LECTURE 4 Terms and Conditions Lecture

10/23/23
1 Terms of the Contract

2 II. Operation of Contract
3 What do we mean by Terms and why are they important?
• Whether a statement made by one contracting party to another,
prior to the conclusion of the contract, has been incorporated into
the contract as a term or is merely a representation that has
induced that party to enter into the contract depends upon the
intention of the parties, objectively ascertained.
• In seeking to discern the intention of the parties the courts have
regard to a variety of factors that are considered.
• The terms of the contract are obviously of great significance to
the parties because they define their rights and liabilities.
• English law gives the parties considerable freedom to define for
themselves the terms of their contract: freedom of contract
remains a fundamental part of English law.
•
•
4 What are the main issues in the Terms?
• The main issues here are:
• Whether the terms that had been negotiated have been
incorporated in the contract. This is easy when the terms under
consideration are written.
• But what about Oral contracts, or terms which were Orally agreed
upon but not written down?
• The main issue remains how the Courts will eventually interpret
the terms of the contract
5
2.1 Terms of the Contract

6 Pre-contractual statements: terms or mere representations?
• The important question here is whether pre-contractual

statements (which are often oral) have become terms of the
contract.
• Pre-contractual statements are of three types:
• • puffs;
• • reprepresentations; or
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• • puffs;
• • reprepresentations; or
• • terms.
• The most common type of puff is the advertising gimmick.
• Puffs are statements that give rise to no legal consequences.
• They are statements that are not meant to be taken literally and
by which there is no intention to be legally bound
7 Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256?

• A mere Puff or a representation??
• Is an example of an advertising gimmick in which the statement
was more than a puff, because there was evidence of an
intention to be bound in the statement that the company had
deposited £1,000 with its bank
8
9 Terms of a Contract
• The obligations undertaken by the parties to a contract are
defined by the terms of a contract.
• Terms could be either express or be implied.
• Whether terms of a contract are express or implied terms,
contractual terms can be categorised into two other types:
•
•
• CONDITIONS
» These are the more important contractual terms.
» If a party to a contract breaches a condition, the ‘innocent’
party is entitled to treat the contract at an end (repudiate the
contract).
» This will entitle the innocent party to go back, so far as it is
possible to do so, to the position that existed before the
contract came into existence. The innocent party may also be
entitled to damages for breach of contract.
» Poussard v Spiers and Pond [1876] 1 QBD 410
• WARRANTIES
• These are the lesser important terms of the contract.
• If the broken term is only a warranty, then the innocent party must
go on with the contract, but s/he can sue for damages for any
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loss caused as a result of the breach.
• Bettini v Gye [1876] 1 QBD 183
• Why should care be taken when using the terms ‘conditions’ and
‘warranties’ to ensure that they are being used in their correct
legal meaning.
•
12 Express terms
• Terms that the parties have specifically decided should form part
of the contract are known as ‘express terms’
• Such terms are usually in writing
• Where oral contracts are made, problems can arise as not every
promise made during negotiations will amount to a term
• Some statements will amount to mere ‘puffs’ that have no legal

standing and will never provide any form of remedy
• Many advertisements contain such puffs (e.g. whiter than white)
• Other statements will be more than puffs and will amount to terms
or mere representations, and it is vital that these different types of
statement can be distinguished
•
13 Recission vs mere claim for damages
• The Breach of a term will allow the innocent party to either
Rescind the contract and sue for breach of Contract and claim
damages OR simply choose to go ahead with the Contract and
Merely sue for Damages.
• In the case of breach of representation, The only option for the
Innocent party is to claim damages.
• A breach of a Term vs a breach of a Representation will also
determine the measure of Damages!!
14 Misrepresentation and Terms of the Contract
15 Mere representations and Terms
• Terms are contractual undertakings that set out the rights and
obligations of the parties
14
15
• Terms are contractual undertakings that set out the rights and
obligations of the parties
• Terms, if not complied with, allow the non-breaching party to sue

for breach of contract
• Mere representations are statements made to induce the other

party to contract but which are not intended to form part of the
contract
• Representations, if not complied with, do not give rise to an

action for breach of contract, but may give rise to an action for
misrepresentation
• The courts use an objective test to distinguish between terms and

representations
• Thake v Maurice [1986] QB 644 (CA) (the vasectomy case)

