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Lecture notes Contract Law
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Full LLB law concise notes on contract law, involving all concepts.
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CONTRACTUAL TERMS❖ Terms are the actual provisions of the contract
❖ In written contracts:
➢ Remedies for breach of an innominate term depend on the situation → depends
on the actual impact of the breach
➢ Misrepresentation Act 1967 (even if it is a term you could get better damages)
➢ Remedies for breach of a condition = right to terminate + damages
➢ Remedies for breach of a warranty = damages only
❖ Oral statements:
➢ mere puffs have no legal significance
❖ How to determine whether an oral statement has been made:
➢ Test from Heilbut, Symons and Co v Buckleton [1913] AC 30
■ 4 principles which help decision
● Timing
● Importance
● Whether the term was reduced to writing
● Special knowledge
■ Intention must be deduced from the totality of the evidence (objective)
➢ Bannerman v White [1861] 10 CB NS 844
■ Held that the buyer saying he would not buy if… is a term
➢ Oscar Chess v Williams:
■ Was the statement as to age of car a term or a misrepresentation?
■ Denning LJ and Hodson LJ, buyer was expert so they could have
checked
● The statement was an innocent misrepresentation not a term
● Remedy of rescission was lost as a result of time passing
➢ Dick Bentley v Harold Smith:
■ Buyer sues for damages for breach of term because of mileage (was a lot
higher than he was told). Seller = Car dealer
■ Denning MR: intention depends on conduct of parties and on words and
behaviour as opposed to their thoughts
■ Specialist knowledge
➢ Routledge v McKay [1954] 1 All ER 855
■ Written sale
■ Oral representation made a week before written contract about the age of
the motorbike
■ Denning said it was not a contractual statement as there was no intent
■ Terms were only those reduced to writing
➢ Reliance on an expert’s statement is very likely a term → Schawel v Reade
[1913] 2 IR 81
➢ Greater the delay the less likely statement is a term
❖ Parol evidence rule:
, ➢ If an agreement has been set out in writing → extrinsic evidence, that is evidence
outside the document itself → cannot be used to add to/vary/contradict the terms
of the document
➢ Exceptions:
■ Written agreement is not whole thing
■ Validity of contract
■ Implied terms (Burges v Wickham)
■ Operation of the contract (Pym v Campbell)
■ Evidence as to parties
■ Aid to construction
■ To prove custom (Smith v Wilson)
■ Rectification
■ Collateral contract (City & Westminster v Mudd)
❖ Incorporation by signature
➢ L’Estrange v Graucob [1934] 2 K.B. 394
■ Even if you haven’t read it you are bound by everything in the contract
you signed
➢ How to avoid this…
■ Non est factum (Saunders v Anglia Building Society [1971] AC 1004)
■ Curtis v Chemical Cleaning and Dyeing Co Ltd [1951] 1 KB 805
● Signed a contract excluding liability
● Oral assurance was given at time being more specific so he was
still liable
■ Grogan v Robin Meredith Plant Hire [1996] CLC 1127
❖ Incorporation of Terms
➢ Ways to incorporate:
■ Signature
■ Reasonable steps to bring term to notice
● Unsigned but written contract/small print
● Requirements:
◆ Notice must be given before or at the time of contracting
◆ Term must be contained or referred to in document
intended to have contractual effect
◆ Reasonable steps must have been taken to bring terms to
attention of the other party
◆ Statute today: Unfair Contract Terms Act 1977, Consumer
Rights Act 2015
● Interfoto
■ By course of dealing:
● McCutcheon v MacBrayne 1964 HL
◆ Exclusion clause re negligence
◆ Risk note containing it was not signed
◆ It was held that the terms were not incorporated
, ◆ Reid LJ and Devlin LJ → no consistent course of dealing +
no actual knowledge of terms
■ Collateral contracts/warranties
● Certain terms not incorporated in the main agreement
● Shanklin Pier Ltd v Detel Products Ltd [1951] 2 KB 854, 2 All ER
471
■ Oral Variation
● Rock Advertising Ltd v MWB Business Exchange Centres Ltd
[2018] UKSC 24
◆ Declined to address question of rule in Foakes v Beer
❖ Classification of terms
➢ 3 ways
■ Parliament
■ Courts
■ Parties → this is the most simple
➢ Schuler v Wickman [1974] AC
■ Lord Reid: use of the word condition is an indication but is not conclusive
→ the more unreasonable the result the more unlikely
● Lord wilberforce still dissents
➢ Innominate terms → the intention of the parties is not determinative
■ Hong Kong Fir Shipping [1962] 2 QB 26
● Termination possible where the breach denies the plaintiff
substantially the whole of the benefit which it was intended he
should obtain
➢ Conditions
■ Promissory conditions → promise a certain fact
● Glaholm v Hays [1841] 2 M&G 257
■ Non promissory conditions →
❖ Where the failure to perform the term leads to something being different substance →
can terminate. Basically, what happens if this does not? - Warranty
❖ Do not know whether intermediate terms are conditions/warranties just by looking.
❖ Can imply terms by custom, statute or courts
➢ Problem is with terms implied by courts
❖ Hutton v Warren → landlord. Notice to terminate was given to the farmer. Custom is you
keep working until tenancy is over and then get compensation. If custom is known by
both parties and it is agreed that it exists, then the court can imply it into the contract
❖ Why would a court imply a term? → so that the contract can match the intentions of the
parties.
➢ Terms are implied because they are necessary so the test for courts implying
terms is necessity
➢ Not reasonableness
➢ Terms implied in fact:
■ One off situation. → do not apply to all situations, only one specific
situation
, ■ Business efficacy test. The Moorcock 1889:
● Ship ended up on riverbed and got damaged
● Court implied not the original term but they implied the term that
the owner should do the minimum necessary for the contract to
function
■ Shirlaw v Southern Foundries 1939
● Mackinnon LJ → “something so obvious it goes without saying”
■ Modern Approach and Commercial contracts:
● “does the term in question spell out in express words what the
instrument, read as a whole against the relevant background,
would reasonably be understood to mean?” - Hoffman LJ in AG of
Belize and others v Belize Telecom Ltd [2009]
● M&S plc v BNP Paribas Securities Services Trust [2015] UKSC 72
◆ Lord Neuberger: ‘a term can only be implied if, without the
term, the contract would lack commercial or practical
efficacy’
◆ Interpretation and implication are different
◆ Only what is absolutely necessary should be implied into
the contract
● Wells v Devani [2019] UKSC 4
◆ No implied term in agreement between property seller and
estate agent (but binding agreement reached)
◆ Do not jump into implication when it is not needed. If it is
obvious what will happen there is no need for implication.
● Bou-Simon v BGC Brokers LP [2018] EWCA Civ 1525
◆ No hindsight
◆ Terms should be implied as a reasonable reader would at
the time the agreement was entered into.
➢ Implication of terms in law
■ All situations that may arise. Implication in law is valid for all other
situations.
■ Definable category of contractual relationship: leases, employment, govt
contracts
● Liverpool CC v Irwin:
◆ Flats for tenants.
◆ Did landlords have any duty to keep communal areas in
reasonable repair?
◆ Tenants asked the landlord to keep communal areas in
good repair. Landlords said no. Tenants did not pay rent.
◆ There WAS an implied term but the council did not breach
it, more money on repairs than on rent.
◆ “Necessary” v “reasonable”
● • Scally v Southern Health and Social Services Board
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