A well written, detailed assignment which meets the criteria for P4 P5 and D1- Unit 21 Aspects of Contract and Business Law. BTEC Level 3 Extended Diploma in Business. P4 - Describe the meaning of terms in a standard form contract. P5 - Explain the effect of terms in a contract. D1 - Evaluate the e...
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Unit 21 - Aspects of Contract and Business Law
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Conor Cunningham P4 P5 D1
Task 2
Prepare a set of notes which:-
a) Identifies the main types of express terms in a standard form contract. You need to
include express and implied terms and the distinction between them.
b) Using your chosen contracts, or any other relevant examples, select a number of
significant express terms and describe their meaning as they apply in your chosen
contracts.
(Significant terms should include clauses such as: - time for performance and
rejection of goods, price variation, payment terms, quality and quantity of goods
delivered, reservation of title, exclusion clauses). (P4)
c) Explain the effect of each of the terms identified in part a on both parties to the
contract. (P5)
d) Evaluate the effectiveness of the chosen terms (D1)
(The effectiveness of the terms should be considered from the point of view of both
parties to the contract, for example businesses expecting to protect themselves from
losses through non-payment or claims for incomplete performance, consumers with
respect to receiving defective goods, poor service or late delivery.
You should also be evaluating against up to date legislation which impacts on
common contractual terms e.g. Unfair contract Terms Act 1077, Unfair Terms in
Consumer Contract Regulations, Distance Selling Regulations, Consumer Rights Act
etc.)
This provides evidence for P4, P5, and D1
Introduction
These set of notes will identify the main types of express terms in a standard form contract.
It will include expressed and implied terms and the distinction between them. A number of
expressed and implied terms will be identified and explained in relation to two chosen
contracts.
These set of notes will also explain the effect of each of the terms identified on both parties
to both contracts and an evaluation will take place on the effectiveness of the chosen terms
from the point of view of both parties to the contract.
,Conor Cunningham P4 P5 D1
P4, P5, D1
Standard form contract
A standard form contract is a contract between two parties, where the terms and conditions
of the contract are set by one of the parties, and the other party has little or no ability to
negotiate more favourable terms and so is placed in a "take it or leave it" position.
Standard form, business-to-consumer contracts fulfill an important role in the distribution
of products and services. These contracts have the potential to reduce transaction costs for
businesses by eliminating the need to negotiate the many details of a contract for each
instance a product is sold or a service is used. However, these contracts also have the ability
to trick or abuse consumers because of the unequal bargaining power between the parties.
Expressed terms
Expressed terms are the terms that the parties specifically and mutually agree to. They may
be written or verbal. If they are verbal terms, the courts will have to determine what the
parties may have said. If they are written, it is in clear writing what expressed terms the
parties have agreed to. Expressed terms are those agreed between the parties themselves.
Types of expressed terms include charges, delivery, returns and payment.
Implied terms
Implied terms are the terms in which it has not been mentioned by either party that will
nonetheless be included in the contract. Typically, this is because the contract does not
make any commercial sense without that term. There are two main types of implied term
which are terms implied be courts and terms implied by statute.
Implied terms are as important as express terms and sometimes more important. If there is
an implied term that conflicts with an express term, the express term will normally override
the implied term. However, if the term is implied by statute, the implied term will override
any express term agreed by the parties.
Types of implied terms include satisfactory quality, fit for purpose and the right to sell the
product or service. Terms can be implied in different ways;
Terms implied by custom – These are the terms that are implied to exist in contracts
because of a local custom that exists and is a custom generally regarded as being
associated with such contracts. Such custom needs to be reasonable and certain.
Terms implied by courts – The courts may determine that the parties intended a
term to be included in the contract based on the facts even if it was not specifically
,Conor Cunningham P4 P5 D1
expressed in the contact. The court may also imply a term if they consider that the
law implies such a term into the contract based on common law decisions.
