Terms.pptx

CONFIDENTIAL
1. Puffs
2. Terms
3. Representations
copyright zen law chambers
PRE CONTRACTUAL STATEMENTS

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1. Puffs
• A puff is a statement which cannot give rise to legal
consequences, as they are never meant to be taken
literally and there is no intention to be legally bound. Carlill
example.
• EXAMPLE:- an advertisement for a theme park which
stated “you will have the time of your life at our theme
park”, what if you didn’t have “the time of your life”,
would you be able to sue for breach of contract?

RED BULL GIVES YOU WINGS
=
SALES PUFF

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2. TERM
• A promise as to the truth of a statement
On a breach of a term, there is
automatically a right to claim for damages.

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3. MISREPRESENTATION
There is no promise, but the statement induces the
making of the contract
A misrepresentation only allows a claim for
damages if it can be proven that the statement
was made fraudulently or negligently

THE CONTENTS OF A CONTRACT
ARE KNOWN AS TERMS OR CLAUSES

AGREEMENT CONSIST OF TERMS
EG. I WILL SELL YOU MY PEN
YOU AGREE AND YOU SAY YOU WILL BUY
FOR10 POUNDS

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PROBLEM OF ORAL/IMPLIED CONTRACT
Terms Warranties Representation
Hard to establish which statements amounted to the following:

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Express Terms
Implied Terms
TERMS

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Term may give
rise to liability
Misrepresentation
TERMS

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 For oral contracts evidence of what was said is presented
before a judge smith v hughes 1871
 For written contracts the courts will look objectively at the
document but will not admit other evidence designed to show
what the parties meant (parol evidence rule)
Chartbrook ltd v persimmon homes ltd 2009
EXPRESS TERMS

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 If the statement does not form a part of the contract, it is said
to be a mere representation.
 If a mere representation is not true, there is not a breach of
contract because the representation is not a part of the
contract.
 Someone who suffers loss as a result of their reliance upon a
mere representation will not be able to sue for breach of
contract but will have other remedies available.
MISREPRESENTATION

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 Prior to the enactment of the Misrepresentation Act 1967, and the development of the
tort of negligent misstatement in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964],
a misrepresentation had to be fraudulent in order for the injured party to receive
damages and the proof of fraud was very difficult.
 Because of this, the older cases are concerned with attempts by the injured party to
establish that the statement was a contractual term (for which damages were available)
rather than a representation.
FALSE REPRESENTATION

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Where a professional has a duty of care
to give reliable information and fails in
that duty
NEGLIGENT MISSTATEMENT

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 Hedley Byrne was as advertisement agency
 They were approached by Easy Power- who initially wanted to spend 8-9k pound on
add
 This was a fair amount
 Hedley byrne ask their bank to contact easy power bank heller and partner to confirm
that easy power was in a financial position to enter into such contract
 Heller and partners said that easy power was a subsidiary of a larger corporation which
was in liquidation
 But easy power itself was trading successfully a few months later, easy power Clearly
ramping up their advertising efforts
HEDLEY BYRNE & CO V HELLER=

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 Hedley and byrne though heller and partner reassurance that easy power was good for
100,000 pounds
 Heller and partner replied in a letter “for your private use and without responsibility on
the part of this bank or its officials.
 The letter said that easy power was a respectable constituted company considered
good for its ordinary business engagements. Your figures are larger than we are
accustomed to see…..

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 Facts: Hedley Byrne were interested in working with Easipower, a company they had not
previously worked with, so they sought a financial reference from their bank. Heller and
Partners provided a satisfactory reference for Easipower, which turned out to be incorrect and
inappropriate. When Hedley Byrne suffered losses following non-payment from Easipower,
they sought a claim
 Outcome: Not liable – there was an effective disclaimer in this case.
 Legal principle: There was an actionable cause in negligence, where there is special
relationship in certain circumstances this could give rise to a claim for purely economic loss,
special relationships where there is an assumption of responsibility, albeit no contract.

