4.1.1 Terms of a Contract – Introduction

Welcome to the fourth lesson of this module guide – the terms that form a contract! The terms of a contract are important to examine how the parties’ agreements are to be interpreted. An understanding of how to identify terms and how the courts may interpret them is vital to this subject area. Terms may sound deceptively simple but can come at a variety of stages in a contract as well as in several forms.

Terms, if incorporated into a contract, are important to determine the extent of damages, for example. It is therefore important to understand what constitutes a term, whether it has been incorporated successfully and whether they are express or implied.

This section will begin by examining whether statements made pre-contract are terms or merely representations as this can substantially affect the form of remedy a party may receive. The differences between these two forms of statement are then further explored in light of the presumptions and guidance which the courts consider. Following this, it is examined how terms may be incorporated successfully into a contract, before discussing their different types. Finally, terms may be incorporated either expressly or impliedly and the distinction between the two methods will be considered.

Below are some goals and objectives for you to refer to after learning this section:

Goals for this section

  • To understand the importance of terms to a contract
  • To understand what terms are
  • To understand what constitutes a term and their different types

Objectives for this section

  • To be able to define a term
  • To determine whether statements made pre-contract are terms or representations
  • To understand what a ‘puff’ is
  • To understand the difference between a term and a representation as well as the presumptions the courts will take into account
  • To understand how terms may be incorporated and the main ways this may be accomplished
  • To be able to distinguish between terms incorporated expressly or impliedly
  • To be able to distinguish between the various ways in which terms may be implied
  • To understand the different types of terms: conditions, warranties and innominate.

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