Contract Terms Terms – refers to the stipulations in the contract Express terms v implied terms

1. Contract Terms Terms – refers to the stipulations in the contract Express terms v implied terms

2. To imply terms court shall have reference to: 1- customs or trade usage; Owen v Teather & Greeenwood Trade usage must be satisfy the requirement of: -reasonableness, -certainty (enforceability and definiteness, clearly established), -notorious (well known in the market in which it is alleged to exist, it is not necessary that the practice, custom or usage be known to the whole world or by all the persons in the trade,

3. or even by the person against whom the custom or usage is being asserted 2- necessary to give business efficacy Reigate v Union Manufacturing Co. Ltd “…Terms can only be implied if it is necessary in the business sense to give efficacy to the contract” 3- based on statutes Statutes provide that some terms must be impliedly read into the contract

4. When the term is not implied by statute, term will not be implied to contradict express terms • Terms to be implied– reasonably consider the whole facts surrounding the contract – deduced intention of the parties - it becomes clear that the parties must have intended that that the suggested terms should be part of their contract. Yong Ung Kai Contract for sale of timbers was to be subjected to the obtaining of the necessary licence because “it must have been in the mind of the parties”.

5. - Officious by stander test Shirlaw v Southern Foundries The idea is to use officious bystander test : if he were to suggest to the contracting parties some express provisions to be included in the agreement, the parties will response positively with, “Oh, of course!” Term may be implied at common law / statute a) Common law – terms are implied to fill in the gaps or omissions where it is clear that a contract has been made.

6. e.g. in a contract for telecommunication service where no price is fixed, a reasonable price is implied. If no time for performance is fixed, it is implied that it will be performed w/in a reasonable time. Take into account the parties’ expectation e.g. A hire a car. It is implied in the contract that he will exercise reasonable care in the use of the car

7. b) Terms implied by statutes e.g. Sales of Goods Act 1957 S14. In a contract of sale, unless the c/stances of the sale of the contract are such as to show a different intention there is-(a) an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass

8. Terms and RepresentationsDifferences between term and representation

10. Terms are divided into conditions, warranty and intermediate terms

11. Incorporating contract terms When a person signed the contract he is bound by the contract because of his signature: whether he read its terms or not whether he understood them or not To avoid the contract the consumer has to show: i- He was induced to sign the contract by any act that defeat his free consent to contract; or ii- He can successfully raise the plea of non est factum; or

12. non est factum the fundamental basis of the signed contract must be completely different from what was intended Lloyds Bank v Waterhouse A father acted as a guarantor to his sons debt when purchasing a farm. The father was illiterate and signed the bank document under the belief that he was acting as the guarantor for the farm only, when the contract was actually for all the debt accumulated by the son.

13. As he was illiterate, this was a mistake as to the document signed and the father was successful in claiming non est factum. iii- he was unaware of the terms or that the document he signed was not of a type which could reasonably be expected to contain contract terms

14. How to incorporate terms into contract? Notice and contract terms e.g. after taking a parking ticket at the parking machine, a car driver found a notice in the parking bay saying that the operator is not responsible for injury, loss or theft to the car or his personal Can the car owner claim damages for injury loss or theft? It is necessary to find out whether the term has been incorporated into the contract. i.e., whether it is part of the contract

15. Rule regarding notice Is it part of a contract? Generally it was given after the contract, so it is not part of the contract. Question to ask: i- whether reasonable steps have been taken to bring the contents of the notice to the attention of the other contracting party

16. i- reasonable steps have been taken to bring the contents of the notice to the other party Causer v Browne Plf. took a frock coat to the launderette for dry-clean. when it was collected it was damaged. The Def sought to escape liability by relying on an exclusion clause stated on the ticket handed to the Plf. .

17. The exclusion clause protect the cleaners against claims for negligence. Q- Was the clause part of the contract? Held - The exclusion clause was not part of the contract. This is because a reasonable person would not assume the ticket was contractual in nature. It appeared to be merely a receipt and a voucher to be presented when collecting the clothing.