• The couple became pregnant and tried to sue the Doctor for a
breach of term.
• But court held that it was not a Term , but a representation.
However allowed the couple 11,700£ for negligence of the doctor)
• To ensure consistency, there are a number of factors the court

can take into account
•
16 Incorporating Statement of fact or intention?
• If the statement is merely of intention and has not been
incorporated into the contract, there is no legal effect of such a
statement. The only legal recourse may be through the doctrine
of promissory estoppel…
• On the other hand, a statement of fact, which has not been
incorporated, may allow the effected party to rescind the contract
if it turns out to be untrue.
• This would be dealt as Misrepresentation and may have a
remedy in the Tort of Misrepresentation or under the
Misrepresentation Act 1967
17 Why distinguish representations and terms?
17
• The basic distinction between a representation and a Term is that

a term involves a promise as to the truth of the statement,
• whereas a Representation involves no such promise as to truth,
although the statement in question does induce the making of the
contract.
• Both representations and terms give rise to legal consequences if
the representation is false (misrepresentation) or if the term is
broken (breach of contract).
• It is significant, however, that the legal consequences for
misrepresentation and breach of contract are not the same.
• The distinction between a claim for misrepresentation and one for
breach of contract is essential in relation to both the ability to
claim damages and the measure of those damages.
18 False representations under English law; consequences
• Prior to the enactment of the Misrepresentation Act 1967, and the

