False Representations And Broken Promises

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Chapter 6
Enforcing deals

Chapter 6 | Enforcing deals
1.
2.
3.
4.
5.
6.

False representations and broken promises
Terms of the contract
Non-contractual representations and promises
Enforcing the contract
Remedies
The end of the contract

False representations and broken promises
Chapter 6
Enforcing deals

False representations and broken promises
• The legal consequences of making a false representation (statement of fact) or breaking a promise depend upon whether the representation or promise was:
– a term of the contract,
– a statutory term, or
– a non-contractual representation or promise.

Figure 6.1

Terms of the contract
Chapter 6
Enforcing deals

Terms of the contract

•The terms of the contract are the specific details of the agreement, including each party’s rights and obligations.
•Broadly speaking, there are two types of contractual term: express terms and implied terms. Implied terms include those implied by the courts and any relevant statutory terms.

Express terms
• There are two ways by which a term becomes an express term of the contract: – By inclusion in a signed written contract.
– By being brought to the attention of the other party by reasonable notice.

Express terms
• If a term is in a written contract that has been signed by the parties, it is a binding and enforceable term of the contract, even if one of the parties has not actually read and understood the written contract:
– L’Estrange v Graucob (1934)
• Situations where a signed contract may be unenforceable include:
– cooling off periods, and
– non est factum.

Express terms
• If a statement is not contained in a written and signed contract it will only be an express term of the contract if the other party had reasonable notice of the statement.
• A statement brought to the attention of X after the contract had already been formed will not be a term of the contract:
– Olley v Marlborough Court (1949)
– Thornton v Shoe Lane Parking (1971)
– Thomson v London, Midland and Scottish Railway Co
(1930)

Implied terms
• Courts are frequently willing to imply a term into a settled contract to ‘fill the gaps’, as long as it is:
– reasonable and fair,
– necessary to make the contract viable,
– so obvious that it ‘goes without saying’,
– able to be clearly expressed, and
– consistent with the express terms.

Implied terms continued
• The court will imply into the contract a term of which the parties are deemed to be aware as a result of prior dealings:
– Balmain New Ferry Co Ltd v Robertson (1906)

Statutory terms
• The sale of goods legislation implies statutory terms that protect the buyer into contracts for the sale of goods. • (Similar terms are implied into consumer contracts by the ACL: these are considered in Chapter 8.)
• A contract for the sale of goods is a contract where a seller transfers, or agrees to transfer, the ownership of goods to a buyer in return for a monetary price.

Implied terms protecting the buyer
• In every contract for the sale of goods there is an implied:
– condition that the seller has title, i.e. the right to sell those goods to the buyer,
– condition that the goods will correspond with their description, – condition that the goods will be of merchantable quality,
– condition that the goods will be fit for their purpose,
– condition that the bulk of the goods will correspond with the sample.

Statutory terms
• A seller will have breached the statutory implied term regarding merchantable quality if:
1. the contract is for the sale of goods;
2. the buyer has relied upon a description of the goods;
3. the seller normally sells goods of that description;
4. the goods are not of merchantable quality; and
5. the buyer has not examined the goods or, if they have examined the goods, the defect is not one that would have been revealed by the examination.

Statutory terms
• A seller will have breached the statutory implied term regarding fitness for purpose if:
1. the contract is for the sale of goods;
2. the seller
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