PassTrimesterQuestion Contract Law I

1. Express Terms
September 2012 – Question 3 (a)
Explain the distinction between a representation and a term of a contract. What are
the effects of breach of term?
Express terms are terms made in words, whether oral or in writing. In the
negotiation process, the statement made by the parties either oral or in writing plays
an important role to determine as to whether the statement made is a representation
or a term. Below are the distinctions between both:
Term
A term is a statement which is
intended to form part of the
contract. Terms are legally binding
and the other party can sue for
breach of contract if the terms have
not been adhered to.
Representation
Definition A representation is a statement
made only to induce the other party
to
enter
into
a
contract.
Representation
are
not
contractually binding and do not
form part of the contract however
they have legal effect and the party
who have been induced by the
statements to enter into a contract
is
entitled
to
relief
for
misrepresentation.
The shorter the time that has
When
The longer the time that has passed
passed from the moment the statement from the moment the statement was
statement was made until the time
is made
made until the time the contract is
the contract is formed, the
formed, the statement is more likely
statement is a term of the contract.
to be treated as a representation.
If there is a written contract and the Importance If there is no written contract and
statement is included in it, the
of the
the statement is not included in it,
statement is then a term of a statement the
statement
is
then
a
contract. The inclusion of the
representation. The exclusion of the
statement emphasised that it is
statement emphasised that it is not
important factors of the contract.
an important factors of the contract.
If a person has special knowledge Knowledge If a person lack of knowledge and
and skills or in a better position to
skills and only depending on
ascertain the accuracy of a
another statement received from
statement, it may be regard as a
others, his statement may regard as
term.
a representation.
In the case of Bannerman v
Case
In the case of Routledge v. Mc
White, plaintiff and defendant
Kay,
plaintiff
and
defendant
negotiated on the sale of hops.
negotiated
on
the
sale
of
Plaintiff asked on whether sulphur
motorcycle
belonging
to
the
was used in process of growing the
defendant. The defendant notified
hops and states that he would not
that the model of motorcycle was
even bother to negotiate further if
said to be 1942 based on the
sulphur was used. The defendant
registration book. After 1 week, the
clarified that sulphur was not used
contract was entered into and it was
and
they
entered
into
an
silent on the model of the
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2. agreement immediately after. Later,
there was evidence to show
sulphur was used on the small
portion in growing the hops.
Plaintiff argued that there is a
breach of contract. Court held that
the statement made by defendant
regarding the usage of sulphur was
a term of contract. Plaintiff had
agreed to enter into contract
directly after the defendant denies
the usage of sulphur. Besides,
plaintiff also had showed great
importance on the truth of
statement as she does not even
bother to ask the price if sulphur is
used. Lastly, defendant seems
have intended to lie regarding the
usage of sulphur where he can
denies his knowledge regarding
the sulphur.
motorcycle. Plaintiff later found out
that it was a 1930’s and argued the
defendant’s statement was a term
and therefore, there had a breach
of contract. Court held that plaintiff’s
argument was rejected. The
statement made was just a mere
representation because the longer
duration before making a contract
and the absence of the statement
in the written contract. Besides
that, the absence of the statement
in written contract emphasised that
the statement made was not
important thus it does not regard
as a term but only a mere
representation.
Once the statement complete as a Contractual term it is then further classified
as a condition or a warranty. The importance of the classification is to determine the
effects of a breach of term as the remedy for a breach of a term depend on the type
of term that has been breached.
Condition
A condition is an essential and the
more important term, thus a
breach of a condition gives an
innocent party the rights to rescind
the contract and claim for
damages.
In the Poussard’s Case plaintiff
had an agreement with defendant
to perform at his event for 3
months. She attended several
rehearsals however fell sick and
unable to perform at the opening
of the opera season. Her roles
was substituted by another person
and after her recovery, defendant
refuses to accept her service.
Court held that, the inability to
perform at the opening of the
opera season went to the root of
the contract thus it is regarded as
condition.
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Definition
Case
Warranty
A warranty is a non-essential term, a
subsidiary term and being the less
important term, a breach of which
only gives rise to an action for
damages.
In the case of Bettini v Gye, plaintiff
agreed to sing for defendants’ event
for 2 consecutive weeks and agreed
to be in London at least 6 days prior
to the event for rehearsals purpose.
However, plaintiff fell sick and
arrived at London 2 days before the
show. Defendant refused to employ
plaintiff. Court held that the term
regarding the rehearsals was not a
condition and did not go to the root
of contract. The breach did not
entitled defendant to rescind the
contract.

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