You can ask our online solicitors for advice on contract terms using the question box on the front of our website or the following free legal advice guide may answer your questions.
Contract terms form the basic structure of any contract whether you are buying something, or you are being appointed by an employer. You only enter a contract once you are happy with the terms. However, there are two distinct types that you should be aware of; express terms and implied terms. An express term will outline specifically the terms of the contract. An implied term is something that is not necessarily written down or spoken and it can be implied through custom, law or fact.
Often in contract law it is assumed that a contract must be in writing. However, in reality, most contracts that are created don’t require any formalities and they can be created verbally.
Sometimes an official document such as a deed can act as a substitute for consideration. If consideration is present (consideration is a legal term that relates to the bargaining process), certain requirements are allocated to certain types of contracts.
If you were entering into a contract with another party and they made a statement before the contract was agreed, this could in actual fact become part of the contract. If it doesn’t it could form what’s known as a representation. If it is arepresentation but the statement is proved to be false or inaccurate there will be no grounds to pursue legal action for a breach because it wasn’t an actual term incorporated into the contract.
If, however it is decided that the statement was a term then action could be pursued for a breach of contract and remedies may be available.
There may be occasions when a statement is both a representation and a term. If this proves to be the case, the individual who is pursuing the breach will need to determine not only which route they would like to pursue and of course the remedy that they are seeking.
In order to determine whether a statement should be dealt with as a term depends on what the intent is. Intention can be indicated through the conduct of the parties involved and whether their conduct could express what they intend to do.
If in an everyday situation someone would believe that the intention was there to make the statement part of the contract terms, this would suffice to pass the test of intention. When some contracts are created it may be clear to both parties that certain statements were meant to form part of the contract.
When the court determines whether a statement is a term or a representation, there are three factors it will take into consideration.
The first is how important the statement was, the second would be whether there was a reliance on the statement by all parties and thirdly the relative knowledge of the parties involved in the contract.
How important the statement was?
The courts will determine whether it was clear to both parties that a statement was meant to be part of the contract.
Reliance on the statement
When a statement is made and it is relied upon without the need for it to be verified, it essentially becomes part of the contract and considered to be a term
When reaching a decision over statements, the courts will often aim to establish whether any of the parties were at an advantage to know whether the statement was a representation or an actual contractual term.
This is closely related to reliance and how important the statement was to the person who entered into the contract.
Contract terms should always be drafted by a qualified legal professional so there is no ambiguity and statements that should be incorporated into the contract as terms are added in the right way.
If you have any doubt about statements or contracts it is strongly recommended that you seek legal advice from someone experienced in the intricacies of contract law.o