Standard form contract
Terms in different Contracts
In this assignment I’ll pertain and examine the bylaw on contract requisites citing standard-form contracts regarding Budgburys also conferring the outcome of exemption clauses prohibiting contractual liability.
Budgburys entered a standard-form contract with ICC Plc, supplier of computer systems (stock control) for purchase, installation, and maintenance with a clause: ‘ ICC doesn’t accept responsibility regarding suitability of the system provided for purposes of the purchaser and could cease without notice the maintenance duties without any compensation remunerated’. Later the system was deemed unsuitable and ICC declined the maintenance duties citing the clause.
Standard form contract
This is an agreement where one party places the terms and conditions of the contract whilst the other party is positioned in a ‘take it or leave it’ situation and have limited capacity to parley terms to favour them. In UK common law the Unfair Contract Terms Act (1977) restricts the capacity of the drafter to prepare clauses which permit them to execute in an unreasonable manner.
Adams (2010, page 111) suggests S3 of the act responsibility of violation cannot be disqualified where one side enters a contract formed on the other’s standard terms (nonnegotiable) or when dealt as a customer. In terms of Budgburys’ situation the court will be in their favour since the contract they had entered was unreasonable based on a variety of factors.
Firstly the plaintiff’s specialist requirements restricted their choice of suppliers hence its unreasonable to exclude liability. Budgburys needed someone that would provide them the product also install and preserve it, since no wider variety of choices, the business had to agree. In St Albans City & District Council v International Computers Ltd (1996) the council was supplied software with a clause limiting liability to £100,000 the software was defective leading to significant monetary losses. The court held the council’s special needs meant limited alternatives and the liability limit was significantly low to the £50m insurance.
Secondly no equal bargaining power because Budgburys lacked specialist knowledge hence they agreed to a maintenance contract. Budgburys entered a standard-form contract meaning they couldn’t negotiate terms thus were dependent on ICC’s expertise hence their ignorance created a power disparity. In Smith v Eric S. Bush (1989) the claimant purchased a house relying on the surveyor’s report which didn’t guarantee accuracy or acceptance of legal responsibility. His inattention led to a serious defect the chimney collapsed resulting in repair bills. The court held in favour of Mrs Smith because of her ignorance to the report’s accuracy resulted in a power disparity.
Finally ICC neglected its duties constituting a breach of the Unfair Contract Terms Act 1977. The term stating ceasing maintenance duties and suitability of the product isn’t reasonable because it wasn’t of satisfactory quality constituting a breach in the Misrepresentations Act 1967 S3 and excluding complete liability isn’t reasonable as ICC’s job’s to look after the product per maintenance agreement. In Medical Supplies v Orient (1999) an exclusion clause declaring the litigant isn’t liable for loss of merchandise in shipment was held as unreasonable given another term obligated the litigant to insure merchandise which wasn’t completed.
Terms in different Contracts
There are a range of contracts available thus it’s clear there are specific terms designed to cater to the needs of these contracts. I’ll discuss three types of terms relating to different contracts which are the following: Implied, Express, and Warranty.
(The Law Handbook, 2012) suggests terms embarked in law are involuntarily a component of a contract, without needing to be declared in the text is known as an implied term. In the contract of sale an implied term is necessary because the goods must be satisfactory, lawfully transferred, and good for purpose.
In Rowland v Divall (1923) the defendant purchased a vehicle in good faith which was stolen. Thus the crook couldn’t transfer ownership and the defendant when he traded it to the plaintiff. Subsequently the plaintiff used it for 4 months; the actual proprietor came and seized the vehicle. It’s held the plaintiff was permitted to recuperate complete purchase value from the defendant. No concession was permitted for 4 months use as possession wasn’t transferred.
Adams (2010, page 351) recommends terms are declared in any printed contract of employment, furthermore to be established in written constitutional information illustrated. They consist of assurances through idle talk prior to approval. In an employment contract it is expected of a worker to carry out their contractual obligations which they have viewed and agreed to.
