This is a presentation on the terms of a contract. It covers the general concepts of terms of a contract. It is ideal for beginner to intermediate level Contract Law students

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Terms and Conditions
Terms and Conditions
Generally, a contract may be
1. wholly oral,
2. wholly in writing or
3. partly oral and partly written
Leading to the formation of a contract, the parties make statements to each other. Some of the
statements are meant to be part of the contracts and others are not.
TERMS AND REPRESENTATIONS
• If a statement is made such that it is a part of a contract, it is said to be a term of the contract.
Any other statement not part of the contract is a mere representation.
• The legal effect of terms and mere representations are different.
• The terms of a contract are the statements, promises or propositions which form part of the
contract and which define the respective rights and obligations of the parties under the
contract.
• The legal consequences of a breach of a term can entitle the aggrieved party to sue. However,
unless a representation is proved to amount to misrepresentation there are no legal
consequences for representations leading up to a contract.
• Note that some terms are of more significance than other.
• Depending on the consequences of a breach, terms are classified as conditions, warranties
and innominate terms
• Terms may be expressly stated and agreed on by the parties (Express Terms) or implied by
statute or custom (Implied Terms)
GUIDELINES FOR DETERMINING TERMS OF THE CONTRACT
Various guidelines have been developed by the courts to help decide whether a statement is really a
term of a contract or a representation.
1. A representor with special knowledge
Generally, more importance is placed on representations made by someone who has expert knowledge
on a subject than on a similar statement made by an amateur
Oscar Chess v Williams (1957)
The plaintiff sold his Morris car to the defendant car dealer. The registration document stated that the car
was a 1948 model, but it was later found to be a 1939 model, for which the dealer had paid more than he
would have done had he known the real age. However, it was held that the age was not a term of the
contract, since the car dealer who was the buyer had the skill and experience to put him in a position to
know the real age of the vehicle.

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2. Special importance placed on the issue by the representee
A representee may make a special enquiry about an aspect of the negotiations, or make it clear that a
particular fact is important.
3. Reduction of the terms into writing
Where the parties reduce the oral contract into writing the omission or exclusion of an oral statement
from the written document may lead to an inference it was not meant to be a term of the contract
4. Distance of time between statement and contract
5. Strength of inducement
A casual remark is less likely to be regarded later as a term of the contract than a statement made
with much persuasion. Contrast the following two cases.
COLLATERAL CONTRACTS
A collateral contract is a contract which exist side by side with the main contract which serves a
reason for entering into the main contract.
Ecay v Godfrey (1947)
The defendant described the boat he was selling as ‘sound’, but suggested that the buyer obtain a private
survey. Because of this, the statement was held not to be a term of the contract of sale.
Schawel v Reade (1913)
The seller of a horse claimed that it was sound and that the buyer need not look for anything. He said, ‘If
there was anything the matter with the horse I would tell you. ’The claim was held to be a term of the
contract of sale.
Routledge v McKay (1954)
Statements made about a motor-cycle over a week before the sale were held not to be terms of the contract
of sale.
Routledge v McKay (1954)
The plaintiff and the defendant were discussing the possible purchase and sale of the defendants
motorcycle. Both parties were private persons. The defendant, taking the information from the registration
book, said on October 23, that the cycle was a 1942 model. On October 30, a written contract of sale was
made , which did not refer to the date of the model. The actual date was later found to be 1930. The buyer’s
claim for damages failed in the Court of Appeal partly on the ground that the said statement was omitted
from the written statement and partly on the basis of the time interval between the making of the statement
and the conclusion of the contract
Bannerman v White (1861)
Because a buyer particularly asked if some hops had been treated with sulphur, this was taken to be a term
of the contract of sale. When the hops were later found to have been treated with sulphur the buyer was
entitled to repudiate the contract.
Oscar Chess v Williams (1957)
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965) A dealer sold a car to a customer which
was stated to have done 20,000 miles when it had really done 100,000. This was held to be a term of the
contract because the dealer was in a position to know whether the mileage was accurate.