Terms implied by legislation – Terms are included and implied into contracts by right
of legislation. For example, the Consumer Rights Act 2015 implies terms regarding
consumer protection into all sale of goods contracts and these terms cannot be
excluded in any consumer contract.
A condition is a term or requirement stated in a contract which must be met for the other
party to have the duty to fulfill their obligations. A warranty is an assurance, promise, or
guaranty by one party that a particular statement of fact is true and may be relied upon by
the other party. A breach of condition will entitle the injured party to repudiate the contract
and claim damages (financial compensation). Breach of warranty gives the injured party the
right to claim damages but not repudiation of contract. Conditions and warranties are both
included in standard form contracts.
Difference between expressed terms and implied terms
The main difference between expressed and implied terms are that express terms are those
that are specifically written into the contract, for example pay and hours of work. Implied
terms are those that are not written in but a court would assume them to be there, such
things as mutual trust and confidence. Implied terms are known to both parties too,
however they are assumed to exist in the first place which is another reason why they are
not stated like an express term is.
Exclusion clauses
Exclusion clauses are clauses, usually written down, that say that one party to the contract
will not be responsible for certain happenings.
These clauses can be valid as long as:
they have been properly included in the contract and
are not contrary to law.
To be properly included in the contract, the clause cannot be tacked on after the contract
has been made. If there is a signed contract containing the clause, this will usually have the
effect of including it. If there is no signed contract, but there are printed documents or signs
posted stating the terms, these can be included in the contract if they are brought to your
attention before the contract is made.
The use of exclusion clauses by parties in contracts has always been subject to disapproval
by the courts. This is because exclusion clauses are usually inserted into the contracts by the
more powerful party to take advantage of the smaller and weaker party to the contract. To
overcome this, rules have been implemented by the court which states when the use of an
exclusion clause is allowed. There is also legislation that states when an exclusion clauses is
capable or not capable of being enforced against an injured party.
, Conor Cunningham P4 P5 D1
1) Purchasing a product from JD
3 Express terms in the contract
Delivery –
“Our carrier delivers between 7.30am and 10pm, and in some cases a signature may be
required. If you are not around, the carrier will try your neighbours, or (if a signature is not
required) will try to find a safe, dry place to leave your parcel. Alternatively, they'll leave a
calling card with the details on how to re-arrange delivery. Or depending on the courier a re-
delivery attempt may be made without contact. Please note deliveries outside of the UK can
take anything up to 10 working days and sometimes longer. Check with your local postal
service to check if any attempt has been made at delivery as you may have been out when
they called.”
The delivery term in this contract sets out the terms which are agreed upon by JD and the
customer purchasing the product. In this contract, this express term sets out the protocol of
delivery by the JD company and as a result of the customer of JD creating the contract, they
are agreeing to the delivery terms. This will mean, for example, they are agreeing to the
product being left in a safe, dry place if they are not at home. This delivery term also sets
out a time for delivery clause, being between 7.30am-10.00pm. This means that the product
will be delivered within this time frame and if it isn’t, JD have breached the contract.
This delivery term set out by JD has effects on both parties to the contract. It effects JD as
they must deliver the product within the times they have stated. It also protects them if
they deliver the product when the customer is not at home as this is stated within this term.
This term also has an effect on the customer as they are agreeing to the product being
delivered then they are not at home. If delivered when the customer is not at home, they
have no right to file a law suit against JD as they have agreed to this term that it can be
delivered when they are not at home.
This term is effective in that it sets out a clear term for both JD and the customer to
understand. It is effective in protecting the company through the times of delivery being
stated. This also is effective in relation to the customer protecting themselves in relation to
late delivery. It isn’t as effective for the customer however, as they really have no protection
in relation to if the product is stolen after delivery for example. After looking at this term, it
is more effective for JD than it is for the customer – which is often the case in contracts
where one party is much more powerful that the other.
Returns –
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