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 Lord Denning MR described these attempts in Esso
Petroleum Co Ltd v Mardon [1976]. At present,
however, the matter is not so clear-cut. In many
circumstances it is now advantageous for a party to
establish that the statement is a representation and
actionable as a misrepresentation under the
Misrepresentation Act 1967
FALSE REPRESENTATION

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FACTS
 The plaintiff, Mr Mardon, entered into a tenancy agreement with the defendant, Esso
Petroleum, in respect of a petrol station owned by Esso.
 During the course of the negotiation of the agreement, ‘expert’ advisers employed by the
defendant had provided an estimate of the sales which the petrol station could expect which was
based on inaccurate information and consequently was significantly inflated.
 The value of the rent on the agreement had been calculated based on this inflated figure. As a
result, it was impossible for the plaintiff to operate the petrol station profitably.
ESSO PETROLEUM V MARDON 1976

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 Issue
The issues were:
1. firstly, whether the plaintiff could have any action for
misrepresentation given that the figure purported to be an
‘estimate’ rather than a statement of fact;
2. secondly, whether the defendant owed any duty of care to the
plaintiff so that he could bring his claim in the tort of negligence.

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 Decision
 The Court of Appeal held that the contract could not be voided for misrepresentation as the
defendants presented the inflated figure as an estimate rather than as a hard fact.
 On the other hand, as the defendant had taken it upon themselves to employ experts for the
purpose of providing an estimate of sales, they owed a duty of care to the plaintiff to ensure that
this was done on the basis of accurate information.
 The plaintiff was therefore able to recover the losses which he had suffered as a result of the
defendant’s negligent misstatement.

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 Misrep=false statement of fact or law which induces the representee to
enter into a contract
 Representation- it does not give rise to any legal liability
 If MISREP-gives rise to legal liability
 If there is a breach of a more important condition-claimant can
repudiate/deny/reject the contract
 If there is a breach of a warranty- considered to be less important-
claimant is still allowed to bring a case to the court but only entitled to
damages
MISREP, CONDITION AND WARRANTY

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CONTRACTUAL TERMS
Conditions
or
warranties

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 We need to differentiate/correctly identify which are terms and which are
warranties because where there is a breach of contract we need to establish
which type of term has breached in order to establish the remedy.
CONDITION AND WARRANTY

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 Major
 Fundamental term of the contract
 Root of the contract
 If a condition is breached the innocent party is entitled to repudiate=end
the contract and claim damages
CONDITION

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 Poussard v Spiers 1876
 Madam pousaard entered into a contract to perform as an opera singer
 She became ill before the opening night
 Was not able to perfume
 Spiers replaced her with another opera singer
 Court said madam poussad was in breach of condition and spiers was
entitled to replace her cause she missed the most important night
CONDITION

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 Warranty are minor terms of a contract
 Not central to the existence of the contract
 If a warranty is breached the innocent party may claim damages
 But he cannot end the contract
 Betttini v Guy 1875
 Another opera case
WARRANTY

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 Bettini agreed by a contract to perform as an opera singer
 For 3 months period
 He became ill and missed 6 days of reherseal
 The employer terminated him and replaced him with another opera singer
 Court held: Bettini was in breach of a warranty only and therefore the
employer was not entitled to end the contract
 Missing the rehearsals did not go to the root of the contract
BETTINI V GUY 1875=WARRANTY

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 A statement made in negotiations is not a term is not now so serious for the party who relied upon it
because the victim of a misrepresentation now has a greater range of remedies available than in the past
 If in your answer you wrongly classify a statement made in negotiations as a term when it is a mere
representation this will lead you to write about the remedies available for breach of contract which are not
relevant and so you will gain little or no credit.
 The criterion of relevance is applied strictly by markers. There are no ‘charity marks’ for a discussion of
an area of law, no matter how well written and supported by cases, if it is not relevant to the question
asked. It is a feature of many legal problems that a piece of initial analysis is a ‘signpost’ that directs the
rest of your answer in a particular direction. Any such ‘signpost’ must be identified and conclusions
reached after careful application of the relevant principles.
EXAMINATION TIP

