What are the terms? Express and implied
The first distinction of many, between the terms of a contract involves whether the terms of a contract are express or implied.
Express terms will expressly state in words or writing the terms in contains. Where as an implied term are terms established not so clear as spoken or written words but implied through fact, law or custom.
It is commonly assumed that a contract has to be a written document. In fact, most contracts formed on a daily basis require no formalities and can be created orally, although a deed or document may substitute the consideration of either party.
If there is consideration (bargaining element of either party) then certain requirements are restricted to specific types of contracts.
Statements, representations and terms
Where someone makes a statement prior to the actual contract being established then this could become an actual term of the contract itself or it could possibly become a mere representation.
If it is decided to be a mere representation and it is proven to be untrue and false or doies not occur then there will be no remedy available for a breach of term, as it is not an actual term but a representation.
If it is decided that the statement is an actual term of the contract, then if the term is breached, there will be a remedy available.
In certain situation it is possible that a statement becomes both a term and a representation. If this is the case then the person claiming the breach decides which route they wish to follow and then depending on they choice, which remedy they pursue.
The basic test
The basic test for establishing whether a statement is a term is all based on the intention of the parties.
The intention of the parties can be identified by the conduct of the parties, do their actions imply they have the intention to make their statement a term of the contract?, their words and behaviour rather than their thoughts.
For more information on:
- Indicators of intention
- Importance of the statement
- Relative knowledge of the parties