development of the tort of negligent misstatement in Hedley
Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, a
misrepresentation had to be fraudulent in order for the injured
party to receive damages and the proof of fraud was very difficult.
• Because of this, the older cases are concerned with attempts by
the injured party to establish that the statement was a contractual
term (for which damages were available) rather than a
representation.
• At present, however, the matter is not so clear-cut. In many
circumstances it is now advantageous for a party to establish that
the statement is a representation and actionable as a
misrepresentation under the Misrepresentation Act 1967.
19 The test to determine A Term from a Representation
• Making the distinction between representations and terms; the
test!!
• The test of whether a representation has become a term is very
imprecise.
• It is essentially a question of the statement maker’s intention, as
objectively judged
• “Was it the statement maker’s intention to make a binding
promise as to the truth of their statement so that, if the statement
were inaccurate, it would result in automatic breach of the
contract?” (Heilbut, Symons and Co. v Buckleton [1913] AC 30.)
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were inaccurate, it would result in automatic breach of the
contract?” (Heilbut, Symons and Co. v Buckleton [1913] AC 30.)
•
20
So how do we determine the intention of the parties
• RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co.
KG (UK Production) [2010]:
• “Whether there is a binding contract between the parties and, if
so, upon what terms depends upon what they have agreed.
• It depends not upon their subjective state of mind, but upon a
consideration of what was communicated between them by
words or conduct, and whether that leads objectively to a
conclusion that they intended to create legal relations and had
agreed upon all the terms which they regarded or the law
requires as essential for the formation of legally binding
relations.”
21 How do we find the intention of the parties: the presumptions
•
1.Whether the statement maker has special knowledge of the
matter in question – where the representor has greater
knowledge of the matter than the other, this is indicative that the
statement is intended to be a term – Dick Bentley v Harold Smith
Motors [1965] 2 All ER 65;
2.where the representee( the person receiving the statement) has
greater knowledge of the matter than the other, this is indicative
that the statement is intended to be a mere representation –
Oscar Chess Ltd v Williams [1957] 1 All ER 325).
3.Whether the maker of the statement accepted responsibility for
the soundness of the statement – where such responsibility is
assumed, this indicates that the statement was intended to be a
term (Shawel v Reade [1913] 2 IR 64).
•
22
•
22 Oscar Chess Ltd v. Williams [1957] 1 WLR 370, Court of
Appeal : where the representee( the person receiving the
statement) has greater knowledge of the matter than the
other, this is indicative that the statement is intended to be a
mere representation
•
• The contract was for a exchange of a old car for a reduction in
the Cost of the new car.
• The car was represented as being 1948 model ( the papers
confirmed this) and were given a value of 270£
• But later on was found that the Model was 1939, worth only 170£
• The P sought the cost of the difference between the two
• Held: this was an innocent misrepresentation and Wasn’t a term
of the contract!
• The age of the car ‘induced’ the parties into a contract, but wasn’t
considered as a Term
• Distinction between a Warranty and Condition discussed by
Denning J
23 Denning J
• Turning now to the present case, much depends on the precise
words that were used. If the seller says: ‘I believe the car is a
1948 Morris. Here is the registration book to prove it’, there is
clearly no warranty. It is a statement of belief, not a contractual
promise.
• If, however, the seller says: ‘I guarantee that it is a 1948 Morris.
This is borne out by the registration book, but you need not rely
solely on that. I give you my own guarantee that it is’, there is
clearly a warranty. The seller is making himself contractually
responsible, even though the registration book is wrong.
•
•
24 Denning J on the expertise of the maker of the statement
• It seems to me clear that the motor dealers who bought the car
relied on the year stated in the log-book.
• If they had wished to make sure of it, they could have checked it
then and there, by taking the engine number and chassis number
and writing to the makers.
• They did not do so at the time, but only eight months later.
and writing to the makers.
• They did not do so at the time, but only eight months later.
• They are experts, and, as they did not make that check at the
time, I do not think that they should now be allowed to recover
against the innocent seller who produced to them all the evidence
which he had, namely, the registration book.
• I agree that it is hard on the plaintiffs to have paid more than the
car is worth, but it would be equally hard on the seller to make
him pay the difference.
•
25 Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd
[1965] 1 WLR 623, Court of Appeal
• The plaintiff, Dick Bentley, told the defendant, Harold Smith, that
he was on the look-out for a ‘well vetted Bentley car’.
• Mr Smith found one and bought it for £1,500. He then informed
Mr Bentley of his acquisition.
• Mr Bentley then went to see the car.
• Mr Smith told him that the car had been fitted with a replacement
engine and gearbox and that it had done only 20,000 miles since
the work had been carried out.
• The speedometer on the car showed only 20,000 miles. Mr
Bentley agreed to buy the car for £1,850 but the car proved to be
a ‘considerable disappointment to him’.
• He brought an action for damages for breach of warranty.
• Mr Smith admitted that he had made a statement that, to the best
of his belief, the car had done only 20,000 miles since the
replacement of the engine and the gear box but he denied that
these statements amounted to warranties or representations and
averred that the statements were made honestly in the belief that
they were true.
•
•
26 Judges view on this issue:
• Here we have a dealer, Smith ( the seller), who was in a position
to know, or at least to find out, the history of the car.
• He could get it by writing to the makers. He did not do so. Indeed
it was done later. When the history of this car was examined, his
statement turned out to be quite wrong.
• He ought to have known better. There was no reasonable
foundation for it.
• He ought to have known better. There was no reasonable
foundation for it.
• The judge found that the representations were not dishonest.
• Smith was not guilty of fraud. But he made the statement as to
20,000 miles without any foundation.
• And the judge was well justified in finding that there was a
warranty.
• He said: ‘I have no hesitation [in saying] that as a matter of law
the statement was a warranty. Smith stated a fact that should be
within his own knowledge. He had jumped to a conclusion and
stated it as a fact. A fact that a buyer would act on’. That is ample
foundation for the inference of a warranty.
•
•
27 Presumptions ( contd..)
4. The importance attached to the statement – the more important
the matter, the greater the likelihood that the parties intended the
statement to be a term (Bannerman v White [1861] 142 ER 685).
5. Where the statement is accompanied by a recommendation that
its truth be verified – the statement is more likely to be a mere
representation (Ecay v Godfrey [1947] 80 LI L Rep 286).
6. Where one party clearly relied upon the other, this is indicative
that the statement was intended to be a term (Esso Petroleum Co
Ltd v Mardon [1976] QB 801).
28 Esso Petroleum Co Ltd v. Mardon [1976] QB 801, Court of
Appeal: Where one party clearly relied upon the other, this is
indicative that the statement was intended to be a term
• The contract was between ESSO ( via their employee mr Lieth)

