Understanding Contractual Terms and Exclusion Clauses

This assignment discusses the types of contractual terms, including express and implied terms, conditions, warranties, and exclusion clauses. The main difference between conditions and warranties is that a breach of condition allows for termination of the contract, while a breach of warranty only allows for damages. Implied terms are those that are not explicitly stated in the contract but are considered essential to its performance. In the present case, if it is considered that Office Pro X9's provision of sufficient lower back support was a term of the contract between Peter and the company, then it needs to be treated as a condition of the contract. An exclusion clause can reduce or exclude liability for breach of contract, but it must be properly added to the contract and not contravene the law. In this case, the exclusion clause cannot be relied upon because it is illegal, attempting to exclude obligations imposed on businesses by consumer legislation.

1.
Under the law of contract, the rights and obligations of a party are decided on the basis of the
terms of the contract. Search terms can be expressed or implied. In this regard, there are certain
representations that are considered as mere sales puff. For example, a number of claims are made
in the advertisements of a particular product or service. In this regard, a sales puff can be
described as exaggerated sales talk. While making such statements, it is not the intention of the
speaker that they should be taken literally by the other party (Beatson, Burrows and Cartwright,
2010). This would also be recognized by any reasonable person. As a result, no reasonable
person will believe that such a statement was intended to be relied upon. The result is that under
the law of contract, such statements do not amount to a representation of a term of the contract
(Baxt, Fletcher and Fridman, 2008). The result of this situation, under the contract law is that no
remedy is available to the other party if such a statement turns out to be a false one. In the
present case also, the statement made in the advertisement that Office Pro X9 is an amazing chair
and the statement made by Samantha that it is the best in the market are mere sales puff. The
statements were not intended to be relied upon by the other party. Any reasonable person would
not have relied upon the statements in order to enter into the contract. Therefore, it can be
concluded in this question that the statements were not a term of the contract that was concluded
between Peter and Forever Furniture regarding the Office Pro X9 chair.

2.
While evaluating the terms of the contract, it is significant consider the pre-contractual
statements made by the parties and also their post contractual conduct which may give rise to
rights and obligations that are in addition to, or independent from the terms determined by the
parties to the contract. Generally a false pre-contractual will result in giving rise to the liability of
the other party. In this context, the terms of the contract can be classified as express terms and
implied terms. Express terms are the ones that have been determined by the parties while in
bringing to the contract. The law provides that whenever there is a breach of any term of the
contract, remedies may be available to the other party. In order to be considered as a term of the
contract, it should be the intention of the parties to consider the term as promissory in nature. As
is done by deciding the intention of the parties to create regulations, in this context also, the
intention is determined objectively (Ellul & Ellul v Oakes, 1972). Therefore, it has to be seen,
what would be thought by any reasonable person, to be the intention of the parties under the
circumstances. In the same way, a pre-contractual statement that amounts to a term may also
constitute a representation. There are certain cases, where it was not intended that the
representation will be promissory in nature. And as a result, they do not amount to a term of the
contract. But in case, such representation is found to be false, the party to whom such
representation has been made has some remedies provided by the common law or under statue.
Under the common law, if a contract has been created as a result of a false representation, the
party to whom representation was made can rescind the contract (Atiyah, 2000). In the present
case also, Samantha had made a statement to Peter according to which the chair provided
excellent back support. In this way, it can be said that Peter had entered into the contract after

Samantha assured him that the chair provided good back support. As a result, this statement has
become a part of the contract, and Peter can claim remedies if the statement turns out to be
untrue.

