Express and Implied Terms in Contract Law, Summaries of Law

Download Express and Implied Terms in Contract Law and more Summaries Law in PDF only on Docsity! Express and Implied Terms I Pre- reading activity 1 What terms would you like to have in your contract for sale? 2 If a person included a false fact in a contract, what would he commit in the eyes of the law? 2 Reading for gist Skim the following Heilbut, Symons & Co. V Buckleton and Museprime Properties v Adhill Properties (1990) cases and decide whether these statements are true or false: 1 Heilbut, Symons & Co v Buckleton (1913) AC 30 is a leading Court of Appeal decision on misrepresentation in contract law. 2 Heilbut, Symons & Co issued shares of a rubber company. 3 The manager of Buckleton stated and said to Heilbut that they were “bringing out a rubber company“. 4 Relying on this information, Buckleton purchased a large amount of shares. 5 Because of the fact that the shares did very poorly, Buckleton sued for breach of contract. 6 Although the misrepresentation was made, it was not done fraudulently. 7 Despite the fact that a statement regarding the rubber company established a warranty, Buckleton, being a plaintiff, lost the case. 8 In the cause Museprime Properties v Adhill Properties (1990) the plaintiff company discovered misrepresentation and commenced an action for rescission. 9 On the other hand, the defendant company filed the defence that no misrepresentation was made. 10 Upon the decision of the court the plaintiff company was awarded only damages related to conveyancing expenses and interest. 11 Some jurisdictions, mainly Austria, Israel and India imply a term of good faith into contracts. 3 Close reading Read the article closely and answer the following questions: 1 Who were the defendats? What was their profession? 2 How can the deal be characterized? 3 Was there intention to misrepresent Buckleton on the part of Heilbut & Symons? 4 What did Lord Moulton hold in conclusion of a case? 5 Who commenced an action in Museprime Properties v Adhill Properties? 6 Did the defendant company answer? If so, what was its defence? 7 What were the grounds on which the plaintiff established his claim? 8 Were the rulings of the trial court and the House of Lords in compliance? 4 Text Heilbut, Symons & Co v Buckleton [1913] AC 30 is a leading House of Lords decision on misrepresentation in contract law.. The Court held that an innocent misrepresentation gave no right to damages. Background Heilbut, Symons & Co. were rubber merchants who were underwriting shares of what they claimed was a rubber company. Buckleton called up a manager at Heilbut to inquire about the shares. In response to the questions, the manager stated that they were "bringing out a rubber company". Based on this statement, Buckleton purchased a large amount of shares. The shares turned out not to be for a rubber company at all, the shares did very poorly. Buckleton sued for breach of warranty. At trial the Court found that Heilbut made misrepresentation but was not done fraudulently. Nevertheless, at trial is was found that there was a warranty in the statement regarding the rubber company. The Plaintiff Buckleton succeeded at trial. Opinion of the Court For the Court,Lord Moulton identified two ways that the action could be successful. First, if the plaintiff could show fraudulent misrepresentation "or what is equivalent thereto, must be made recklessly, not caring whether it be true or not." Second, if there was intent (animus contrahendi) to be held to a promise then there may be a collateral contract, that would bind Heilbut to their representation. However, they are difficult to find, and, on the fact, none was found. In conclusion, Moulton held: It is, my Lords, of the greatest importance, in my opinion, that this House should maintain in its full integrity the principle that a person is not liable in damages for an innocent misrepresentation, no matter in what way or under what form the attack is made. In the present case the statement was made in answer to an inquiry for information. There is nothing which can by any possibility be taken as evidence of an intention on the part of either or both of the parties that there should be a contractual liability in respect of the accuracy of the statement. It is a representation as to a specific thing and nothing more. Museprime Properties v Adhill Properties [1990] 36 EG 114 In a sale by auction of three properties the particulars wrongly represented the rents from the properties as being open to negotiation. The statements in the auction particulars and made later by the auctioneer misrepresented the position with regard to rent reviews. In fact, on two of the three properties rent reviews had been triggered and new rents agreed. The plaintiff company successfully bid for the three properties and discovered the true situation. They commenced an action for rescission. The defendant company countered with the defence that the misrepresentations were not such as to induce any reasonable person to enter into the contract. It was held that the plaintiff's had established, and indeed that the defendants conceded, that misrepresentation had occurred and any misrepresentation is a ground for rescission. The judge referred, with approval, to the view of Goff and Jones: Law of Restitution (see Lecture p2-3), that the question whether representations would have induced a reasonable person to enter into a contract was relevant only to the onus of proof. Here the plaintiffs had established 8 Another way is to show that there was an ............ to be held to a promise. 9 In a sale by auction case the plaintiff successfully .......... for the three properties. 10 Later, when he discovered the situation, he commenced an action for .............. . 11 In their defence the defendant company declared that the misrepresentations were not such as to induce a ............. person to enter into a contract. misrepresentation, common, breach, implied, defective, warranty, to suffer, condition, to replace, damages, custom, obligation, representation, performance, statute 1 When the goods delivered by the seller are ..........., he has the obligation to repair or ................. them. 2 A ............, as an essential term of the agreement may constitute a ..........of contract if it is not ............. . 3 Unlike the condition, breach of ........., as the secondary term of a contract, is not the reason for discharge of a contract. 4 Nevertheless, if the loss is .............. , innocent party may sue for ........... . 5 The facts concerning a contract that are not intended to be legally binding are called ......... . 6 If they later turn out to be false, it does not cause breach of contract but may result in action for ............. . 7 ............ terms of a contract are not expressed by words but are included into it in several ways. 8 If such terms are used in market, or have been in the previous dealings, they are implied by ................ . 9 If they are specified in legislation, they are then implied by ............... . 10 Traditionally, the implication is carried out by ............ law, resulting from the intention of the parties to make the contract work. 4 Create word families: verb noun adjective delivery defective to sue loss implied satisfactory to induce identification rent rescission 5 Fill in the proper prepositions: to deliver goods ... a certain period, term ... the contrary, to turn ... to be false, to do sth ... sb´s sole discretion, to replace the goods subject ... the following conditions, to be fit ... habitation, to be ... satisfactory quality, to be done ... certain circumstances, a finding ... misrepresentation allows ... a remedy, to call ... sb to inquire ... sth, to succeed ... trial, to be ... a great importance, sale ... auction, to be liable ... damages ... misrepresentation, to bid ... the property ... auction 7 Practice your translation skills 1 Každá zmluva obsahuje hlavné podmienky, ktorých nesplnenie zakladá porušenie zmluvy. 2 Porušenie zmluvy jednou zo zmluvných strán umožňuje druhej strane prerušiť plnenie a následne dochádza k ukončeniu zmluvného vzťahu. 3 V dôsledku porušenia zmluvnej podmienky má poškodená strana právo na podanie žaloby o odškodné. 4 Zmluva obsahuje okrem výslovných aj konkludentné podmienky, často vo forme obchodných zvyklostí. 5 Konkludentné podmienky vychádzajú aj zo zákona alebo zvykového práva. 6 Úmysel zmluvných strán môže súdom uľahčiť rozhodovanie o oprávnenosti prerušenia plnenia zmluvných záväzkov. 7 Uvedenie zmluvnej strany do omylu, často vedie druhú stranu k uzatvoreniu zmluvy v dôsledku čoho utrpí ujmu.. 8 V prípade, že nález súdu uzná uvedenie do omylu, má poškodená strana právo na odškodnenie alebo aj na anulovanie zmluvy. 9 Ak nie je podľa nálezu súdu uvedenie do omylu úmyselné, nie je možné získať odškodnenie. 10 Skutkovou podstatou prípadu Heilbut, Symons & Co v Buckleton bolo uvedenie do omylu pri upísaní emisie cenných papierov údajnej spoločnosti obchodujúcej s gumou. 11 Uvedenie osoby do omylu je možné slovom alebo správaním, hoci nie všetko čo sa povie alebo vykoná môže uvedenie do omylu zakladať. 12 Keďže sa ukázalo, že zakúpené akcie sú fakticky bezcenné, kupujúci podal žalobu za porušenie zmluvnej podmienky. 15 Napriek uvedeniu do omylu, úmysel podvodu nebol preukázaný. 16 Poškodenej strane bola vrátená záloha a bolo jej priznané odškodné za stratu pri prevode nehnuteľnosti. 8 Subject-matter comprehension check Use as much new vocabulary and information from the seminar and RS as possible to discuss: 1 Types of contractual terms 2 Grounds for repudiation of contract 3 Breach of warranty and available consequences 4 Concepts of representation and misrepresentation 5 Ways of implying terms into contracts 6 Reasons for termination of contract 9 Write four different situations in which implied terms are operating.