and Mr Maradon ( the tenant of the petrol Pump)
• The issue was with the statement that Mr leith had made to
Maradon about the Thorough-put of petrol at that Location at
250000 gallons.
• After some losses Mr Maradon terminated the contract, ESSO
sued for the monies due, and maradon Counter sued for
Misrepresentation.
• Question in front of the court was: whether the Statement of the
Thorough-Put being 250000 gallons, was it an opinion or a
Condition/ Warranty?
29
Condition/ Warranty?
29 Denning J
• Now I would quite agree with Mr Ross-Munro that it was not a
warranty—in this sense—that it did not guarantee that the
throughput would be 200,000 gallons.
• But, nevertheless, it was a forecast made by a party—Esso—who
had special knowledge and skill.
• It was the yardstick (the estimated annual consumption) by which
they measured the worth of a filling station.
• They knew the facts. They knew the traffic in the town. They
knew the throughput of comparable stations.
• They had much experience and expertise at their disposal. They
were in a much better position than Mr Mardon to make a
forecast.
• It seems to me that if such a person makes a forecast, intending
that the other should act upon it—and he does act upon it, it can
well be interpreted as a warranty that the forecast is sound and
reliable in the sense that they made it with reasonable care and
skill.
•
30 Measure of damages for Breach of Warranty ( representation)
• In the present case it seems to me that there was a warranty that
the forecast was sound, that is, Esso made it with reasonable
care and skill.
• That warranty was broken. Most negligently Esso made a ‘fatal
error’ in the forecast they stated to Mr Mardon, and on which he
took the tenancy. For this they are liable in damages
• Mr Mardon is not to be compensated here for ‘loss of a bargain’.
• He was given no bargain that the throughput would amount to
200,000 gallons a year.
• He is only to be compensated for having been induced to enter
into a contract which turned out to be disastrous for him.
• Whether it be called breach of warranty or negligent
misrepresentation, its effect was not to warrant the throughput,
but only to induce him to enter the contract.
• So the damages in either case are to be measured by the loss he
suffered.
•
•
31
•
31 Presumption: Terms and importance attached to it
• As a general rule, the longer the period of time between the
making of the statement and the entering into of the contract, the
less likely it is that the statement will amount to a term
• Bannerman v White (1861) 10 CBNS 844
• However, this rule is not absolute

• The more important a statement is to one of the parties, the more
likely it is to be a term
• If a statement is of such importance that a party would not have

entered into the contract but for the making of the statement, then
the statement will almost certainly amount to a term
• J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1

WLR 1078 (CA)
•
32 Bannerman v White (1861) 10 CBNS 844
• The claimant, Bannerman, formed a contract with the defendant,

