Contract Law - Implied Terms

This assignment delves into the complex area of implied terms in contract law. It requires students to analyze various case studies, such as Shirlaw v Southern Foundries, Chapelton v Barry UDC, Heilbut Symons & Co v Buckleton, Birch v Paramount Estates Ltd, and Trollope and Colls Limited v North West Metropolitan Regional Hospital Board. Students must explain the legal principles surrounding implied terms, discuss different types of implied terms (including those imposed by law or custom), and evaluate how these cases have shaped the development of contract law.

Business Law and Ethics
Common Law Assignment
04-Dec-17
(Student Details: )

Business Law and Ethics
Question 1
Issue
Whether the vegan leather being all-natural was a term of the contract drawn between Peter and
Animal-friendly Cobbler Supplies, or not?
Rule
A contract is defined as the legal validity holding agreement where party X promises that it
would pay consideration amount and party Y would be doing the task for which the
communication is being paid. The terms of the contract give rise to the rights and responsibilities
under the contract. Where the terms covered under the contract are not upheld, the liability is
raised under the common law of contract law. Contract formation is not a simple task and before
the formation of contract, negotiations take place for the same, which are often referred to as
puffs. These puffs are not deemed as contractual terms, for the lack of intent of the parties to be
bound by such statements (Andrews, 2015).
The main rule regarding the statements which are made before the contract is formed makes
them simply presentation, since the same are not reduced to writing expressly in the agreement.
In the case of Birch v Paramount Estates Ltd (1856) 16 EG 396, it was held by the court that the
oral statements have to be deemed as the terms of enforceable contract but it is important to be
sure that the obligation of the parties have been carried out in the manner in which it has been
envisioned. Thus, the fundamental rule have provided that the statements which have been made
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before the contract is formed, they can only be deemed as the term of the contract when the
parties have such intent (Young, 2009).
In the matter of Heilbut, Symons & Co v Buckleton [1913] AC 30, the court stated that for the
intent of the parties, there was a need to hold the consensus ad idem, which denotes the meeting
of minds. The key reason for getting into the contract needs to be the making of such statement
(World Library, 2017). A similar ruling had been given in Bannerman v. White (1861) 10 CBNS
844 where the court was of the view that the statement made needs to induce the parties of the
contract and there is a need for the decision to be made, after conceding to the agreement made
on the basis of the statement (E-Law Resources, 2017).
Application
The facts which have been given in this show that the statement which has been made by Peter
was in oral manner and the same cannot be taken as a term of the contract based on Birch v
Paramount Estates Ltd for the reasons of the same being a major element of contract. There is
also a need for considering the intent of the parties as a result of which the agreement is formed,
particularly when it had been clear that vegan leather had to be all natural and this had been a
major part of this case. The same had been properly agreed by Animal-friendly Cobbler Supplies
based on the previous request as had been made by Peter and he had informed that the same was
the preference of his clients. Peter would not have gone forward with this contract where there
had been a lack of consensus ad idem based on this term. Thus, it becomes very clear that the
minds of the two parties had met in this case, along with the presence of intent between the
parties, for deeming the statement made as a term of the contract.
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Conclusion
To conclude, the statement made by Peter to Animal-friendly Cobbler Supplies in the matter of
the vegan leather being all-natural was a term of the contract.
Question 2
Issue
Whether there an implied term in contract drawn between Peter and Samantha regarding the
shoes to be made with all-natural vegan leather with no synthetic material/ingredients involved,
or not?
Rule
The contract law provides for the terms of the contract to be implied or express. A term is
deemed to be an implied term where the parties conceded to the same in an obvious manner,
where the same had been brought properly before the parties’ attention when the negotiation for
the contract was taking place (Stone and Devenney, 2017). When such happens, there is a need
to consider the viewpoint of a rational bystander; and the same had been provided in the matter
of Shirlaw v Southern Foundries [1939] 2 KB 206. The test given under this case provides that
the term has to be taken as implied term in such cases only where a rational person would also
hold that the statement was obvious which can be deemed as a term which had been expressed
(Marson and Ferris, 2015).
In such cases, the business efficacy test is of help, which has been provided in the matter of
Moorcock (1889) 14 PD 64. In this case, it was provided that a particular term is to be taken as
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an implied term in which it is important to ensure that the business is being operated effectively.
In Trollope and Colls Limited v North West Metropolitan Regional Hospital Board [1973] 1
WLR 601, a similar ruling had been given in which the contract’s implied term had to be taken
as operating with the intent of party. Further, in absence of such intent, the contract cannot be
proceeded with. An implied term also has to be a very common practice in the business
(Macdonald and Atkins, 2014).
