Commercial Law - Terms of Contract

What a hot week it has been. I hope you have been hydrating and drinking lots of fluid.

This week we looked at issues involving terms of the contract ie. what did parties agree upon. What were the promises they had exchanged. The difficulty here in many cases is trying to determine if the promises (terms) in question were in fact agreed upon or incororated into the contract. In a contract there maybe many terms that are agreed upon -some of these terms are easy to determine and some more difficult.

Point 1 (Pre Contractual Statements)

We startd by looking at the issue of pre contractual statemenst - statements made before the contract was made. Some of these become terms, some remain as representations and some are merely puffs or inconsequential statements. Your text suggests some guidelines on how representations become terms - I sugges you have a quick read there.

Point 2 (Express Terms)

We explored the fact that terms are incorporated into a contract eexpressly (expressed terms) or implied terms. Express terms are terms which parties agreed upon expressly - either orally or in writing. The probelm that may arise is the inconsistencies in what was said orally and what was writen. You must be mindful of the Parol Evidence Rule.

Point 3 (Common Law Implied Terms)

We then started thinking about how terms are implied into the agreement. They are implied by the court using the common law or implied by legislations. The common law uses a "business efficasy" test as shown in The Moorcock or the "officious bystander" test as shown in Shirlaw v Southern Foundries.

Point 4 (Statutory Implied Terms)

Whilst there ae many legislations that regulate certain types of contract, we explored only the Sale of Goods Act which is an English Legislation but applicable in Singapore. Here we looked speifically at some of the sellers responsibilities. They were :

Sections 12 - duty to pass good title
Sections 13 - duty to sell goods that corresponds with the description
Sections 14(2) - duty to sell goods of satisfactory quality
Sections 14(3) - duty to sell goods that is fit forits intended purpose
Sections 15 - duty to sell goods that matches its sampe.


Point 5 (Condition & Warranty)

Terms of a contract are of different qualities - some important and some less important. If an important terms is breached - you have the rights to repudiate the contract - such terms are considered Conditions are fundemental terms that go to the root of the problem. Less important terms are labeled Warranties - breach of which entitles you only to damages -w hich means you haveto keep the goods and can only claim compensation.

There are however terms that we cannot know if they were conditions or warranties and is depedant purely on the extent of the breach. These type of terms are known as Innominate terms and was discussed at length in the Hong Fir Case.

Point 6

Finally we looked at Exclusion Clauses. These are terms of a contract intended to exclude or limit the liability of a party. There are generally 2 parts to this subject.

The first is the point of incorporation. Whether the clause has bee incorporated into the agreement by way of a written contract, notice on a document that a reasonable person will expect to find a contractual term Chapelton v Barry UDC or reasonable notice (Olley Marlborough Court)

The second is whether the UCTA restricts or limits the scope of the exclsion clause. In ths respect Sections 6 of the UCTA is relevant and the definition of a consumer transaction in Section 12 of UCTA.

Next week we will be looking at some vitiating factors.

Enjoy the rest of the week.

SK