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0105terms And Standard Form Contract

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Terms and Standard Form Contract
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Page 1: 0105terms And Standard Form Contract

Terms and Standard Form Contract

Page 2: 0105terms And Standard Form Contract

TermsTerms

• Terms in the contract are obligations that theTerms in the contract are obligations that the contracting parties are to fulfill. 

• Terms which are against the statutoryTerms which are against the statutory regulations may render the contract void

• Terms that are legally unfair may beTerms that are legally unfair may be unenforcible

• It is therefore important that terms are to beIt is therefore important that terms are to be clearly understood by contracting parties before they sign on the agreement. 

Page 3: 0105terms And Standard Form Contract

When terms are brokenWhen terms are broken

• When the terms in the agreement are brokenWhen the terms in the agreement are broken by a party, the other party may seek for remedies through legal actionremedies through legal action. 

• When terms are broken, it may lead to impact including lawsuits and ill feeling betweenincluding lawsuits and ill feeling between parties. This may further lead to termination of relationship between parties and both mayof relationship between parties and both may incur expenses for costly legal tussles. 

Page 4: 0105terms And Standard Form Contract

Representation and termsRepresentation and terms

• Statements made during the process ofStatements made during the process of negotiation that leads to formation of a contract can be eithercontract can be either– A representation,  something said before the contractcontract

– A term in the contract                          

• Representation Not written in the contract• Representation – Not written in the contract

• Terms – Written in the contract            Pg 104

Page 5: 0105terms And Standard Form Contract

RemediesRemedies

• Different remedies are available depending onDifferent remedies are available depending on whether – A term is broken; or;– A representation is untrue ‐misrepresentation

• You can claim for breach of contract if the  statement is not true and it becomes a term of the contract 

• Usually, lesser remedy is given to representation than terms in contract    Pg 104

Page 6: 0105terms And Standard Form Contract

A person with special knowledgeA person with special knowledge

• If the statement made by a person withIf the statement made by a person with special knowledge, it is more likely to be treated as a contract termtreated as a contract term

P 105Page 105

Page 7: 0105terms And Standard Form Contract

Express termsExpress terms

• Legal agreement must be complete in itsLegal agreement must be complete in its terms to be a valid contract

• When an agreement appears vague or• When an agreement appears vague or incomplete, the court will seek to uphold it by looking at the intention of the partieslooking at the intention of the parties

Page 105

Page 8: 0105terms And Standard Form Contract

Oral evidenceOral evidence

• Parol evidence rule– When a contract is in writing, and all the necessary terms are present, the court will interpret the terms of the contract by reference to the written documentof the contract by reference to the written document only except

– Oral evidence may be given of trade practice or customcustom

– The parties may agree orally that their written consent should not take effect until a condition precedent has been satisfiedprecedent has been satisfied

– The document is not intended to comprise all the agreed terms                                            Page 106

Page 9: 0105terms And Standard Form Contract

DiscussDiscuss

• Activity 1 Pg 107Activity 1, Pg 107

Page 10: 0105terms And Standard Form Contract

Standard form contract – Pg 51Standard form contract  Pg 51

• The standard form contract is a standardThe standard form contract is a standard document containing terms and conditions on which they contract with their customerswhich they contract with their customers.  

Th i di id l ll k i l i• The individual must usually take it or leave it probably because the supplier is the only 

li i h ksupplier in the market.

Page 11: 0105terms And Standard Form Contract

Standard form contractStandard form contract

• For example you have no choice but to sign onFor example, you have no choice but to sign on the standard form contract if you want to advertise in, say, newspaper or TV station even , y, p pthough if you don't agree with some of the terms.

