In-depth and complete notes on Terms of Contracts, prepared for the 2019 Contract Law paper at Cambridge University. Covers: incorporation of terms; implication of terms; interpretation of terms; rectification of terms; validity of exclusion clauses at common law, UCTA1977 and CRA2015, all to the e...
Principle of freedom of contract: Parties are free to make contracts and decide for themselves the terms of those
contracts
• The main job of the court is to uphold the contract, not to interfere with the terms of the contract.
• But the court & Parliament have sought to regulate the use of certain types of terms, e.g. exclusion clauses.
Contract term versus mere representation
• Affects what damages can be recovered
o If term: Failure to comply with it constitutes a breach of contract (i.e. can sue damages for breach of
contract). Measure of damages is usually the expectation interest, aimed to put C in the position he would
have been in had the contract been performed (hence looking to the future).
o If representation: Any liability will be for misrepresentation, for which C can still recover damages but
measure of damages is usually the reliance interest, aimed to put C in the position he was in before the
representation was made (hence looking to the past).
• Affects C’s ability to set contract aside
o If term: In limited circumstances, C can set the contract aside, depending on the classification of term
(e.g. if it is a condition)
o If representation: C can always potentially set the contract aside.
Key cases & materials
Cases Notes
(1) TERM OR REPRESENTATION
Heilbut, Symons & Co v Buckleton [1913] Test: Whether a particular statement is a contract term or a mere
AC 30 representation depends on parties’ intentions.
• Per Lord Moulton: Whether there is “evidence of an intention by
one or both parties that there should be a contractual liability in
respect of the accuracy of the statement.”
• Intention ascertained objectively
Couchman v Hill [1947] KB A relevant but not conclusive consideration is importance of the
truth of the statement.
• Statement is likely to be a term where it is so important to the
person to whom it is made that, had it not been made, he would
not have entered into the contract.
• FACTS: Heifer put up for sale at auction. C asked whether heifer
was ‘unserved’ (i.e. not used in breeding before), stating that he
was not interested in buying it if it was not ‘unserved’.
Auctioneer and seller gave oral statements that heifer was
‘unserved’. It was actually not ‘unserved’ and died after
suffering a miscarriage. C sued for breach of contract.
• HELD: Term.
Oscar Chess Ltd v Williams [1957] A relevant but not conclusive consideration is the relative position
and knowledge of party making the statement regarding the
ascertainment of the statement’s truth.
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