White, regarding the purchase of hops, intending to use them to
produce beer. The claimant specifically enquired as to whether
the hops had received a sulphur treatment as it is only possible to
make usable beer from hops that have not received this
treatment.
• Furthermore, the claimant expressly stated that he would be
unwilling to buy the hops if they had been treated.
• The defendant assured the claimant that the hops were
untreated, however in fact the hops had received sulphur
treatment and were subsequently useless to the claimant; thus
Bannerman brought an action against White for damages,
contending that the statement regarding treatment ought be
viewed as a contractual term which White had thus breached.
• Issue
• Whether the defendant’s assurance regarding whether the hops
had received a Sulphur treatment constituted a representation or
a contractually enforceable term?
•
33
•
33 The Court’s on the issue
• The Court found for the claimant, viewing that the matter of
whether the hops had received Sulphur treatment was indeed a
contractual term rather than a mere representation.
• The Court placed particular emphasis on the fact that the
claimant had communicated the significance and consequence of
the treatment to the defendant, meaning they were reasonably
aware of its importance and that the claimant was only
contracting on these grounds.
•
34 Factors that the courts will take into account when deciding
between a Term or a mere representation: summary
• First, [the courts] may have regard to the time which elapsed
between the time of making the statement and the final
manifestation of agreement; if the interval is a long one, this
points to a representation.
• Secondly, they may consider the importance of the statement in
the minds of the parties; a statement which is important is likely
to be classed as a term of the contract.
• Thirdly, if the statement was followed by the execution of a formal
contract in writing, it is more likely to be regarded as a
representation where it is not incorporated in the written
document.
• Finally, where the maker of the statement is, vis-à-vis the other
party, in a better position to ascertain the accuracy of the
statement or has the primary responsibility for doing this, the
Courts will tend to regard it as a contractual term.
•
35 Pakistani case law on mere Opinions
• Mere Opinions are not incorporated as terms of the contract:
• CASELAW:
• 2003 YLR 1523: relevant as it states that mere opinions are not
binding.
• The plaintiff authorized the defendant to operate a duty free shop
at Karachi airport.
• The plaintiff sued to enforce the agreement but the defendant
said that contract to open the shop was voidable as there had
been misrepresentation regarding the forecast of the number of
said that contract to open the shop was voidable as there had
been misrepresentation regarding the forecast of the number of
passengers expected through the terminal. Held??
• The court held that the forecast was not a statement of fact and
was not binding.
• Opinions may be binding where they are made by an expert who
has more knowledge in the field and where the other party has
relied upon that expertise. This will be covered in
misrepresentation/fraud.
•
36 EXPRESS TERMS OF THE CONTRACT
Pakistani case law
• Parties are bound by the express terms of the contract where

they are clear and unambiguous.
• The express terms are presumed to constitute the true intentions
of the parties.
• CASELAW:
• National Bank Pakistan v Khalid Mehmod 2002 CLD 658: “no one
can be allowed to go beyond the terms and conditions contained
in an agreement executed between two parties”.
• The plaintiff was an ex-employee of NBP who took out a
mortgage with the bank and then duly paid the charge.
• However, NBP refused to redeem the property and release the
documents.
• NBP refused on the ground that the plaintiff had been served a
charge-sheet for misconduct and NBP would not redeem the
property until he was cleared of the charges under the charge-
sheet.
• The court held that there was no clause in the contract which
states that NBP would retain the property incase of there being
any charges against the mortgager; NBP to redeem property as
payment had been made.
•
37 PARDANASHIN LADIES
• The principle is that written agreements are binding irrespective

of whether they have been read or not (L’estrange v Graucob).
• However, in Pakistan there is the concept of ‘Pardanashin ladies’
who are illiterate or have not been exposed to the public sphere
and hence need to be protected by law.
who are illiterate or have not been exposed to the public sphere
and hence need to be protected by law.
• Even if they sign a written agreement, or it is signed by a person
to which they assigned the power of attorney, the agreement will
not be binding unless it can be shown that they were made aware
of what was happening, and had sought independent legal
advice.
• CASELAW
• 2004 CLC 1747: relevant as it showcases the principle that
pardanashin ladies are protected under the law and may not be
bound to execute a written agreement where they are being
exploited and did not enter it with consent.
• The respondent assigned power of attorney to her brother to sell
her land.
• He ‘sold’ it to his sons without any consideration and she
successfully challenged the sale. The other party was not able to
show that she had understood the transaction and had sought
independent legal advice.
•
•
38 The Parole Evidence Rule
39 Parole evidence rule: a very strong Presumption
• Even where a written agreement exists, one party might argue
that it does not contain all the terms and that additional terms
were intended to be included
• The parol evidence rule provides that evidence cannot be

admitted to add to, vary or contradict a deed or other written
document
• However, the rule merely provides a presumption that a written

contractual document contains all the terms of the contract
• Accordingly, it can be rebutted if a party can establish that other
terms were intended to form part of the contract
• The parol evidence rule is subject to numerous exceptions and

