This is my assignment for Aspects of Contract and Business Law, Unit 21 Level 3 BTEC Business. This is the work I did to achieve Pass 6, 7, 5, and Distinction 1.
This is a contract formed between two parties using their standard set of terms.
This means every customer will sign the same contract and have the same rights
as other customers. This means they are able to have as many customers as
possible sign up every day without having to sit down and discuss terms with
each person individually. It also means that a customer will know if one
customer’s contract was broken theirs was too as they all have the same rights
as each other.
This means every customer will agree that they are over 18, every customer will
get billed monthly and allows for small differences such as ‘your Netflix
membership may start with a free trial’. This also means Netflix has the right to
bill each customer monthly unless the membership is cancelled, etc.
Benefits of standard form contracts
- Cost reduction
Netflix do not have to create and negotiate a new contract with every customer
that enters into a contract with them. This means they are not having to spend
time (and therefore money) creating and going through hundreds of new
contracts a day.
- Avoiding the need for individual negotiation, speeds up the process
Netflix can use the same contract for every customer, this means the process is
a lot quicker because they are not having to do an individual negotiation with
each new customer. Having the process sped up means it is easier and more
convenient for both the customer and Netflix, customers would not want to have
to be put on a waiting list to be able to negotiate an individual contract with
Netflix in order to start using their services.
- Regular parties who are contracted frequently become familiar with their
rights and obligations
This is good because it will mean that everyone knows their rights, for example
Netflix know what rights and obligations they have towards their customers so if
a problem occurs they know where they stand.
- Consistency in contracts helps to make sure that one party doesn’t change
their terms without notifying the other party
Because Netflix have the same Terms of Use contract with every customer,
customers do not have to worry about Netflix adding things that deviate from the
standard contract into contract because a standard form contract means it is
the same for every person who is signing it.
Issues with standard form contracts
, - They can seem one-sided, especially when one party is an individual and
the other party has a stronger bargaining position
Netflix have a much stronger bargaining position than the customer does when
going into the contract, this means it can seem one sided for the customer as
they don’t have the ability to negotiate and just have to 1accept the standard
contract or not use their services at all.
- There are statutory controls regulating standard form contracts, some
terms will be subject to a reasonableness test
If the terms are not deemed fair, especially when one party is a private individual
as is the case with people signing up for Netflix, then their terms can be deemed
unreasonable and therefore unenforceable.
- A business may start to rely on their standard form contracts and not
bother to negotiate individual contracts for customers
Because Netflix has the same contract for every customer, they won’t be
negotiating with individuals and therefore cannot alter prices based on the
person, etc.
- Standard terms must clearly form part of the business arrangement
This is so that the other party is given notice of the terms before the contract is
entered into so that they can be accepted or rejected
- Battle of Forms
This is when two businesses both want to use their standard form contract. They
will usually negotiate a third contract which can be used every time these two
businesses work together. Courts will decide which standard form contract
applies.
P3
Misrepresentation
Misrepresentation is a false statement of fact made by one party before the
contract is made. There are three types of misrepresentation, all of which can
result in a voidable contract.
Fraudulent misrepresentation
Fraudulent misrepresentation is when someone is persuaded into signing a
contract with incorrect information. The person giving the incorrect information
knows it is false or they are careless/reckless about whether it is true or false.
The person committing fraudulent misrepresentation may go to court for fraud.
If Netflix were to promise customers certain movies will be available for them to
watch once they have signed up, knowing that they don’t have these movies in
their library and therefore cannot be seen by customers, this would be
fraudulent misrepresentation.
Case example: Spice Girls Ltd v Aprilia World Service BV [2002]
The Spice Girls signed a contract with Aprilia which agreed all 5 girls would be in
an ad, however the Spice Girls knew that a member was leaving. Aprilia claimed
this was fraudulent misrepresentation because the Spice Girls knew when
entering into the contract that one of the members was leaving and so all 5 girls
would not be able to do the advertisement.
Negligent misrepresentation
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