Terms of a contract: express and implied terms, the classification of terms as conditions, warranties and innominate terms, exclusion clauses, and statutory implied terms under the Consumer Rights Act 2015.

What this dot point is asking

AQA wants you to distinguish express and implied terms, classify terms as conditions, warranties or innominate terms with the effect of each breach, explain the control of exclusion clauses, and apply the implied terms in the Consumer Rights Act 2015.

Express and implied terms

Classification of terms

Exclusion clauses and the Consumer Rights Act 2015

An exclusion clause tries to limit or exclude liability. To be effective it must be incorporated into the contract (by signature, reasonable notice given before the contract, Olley v Marlborough Court, or a consistent course of dealing) and must, on its construction, cover the loss (the contra proferentem rule). Statute then controls it: the Unfair Contract Terms Act 1977 subjects many business clauses to a reasonableness test and bans exclusion of liability for death or personal injury from negligence, while the Consumer Rights Act 2015 governs consumer contracts.

The Consumer Rights Act 2015 implies into consumer contracts that goods are of satisfactory quality, fit for purpose and as described, and that services are performed with reasonable care and skill, within a reasonable time and for a reasonable price. It also subjects consumer terms to a fairness test and gives consumers a tiered set of remedies: a 30-day short-term right to reject for a full refund, then the right to repair or replacement, and finally a right to a price reduction or to reject if repair fails. Crucially, these statutory rights cannot be excluded against a consumer, so an exclusion clause that tries to do so is simply not binding, which is why a problem question on faulty consumer goods turns on the Act rather than on the common-law incorporation rules.

The control of exclusion clauses therefore operates in three stages. First, incorporation: was the clause part of the contract, by signature (L'Estrange v Graucob, subject to misrepresentation in Curtis v Chemical Cleaning), by reasonable notice given before the contract (Olley v Marlborough Court, Thornton v Shoe Lane Parking on tickets), or by a consistent course of dealing? Second, construction: does the clause, read contra proferentem against the party relying on it, actually cover the loss that occurred? Third, statutory control: the Unfair Contract Terms Act 1977 (business contracts, reasonableness test, no exclusion of liability for death or personal injury from negligence) and the Consumer Rights Act 2015 (consumer contracts). A clause must survive all three stages to be effective.

How terms are examined

Terms questions reward separating two tasks: classifying the term to fix the remedy for breach, and testing any exclusion clause through incorporation, construction and statute. The most common error is to assume an exclusion clause is effective once incorporated, forgetting that consumer statutory rights cannot be excluded at all.