Contractual Terms

Contractual Terms Works Cited Not Included Contractual terms are statements that form part of a contract. Parties

to a contract will normally be bound to perform any promise that they

have agreed to, and failure to perform this promises, or a

unsatisfactory performance, may lead to an action for breach of

contract. Some statements, however, do not form part of a contract,

even though they might have led the other party into entering into the

contract in the first place. These pre-contractual statements are

known as representations. The consequence of such representations

turning out to be false is an action for misrepresentation, not an

action for breach of contract. The key consequence of this distinction

is that each of these actions provides different remedies. It is

important, therefore, to decide precisely what promises are included

in the contract.

Types of contractual terms

Once it is decided that a statement is a term, rather than merely a

pre-contractual representation, it is further necessary to decide

which type of term it is, in order to determine what remedies are

available for its breach. Terms can be classified as one of three

types.

(1) Conditions

A condition is a fundamental part of the agreement - it is something

which goes to the root of the contract. Breach of a condition gives

the injured party the right...

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(2) Terms implied by custom

An agreement may be subject to customary terms, which do not have to

be expressly stated by the parties. For example, in Hutton v. Warren

(1836) it was held that customary usage permitted a farm tenant to

claim an allowance for seed and labour on quitting his tenancy.

Custom, however, cannot override the express terms of an agreement (Les

Affreteurs v. Walford (1919)).

(3) Terms implied by the Courts

On occasion the Court will presume that the parties intended to

include a term which is not expressly stated in the contract. The

court will only do this where it is necessary to give business

efficacy to the contract. Thus, in The Moorcock (1889) it was held

that there was an implied warranty in the contract that a place of

anchorage should be safe for a ship making use of it.