(Notes) Contract - Terms and Exclusion Clauses

(Notes) Contract - Terms and Exclusion Clauses - CONTRACT...

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CONTRACT TERMS (Pg 113) Puffs, Representation, and Terms (Pg 113) Puffs (No legal effect) Statements which have no legal effect whatsoever. They tend to be statements which are vague because of imprecision or exaggeration. – Dimmock v Hallet (1866) – Court held that the description of the land “fertile and improvable” was a mere puff. Representation (Not part of the contract) A representation is a statement made before or at the time a contract is formed concerning some matter relating to the contract. Although it may be in writing, it is not am integral part of the contract. Contract is not breached when the representation is held to be untrue. Behn v Burness (1863). In this situation, the party can only take an action under the law of misrepresentation but cannot initiate an action for breach of contract. Terms (Part of the Contract) Terms are statement, which form part of the contract . The only similarity between terms and representations is that they originate as oral and written statements before a contract is formed. Terms are part of the contract while representations are not. Terms and representations create different rights and obligations for the contracting party. Guidelines to distinguish terms from representations (Pg 115) Main criterion: Intention of parties. Basic test: whether there is evidence that one or both contracting parties intended that there’s contractual liability in respect of statement. When Statement was Made The closer to the time the contract was finally concluded, then it is more likely to be a term rather than a representation . Routledge v McKay (1954) – The English court of appeal held that there was clear and significant interval of one week between the making of the statement and the making of the contract. This indicates that the statement was not a term of the contract. Maker’s Emphasis The greater the emphasis, the more likely the statement is a term . Bannerman v White (1861) – The court held that Bannerman was found to have breached the contract, thus entitling White to repudiate the contract. Maker’s Special Knowledge Where the maker of the statement has greater knowledge concerning the statement as compared to the other party, it is more likely that the statement is a term. Oscar Chess Ltd v Williams (1957) – The court of Appeal held that William’s statement was not a term of the contract because as a private individual, Williams was not in a position to guarantee the accuracy of the year of registration given. [representation] Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965) – The English Court of Appeal held that there was a breach of contract because the defendant’s statement was a term of the contract. The seller, a motorcar dealer, was in a better position to know the true facts regarding the Bentley. [term] Invitation to Verify Statement If the make of the statement invited the other party to verify the truth of the statement made, then the statement is more likely to be a representation. Converse true if maker dissuades other party from verifying truth.
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