18. Chapelton v Barry Urban District Council C hired deck chairs from UDC. On the beach there was a notice wh stated: "Hire of chairs 2d. per session of 3 hours." it went on to state that the public were requested to obtain tickets for their chairs from the chair attendants and that those tickets should be retained for inspection.

19. C got two chairs and two tickets. On the back of the tickets was a printed clause which provided " The council will not be liable for any accident or damage arising from the hire of the chair". C, who had not read this, put the chairs up and then sat down on a chair which gave way, the canvas having come away from the top of the chair.

20. Q- did the clause exclude UDC from being liable? Held – the ticket did not constitute a contract. It was a proof that he had fulfilled his obligation to pay for the privilege of sitting in a chair on the Beach Court stressed that nobody could be expected that by paying 2d. under those circumstances for the privilege of sitting in a chair on the beach would think for one moment that some conditions were being imposed upon him which would limit his ordinary rights

21. or that the document he received when paying his 2d. was a contractual document in any shape or form. ii- reasonable notice must be given before the contract is completed Olley v Marlborough Court Ltd The Olleys rented. a room at a hotel. When they went upstairs to their room they foundattached to the back of the door a notice to the effect that the management would not be held liable for the safety of articles left in guests’ rooms.

22. When the Olleys’ room was burgled, the def. tried to rely upon the disclaimer. Q- was the disclaimer binding on olleys? Held: the disclaimer did not bind the Olleys, because they had no notice of it at the time they made the contract with the def. at the front desk. By the time they read the disclaimer upstairs in their room, it was too late.

23. iii- previous dealings may be relied on to show that the terms are part of the contract. To use this ground the parties relying on the terms must show that the dealing was established and regular between them and there is a degree of consistency Hollier v Rambler Motors Ltd H owned Rambler motor cars for some 5 years. He had frequently bought spare parts from He had never been given any form to sign. 3 to 4 times he had the def services his car. Most of times he went to some other places.

24. R usually used invoice in his business. He gave the invoice to H at least twice. The form described the details of work to be done and price, and signed by H. At the bottom were the words: “I hereby authorise the above repairs to be executed and agree to pay cash for same upon delivery of car to me. Customer’s signature”.

25. Under the space for signature were the words: “The company is not responsible for damage caused by fire to customer’s cars on the premises”. On the disputed contract H called to ask R to repair his car. R agreed to do the repair. H had the car conveyed to R . While it was in the garage, the car was substantially damaged by a fire that arose from faulty electric wiring on R’s premises

26. Q- did the term that exclude R from liability constitute part of the contract? Held- it was not given to H in the disputed contract though it was given previously in few occasions. There was no course of dealings between H and R to impute the disputed term into their current contract because: • There had only been three or four repairs or services over five years. • The invoice had not been used on each of those occasions.

27. When used, the invoice was given after the repair or service had been done, and at the time of payment. McCutcheon v. David MacBrayne Ltd. M arranged to ship car with the D. The contract was concluded orally. The car was lost when a ferry boat sank, partly due to the negligence of the operator. A liability exclusion clause existed but this one time, M had not signed it. The risk note wh contained the clause was not given to M this time though M & D had used the note in their previous dealings.

28. D tried to rely on previous dealings to have the exclusion clause implied. Q- can the def rely on the exclusion clause? Held- there had not been a sufficiently consistent course of dealings between the parties.

29. iv- where the disputed term is an exemption/ exclusion clause; clause wh either limit or exclude liability, it will be strictly construed against the party who attempts to rely on it.

30. Exemption/exclusion clause/limitation clause Terms inserted into the contract to exclude or limit the liability of the party relying on the terms. Thornton v Shoe Lane Parking Plf went to park it at a multi-storey automatic car park.There was a notice on the outside headed ‘Shoe Lane Parking’. It gave the parking charges, 5s for two hours, 7s 6d for three hours, and so forth;

31. and at the bottom: ‘ALL CARS PARKED AT OWNERS RISK’. The plaintiff drove up to the entrance. There was not a man in attendance. There was a traffic light which showed red. As he drove in and got to the appropriate place, the traffic light turned green and a ticket was pushed out from the machine. The plaintiff took it. He drove on into the garage Once he had finished his business he went to pick up his car. When he wanted to put his belongings into the boot of the car, an accident occurred.