qualifications
•
40 Parole evidence rule and the evidence required
• Where the court is of the opinion that a written document was not
40 Parole evidence rule and the evidence required
• Where the court is of the opinion that a written document was not
intended to represent the full extent of the agreement between
the parties, evidence can be adduced
The main Presumptions and requirements for Oral evidence/
terms to be allowed:
1.The parole evidence rule applies only to express terms
2.The rule does not apply to any evidence that casts doubt upon
the validity of a written contract (e.g. lack of consideration or
intention, incapacity)
3.Where the written document failed to reflect the parties’ true
intentions, evidence can be adduced
4.A statement may result in the creation of a collateral contract,
and the court will hear evidence regarding whether such a
contract exists (Birch v Paramount Estates (Liverpool) Ltd (1956)
167 Est Gaz 396 (CA))
5.Parties who wish to ensure that oral statements do not become
terms can do so by inserting an ‘entire agreement clause’ into the
contract
•
41 Entire agreement clauses: examples
• Scope of an entire agreement clause: lack of express reference
to misrepresentation not fatal
• In NF Football Investments Ltd v NFCC Group Holdings
Limited the High Court found that the entire agreement clause,
when interpreted in the context of the contract as a whole, did
prevent a claim for damages for misrepresentation
notwithstanding the absence of an express exclusion to that
effect.
• Facts
• Under a sale and purchase agreement (SPA), two buyers
purchased all the shares in Nottingham Forest Football Club (the
Club). The SPA included an entire agreement clause as follows:
"This agreement (together with the documents referred to in it)

constitutes the entire agreement between the parties and
supersedes and extinguishes all previous discussions,
correspondence, negotiations, drafts, agreements, promises,
assurances, warranties, representations and understandings
between them, whether written or oral, relating to its subject
matter."
42
matter."
42 PAROL EVIDENCE RULE

Pakistani case law
• PLD 1996 LAHORE 633: “No party to an agreement is permitted
to set up any plea contrary to the express terms of the
agreement in order to prove or establish through oral evidence,
mercantile practice, or custom or usage to lead that the express
terms of agreement should not be enforces or that the parties
orally settled some different terms”.
• The company (defendant) took out a cash facility of Rs. 10,000
million from HBL (plaintiff) which was later increased to Rs.
40,000 million due to mutual agreement.
• However, the company failed to maintain stock reports as
required under the contract, despite repeated requests by HBL
and so HBL sought to wind up the company on the grounds of
the remaining amount due to them.
• The company tried to rely on custom/usage , but the court held
that custom could not override express provisions of the contract
and hence the company had failed to pay its debt and HBL’s
assertations for winding it up were permissible.
•
43 Implied Terms
44 Implied Terms
45 Implied Terms
46 Justifications for Implying terms into contract
• The first reason/ justification is based on policy rationale
• Business expediency
• The Courts fill in the gap where there is a chance of exploitation
of one party by the other. This is specifically important in
Consumer contracts.
• The second rationale is based on giving effect to the presumed
intention of the parties. This is more controversial than the first
reason.
47 Terms implied by Courts
• A term is implied in fact
• when it is implied into the contract in order to give effect to what
is deemed by the court to be the unexpressed intention of the
47
• when it is implied into the contract in order to give effect to what