3.
The terms of the contract can be classified as conditions, warranties and innominate terms. This
classification could be specified in the contract or it could be implied by the nature of the term all
implied by law. A particular term of the contract that can be described as a condition results in
providing a right to the other party either to terminate the contract or to reaffirm it. At the same
time, neither party can also claim damages for the breach of the condition. But in case of a term
that has been classified as a warranty, the breach does not provide the right to the other party to
terminate the contract. In such cases, the other party only gets the right to claim damages. The
difference between a condition and a warranty is that a condition can be described as a
fundamental term of the contract goes to the heart of the contract. On the other hand, any
statement or assurance regarding a factual issue will generally be a warranty. The difference
between the two can be understood from Poussard v Spiers (1875) and Bettini v Gye (1875).
While in the first case, the obligation of the singer to sing on the first night of the concert was
treated as a condition but in the second case, the obligation of the singer to attend the rehearsal
was held to be a warranty. Between these two, there are the innominate terms. In this case, the
remedy for breach depends on the effect caused by the breach. If the effect is significant, it will
provide a ride to the other party to terminate the contract. If it is not, then the other party only
gets the right to claim damages.
The contractual terms can also be described as express terms and implied terms. Express terms,
are the terms that have been specifically mentioned by a party while entering into the contract
and both parties have agreed regarding it. Such term can be oral or in writing. On the other hand,
implied terms are terms that have not been mentioned by either party. Still, it is considered as a

part of the contract, generally due to the reason that without such a term, the contract would not
make any commercial sense.
In the present case, if it is considered that it was a term of the contract that Office Pro X9 will
provide sufficient lower back support so that Peter can comfortably continue to work the whole
day, such term needs to be treated as a condition of the contract. The reason is that this term goes
to the heart of the contract. Without sufficient back support, Peter would not have purchased the
chair. As a result, this term can be classified as a condition of the contract between Peter and the
company.

4.
An exclusion clause is a clause that is generally present in writing and which provides that a
party to contract will not be held liable if a particular thing happens. In this way, an exclusion
clause reduces or excludes the liability of a party for conduct that would otherwise be treated as a
breach of contract on the amount to a tort. Hence, an exclusion clause is the term of the contract
that tries to either modify the main obligations of one party under the contract or it excludes or
limits the liability of one party to the contract that would otherwise be present in case of a breach
of contract by such party regarding its obligation, which requires that the contract should be
performed according to its terms (Gooley, Radan and Vickovich, 2014).
An exclusion clause can be treated as valid and the party can rely on such seclusion clause if the
clause is properly added in the contract (Thornton v Shoe Lane Parking Ltd. 1971) and if such
clause is not contrary to law.
In order to be properly added in the contract, the clauses should not be included in the contract
after the contract has been made. For example, if a signed contract is present, which contains the
clause, generally, they still have the effect of, including such a clause in the contract. If no signed
contract is present, but there are signposts or printed documents that mention the term, these can
be considered as a part of contract if they have been brought to the notice of the other party
before the contract has been concluded.
Similarly, the exclusion clause should also be legal. There are a number of obligations imposed
on businesses by consumer legislation. These obligations cannot be excluded by adding an
exclusion clause in the contract (Paterson, Robertson and Duke, 2009).
In the present case, the exclusion clause has been mentioned as clause 10 of the contract signed
by the parties. In this contract it has been mentioned that Forever Furniture, cannot be held liable

for a breach of warranty. But as mentioned above, the obligations imposed on the business in
favor of the consumers cannot be excluded by inserting an exclusion clause. As a result, in the
present case also, Forever Furniture cannot rely on this clause as the clause is not legal, even if it
has been incorporated in the contract.

References
Atiyah, P.S. 2000, An Introduction to the Law of Contract Clarendon
Baxt, R, Fletcher, K and Fridman, S., 2008, Corporations and associations: cases and materials,
10th edn, LexisNexis, Butterworths, Sydney, New South Wales
Beatson, J., Burrows A . and Cartwright, J., 2010, Anson's Law of Contract, 29th Ed. OUP
John Gooley, Peter Radan and Ilija Vickovich, 2014, Principles of Australian Contract Law
LexisNexis Butterworths, 3rd Ed
Paterson, Robertson and Duke, 2009, Principles of Contract Law Lawbook Co, 3rd Ed
Case Law
Bettini v Gye (1875) L.R. 1 QBD 183
Ellul & Ellul v Oakes (1972) 3 SASR 377
Poussard v Spiers (1875) L.R. 1 QBD 410
Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686