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 An innominate term is the middle point between a condition and a warranty. It is often considered the “no-
mans land” between the two.
 Established in Hong Kong Fir Shipping vs Kawasaki Kisen Kaisha
 Rather than classifying the terms as conditions or warranty, innominate term approach the term to the
point of view of looking into the effect of breach and the question whether the innocent party to the breach
was deprived of substantially the whole benefit of the Contract.
 If yes: then the contract will end.
INNOMINATE TERM

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 Hong Kong Fir Shipping vs Kawasaki Kisen Kaisha
 Ship was charteered to the Defendant for a 2 year period
 The agreement included that the ship would be sea worthy
 The problems developed with the engine and the crew
 Consequently the ship was out of service for a 5 weeks and further 15
weeks
 The defendant treated this as a breach of condition and ended the contract
 Claimant brought an action for wrongful repudiation arguing the term
relating to sea worthiness was not a condition of the contract
INNOMINATE TERM=HONGKONG v
KAWASAKI

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 Courts held: defendant were liable for wrongful repudiation. Courts
inntroduced innominate term approach
 Rather than seeking to classify the term or warranty- court wll look INTO
THE EFFECT of breach and ask whether the breach ahs substantially
deprived the innocent party of the WHOLE BENEFIIT OF THE
CONTRACT.
 If YES- then breach of condition
 In this case 20 weeks period out of a 2 year contract did not substantially
deprive the defendants of the whole benefit and therefore they were not
entitled to repudiate the contract.
INNOMINATE TERM

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 The intention of the parties is deduced from the totality of
the evidence;
 It is of critical importance to establish if the statement is a
term of the contract or a ‘mere’ representation which is not
a part of the contract.
HOW IS THIS ASCERTAINED?
INTENTION OF PARTIES

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 Depends on the intention of the parties.
 Do their words and conduct indicate to a reasonable person that the statement was intended to be mere
representation or, alternatively, that it was intended to be a contractual term?
 Difficulty arises in the application, as opposed to the statement, of this test.
 The courts have utilised a small number of factors or ‘rules of thumb’ to assist them.
 It is important to emphasise that these are factors, not rules.
 If one of these factors applies it inclines to a conclusion that the statement was intended to be either a mere
representation or a term. They are not rules which would dictate a certain conclusion. When applied to a set of
facts one factor might suggest the statement was intended to be a term, another that it was a mere representation.
 In such cases the competing factors must be weighed one against the other to see which, on the facts, is the
stronger. The factors referred to by the courts include the following. The cases suggest that the first factor may
be the most important.

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The factors referred to by the courts include the following:
 Whether the statement maker has special knowledge of the matter in question – where
the representor has greater knowledge of the matter than the other, this is indicative
that the statement is intended to be a term – Dick Bentley v Harold Smith Motors
[1965];
 Where the representee has greater knowledge of the matter than the other, this is
indicative that the statement is intended to be a mere representation – Oscar Chess Ltd
v Williams [1957].
 Whether the maker of the statement accepted responsibility for the soundness of the
statement – where such responsibility is assumed, this indicates that the statement was
intended to be a term Shawel v Reade [1913].
FACTORS FOR TERM/MISREP

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The factors referred to by the courts include the following:
 The importance attached to the statement – the more important the matter, the
greater the likelihood that the parties intended the statement to be a term-
Bannerman v White [1861]
 Where the statement is accompanied by a recommendation that its truth be
verified – the statement is more likely to be a mere representation Ecay v
Godfrey [1947]
 Where one party clearly relied upon the other, this is indicative that the
statement was intended to be a term Esso Petroleum Co Ltd v Mardon [1976]
FACTORS FOR TERM/MISREP

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Lord Moulton observed in Heilbut, Symons & Co v
Buckleton, that none of these factors are decisive tests.
The presence or absence of these factors is not
conclusive of the intention of the parties: the intention of
the parties is deduced from the totality of the evidence.

