Terms

Express terms: terms of a contract actually

If a representation is false,

Distinction between representation and terms- more crucial before, less important now

Plaintiff can always get damages for breach

there was no possibility of damages for misrepresentation unless the statement was made
fraudulently/ dishonestly (hard to prove)—former case

It is easier to get damages for misrepresentation now

1. If a statement is made a considerable time BEFORE a formal contract is made (AND / OR not
repeated in the contract, it’s likely to be representation
Routledge v McKay (1954)
The parties had discussions during which owner of motor bike told potential buyer that the
bike was a 1942 model. In fact it was 1930. One week later the parties made a formal
contract which made no reference to age.
Held: statement as to age NOT a term, only a representation; so no liability for breach of
contract
- Any statement made before a formal contract and not included in the contract will be
considered as representation
- The buyer may still buy the bike even if he knew the real age of it.
Heilbut Symons & Co v Buckleton (1913)
The parties were discussing a possible purchase of shares. P asked: “I understand you are
bringing out a rubber company?” & asked if it’s all right. D’s manager said they were bringing
out such a company & implied it was good. P invested & lost money. P sued since company
NOT a rubber company but action failed (HL) as
Held: Subsequent written agreement for shares made no reference to rubber company so
NOT a term.
- If there’s a later written contract, any statement not included in the written contract or
only in oral form will be considered as representation

2. Cc
- The parties will not form a contract, if the term is different

3. Where the maker of a statement has special skills and knowledge on which the other relies,
the statement is likely to be a term
Dick Bentley Productions (Ltd) v Harold Smith (Motors) Ltd (1965)
The parties were discussing the possible sale of a used car. D, the seller, was a car dealer and
informed P (the potential buyer) that the car had done 26,000 with a new engine. IN FACT
the car had done more than 100,000 miles! Later contract made no reference to mileage
but, on discovering the truth P sued for breach.
Held: Although the mileage statement was not in final contract it was a term because the
maker of the statement was a car dealer; whose expertise P relied upon.*
* It was essential to prove a term if P to get damages. Today he would sue for
misrepresentation damages. NB the year of the case.
Oscar Chess v Williams (1957)
 Where the incorrect statement came from a CUSTOMER to a car dealer. The dealer was in as
good a position to know the truth as the maker of the statement so…only a
“representation”. The car dealer should have known better.
4. Where the maker of a statement
Ecay v Godfrey (1974)
The parties were discussing the sale of a boat. The prospective seller said the boat was in
good condition but recommended that the prospective buyer had an independent
inspection. Buyer sued because boat unsound.
Held: the seller’s statement was only a representation NOT (implied) term.
- The party has stated that do not rely on him, get a second opinion
Schawel v Reade (1913)
P was prospective buyer of horse from D. P started to inspect the horse but D said there was
no need to inspect as he could “assure” the buyer that the horse was sound in every
way….The “soundness” statement was a TERM
- If the party try to prevent the other party for any inspection

Relevance of “parol evidence rule”- very important

Where the contract is reduced to writing, no extrinsic evidence may be used to “add to, vary or
contradict” the written document

Exceptions:

1. Evidence permitted to show contract not yet commenced or already completed

2. Evidence may be used to show a collateral promise overriding the written undertaking
Couchman v Hill (1947)
P, a prospective bidder at auction, told owner he would only bid if heiffer (cow) “unserved”.
Owner said it was, so P bid and won. Heiffer was not “unserved” so P sued. It was held
“unserved” was a term even though auction rules said lots “as seen”. Owners oral promise
overrode the auction terms. (“collateral” agreement: if you promise I will bid).
- If you bid for the cow, I
- Unless you promise the cow is unserved, I will not bid
3. Dd
4. Parol evidence will be permitted to show customary/ trade usage

Interpreting or construing terms