Contract Law Case Study: OFFICE PRO X9

This document presents a detailed case study analysis of a contract law scenario involving the purchase of an office chair, the 'OFFICE PRO X9'. The analysis delves into whether certain statements made during the negotiation process constitute contractual terms, mere representations, or puffery. It examines the application of the parole evidence rule, relative expertise, the value of the statement, and the timing of the statement in determining the status of pre-contractual statements. The case study also explores the concept of express terms and their sub-categories, specifically pre-contractual statements. Furthermore, it assesses the validity of an exclusion clause under the Unfair Contract Terms Act 1977, referencing relevant case law such as Curtis v Chemical Cleaning. The analysis concludes that the exclusion clause would not be valid due to misrepresentation, and the claim for breach of contract would likely succeed. The document includes a bibliography of relevant legal texts and cases.

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Question 1
No, by analysis, the term “OFFICE PRO X9 is an amazing chair and/or the best on the
market” was not a term of this contract. In the law of contract, negotiation statements can be
contractual terms, representations, or mere puff. Contractual terms have contractual obligations.
Also, mere representation which then turns out to be untrue yet the induced the customer may
become contractual terms if they induce the customer to make the contract.1 On the other hand,
mere puff are unrealistic or exaggerated opinions that have no facts, and therefore they have no
basis of actions in the law of contract.
In determining the status of each statement, the courts usually employ four factors. The
first one is the parole evidence rule.2 This rule governs written contracts, and it restricts the
parties only to the terms that written in the contract. Other verbal terms are just representations.
Second is the relative expertise. This one governs contracts where the person who gives the
statement happens to be of greater knowledge.3 In other words, statements from an expert made
to the customer may cause the client enter into the contract. So, if the client changes the position
following those comments, that could likely be a term. For example, Schawel v Reade [1913]4
The claimant told the defendant that he planned to use the horse breeding purposes. The
defendant assured the claimant that the horse was good and there was no need for vet
examinations. The horse turned out to a breeding disease. The court held that the statement
guaranteeing bleeding status was a contractual term.
Next is the value of the statement. If the seller relies on that statement, then the statement
1 Kenneth W Clarkson et al, Business Law. Text And Cases (Cengage Learning, 13th ed, 2015).
2 Sarah Riches, Vida Allen and Denis J Keenan, Keenan And Riches' Business Law (Pearson/Longman, 9th ed, 2009).
3 "Contractual Interpretation In Indian Evidence Act Jurisdictions: Compatibility With Modern Contextual
Approach?" (2013) 13(1) Oxford University Commonwealth Law Journal
4 2 IR 81

becomes a term. An example of this is the case of Ecay v Godfrey [1947].5 The claimant bought
a boat from the defendant. The defendant said the boat was all right, but it needed an
examination. Later the inspection revealed that the boat was defective. The court found the
statement a representation since he even advised the claimant to inspect the boat before
purchasing. The last factor is the timing of the statement.6 The duration of the time between the
contract and the statement. Lengthy time gap signifies a representation while short time signifies
a term. Following these explanations, “OFFICE PRO X9 is an amazing chair and/or the best on
the market” is more of a trader’s puff meant for advertisements.
Question 2
Yes, it the term that the OFFICE PRO X9 provides sufficient lower-back support to allow
Peter to work the whole day comfortably. This issue is a matter of applying one of the
determining factors as discussed in question one. In particular, this question falls in the approach
to the knowledge and skill of the seller, who is the party with advanced skills. The application of
this rules works in two ways. For one, it can be a statement coming from the seller, who is the
party with special skills, then making a statement to the buyer who has no skills. On the other
hand, it can be a statement from the buyer who possesses no knowledge clarifying what he
wants, and this information aims to help the expert decide on the best item to sell to the buyer.7
In this case, if the response of the seller makes the buyer change the position, that statement
would become a term.
A scenario similar to this situation is the case of Dick Bentley v Harold Smith Motors
[1965].8 Bentley asked Harold Smith Motors to find a car which should be in good condition.
5 80 Lloyds Rep 286
6 Richard Stone, Text, Cases And Materials On Contract Law (Routledge, 2nd ed, 2014).
7 Richard A Mann, Barry S Roberts and Len Young Smith, Smith & Roberson's Business Law (South-Western
Cengage Learning, 15th ed, 2012).
8 Dick Bentley v Harold Smith Motors [1965] 1 WLR 623