Application
The application of the facts to the rules shows that vegan leather being all natural was an aspect
which was used as a means of attracting clients for Peter’s business. Thus, it is reasonable to
expect that the vegan leather had to be all natural. Thus, the same has to be deemed as an implied
term for Peter to use an all natural began leather, especially based on the view of a rational
individual based on the case of Shirlaw v Southern Foundries. The business efficacy test based
on case of Moorcock also requires that the vegan leather being all natural would have allowed
Peter in running his business in a more successful manner. On these bases, the use of all natural
vegan leather had to be deemed as a common thing in this trade, making it an implied term for
the drawn contract between Samantha and Peter.
Conclusion
To conclude, it becomes very clear that the shoes to be made with all-natural vegan leather with
no synthetic material/ingredients involved was an implied term of the contract.
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Business Law and Ethics
Question 3
Issue
Whether the colour of the soles of sneaker was a warranty or condition of the contract, or not?
Rule
A condition covered in the contractual terms results in the same being deemed as a basic aspect
of such contract. The main duties of the parties are deemed as the terms of the contract. The
bases of the contract are the terms of the contract and with these terms, the contract is held
together. When a condition is contravened, the same results in the end of the contract. Poussard
v Spiers and Pond [1876] 1 QBD 410 was a case in which a promise had been made by the
plaintiff that a performance would be made by her at the defendant’s opera. However, as she fell
sick, she was not able to perform and this required the defendant to hire some other singer. A
case was brought by the plaintiff, against the defendant, as a result of which the court holding
that the contravention of the contract had taken place by the plaintiff, due to the condition here
being the foundation of the drawn contract (Gibson and Fraser, 2014).
Conversely, in cases of a warranty, the same is not as important as is the condition given in a
contract. And very minor preference is given to warranties under the contract. In Wills v Amber
[1954] 1 Lloyd’s Rep 253, the court stated that the warranty does not result in end of the contract
where the warranty is contravened (Law Teacher, 2017).
Application
The main term in this contract had been preparing the white men’s sneakers with white rubber
soles. Thus, deeming it as a key condition of the contract, Peter should have made the soles
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Business Law and Ethics
white. The sole being caramel in colour has to be deemed which did not affect the performance
in a major manner, making it a warranty, instead of a condition.
Conclusion
To conclude, the colour of the soles of sneaker was a warranty of the contract.
Question 4
Issue
Whether Peter would be liable for the white sole colour, as a result of exclusion clause being
present at the shop, or not?
Rule
Exclusion clauses are such clauses in the contract which have the ability of restricting or limiting
the liability of the contractual party (Treitel and Peel, 2015). The validity of an exclusion clause
depends on the same being properly brought to the parties’ attention and being read by them
based on Chapelton v Barry UDC (1940) 1 KB 532 (Roach, 2016). Again, breach of warranty
allows the parties to claim damages for the same as per Wills v Amber.
Application
As in this case, only the warranty had been contravened by Peter, it would mean that the contract
was not breached. Thus, the contract could not be ended on the basis of Wills v Amber. Also, by
the use of exclusion clause, Peter can be saved from the liability for this breach as the same had
been brought to the attention of the parties.
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Conclusion
To conclude, Peter would not be liable for the white sole colour, as a result of exclusion clause
being present at the shop.
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References
Without Links
Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press.
E-Law Resources. (2017) Bannerman v White (1861) 10 CBNS 844. [Online] E-Law Resources.
Available from: http://www.e-lawresources.co.uk/Bannerman-v-White.php [Accessed on:
04/12/17]
French, D. (2017) Mayson, French & Ryan on Company Law. 34th ed. Oxford: Oxford
University Press.
Gibson, A., and Fraser, D. (2014) Business Law 2014. 8th ed. Melbourne: Pearson Education
Australia.
Law Teacher. (2017) Classification of Conditions or Warranties. [Online] Law Teacher.
Available from: https://www.lawteacher.net/free-law-essays/contract-law/classification-of-
conditions-or-warranties-contract-law-essay.php [Accessed on: 04/12/17]
Macdonald, E., and Atkins, R. (2014) Koffman & Macdonald's Law of Contract. 8th ed. Oxford:
Oxford University Press.
Marson, J., and Ferris, K. (2015) Business Law. 4th ed. Oxford: Oxford University Press.
Roach, L. (2014) Card and James' Business Law. 3rd ed. Oxford: Oxford University Press.
Stone, R., and Devenney, J. (2017) The Modern Law of Contract. 12th ed. Oxon: Routledge.
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World Library. (2017) Heilbut, Symons & Co v Buckleton. [Online] World Library. Available
from: http://worldlibrary.net/Article.aspx?ArticleId=0002843667&Title=Heilbut,%20Symons
%20&%20Co%20v%20Buckleton [Accessed on: 04/12/17]
Young, M. (2009) Understanding Contract Law. Oxon: Routledge.
With Links
1. Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press.
https://books.google.co.in/books?
id=4VqtCAAAQBAJ&printsec=frontcover&dq=Andrews,+N.
