Developing Contracts

							         Developing Contracts



                      Session 4
                  Terms of a Contract




Developing Contracts
Pre-Contractual Statements

  Advertising ‘puffs’ – ‘just like granny
   used to make’

  Representation – factual statements,
   legally binding

  Contractual terms - legally binding



Developing Contracts
                   Contract Terms
 Representation - statements of fact made at
     pre-contract stage
 if false - misrepresentation

 Terms - statements incorporated in the
   contract

 1954 motor bike advised as 1942 found to
   be 1930 - Misrepresentation
 Car sold as 20k miles in fact was 80k ‘term
   of the contract’ (court of appeal)
Developing Contracts
                   Contract Terms

  Implied terms
  Sale of Good Act 1979 S12,13,14,15

  Express terms
  Price, Delivery date




Developing Contracts
                       Conditions
  A condition - goes to the very heart of the
   contract
  Breaching entitles the other party to sue
   for damages and terminate the contract if
   they wish
  In some cases, the injured party might
   take the option of affirming the contract
   and claiming damages
  Pousard v Spiers 1876



Developing Contracts
                       Warranties
  A warranty is a minor term relative
   to condition
  Breaching a warranty does not
   entitle the injured party to
   terminate the contract but there is
   entitlement to damages

  Bettini v Gye 1876



Developing Contracts
                Legal Framework

    Sale of Goods Act 1979
    Supply of Goods and Services Act 1982
    Sale and Supply of Goods Act 1994
    Data Protection Act 1998
    Fair Trading Act 1973
    Competition Act 1980
    Unfair Contract Terms Act 1977
    Limitation Act 1980


Developing Contracts
   Sale of Goods Contract

                Defined as ...
        a contract by which the seller
      transfers or agrees to transfer the
      property in goods to the buyer for
      a money consideration called the
                 price. s2(1)



Developing Contracts
                       Definitions

                  Seller -
                  Buyer -
         Agreement to sell -transfer of
                  property




Developing Contracts
                       Definitions

                          Goods -

           Specific - your coat
      Unascertained - a tonne of coal
           Future - to be made
         Existing - at your factory


Developing Contracts
                       section 11

       A breach of any of the implied
      conditions will entitle the innocent
                  party to ..

       Reject goods, treat contract as
       repudiated and claim damages.


Developing Contracts
                       section 11

 A breach of an implied warranty will
     entitle the innocent party to ..

                       claim damages.




Developing Contracts
                         title s12
The seller has a right to sell the goods -

                         Condition




  Developing Contracts
                description s13

    The goods shall correspond with
            the description -

                       Condition




Developing Contracts
    Beale v Taylor 1967




Car was described as a Triumph Herald
1200 but was a ‘cut and shunt’
  Developing Contracts
   satisfactory quality s14

   The goods shall be of satisfactory
                quality -
        Condition or warranty
        scratch or dangerous

          Set the standard which a
       reasonable person …. Price and
                description….
Developing Contracts
       Satisfactory quality?


                       Grant wore the pants before
                       washing them
                       ouch!

                       Grant v Australian knitting mills 1936




Developing Contracts
   satisfactory quality s14

                Limits to liability s14(2)

     only applies in the course of
      business, not private seller
 notice of defects given by the seller
       inspection by the buyer


Developing Contracts
goods correspond with sample
            s15
           The goods correspond to the
                     sample -
              Condition section 15




  Developing Contracts
Transfer of Property in goods

        s 16 Property in unascertained
        goods cannot pass before they
             have been ascertained
                ………………...




 Developing Contracts
Hayman v McLintock 1907

   Which
  bags are
   yours?




Developing Contracts
    s17 property passes at such time
       as parties intend it to pass or
                 ………….

  section 18 - property passes when
            ………rules 1 - 5


Developing Contracts
Rule 1 property passes at time
          of contract
   Tarling v
  Baxter 1827

   Haystack
  catches fire!




  Developing Contracts
      Rule 2 specific goods
    Underwood
    v BCB 1922

       engine
      stuck in a
       block of
      concrete!



Developing Contracts
Rule 3 Weigh, test or measure

 Turley v Bates
      1863

 goods have
 not yet been
   weighed




   Developing Contracts
       Rule 4 Sale or Return
  Elphick v Barnes
        1880

       ‘dead horse’




Developing Contracts
   Rule 5 Unconditionally
        appropriated

  Healy v Howlett
  and Sons 1917 -
        fish

      Bikes 1957

  how can you tell
      they are your
   specific
Developing Contracts goods?
                       Title
 S 19 seller retains title until …….
 usually payment

 Romalpa

 Peachdart



Developing Contracts
Supply of Goods and Services Act
             1982
    Part I ss2 – 5 apply to contracts which
     are for the supply of goods:

      s2 Title
      s3 Description
      s4 (2A) Quality
      s4 (3) Fitness for purpose
      s5 Sample



  Developing Contracts
Supply of Goods and Services Act
             1982
    Part I ss7 – 10 apply to contracts which
     are for the hire of goods

      s7 Title
      s8 Description
      s9 (2A) Quality
      s9 (3) Fitness for purpose
      s10 Sample



  Developing Contracts
Supply of Goods and Services Act
             1982
    Part II ss 13 – 15 apply to contracts which
     are for the supply of services

    s13 – reasonable skill and care
    s14 – within reasonable time
    s15 – reasonable price




  Developing Contracts
Unfair Contracts Term Act 1977

   Olley v Marlborough Court 1949

   Car Parks




 Developing Contracts
                       Core Clauses

    Terms of payment
    Time of the essence
    Confidentiality and data protection
    Insolvency and bankruptcy
    Force majeure
    Dispute resolution
    Termination for breach




Developing Contracts
           Liquidated Damages

  Compensation that represents a genuine
   pre-estimate of loss

  Often referred to mistakenly as ‘penalty
   clauses’

  Describe what is meant by penalty
   clauses by giving examples that you are
   aware of


Developing Contracts
                   Liability Clause
  Should clearly state the maximum amount that
   one side will pay to the other in compensation in
   the event of a breach of contract

  The type or types of loss for which no
   compensation can be claimed

  Some clauses limit liability of both buyer and
   seller but more often clauses are drafted to limit
   the liability of the seller




Developing Contracts
                Contract Clauses

 Clauses should be included to cover:
  Variation of contract
  Renewal of contract
  Termination of contract
  Dispute resolution
  Guarantee - primary and secondary
   liability
  Indemnity - primary liabilty
  Confidentiality
  IPR
Developing Contracts
                       Review

 Conditions and Warranty clauses

 Implied and Express

 Sale of Goods Act S12.13.14.15.17.18……

 UCTA

 Clauses to consider

Developing Contracts