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WRITTEN CONTRACTS
The general principle is that if two parties have taken the trouble to put their contract into writing,
they intend that document to be binding and to form the whole of their agreement, without oral
additions or amendments. Two ‘rules’ have been formed over this, although it will be seen that
there are exceptions to both of them.
1. The parol evidence rule
The rule is that generally oral or other evidence will not be admitted to contradict or amend a
written contract. However, the parol evidence rule is then subject to various exceptions.
Exceptions to the parol evidence rule
Parole evidence will be admissible
a) To establish or prove the existence of a collateral contract
b) To establish the existence of vitiating factors
c) To establish the plea of non est factum
d) To prove the existence of a custom or trade usage which should apply to the contract
e) To show that the operation of the entire contract had been suspended until the occurrent of
some even (promisory estopel)
f) To explain the meaning of some ambiguous words or phrases
g) To show that the written contract was not meant to contain all the terms of the contract
h) To show that the written did not take record of all the contents of an earlier oral contract
2. The rule in L’Estrange v Graucob
This rule is named after the case from which it came, and states that if a person signs a document
which forms a contract, then he is bound by that contract, even though he may not have read the
terms. This indicates the importance of reading a document thoroughly before signing it.
Inusah v DHL Worldwide Express
The claimant purchased a cigarette vending machine for use in her cafe. She signed an order form which
stated in small print 'Any express or implied, condition, statement of warranty, statutory or otherwise is
expressly excluded'. The vending machine did not work and the claimant sought to reject it under the Sale
of Goods Act for not being of merchantable quality.
Held: In signing the order form she was bound by all the terms contained in the form irrespective of whether
she had read the form or not. Consequently her claim was unsuccessful.
City and Westminster Properties Ltd v Mudd (1959)
The defendant leased a shop from the plaintiffs and was known by the plaintiffs to be in the habit of staying
overnight in one room of the premises. When the lease was due for renewal a draft was produced which
only allowed the premises to be used for business purposes. The defendant stated that he would sign the
lease if the plaintiffs agreed that he could continue to sleep on the premises. They did so, but later sued the
defendant for breach. He successfully relied on the collateral contract to which the plaintiffs had agreed
before he signed the main lease.

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DOCTRINE OF NON EST FACTUM
Non est factum is a defence in contract law that allows a signing party to escape performance of an
agreement "which is fundamentally different from what he or she intended to execute or sign." A
claim of non est factum means that the signature on the contract was signed by mistake, without
knowledge of its meaning. A successful plea would make the contract void ab initio.
To succeed in a plea of non est factum the party must show
a) That the signature was procured by fraud
b) That the other parties fraud was such as to lead the party to believe that the nature and
contents of the document were fundamentally different from what they actually were
c) That the party who signed is not guilty of negligence in signing
Lewis vs. Clay
In the case of Lewis vs. Clay, the defendants signed as witness in a particular deed by a third party. They
couldn’t see the full documents and when they asked to see, they were told that they didn’t need to see the
full documents, only their signature was needed. What they were actually signing was a promissory note to
pay Lewis as sum of 11000 pounds. Their plea of non est factum was successful because they were not
negligent in the sense that they made steps to be sure of what they signed although they were misled
Inusah v DHL Worldwide Express
in Inusah v DHL Worldwide Express, [1992] 1 GLR 267 the plaintiff had travellers cheques valued at
$6000 submitted to the defendants to be delivered to his bankers in London. He read and signed an air bill
issued to him. The air bill contained a disclaimer clause limiting the defendants’ liability to $100. The
plaintiff’s bankers received traveller’s cheques valued at $1500. The plaintiff sued to recover his money.
He failed. It was held that when a document contained contractual terms has been signed, then in the
absence of fraud or misrepresentation, a party of full age and understanding was bound.