2015-08-21
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| Conditions | Warranties | Innominate terms | |
| Meaning | A term which is vital to the contract, going to the root of the contract. | It is a less important term, which does not go to the root of the contract, but is subsidiary to the main purpose of the agreement. | Term which is not clearly a condition or a warranty. |
| Effect | Breach of a condition entitles the party not in breach to treat the contract as discharged and to claim damages. e.g Poussard v Spiers 1876 | One party breaching a warranty is that the other party can claim damages but cannot terminate the contract. e.g Bettini v Gye 1876 | Where is not clear what the effect of breach of the term was intended to be, it will be classified by the court as innominate term. e.g Hong Kong Fir Sipping Co Ltd v Kawasaki Kisa Kaisha Ltd 1962 |
Exclusion clauses and onerous terms
| Exclusion clauses | Onerous terms | |
| Meaning | An exclusion clause is a term in a contract which limits or purports to limit liability in case of a problem. | Heavy terms, for example penalty clauses. |
| Effect | It is only valid if it is incorporated into the contract. e.g. Olley v Marlborough Court 1949 | To be valid these must be made clear. e.g Interfoto v Stilletto |
Conclusion
In this paper I have explained the importance of the essential elements required for the formation of a valid contract, discussed the impact of different types of contract and analyzed terms in contracts with reference to their meaning and effect.
Introduction
In this paper I will apply the elements of contract in given business situations, apply the law on terms in different contracts and evaluate the effect of different terms.
Applying the elements of contract in given business situations
According to elements of contract I will explain if there is a contact, how the law applies, can someone sue in scenario 1.