• One of the problems with standard form contract is that the dominating party tries to excludeis that the dominating party tries to exclude liability for the terms in the contract

Pg 115Pg 115

Page 12: 0105terms And Standard Form Contract

Exclusion clausesExclusion clauses

• A clause in a contract to exclude liability or toA clause in a contract to exclude liability or to restrict it by limiting damages

• Also known as exemption clause

Page 115g

Page 13: 0105terms And Standard Form Contract

Statutory safeguardStatutory safeguard

• To protect consumersTo protect consumers

• Statutory safeguard provided by the Unfair Contract Terms Act 1997Contract Terms Act 1997

• The courts – protect consumers from the h h ff f l i l i 2harsher effects of exclusion clause in 2 ways:– Exclusion clause must be incorporated into a 

b f h h l l ffcontract before they have legal effect;

– Exclusion clause are interpreted strictly        Pg 115 

Page 14: 0105terms And Standard Form Contract

Unfair contract termsUnfair contract terms

• Voidable by statuteVoidable by statute– E.g. A clause which exclude death or personal injury resulting from negligence is void Pg 121injury resulting from negligence is void      Pg 121

– Anti‐competition

• Test of reasonableness• Test of reasonableness– E.g. A person cannot introduce a clause restricting his liability for negligence unless the terms ishis liability for negligence unless the terms is reasonable                         Pg 121

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Consumer protectionConsumer protection

• The law also seeks to protect consumers who are e a a so see s to p otect co su e s o a eusually the weaker party to the contract from the full force of exclusion clauses. 

• The person who uses a standard form contract in dealing with a consumer cannot, unless the term i bl t i t li bilit f hi b his reasonable, restrict liability for his own breach. 

• For example, a clause attempts to restrict liability for other loss or damage arising from negligencefor other loss or damage arising from negligence is void unless it can be shown to be reasonable. 

Pg 121Pg 121

Page 16: 0105terms And Standard Form Contract

Contractual documentsContractual documents

• Where the exclusion clause is contained in anWhere the exclusion clause is contained in an unsigned document it must be shown that this document is an integral part of the contract and is one which could be expected to contain terms                           

• See Chapelton v Barry UDC 1940• See Thompson v LMS Railway 1930

Pg 113

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Signed contractsSigned contracts

• If you sign a document containing a term youIf you sign a document containing a term, you are held to have agreed to the term even if you had not read the documentyou had not read the document

• But this is not so if  the other party puts forward the document for signature gives aforward the document for signature gives a misleading explanation of the term’s legal effecteffect              

Page 116

Page 18: 0105terms And Standard Form Contract

DiscussDiscuss

• Activity 4 page 117Activity 4, page 117

Page 19: 0105terms And Standard Form Contract

Unsigned contracts and noticesUnsigned contracts and notices

• Each party must be aware of the contract’sEach party must be aware of the contract s terms before or at the time of entering into the agreement if they are to be bindingthe agreement if they are to be binding

• Exception: Wh b th ti h d i t t d li– When both parties had consistent dealings; or

– When both party sufficiently aware of the terms at the time making the latest contractat the time making the latest contract

Page 117

Page 20: 0105terms And Standard Form Contract

DiscussDiscuss

• Activity 5 page 118Activity 5, page 118

• Activity 6, page 118

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Onerous termsOnerous terms

• E g fine printE.g. fine print

• Unusual terms should be highlighted

il d h i d• Failure to do so may mean that it does not become incorporated into the contract

Page 119

Page 22: 0105terms And Standard Form Contract

DiscussDiscuss

• Activity 7 page 119Activity 7, page 119

Page 23: 0105terms And Standard Form Contract

Assignment 1 – Claim 4Assignment 1  Claim 4

• DiscussDiscuss– 2a

2b– 2b

Page 24: 0105terms And Standard Form Contract
Page 25: 0105terms And Standard Form Contract

Claim 4 ‐ PlasterClaim 4  Plaster

• Keith tendered for the contract to supply plaster pp y p300 tonnes at $5,000 per tonne to John

• Agreement: h b l f h l– John cannot buy plaster from other supplier 

– Keith did not undertake quality or fitness of plaster and no compensation if plaster is unsatisfactoryp p y

• John wanted to– discontinue supply on the unsatisfied fourth delivery

h d f l l– Switch to Fred for plaster at lowe price• Keith seeked injunction, payment of 4th payment and loss of profit on future 220 tonnesand loss of profit on future 220 tonnes

Page 26: 0105terms And Standard Form Contract

DiscussDiscuss

Based on the case givenBased on the case given,

• Analyse the importance of terms in the contractcontract

• What are the impact when terms are broken?

• Analyse and apply the law of standard form contract

Relate to caseRelate to case 


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