Were to suggest that some not expressly included term

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were to suggest that some, not expressly included, term be included in the agreement would the parties turn on him and say ‘of course we are including that’? The officious bystander test has since been replaced by a five point test designed to ensure that the term would have been agreed to by both parties if the question of its inclusion had been raised at the point of agreement. The five points were summarised by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20 at 26 and they have been consistently applied by all Australian courts ever since. Those five requirements (as they were laid down by the Privy Council) are: (1) [the suggested term] must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; (3) it must be so obvious that it goes without saying; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract. 4.1.3 Classifying terms Once you have determined that some promise or undertaking agreed to during negotiations has become a term of the contract any breach or non-performance of it lets the innocent party seek some form of remedy. What that remedy will be will depend on the seriousness of the breach — viewed against the overall obligation represented by the contract. To help determine the seriousness of particular breaches, all terms are classified into: conditions; warranties; and intermediate (or innominate) terms. Conditions Conditions are major terms of the contract. They can usually be identified by asking the question: Was this promise or undertaking of such importance to the promisee that he or she would not have contracted at all unless assured of a strict or substantial performance of it — and would this reluctance have been apparent to the promisor? In other words, was the performance of that promise fundamental to the whole contractual obligation? Because conditions are such fundamental obligations, any breach of condition gives the innocent party the right to terminate the contract, to refuse to further perform his or her obligations (if any) under the contract and to sue the other party (the party in breach) for damages.
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© Stephen Graw 2012 24 Warranties Warranties are minor terms of the contract. Breach of a warranty makes performance of the contract different but not substantially different from what the parties agreed. Consequently, the innocent party still gets essentially what was contracted for and, therefore, he or she cannot terminate the contract because of the breach of warranty. That would be too great a penalty for the other party given the seriousness of the breach. As a result, the contract remains in force, both parties must continue with and complete it and the innocent party can only sue for damages.
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