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Contract: Terms

Representations and terms

  • 3 things to know
  • A2 Units 3 and 4

Overview

Term of a contract, representation in the law of contract and mere puff.

What you need to know

Answer each one before you reveal it.

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Key term

How does a court decide whether a statement is a term or a representation?

Numbers

Why was the statement in Oscar Chess v Williams (1957) held to be a representation?

Numbers

How can a collateral contract give effect to a statement left out of the main agreement?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is a term of a contract?

    Model answer

    A term is a statement that forms part of the contract itself, so that a party who fails to comply with it is in breach of contract.

  2. 2

    What is a representation in the law of contract?

    Model answer

    A representation is a statement made during negotiations that induces the other party to contract but does not itself become part of the contract.

  3. 3

    Why does it matter whether a statement is a term or a representation?

    Model answer

    Breach of a term gives a right to damages as of right and may allow the innocent party to terminate, whereas a false representation gives a claim in misrepresentation with rescission and damages assessed on a different basis.

  4. 4

    How does a court decide whether a statement is a term or a representation?

    Model answer

    The court asks objectively what the parties must have intended, weighing the importance attached to the statement, the relative knowledge of the parties, the interval before the contract was made and whether the statement was written into the agreement.

  5. 5

    What did Bannerman v White (1861) decide about the importance of a statement?

    Model answer

    It decided that where the buyer made clear he would not buy hops treated with sulphur, the seller's assurance that none had been used was so important to the bargain that it was a term.

  6. 6

    Why was the statement in Oscar Chess v Williams (1957) held to be a representation?

    Model answer

    The private seller honestly relied on the registration document in describing the car as a 1948 model, and since he had no special knowledge of cars the buyer, a dealer, was in the better position to check, so the statement was not a term.

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Pecuniary loss is financial and measurable.
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