32. Def claimed that they are protected by some exempting conditions. They rely on the ticket which was issued to the plaintiff by the machine. The ticket was headed ‘Shoe Lane Parking’. Just below there was a ‘box’ in which was automatically recorded the time when the car went into the garage. There was a notice alongside: ‘Please present this ticket to cashier to claim your car.’ Just below the time, there was some small print in the left hand corner which said: ‘This ticket is issued subject to the conditions of issue as displayed on the premises.’

33. Held- The offer was accepted when the plaintiff drove up to the entrance and, by the movement of his car, turned the light from red to green, and the ticket was thrust at him. The contract was then concluded, and it could not be altered by any words printed on the ticket itself. In particular, it could not be altered so as to exempt the company from liability for personal injury due to their negligence.

34. Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd Securicor were contracted to provide security for two fishing boats which happened to sink in Aberdeen Harbour. A clause was written in Securicors’ contract limiting liability for ‘failure in the provision of services’ to £1000. The House of Lords held that the clause applied even though Securicor failed to provide any security on that occasion because they were clearly expressed to that effect.

35. rules on exemption or limitation clause. i- it must be the contract terms; ii- incorporated into the contract through notice, signature, or course of dealings; iii-reasonable steps must have been taken to bring the notice to the attention of the contracting parties; iv –reasonable notice must be made known to the contracting parties before or at the time of contracting

36. v-if the exclusion of liability is not expected and extra ordinary, in order to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it, or something equally startling. iv- party automatically bound by exemption inserted into a signed contract when the consent was freely given one cannot evade being bound by the terms of a contract, even an Exclusion Clause on the basis that one did not read or understand the terms

37. L'estrange v Graucob L owned a cafe. She ordered a cigarette machine from the manufacturers. She signed a 'sales agreement' which contained a clause excluding any implied conditions without reading it. L sued for breach of the implied condition of fitness for purpose. It was held that L could not claim damages on the grounds that she ``did not see'' the clause in the contract. There was no evidence of fraud or misrepresentation that might have mitigated this judgement.

38. How to interpret exemption clause? i- rule of law in interpreting the exemption clause A contracting party cannot hide behind the exemption clause to avoid liability for fundamental Breach ii- now the rule has been changed – whether the clause can be effective or not depend on the construction of the clause.

39. Suissee Atlantique Societe d' Armement Maritime S.A.V. N.V. Rotterdamasche Kolen Centrale wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of the contract."

40. Photo Production Ltd v Securicor Transport Ltd S agreed to provide a night patrol service for P factory to protect from theft and fire etc. An employee of S, whilst supposed to be patrolling the premises, lit a fire (to keep warm) and ended up burning the factory down. S standard form of contract had a condition which stated that: "the company will not be liable for injurious act or default of the employee, unless it could have been foreseen and avoided by due diligence of the employer, nor for loss by burglary, theft or fire or any other cause,

41. except so far as it is attributable to negligence or the company's employees acting within the course of their employment.” Further provisions limited liability of the Company to stated amounts. Photo Production claimed damages of some £648.000 for breach of contract and / or negligence.

42. Exemption clauses are to be interpreted the same as any other term regardless of whether a breach has occurred. The scope of the exclusion is determined by examining the construction of the contract. On the facts, the court found that the exclusion clause precluded all liability even when harm was caused intentionally.

43. Contra proferentum rule If the clause is wide the court will read it against the interest of the party who inserted the clause into the contract The by applying the rule the court gives the benefit of any doubt in favour of the party upon whom the contract was imposed

44. Hollier v Rambler Motors Ltd The garage was “not responsible for damage caused by fire to customers’ cars’ was held to be only a warning that the garage was not liable in the absence of negligence