Terms of the Contract I The terms and conditions of a contract must have been agreed, either verbally or by implication at the time the contract was made. A court may not look at what occurred later. Logically, the contract must have been agreed expressly or impliedly at the outset. Later acts, words or circumstances may tend to prove what […]
Overview I The law may imply terms into a contract where the verbal and written communications do not contain the full agreement. In many cases, the verbal terms of the agreement which can be ascertained are relatively minimal. The remaining terms must be ascertained by implication. There are a number of sources for implied terms. There are two broad categories […]
Verbal / Parol Evidence Rule The so-called parol evidence rule relates to documents in writing. Parol evidence, in this context, means oral or verbal evidence. The rule excludes the consideration of most statements of intention in prior negotiations when finding the terms of a written agreement. There are two aspects to the parol (verbal) evidence rule. One is a presumption […]
Overview In many cases, the entire contract terms will not be in a single document. Contracts will commonly incorporate standard terms and conditions, often drafted by the stronger commercial party to the contract. The terms of a document may be “incorporated” or brought into the contract by reference to that document in a verbal or written agreement. Where a party […]
Ascertaining the Contract Terms There must be a minimum degree of certainty in relation to the terms of a contract. If all essential terms are not agreed, there is no contract. Some terms are illusory, in that they involve no meaningful undertaking. A promise to undertake an obligation while at the same time, reserving the full right not to do […]
Conditions Precedent v Conditions Subsequent A distinction is made between conditions precedent and conditions subsequent. A condition precedent (or precondition) is a condition which suspends the principal obligations under the contract until it is performed. A condition subsequent is a condition which terminates a contract that has fully come into being. A condition precedent (a pre-condition) must be complied with […]
Interpretation Notionally, the interpretation of a contract involves the ascertainment of the parties’ intentions. However, the party’s private subjective intentions are irrelevant. The Courts interpret the terms of the agreement as they objectively manifest themselves. They interpret the agreement in light of the circumstances and what the parties have said and done. A party may be bound by a particular […]
Traditional Approach to Interpretation Traditionally, all contracts were interpreted in the same manner. Commercial and consumer contracts were subject to the same broad principles. The traditional approach emphasises the plain meaning. In the absence of ambiguity or something pointing to the contrary, effect is to be given to the plain meaning. Under this approach, background evidence is not permitted to […]
Classification of terms The obligations in a contract may vary in importance. Some clauses / terms are regarded as more fundamental or important than others. Contract law distinguishes between terms that are essential to the agreement and those that are less fundamental. A distinction is sometimes made between warranties and conditions. Breach of a condition entitles the innocent party to […]
Overview of Terms Limiting and Excusing Liability One party, usually, the stronger party may insert an exclusion or limitation of liability clause, typically in a standard form contract.An exemption clause is one that seeks to exclude or limit the liability of a party for breach of contract or failure of performance (invariably that of the trader who proffers it). In order […]