3. Terms of Contract - Terms of a contract Some terms when...

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Terms of a contract Some terms when breached may deprive the innocent party of a substantial benefit under the contract. Contractual terms - Can be a condition, warranty or innominate term Procedure: 1. Terms that parties explicitly agree to (freely) are called “express terms” in the contract. 2. The law steps in with implied law – implied in fact or implied in law Parol Evidence Rule When reduced to writing, either party may not attempt to show by extrinsic evidence (not furnished by document but from other sources), that the terms in the written contract must be changed, added to, or contradicted. Exceptions to the rule – proven with extrinsic evidence - The dispute of the validity of the contract is a result of mistake, lack of consideration or misrepresentation . - A party shows the mistake and proves what the contract should have read instead of the disputed term - The written contract has not yet come into existence or is no longer in operation - A particular custom of trade must be implied into. Collateral contract The consideration for a collateral contract can be the agreement of the other party signing the main contract. Shanklin Pier LD v Detel Products LD (1951) One party, in consideration of the other party making a separate and distinct contract, makes a contract with that other party by giving that other party a collateral warranty . - Comes into effect when one party made a representation to persuade the other to conclude the contract - The representation is in the form of warranty collateral to the main contract, and exists with it. (terms of collateral contract must be consistent with main agreement) Terms and Representations Precontractual negotiations - Puff – exaggeration ( legally insignificant as it is not meant to be taken seriously)
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- Representations (validity depends on intention of the inducer) - a statement of fact with the intention to induce the other party to enter the contract, and does enter the contract, but is not intended to form part of the contract.
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