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Courts look at 4 factors
Parole Evidence Rule
Relative Expertise of the Parties
Importance of the statement
Time of the statement
WHETHER STATEMENT IS TERM OR MISREP

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 It has got nothing to do with criminal law despite the word parole
 It’s a contract law doctrine
 It prevents parties to a written contract from presenting extrinsic evidence of terms in a contract that
contradict, modify or vary terms of a written agreement when that written agreement is considered
complete and finalized
 EXAMPLE: in a dispute over a sale of a home
 Buyer and seller have signed a written contract for the sale of home and have written down the sales
price 500,000 pounds
 Buyer will be barred from bringing any discussion where the seller agreed to sell for 400,000 pounds
PAROLE EVIDENCE RULE

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 OUTSIDE EVIDENCE RULE
 Outside evidence cannot be used where there is a written contract.
 Law says: Only the terms included in the written document are
terms that will be considered and any verbal statement will merely
be a representation.

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 OUTSIDE EVIDENCE EXAMPLES:
 Other written agreements
 Written promises
 Oral agreements
 Discussions
PRIOR TO FINALIZING THE CONRTRACT

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Jacobs v Batavia & General Plantations Trust Ltd
[1924]
While the rule is intended to promote certainty, it has
the potential to produce injustice in some instances.

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Exceptions to the rule exist.
1. Where the written document was not intended to cover the whole of the
agreement the rule does not apply: Allen v Pink [1838]
2. Parol evidence is admissible to prove terms or a custom which must be
implied into the agreement.
3. Parol evidence may be admitted to show that the contract is void by reason
of a misrepresentation, mistake, fraud, or non est factum
EXCEPTIONS

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To minimise these injustices a number of exceptions to the rule exist.
4. parol evidence may also be admitted to show that a contract has not
yet come into operation or has ceased to operate.
5. parol evidence may be admitted to prove the existence of a collateral
contract.
EXCEPTIONS

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 The parol evidence rule is said to promote certainty (AIB Group plc v Martin [2001]
 Evidence to support the benefit of such certainty is provided by the fact that many commercial
contracts incorporate an express clause to similar effect called ‘an entire obligation clause’.
 This is a contractual term which expressly provides that the written contract records the totality
of their legally enforceable agreement. Such a provision is valuable in preventing parties from
‘threshing through the undergrowth [for] some…remark or statement (often long forgotten…)
upon which to found a claim’ Inntrepeneur Pub Co v East Crown Ltd [2000].
 In Axa Sun Life Services v Campbell Martin [2011] the Court of Appeal applied this dictum
emphasising that such clauses will help reduce litigation and associated costs.

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 If the representor has greater knowledge, it is more likely to be a contractual term
 For eg.
I am going to buy a car and I go to car dealer
He is a representor
He has greater knowledge of the car
EXPERTISE OF THE PARTIES

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Side contract
Example you can live in my house (Rent
Agreement) but can farm wheat outside my
garden and can sell wheat to me (condition that
if you live in my house)
 Heilbut, Symons & Co v Buckleton [1913]
 Esso Petroleum Co Ltd v Mardon [1976]
COLLATERAL CONTRACT

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1. Think of the circumstances in which a purchaser will rely upon a seller’s expertise as to
the good being sold. In what situations will a purchaser rely upon a seller?
2. Is it relevant to ask, as Lord Denning does in cases such as Dick Bentley Productions v
Harold Smith (Motors) Ltd [1965], whether the defendant was ‘innocent of fault’ as an
aid to determining the existence of contractual intention? Does this shed any light on the
way judges decide what is the ‘proper’ inference?
3. Apply the relevant factors to determine whether the statement made by the private seller
of a car to a private buyer that it is a ‘[Triumph] Herald convertible, white 1961’ would
be classified as a term or a mere representation when it later transpires that the car is not
a 1961 model?
4. What is the ‘parol evidence rule’? Is it still important? If not, why not?
QUESTIONS/HOMEWORK

