • You can claim for breach of contract if the   statement is not true and it becomes a term of  the contract  • Usually, lesser remedy is given to  representation than terms in contract    Pg 104
  6. 6. A person with special knowledge A person with special knowledge • If the statement made by a person with If the statement made by a person with  special knowledge, it is more likely to be  treated as a contract term treated as a contract term Page 105 P 105
  7. 7. Express terms Express terms • Legal agreement must be complete in its Legal agreement must be complete in its  terms to be a valid contract • When an agreement appears vague or When an agreement appears vague or  incomplete, the court will seek to uphold it by  looking at the intention of the parties looking at the intention of the parties Page 105
  8. 8. Oral evidence Oral evidence • Parol evidence rule – When a contract is in writing, and all the necessary  terms are present, the court will interpret the terms  of the contract by reference to the written document  of the contract by reference to the written document only except – Oral evidence may be given of trade practice or  custom – The parties may agree orally that their written  consent should not take effect until a condition  precedent has been satisfied precedent has been satisfied – The document is not intended to comprise all the  agreed terms                                            Page 106
  9. 9. Discuss • Activity 1 Pg 107 Activity 1, Pg 107
  10. 10. Standard form contract  Pg 51 Standard form contract – Pg 51 • The standard form contract is a standard The standard form contract is a standard  document containing terms and conditions on  which they contract with their customers.   which they contract with their customers • Th i di id l The individual must usually take it or leave it  ll k i l i probably because the supplier is the only  supplier in the market. li i h k
  11. 11. Standard form contract Standard form contract • For example you have no choice but to sign on For example, you have no choice but to sign on  the standard form contract if you want to  advertise in, say, newspaper or TV station even  , y, p p though if you don't agree with some of the terms. • One of the problems with standard form contract  is that the dominating party tries to exclude  is that the dominating party tries to exclude liability for the terms in the contract Pg 115 Pg 115
  12. 12. Exclusion clauses Exclusion clauses • A clause in a contract to exclude liability or to A clause in a contract to exclude liability or to  restrict it by limiting damages • Also known as exemption clause Page 115 g
  13. 13. Statutory safeguard Statutory safeguard • To protect consumers To protect consumers • Statutory safeguard provided by the Unfair  Contract Terms Act 1997 Contract Terms Act 1997 • The courts – protect consumers from the  harsher effects of exclusion clause in 2 ways: h h ff f l i l i 2 – Exclusion clause must be incorporated into a  contract before they have legal effect; b f h h l l ff – Exclusion clause are interpreted strictly        Pg 115 
  14. 14. Unfair contract terms contract terms • Voidable by statute Voidable by statute – E.g. A clause which exclude death or personal  injury resulting from negligence is void      Pg 121 injury resulting from negligence is void Pg 121 – Anti‐competition • Test of reasonableness Test of reasonableness – E.g. A person cannot introduce a clause restricting  his liability for negligence unless the terms is  his liability for negligence unless the terms is reasonable                         Pg 121
  15. 15. Consumer protection Consumer protection • The law also seeks to protect consumers who are  e a a so see s to p otect co su e s o a e usually the weaker party to the contract from the  full force of exclusion clauses.  • The person who uses a standard form contract in  dealing with a consumer cannot, unless the term  is reasonable, restrict liability for his own breach.  i bl t i t li bilit f hi b h • For example, a clause attempts to restrict liability  for other loss or damage arising from negligence  for other loss or damage arising from negligence is void unless it can be shown to be reasonable.  Pg 121 Pg 121
  16. 16. Contractual documents Contractual documents • Where the exclusion clause is contained in an Where the exclusion clause is contained in an  unsigned document it must be shown that this  document is an integral part of the contract  and is one which could be expected to contain  terms                            • See Chapelton v Barry UDC 1940 • See Thompson v LMS Railway 1930 Pg 113
  17. 17. Signed contracts Signed contracts • If you sign a document containing a term you If you sign a document containing a term, you  are held to have agreed to the term even if  you had not read the document you had not read the document • But this is not so if  the other party puts  forward the document for signature gives a  forward the document for signature gives a misleading explanation of the term’s legal  effect               effect Page 116
  18. 18. Discuss • Activity 4 page 117 Activity 4, page 117
  19. 19. Unsigned contracts and notices Unsigned contracts and notices • Each party must be aware of the contract’s Each party must be aware of the contract s  terms before or at the time of entering into  the agreement if they are to be binding the agreement if they are to be binding • Exception:  – Wh b th When both parties had consistent dealings; or ti h d i t t d li – When both party sufficiently aware of the terms  at the time making the latest contract at the time making the latest contract Page 117
  20. 20. Discuss • Activity 5 page 118 Activity 5, page 118 • Activity 6, page 118
  21. 21. Onerous terms Onerous terms • E g fine print E.g. fine print • Unusual terms should be highlighted • Failure to do so may mean that it does not  il d h i d become incorporated into the contract Page 119
  22. 22. Discuss • Activity 7 page 119 Activity 7, page 119
  23. 23. Assignment 1  Claim 4 Assignment 1 – Claim 4 • Discuss – 2a – 2b
  24. 24. Claim 4  Claim 4 ‐ Plaster • Keith tendered for the contract to supply plaster  pp y p 300 tonnes at $5,000 per tonne to John • Agreement:  – John cannot buy plaster from other supplier  h b l f h l – Keith did not undertake quality or fitness of plaster  and no compensation if plaster is unsatisfactory p p y • John wanted to – discontinue supply on the unsatisfied fourth delivery – Switch to Fred for plaster at lowe price h df l l • Keith seeked injunction, payment of 4th payment  and loss of profit on future 220 tonnes and loss of profit on future 220 tonnes
  25. 25. Discuss Based on the case given, Based on the case given • Analyse the importance of terms in the  contract • What are the impact when terms are broken? • Analyse and apply the law of standard form  contract Relate to case  Relate to case

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