The defendants got a car and affirmed that it had only made 20,000 miles after being fitted with
new engine and new gear box but in reality, the car had made 100,000 miles. The court found the
statement as a term since it influenced the customer decision. By following this application, it is
clear to see that Peter was relying on Samantha expertise to provide a chair with sufficient lower-
back support that would to allow Peter to work comfortably the whole day.
Question 3
The term “the OFFICE PRO X9 provides sufficient lower-back support to allow Peter to
work the whole day comfortably" falls under the category of express terms, and in the sub-
category of the pre-contractual statements.
In the law of contract, the rights and duties of parties to a particular contract depend on
the terms contained in the contract. These terms could be implied. In this regard, implied terms
can originate from common law.9 In essence, these are terms resulting from necessity, the
conduct of the parties, or from general commercial practices. Also, implied terms can originate
from the statutes.10 The other group of terms of a contract is express terms. These are the terms
articulated and agreed by the parties, and they can either be in oral or written form.
Express terms come before the parties make the contract. Sometimes express terms are
confusing and thus necessary to understand them. Examples of express terms are terms on
display or those delivered by a machine, pre-contractual statements, incorporation of terms
through courses of dealing, Extrinsic evidence, the parol evidence rule, and the outcomes of a
signed form. Following these examples, the statement the term “OFFICE PRO X9 provides
sufficient lower-back support to allow Peter to work the whole day comfortably” was an express
9 Jeffrey F Beatty, Susan S Samuelson and Dean Bredeson, Business Law And The Legal Environment (South-
Western Cengage Learning, 6th ed, 2013).
10 JW Carter and Wayne Courtney, "Unexpressed Intention And Contract Construction" [2016] Oxford Journal of
Legal Studies

term, and it falls in the category of pre-contractual statements.
Question 4
The answer is no. The exclusion clause, clause 10, will not work in this case, and Peter’s
claim suing Forever Furniture for breach will succeed.
In the law of contract, exclusion clauses work only when they certify certain conditions
set under Unfair Contract Terms Act 1977.11 The purpose of this act was to govern the
widespread misuse of exclusion clauses before 1977. UCTA, allows parties to rely on exclusion
clause after they have proved that the close was fair and reasonable. That is, any contracting
party that wishes to build a defense on the exclusion clause must demonstrate that the clause was
not unfair to the other party.12
The set rules for the clause were that the party relying on the clause must prove that it
communicated all the circumstances born by the clause to the other party. Also, the party relying
on the clause had to prove that the affected party understood all the repercussions of the
clause.13In addition to that, the clause must include the losses in question. If the clause wordings
does not talk about the losses incurred or the breach, the court will not allow it.
The application of the waiver of the exclusion clause which perhaps prepared for the
enactment of UCTA was seen in the rationale of the judgment of Curtis v Chemical Cleaning
[1951]14. The defendant was a cleaning company, and Mrs. Curtis contracted the company to
clean her dress. The defendant asked her to sign a receipt which included a clause that excluded
the defendant from liabilities for damages whatsoever. The claimant sort information about the
receipt but the assistant lied. Rather than telling Mrs. Curtis about the repercussion of the
11 Wan Zulhafiz, "Unfair Contract Terms Act 1977: Does It Provide A Good Model In Regulating Risk Allocation
Provisions In Oilfield Contracts In Malaysia?" (2015) 8(1) International Journal of Trade and Global Markets
12 R. G Lawson, Exclusion Clauses And Unfair Contract Terms (Sweet & Maxwell, 10th ed, 2011).
13 ibid
14 1 KB 805 Court of Appeal

document, the secretary told Mrs. Curtis that the document was for the exclusion of the liabilities
for the sequins and the beads, but it was an exclusion for all the liabilities whatsoever.
When she brought a claim for the damages of her dress, the defendant sought to rely on
the exclusion clause. However, the court rejected the clause since there was an innocent
misrepresentation from the defendant assistant. Similarly, Forever Furniture would not rely on
their clause because it amounted to the innocent misrepresentation that induced peter into
entering into the contract.
Bibliography

Riches, Sarah, Vida Allen and Denis J Keenan, Keenan And Riches' Business Law
(Pearson/Longman, 9th ed, 2009)
Clarkson, Kenneth W et al, Business Law. Text And Cases (Cengage Learning, 13th ed, 2015)
Stone, Richard, Text, Cases And Materials On Contract Law (Routledge, 2nd ed, 2014)
Mann, Richard A, Barry S Roberts and Len Young Smith, Smith & Roberson's Business Law
(South-Western Cengage Learning, 15th ed, 2012)
Beatty, Jeffrey F, Susan S Samuelson and Dean Bredeson, Business Law And The Legal
Environment (South-Western Cengage Learning, 6th ed, 2013)
Lawson, R. G, Exclusion Clauses And Unfair Contract Terms (Sweet & Maxwell, 10th ed, 2011)
"Contractual Interpretation In Indian Evidence Act Jurisdictions: Compatibility With Modern
Contextual Approach?" (2013) 13(1) Oxford University Commonwealth Law Journal
http://dx.doi.org/10.5235/14729342.13.1.17
Carter, JW and Wayne Courtney, "Unexpressed Intention And Contract Construction" [2016]
Oxford Journal of Legal Studies https://doi.org/10.1093/ojls/gqw022
Zulhafiz, Wan, "Unfair Contract Terms Act 1977: Does It Provide A Good Model In Regulating
Risk Allocation Provisions In Oilfield Contracts In Malaysia?" (2015) 8(1) International
Journal of Trade and Global Markets http://10.1504/IJTGM.2015.067969
Cases
Schawel v Reade [1913] 2 IR 81
Ecay v Godfrey [1947] 80 Lloyds Rep 286
Dick Bentley v Harold Smith Motors [1965] 1 WLR 623
Curtis v Chemical Cleaning [1951] 1 KB 805 Court of Appeal