IT IS IMPORTANT TO DETERMINE WHETHER A
STATEMENT OR ASSURANCE IS A TERM OF THE
CONTRACT OR A REPRESENTATION BECAUSE THIS
DETERMINES THE REMEDY AVAILABLE TO THE
INJURED PARTY. IF THE STATEMENT IS A TERM OF
THE CONTRACT, OR OF A COLLATERAL CONTRACT,
THE INJURED PARTY MAY BRING AN ACTION FOR
DAMAGES. IF IT IS A REPRESENTATION, THE INJURED
PARTY MUST ESTABLISH THAT THE STATEMENT IS
AN ACTIONABLE MISREPRESENTATION.

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 For oral contracts evidence of what was said is presented before a
judge
Smith v Hughes 1871
 For written contracts the courts will look objectively at the document
but will not admit other evidence designed to show what the parties
meant-PAROL EVIDENCE RULE
EXPRESS TERMS=PAROL EVIDENCE
RULE

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 I order a pair of roller skates from a local sports equipment shop. I stipulate that they are to be a
size 42, have four in-line wheels and that the colour will be black. I agree to pay £99 for the skates.
The shopkeeper stipulates that he will deliver them on Friday. All of the matters in this exchange
amount to express terms – terms the parties have explicitly agreed upon.
 These express terms, however, do not necessarily form the entirety of the contract between the
shopkeeper and myself. In certain circumstances, a court will imply terms into a contract.
 Thus, in the example above, the courts will use the Consumer Rights Act 2015 to imply a duty, as
between a business and consumer to provide goods of a satisfactory quality (s.9(1))
ONLY THAT THE ROLLER SKATES WERE FIT FOR PURPOSE.
IMPLIED TERMS

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 In Crossley v Faithful & Gould Holdings Ltd [2004] the Court of Appeal declined
to find that there was an implied term within the contract of employment which
provided that an employer ought to take reasonable care of an employee’s
economic well-being.
 The introduction of such a term would be a major extension of the existing law and
would place an intolerable burden upon employers.
 Dyson LJ observed that courts in cases involving implied terms ought not to ‘focus
on the elusive concept of necessity’ but to ‘recognise that, to some extent at least,
the existence and scope of standardised implied terms raise questions of
reasonableness, fairness and the balancing of competing policy considerations’.
IMPLIED TERMS

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 Courts will imply terms into contracts either by operation of the common law or by statute law.
These situations include the following:
1. Where there is an established trade usage
2. Nature of the relationship between the parties
3. to give effect to an unexpressed intention of the parties
4. by operation of statute.
IMPLIED TERMS

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EXAMPLE
vendors of a certain type of good always paid
the broker’s commission with regard to the sale;
absent a term to the contrary, courts will imply
such a term into this type of contract.
IMPLIED TERMS=TRADE USAGE

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 ‘general default rules’ arising from ‘particular forms of contracts’ according to
Lord Steyn in Equitable Life Assurance Society v Hyman [2002].
 There are many areas in which the courts have implied terms in order to meet
what might be considered reasonable expectations
 Landlord and Tenant - Liverpool City Council v Irwin [1976] AC 239 the
AC 239 the House of Lords implied a duty to take reasonable care of
the so called common parts (stairs, hallways and lifts, etc.) on the
landlord (here a local authority) of premises with multiple occupants.
-
IMPLIED TERMS=NATURE OF RELATIONSHIP
BETWEEN PARTIES

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 Terms have been implied into contracts of employment to the
effect that an employer should not: overwork its staff in a
way that damages their health (Johnstone v
Bloomsbury Health Authority [1992]
 conduct business fraudulently (Malik v Bank of Credit and
Commerce International SA (In Liquidation) [1997]
IMPLIED TERMS=NATURE OF RELATIONSHIP
BETWEEN PARTIES