is deemed by the court to be the unexpressed intention of the
parties. It is generally, but not always, a term that is specific to the
particular transaction between the parties.
• Under this head, The courts have insisted that they will only imply
a term into a contract as a matter of fact where it is ‘necessary’ to
do so.
• Terms implied in law
• ‘are those terms that are consistently implied into all contracts of
a particular type because of the nature of the contract, rather
than the supposed intentions of the parties’
• In the case of terms implied in law, however, it would appear that
the test is not one of necessity, although the precise nature of the
test remains unclear. It appears to be somewhere in between
‘reasonableness’ and ‘necessity’.
• Thus it might be said that it must be ‘reasonably necessary’ to
imply the term into the contract.
•
•
48 Implied terms in fact
49 The business efficacy test
• This test covers terms which one side alleges must be implied in
order to make the contract work – to give it business efficacy.
• The leading case in this field is The Moorcock (1889).
• The defendants owned a wharf and jetty on the river Thames
which people could pay to use to load and unload their boats.
The defendants contracted with the plaintiffs for the unloading of
the plaintiffs’ boat, called The Moorcock, at their wharf.
• Both parties knew that the water level at the wharf was low and
that the boat would have to rest on the river bed when the tide
was down.
• This would be all right if the river bed was soft mud, but would
damage the boat if it was hard ground.
• In fact, the boat was damaged when it hit a ridge of hard ground
at low tide.
• The contract did not expressly state that the boat would be
moored safely.
• The plaintiffs brought an action for compensation for the damage
to the boat on the basis that there had been a breach of contract.
50
to the boat on the basis that there had been a breach of contract.
50 The Courts rationale
• The Court of Appeal implied a term into the contract that the boat
would be moored safely at the jetty.
• Such a term was necessary to give the contract business
efficacy.
• Otherwise, the boat owner ‘would simply be buying an
opportunity of danger’. The term had been breached and the
action for damages for breach of contract was therefore
successful
• The court implies a term into the contract on the basis that it is
necessary to do so in order to make the contract work.
• That said, was the term implied in The Moorcock one that was
necessary to give efficacy to the contract? Could the contract not
have worked without such a term?
• The issue before the court was, in essence, who was to take the
risk of the bed of the river being unsuitable for the vessel.
Business efficacy does not seem to require that the risk be
allocated to one party or the other.
• Nevertheless, the court took the view that business efficacy
supported the implication of a term to the effect that the
defendants had undertaken to exercise reasonable care to
ascertain that the river bed adjoining the jetty was in such a
condition as not to cause injury to the vessel.
•
51 The officious bystander test: Shirlaw v Southern Foundries
(1926)
• Mr Shirlaw had been the managing director of Southern
Foundries Ltd, which was in the business of iron castings. But
then another company called ‘Federated Foundries Ltd’ took over
the business.
• The new owners had altered article 8 of Southern Foundries Ltd's
constitution, empowering two directors and the secretary (who
were friends of Federated Foundries) to remove any director.
• Then they acted on it, by sacking Mr Shirlaw.
• Mr Shirlaw's contract, signed in 1933 stated that he was to
remain in post for ten years.
• Mr Shirlaw sued the company for breach of contract, claiming for
an injunction to stay in office or substantial damages.
•
52
•
52
• The Court of Appeal held
• that it was an implied term in the 21 December 1933 agreement
that the company would not remove Mr Shirlaw from his
directorship for the time in which he was appointed as managing
director.
• Furthermore, it was held that it was an implied term that the
company would not alter its articles to create a right of removal
and there was no case for reducing the damages awarded by the
High Court.
53 The officious bystander test
• This test was laid down by MacKinnon LJ in Shirlaw v Southern

Foundries (1926). He said:
• . . . that which in any contract is left to be implied and need not be
expressed is something so obvious that it goes without saying; so
that, if while the parties were making their bargain, an officious
bystander were to suggest some express provision for it in the
agreement, they would testily suppress him with a common ‘Oh,
of course!’
• So, this particular term has to be so obvious that it could not have
been missed by an ‘officious Bystander’ ( reasonable man?)
54 Both tests are subjective
• Both the officious bystander and the business efficacy tests are
subjective: they ask what the parties in the case would have
agreed, and not what a reasonable person in their position would
have agreed.
• Consequently, attempts to imply terms in fact commonly fail for
one of two reasons.
• a term will not be implied in fact where one of the parties is
unaware of the subject matter of the suggested term to be
implied, or
• the facts on which the implication of the term is based.
55 Spring v NASDS (1956)