In Walmesley v UDEC (1972) the defendant was ordered to acknowledge relocating to Ireland, which he declined since being, scared he’d be attacked by the IRA. The court held Walmesley was in breach of contract because he wasn’t able to verify any impending or specific risk of injury. As an employment contract has expressed and agreed to contractual duties the employee is legally obliged to perform the errands except if the duty is prohibited.
Adams (2010, page 104) suggests innominate term appears in consequence of the violation and queries if the guiltless side to the violation was dispossessed of the entire advantage of the agreement. Moreover the law is able to settle whether the violation is a condition or warranty. In a construction contract the terms designated should be done unless they don’t affect the final version of the product.
In Reardon Smith Line v Hansen-Tangen (1976) a ship constructed for a purchaser satisfied all its contractual stipulations excluding that its constructed in a different shipyard from the one named in the agreement. It’s held the phrase must be dealt as innominate; no spoil had occurred thus no claim to disclaim.
Business Law (2010, page 119) suggests several contracts consisting of a term where one side is looking to reduce monetary assertions against itself in situations result in the loss/damage or lawful accountability overall of the opposing clientele this is acknowledged as an exemption clause. For an exemption clause to be successful it must meet three criterions: included in the agreement, be apparent, and accepted by statute.
In sequence for a term to be included in an agreement the party being constrained by it is obliged for adequate notification. Two vital aspects are subject of notification: timing and competence. Regarding timing the idiom liability exclusion ought to be advised towards the other side preceding acceptance of contract.
In Olley v Marlborough Court Hotel (1949) a sign in Mrs Olley’s bedchamber settled the hotel owner wouldn’t accept liability for larceny of guest’s belongings. Afterwards ornaments were taken from her bedroom. The court held the agreement was completed at the reception when the claimant made a reservation, prior to reading the sign which subsequently didn’t shape an element of the contract. Consequently the hotel wasn’t excused from accountability of thievery.
Concerning competence a clause isn’t binding except when the offeror engages rational measures to lure it to the consumer’s awareness. The more arduous the idiom the superior the extent of awareness required. Exclusion clauses shown in the text must be written clearly and possibly be highlighted or underlined.
In Curtis v Chemical Cleaning & Dyeing Co. (1951) Mrs Curtis took her bridal outfit to be cleansed and was requested to sign a letter excusing the cleaners from responsibility for harm to the dress. She questioned this nevertheless authorized it learning not to fret as it was convenient only to defend the business if beads/glitter were spoilt. The outfit restored to her was significantly blemished and sued for violation of agreement, the company referred to the exemption clause. It was held the defendant was accountable because the exemption wasn’t effectual as Mrs Curtis had been hoodwinked regarding its capacity.
The Unfair Contract Terms Act (1977) concerns agreements providing rise to company accountability. Hence it’s apprehensive with brokers/merchants seeking to restrict or prohibit responsibility acquired in line of business such as injury/death, faulty commodities.
In George Mitchell v Finney Lock Seeds Ltd (1983) George purchased cabbage seed from the defendant not fitting the depiction and being substandard. The plaintiff lost harvest of £61,000. The contract restricted responsibility for violation for substitute or reimbursement. It’s held it wasn’t rational because the violation occurred from seller’s disregard, seller could’ve covered against harvest stoppage, before the wholesaler resolved claims in excess of the restriction figure signifying deem the clause unjust and irrational.
The Sale of Goods Act (1979) S14 protects the consumer by stating the goods at offer must be of a ‘satisfactory’ quality. This means the goods must fit the usage purposes, liberated from deficiencies, and must be safe and durable. All of the criteria mentioned must be met as it is the typical requirements of a ‘reasonable’ person.
In Godley v Perry (1960) a six-year-old purchased an artificial catapult from a games store. When he used it the grip shattered and a bit hit him in the face leading him to lose an eye. The court held the merchant was liable for violation of S14; evidently the grip wasn’t adequately strong. It was inappropriate the deficiency was sourced by manufacturing defect he had no control over.
- Quote paper
- Amritpal Hayre (Author), 2012, Aspects of Contract and Tort Law: The Scenario of Budgburys Ltd, Munich, GRIN Verlag, https://www.grin.com/document/288165