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 or go back on an earlier promise to provide a large ‘bonus pool’ (Attrill v
Dresdner Kleinwort Ltd [2012] EWHC 1468) in a manner likely to destroy
destroy or seriously damage the relationship of confidence and trust
between employer and employee. In this area the courts are sensitive to the
point that the law of contract is generally understood to be about
enforcing contracts which the parties, not the courts, have fashioned for them.
To minimise any necessary usurpation of the parties’ general right to
create their own contract, a narrowly framed contract term is more likely to be
implied by law than an overly broad one.
IMPLIED TERMS=NATURE OF
RELATIONSHIP BETWEEN PARTIES

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 In Scally v Southern Health Board [1992] 1 AC 294 a term was implied that the
employer was obliged to alert employees to a particular ‘trap’ in their pension
scheme whereby, if they did not act promptly, they would fail to secure a large
benefit.
 In contrast in Crossley v Faithful & Gould Holdings Ltd (2004) the Court of
Appeal declined to impose a term on the basis of a more general duty on
employers to look out for their employees’ financial well-being.
IMPLIED TERMS=NATURE OF
RELATIONSHIP BETWEEN PARTIES

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The courts may imply terms into the contract to give effect to what appears to be
the unexpressed intention of the parties. In some circumstances, the contract will
not function unless the term is implied; the term is necessarily implied to give
‘business efficacy’ (i.e. effectiveness) to the contract. On this basis in The
Moorcock [1889] 14 PD 64 a term was implied into a contract for the use of a tidal
use of a tidal dock that the owner of the facility had taken reasonable steps to
check that the river bottom was safe for a ship to settle on after the tide had gone
out. Consequently, the ‘business efficacy’ test is sometimes also known as the
Moorcock test.
IMPLIED TERMS=INTENTION OF THE PARTIES

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 There is also an open question about what should happen when the
term appears obvious but might not have been agreed to by one of
the Partie Attorney General of Belize v Belize Telecom Ltd [2009]
 It should be noted that a Contract can expressly exclude implied
terms although this should be clear- Johnstone v Bloomsbury Health
Authority
IMPLIED TERMS=INTENTION OF THE
PARTIES

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1. Why did the House of Lords reject the ‘variety of implication’ that the law
implies a term on the basis that it is reasonable to do so, favoured by Lord
Denning MR? (The rejection is made by Lord Wilberforce in Liverpool City
Council v Irwin (1977).
2. A contracts with B to assemble bicycles to B’s specifications. One of these
specifications is that the bicycles will be fitted with a unique gear system. B
manufactures these gear systems. Is there an implied term that B will supply
A with this gear system in sufficient quantities to manufacture the requisite
number of bicycles?
QUESTIONS/HOMEWORK

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 The concept of good faith:
 origins of the concept in the civilian (i.e. continental) systems of law is discussed.
 where parties are negotiating a contract that has not yet come into existence is discussed.
 where the possibility of implying a term obliging the parties to perform a contract in good faith is
discussed.
 where it is related to the duty to disclose arising from the older concept of a contract ‘of the utmost good
faith’ such as an insurance contract.
IMPLIED TERMS=GOOD FAITH

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 Bates v Post Office (No 3) [2019] involved a high-profile
dispute between the Post Office and a number of sub-
involving alleged defects in an electronic accounting
reported shortfalls for which the sub-postmasters were
liable. In preliminary litigation involving 550 claimants
sub-postmasters), the High Court held that their contracts
Post Office were ‘relational contracts’ in which there was
obligation of good faith.

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 The court offered a non-exhaustive list of characteristics that were relevant to categorising a contract as a
‘relational’ one:
 No express term excluding a duty of good faith.
 A long-term contract.
 Intention for the faithful performance of duties with integrity.
 Commitment to collaboration between the parties.
 The spirit of the agreement was incapable of full written expression.
 Parties had mutual trust and confidence.
 Contract required high degree of communication and collaboration with expectations of loyalty.
 Significant investment by both parties.
 Exclusivity of the relationship.

