termsofcontract.pptVIP

Introduction to Law The Terms of a Contract Learning Objectives Quick Review Terms of a Contract Terms v. Representation Types of Terms Implied Terms Exclusion clauses Quick Review A contract is a legally binding agreement In order to create a valid contract, there must be An offer An acceptance Consideration Capacity to contract Intention to create legal relations Terms of a Contract Now that we know how to create a valid contract, we need to think about what is in a contract A contract is an agreement The terms of a contract express what the parties to the contract have agreed A term in a written contract is often called a clause Terms v. Representations It is often important to identify whether a statement is a term of the contract or a representation made during negotiations about the contract This is because a term is part of the contract That means it is binding and the parties must do what the term says Terms v. Representations (cont.) On the other hand, a representation does not form part of the contract so the parties to not have to do what it says A representation is a statement made to try to get someone to enter into a contract Terms v. Representations (cont.) There are 4 tests to help us decide if a statement is a term or a representation The importance of the statement The time between making the statement and making the contract An oral statement before a written contract Where one party to the contract has special skill or knowledge Importance of the Statement If the statement is so important that someone would not have entered into the contract without it, then it is a term of the contract (and not a representation) Eg: Angela is a vegetarian. She does not eat any meat. When she orders a pizza she asks the restaurant if it contains any meat. They say, “No.” The reply made by the restaurant would be a term of the contract because Angela would not buy a pizza which contains meat. Timing If some time passes between the statement being made and the