+(2015)+Contract+Law.&hl=en&sa=X&ved=0ahUKEwi5qIW6gpDYAhXMq48KHTB2
BYoQ6AEIJjAA#v=snippet&q=puff&f=false
2. E-Law Resources. (2017) Bannerman v White (1861) 10 CBNS 844. [Online] E-Law
Resources. Available from: http://www.e-lawresources.co.uk/Bannerman-v-White.php
[Accessed on: 04/12/17]
3. French, D. (2017) Mayson, French & Ryan on Company Law. 34th ed. Oxford: Oxford
University Press.
4. Gibson, A., and Fraser, D. (2014) Business Law 2014. 8th ed. Melbourne: Pearson
Education Australia. https://books.google.co.in/books?
id=NTfiBAAAQBAJ&pg=PA277&dq=Gibson,+A.,+and+Fraser,+D.
+(2014)+Business+Law+2014&hl=en&sa=X&ved=0ahUKEwjWlYz6hpDYAhUMp48K
HfpTA4kQ6AEIJjAA#v=onepage&q=Poussard%20v%20Spiers%20and
%20Pond&f=false
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5. Law Teacher. (2017) Classification of Conditions or Warranties. [Online] Law Teacher.
Available from: https://www.lawteacher.net/free-law-essays/contract-law/classification-
of-conditions-or-warranties-contract-law-essay.php [Accessed on: 04/12/17]
6. Macdonald, E., and Atkins, R. (2014) Koffman & Macdonald's Law of Contract. 8th ed.
Oxford: Oxford University Press. For Moorcock case: https://books.google.co.in/books?
id=kNX1AwAAQBAJ&printsec=frontcover&dq=Macdonald,+E.,+and+Atkins,+R.
+(2014)+Koffman+%26+Macdonald
%27s+Law+of+Contract&hl=en&sa=X&ved=0ahUKEwjgzaa_hpDYAhUIKo8KHbmuC
A0Q6AEILTAB#v=onepage&q=Moorcock%20&f=false For Trollope
and Colls Limited v North West Metropolitan Regional Hospital Board case:
https://books.google.co.in/books?
id=kNX1AwAAQBAJ&printsec=frontcover&dq=Macdonald,+E.,+and+Atkins,+R.
+(2014)+Koffman+%26+Macdonald
%27s+Law+of+Contract&hl=en&sa=X&ved=0ahUKEwjgzaa_hpDYAhUIKo8KHbmuC
A0Q6AEILTAB#v=onepage&q=Trollope%20and%20Colls%20Limited%20v%20North
%20West%20Metropolitan%20Regional%20Hospital%20Board%20&f=false
7. Marson, J., and Ferris, K. (2015) Business Law. 4th ed. Oxford: Oxford University Press.
https://books.google.co.in/books?
id=Yra6BwAAQBAJ&printsec=frontcover&dq=Marson,+J.,+and+Ferris,+K.
+(2015)+Business+Law.&hl=en&sa=X&ved=0ahUKEwj0t4umhpDYAhVBpo8KHbBG
BbYQ6AEIJjAA#v=onepage&q=Shirlaw%20v%20Southern%20Foundries%20&f=false
8. Roach, L. (2014) Card and James' Business Law. 3rd ed. Oxford: Oxford University
Press. https://books.google.co.in/books?
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id=1N4dDAAAQBAJ&pg=PA164&dq=Chapelton+v+Barry+UDC+(1940)+1+KB+532
&hl=en&sa=X&ved=0ahUKEwjn9dP6h5DYAhWGpI8KHSSHCpsQ6AEINTAC#v=one
page&q=Chapelton%20v%20Barry%20UDC%20(1940)%201%20KB%20532&f=false
9. Stone, R., and Devenney, J. (2017) The Modern Law of Contract. 12th ed. Oxon:
Routledge. https://books.google.co.in/books?
id=fAYqDwAAQBAJ&pg=PA526&dq=Stone,+R.,+and+Devenney,+J.
+(2017)+The+Modern+Law+of+Contract&hl=en&sa=X&ved=0ahUKEwjNhaSHhpDY
AhXCwI8KHRkyADYQ6AEIJjAA#v=onepage&q=implied%20terms&f=false
10. World Library. (2017) Heilbut, Symons & Co v Buckleton. [Online] World Library.
Available from: http://worldlibrary.net/Article.aspx?
ArticleId=0002843667&Title=Heilbut,%20Symons%20&%20Co%20v%20Buckleton
[Accessed on: 04/12/17]
11. Young, M. (2009) Understanding Contract Law. Oxon: Routledge.
https://books.google.co.in/books?id=XMOLAgAAQBAJ&pg=SA8-
PA17&dq=Birch+v+Paramount+Estates+Ltd&hl=en&sa=X&ved=0ahUKEwjwuJn6gpD
YAhXFq48KHUpnCY0Q6AEILTAB#v=onepage&q=Birch%20v%20Paramount
%20Estates%20Ltd&f=false
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