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 The first characteristic identified above that – there must be consistency between the express
terms of the contract and any implied duties – is an important one and was the reason why a
duty of good faith was denied in SDI Retail Services v Rangers FC [2019]

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 The Bates case contains a lengthy and sympathetic discussion of so called ‘relational contracts’.
 The case also illustrates that an ‘elation’ contract does not ‘bind’ the parties together indefinitely.
 In New Balance v Liverpool FC [2019] were able to terminate a contract with New Balance, their
previous football shirt supplier, and enter into a new £70 million per year one with Nike. The
club’s previous contract with New Balance, a US firm, gave them the right to ‘match’ any offer
from a new potential contractor such as Nike. The High Court held that New Balance’s attempt
to match Nike’s offer (Nike’s offer included the use of three ‘non-football global superstar
athletes and influencers of the calibre of … Serena Williams’) was tendered in good faith but on
the facts did not match that of Nike, leaving Liverpool FC free to enter a new contract with Nike.

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 In a third case (UTB LLC v Sheffield United [2019] before the High Court
involving a dispute between two shareholders in a football club, it was held that
there was no implied term in the contract between them that required the two
shareholders to deal with each other in good faith. This case illustrates a
different judicial approach because the concept of a relational contract and the
characteristics identified in Bates above were not utilised. The question of
whether such a duty arose was treated as a question of fact rather than
following from legal categorisation as a relational contract, and the conclusion
was that no such duty arose.

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 By operation of legislation. In these instances, the terms are implied or duties imposed because Parliament
legislates that the term will be in the contract. To a certain extent, this is to provide a standardisation of
terms in certain kinds of contracts. It also provides a measure of protection for certain categories of
parties, such as consumers.
 Prior to the passing of the Consumer Rights Act 2015 the key legislative provisions were applicable
(though to different extents) to contracts between two businesses (so called B2B contracts) and also to
contracts between businesses and consumers (so called B2C contracts). Since the Consumer Rights Act
2015 came into force in October 2015 B2B and B2C contracts will be subject to separate statutory
regimes.
IMPLIED TERMS=BY OPERATION OF
STATUTE

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PAST PAPERS 2022
 What is the difference between implication in fact and
implication in law in the context of terms implied into a
contract? Do you consider one of these techniques to be
more easily justified than the other, and if so, why?
Illustrate your answer with relevant cases.

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PAST PAPERS 2022
 Explain by reference to the case law:
a) The parol evidence rule.

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PAST PAPERS 2021
 Tony requires a tutoring service for his two children during a period of home schooling. He
telephones the tutoring company, Easy Learning, to discuss the services they can provide.
Easy Learning tell him that they can provide five hours of tuition for £150 per day. Easy
Learning tell Tony to read the terms and conditions on the website and make the booking
online. When Tony attempts to access the website, however, a message informs him that the
website is being updated and the terms and conditions are not available. Nevertheless, he
presses the ‘I accept’ button on the website and books an Easy Learning tutor for a period
totalling 20 days.

CONFIDENTIAL
PAST PAPERS 2021
 Easy Learning send their tutor, Xavier, to Tony’s house. Unfortunately, Xavier accidentally
spills coffee on Tony’s new laptop and Tony has to purchase another one costing him £700.
 On the last day of tutoring, Tony forgets to return the textbooks that Easy Learning had
loaned to his children. He sends them by post and they arrive five days later. Easy Learning
demand that he pay them £250 for the late return in accordance with their terms and
conditions. When Tony checks their website, he is now able to read the following terms:
 a) Easy Learning limit their liability for any damage whatsoever and howsoever caused;
 b) there is a charge of £50 per day for the late return of any books.
 Advise Tony.

CONFIDENTIAL
PAST PAPERS 2019
 Loki visits his local tropical fish shop, Aquatix, in order to restock his
aquarium. He chooses a selection of fish and goes to the cash desk
to pay. There is a notice at the cash desk that says, ‘customers can
request a copy of Aquatix’s terms and conditions from the cashier’.
Loki is not wearing his reading glasses and does not clearly see what
is written on the notice. Before paying for the fish, Roach, the sales
assistant offers him a monthly Aquatix subscription whereby if he
pays £30 per month for one calendar year, each month he can
choose two fish as well as a monthly stock of aquarium cleaning
products and fish food. He agrees and pays the first month’s
subscription.

