Express Terms

September 2012 Question 3 (a)

Explain the distinction between a representation and a term of a contract. What are the effects of breach of term?

Express terms are terms made in words, whether oral or in writing. In the negotiation process, the statement made by the parties either oral or in writing plays an important role to determine as to whether the statement made is a representation or a term. Below are the distinctions between both: Term A term is a statement which is intended to form part of the contract. Terms are legally binding and the other party can sue for breach of contract if the terms have not been adhered to. Representation Definition A representation is a statement made only to induce the other party to enter into a contract. Representation are not contractually binding and do not form part of the contract however they have legal effect and the party who have been induced by the statements to enter into a contract is entitled to relief for misrepresentation. The shorter the time that has When The longer the time that has passed passed from the moment the statement from the moment the statement was statement was made until the time is made made until the time the contract is the contract is formed, the formed, the statement is more likely statement is a term of the contract. to be treated as a representation. If there is a written contract and the Importance If there is no written contract and statement is included in it, the of the the statement is not included in it, statement is then a term of a statement the statement is then a contract. The inclusion of the representation. The exclusion of the statement emphasised that it is statement emphasised that it is not important factors of the contract. an important factors of the contract. If a person has special knowledge Knowledge If a person lack of knowledge and and skills or in a better position to skills and only depending on ascertain the accuracy of a another statement received from statement, it may be regard as a others, his statement may regard as term. a representation. In the case of Bannerman v Case In the case of Routledge v. Mc White, plaintiff and defendant Kay, plaintiff and defendant negotiated on the sale of hops. negotiated on the sale of Plaintiff asked on whether sulphur motorcycle belonging to the was used in process of growing the defendant. The defendant notified hops and states that he would not that the model of motorcycle was even bother to negotiate further if said to be 1942 based on the sulphur was used. The defendant registration book. After 1 week, the clarified that sulphur was not used contract was entered into and it was and they entered into an silent on the model of the Nelfi Amiera Mizan Multimedia University

agreement immediately after. Later, there was evidence to show sulphur was used on the small portion in growing the hops. Plaintiff argued that there is a breach of contract. Court held that the statement made by defendant regarding the usage of sulphur was a term of contract. Plaintiff had agreed to enter into contract directly after the defendant denies the usage of sulphur. Besides, plaintiff also had showed great importance on the truth of statement as she does not even bother to ask the price if sulphur is used. Lastly, defendant seems have intended to lie regarding the usage of sulphur where he can denies his knowledge regarding the sulphur.

motorcycle. Plaintiff later found out that it was a 1930s and argued the defendants statement was a term and therefore, there had a breach of contract. Court held that plaintiffs argument was rejected. The statement made was just a mere representation because the longer duration before making a contract and the absence of the statement in the written contract. Besides that, the absence of the statement in written contract emphasised that the statement made was not important thus it does not regard as a term but only a mere representation.

Once the statement complete as a Contractual term it is then further classified as a condition or a warranty. The importance of the classification is to determine the effects of a breach of term as the remedy for a breach of a term depend on the type of term that has been breached. Condition A condition is an essential and the more important term, thus a breach of a condition gives an innocent party the rights to rescind the contract and claim for damages. In the Poussards Case plaintiff had an agreement with defendant to perform at his event for 3 months. She attended several rehearsals however fell sick and unable to perform at the opening of the opera season. Her roles was substituted by another person and after her recovery, defendant refuses to accept her service. Court held that, the inability to perform at the opening of the opera season went to the root of the contract thus it is regarded as condition. Nelfi Amiera Mizan Multimedia University Definition Warranty A warranty is a non-essential term, a subsidiary term and being the less important term, a breach of which only gives rise to an action for damages. In the case of Bettini v Gye, plaintiff agreed to sing for defendants event for 2 consecutive weeks and agreed to be in London at least 6 days prior to the event for rehearsals purpose. However, plaintiff fell sick and arrived at London 2 days before the show. Defendant refused to employ plaintiff. Court held that the term regarding the rehearsals was not a condition and did not go to the root of contract. The breach did not entitled defendant to rescind the contract.

Case

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