Contract terms: the distinction between terms and representations, express and implied terms (including terms implied by statute), and the classification of terms as conditions, warranties and innominate terms.

What this dot point is asking

This dot point covers the terms of a contract: what they are, how they get in, and how they are classified. You need to distinguish a term from a mere representation, explain express and implied terms (including those implied by statute), and classify terms as conditions, warranties or innominate terms, which determines the remedy for breach. WJEC tests both explanation with cases and application to scenarios.

The answer

Terms and representations

Whether a statement is a term or a representation depends on factors such as the importance attached to it, the timing, whether it was reduced to writing, and the relative knowledge of the parties.

Express and implied terms

The most important implied terms come from statute. 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. The Sale of Goods Act 1979 implies comparable terms into business-to-business sales.

Conditions, warranties and innominate terms

Terms are classified by their importance, which fixes the remedy for breach:

• Condition: a major term going to the root of the contract. Breach allows the innocent party to repudiate (treat the contract as ended) and claim damages (Poussard v Spiers, an opera singer who missed the opening performances).
• Warranty: a minor term. Breach allows only damages, not repudiation (Bettini v Gye, a singer who missed only rehearsals).
• Innominate term: a term whose effect depends on the seriousness of the breach. The court asks whether the breach deprived the innocent party of substantially the whole benefit of the contract (Hong Kong Fir Shipping v Kawasaki); if so it is treated like a condition, if not like a warranty.

Examples in context

The two singer cases set the classic contrast between conditions and warranties. In Poussard v Spiers the singer's failure to appear for the opening nights breached a condition, because being there for the premiere went to the root of the engagement, so the producers could end the contract; in Bettini v Gye the singer missed only some rehearsals, a breach of warranty, so the producers could claim damages but not terminate. Hong Kong Fir Shipping added the flexible third category: rather than label the seaworthiness obligation in advance, the court asked how serious the actual breach was, and because the charterer was not deprived of substantially the whole benefit, it could claim damages but not repudiate. The statutory implied terms then protect consumers automatically: under the Consumer Rights Act 2015 goods that are not of satisfactory quality breach an implied term whether or not the parties discussed quality at all.

Try this

Q1. What remedy follows from breach of a condition? [2 marks]

• Cue. The innocent party may repudiate (end the contract) and claim damages (Poussard v Spiers).

Q2. Name one statute that implies terms into a consumer contract. [1 mark]

• Cue. The Consumer Rights Act 2015 (satisfactory quality, fitness for purpose, as described).

Q3. Explain how contractual terms are classified and the effect of breach. [12 marks]

• What the marker wants. Conditions (repudiation and damages), warranties (damages only) and innominate terms (judged by the seriousness of the breach, Hong Kong Fir), with cases.