CONFIDENTIAL
PAST PAPERS 2019
 Loki takes his new fish home. Five days later all the fish in his tank have died, including his
expensive Angel fish that he has had for several years. He realises that Roach has
accidentally put the wrong chemicals in the water with the new fish. Furious, he returns to
Aquatix, to demand £500 in compensation to replace all the fish in his tank. He also refuses
to continue with the subscription service. Roach hands him a copy of Aquatix’s terms and
conditions which state:
 (i) Liability for damage by employees of Aquatix, whatsoever and howsoever caused, is
limited to £10.
 (ii) The minimum subscription length is for 12 months. Subscribers wishing to cancel before
this period will need to pay a sum of £300.
 Advise Loki.

CONFIDENTIAL
PAST PAPERS 2019
 Fern has her own garden waste clearance business, JunkBunk. During exceptionally busy
periods, she often gets her friend, Rose, to assist her with the heavy lifting. Fern is
contacted by Mary, the director of a construction company who is about to start work on
nearby land and needs the site cleared of garden waste immediately. Fern emails Mary a
price list. At the bottom of the page in large capital letters the list states, ‘FOR OUR TERMS
AND CONDITIONS PLEASE REFER TO OUR WEBSITE’. Mary tries to access JunkBunk’s
webpages but Fern is doing some maintenance on the site and the relevant pages will not be
available until later that afternoon. Mary is in a hurry and telephones Fern and secures the
services of JunkBunk.

CONFIDENTIAL
PAST PAPERS 2019
 Fern and Rose start work at Mary’s site the following week. However, at the end of the first
day’s labour, Fern damages her back lifting a load that was too heavy and needs to take a
month off work. Rose undertakes the work alone but is not able to complete the work by the
contractual deadline. Mary’s construction project is delayed, triggering serious financial
consequences for her company. In addition, Rose carelessly spills some toxic waste on the
site, forcing Mary to pay £3,000 for special environmental cleaning. Mary is furious but then
notices the following clauses in JunkBunk’s terms and conditions:
 1.1 Liability for damage by employees of JunkBunk, whatsoever and howsoever caused, is
limited to £100.
 1.2 JunkBunk is not liable for any delay, even if caused by their own actions.
 Advise Mary.

CONFIDENTIAL
PAST PAPERS 2019
 ‘The introduction of the category of innominate terms
was unnecessary and has introduced undesirable
uncertainty into the law of contract.’
 Discuss.

CONFIDENTIAL
PAST PAPERS 2018
Critically evaluate the approach taken by the
courts to the implication of terms into parties’
contracts.

CONFIDENTIAL
PAST PAPERS 2018
 Ivan Earing is the University of Blue Skye’s dynamic, but naive, Vice Chancellor who is
developing an ‘electronic campus’ to reduce staff costs. He hears about a new robotic
professor being sold by Logik plc. Ivan visits Logik to see a demonstration of the robot
which is called ‘Professor Bright’. Ivan is Law School. The contract contains the following
provision:

CONFIDENTIAL
PAST PAPERS 2018
 1. Logik plc gives no warranty or assurance that any equipment provided is of
satisfactory quality.
The robot is delivered to the campus where Lurch takes delivery. Lurch signs a document
headed ‘Delivery Note’ which repeats term 1 above but also has the extra clause below:
 2. Logik plc shall not be responsible for any damage to property caused by their equipment.
Ivan attends the robot’s first lecture in the Law School when ‘Professor Bright’ appears to get
very excited when discussing the doctrine of pastconsideration and waves ‘his’ arms wildly.
Unfortunately one of his hands flies off and damages the University laptop which Ivan was
using. The robot then overheats and is ruined but causes no further damage.
 Discuss the contractual liability of Logik arising from the above facts.

CONFIDENTIAL
B2B CONTRACTS

Terms.pptx

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