( where the implied term wasn’t allowed)
• In this case a trade union claimed that it was an implied term of
its contract with each one of its members that the union would
55
• In this case a trade union claimed that it was an implied term of

its contract with each one of its members that the union would
comply with the ‘Bridlington agreement’, which laid down the
rules under which members transferred from one union to
another.
• The court rejected this argument, on the grounds that if anyone
had asked the member concerned whether he had agreed to
allow the union to comply with the Bridlington agreement, he
would have been very unlikely to reply ‘Of course’;
• ‘What’s that?’ would have been a more likely answer.
•
56 BP Refinery (Westernport) Pty Ltd v. President, Councillors
and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20,
[1977] UKPC 13, 26
• Lord Simon (speaking for the majority, which included Viscount
Dilhorne and Lord Keith) said that:
• ‘[F]or a term to be implied, the following conditions (which may
overlap) must be satisfied:
• (1) it must be reasonable and equitable;
• (2) it must be necessary to give business efficacy to the contract,
so that no term will be implied if the contract is effective without it;
• (3) it must be so obvious that “it goes without saying”;
• (4) it must be capable of clear expression;
• (5) it must not contradict any express term of the contract.’
•
• It seems that the courts are less inclined to consider the Business
efficacy test and Officious bystander test as two different tests.
•
57 (Bou-Simon v. BGC Brokers LP [2018] EWCA Civ 1525, [2019]
1 All ER (Comm) 955, [12])
• When deciding whether the term is necessary to make the
contract work, the court must endeavour to put itself in the
position of the parties at the time of entry into the contract.
• It is not appropriate for the court to rely on hindsight and to imply
a term into a contract because it appears to the court to be fair or
because it is believed that the parties would have agreed to the
term if it had been suggested to them
•
58 Marks and Spencer Plc v. BNP Paribas Securities Services
Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742, Supreme
58 Marks and Spencer Plc v. BNP Paribas Securities Services
Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742, Supreme
Court
• The question before the court was whether it should imply into a
lease term which entitled the lessee to recover that part of an
advance payment of rent which related to a period after the
exercise by the lessee of a break period in the lease.
• The lessee paid the full quarter’s rent due on 25 December 2011
but on 24 January 2012 exercised its right under the break clause
to determine the lease.
• The lessee then sought to recover the rent attributable to the
period between 24 January 2012 and the end of the quarter,
being 24 March 2012.
•
59 The SC on the issue of Implication of terms?
• The Supreme Court declined to imply the proposed term into the
lease and it did so for two principal reasons.
1. First, the lease was a very detailed document which had been
entered into between two substantial and experienced parties and
had been negotiated and drafted by expert solicitors.
Further, the lease made provision for a number of contingencies,
but it did not make provision for the return of the balance of an
advance payment of rent in the circumstances of this particular
case.
2. Second, the existence of such an implied term was not
supported by ‘the general attitude of the law to the apportionability
of rent payable in advance’ .
• On the contrary, the long-established rule of the common law is
that rent, whether payable in arrear or in advance, is not
apportionable in time.
•
60 Lady Hale in Marks and Spencer Plc v. BNP Paribas Securities
Services Trust Co
• ‘It may well be that a more helpful way of putting Lord Simon’s
second requirement is, as suggested by Lord Sumption in
argument, that a term can only be implied if, without the term, the
contract would lack commercial or practical coherence.
• On the issue is that what the instrument, read as a whole against
the relevant background, would reasonably be understood to
mean?’
the relevant background, would reasonably be understood to
mean?’
• ‘First, the notion that a term will be implied if a reasonable reader
of the contract, knowing all its provisions and the surrounding
circumstances, would understand it to be implied is quite
acceptable, provided that
• (i) the reasonable reader is treated as reading the contract at the
time it was made and
• (ii) he would consider the term to be so obvious as to go without
saying or to be necessary for business efficacy.’
•
61 Implication vs Interpretation?
• On the question of whether Implying the term is an exercise in
Interpretation( reinterpretation) of the contract?
• The court must first ascertain the meaning of the express terms
of the contract, and it is only once that task has been completed
that the court should turn to the question whether or not it is
appropriate to imply a term into the contract.
• The sequential nature of this exercise derives support from the
rule that the courts cannot imply a term into a contract which is
inconsistent, whether linguistically or in terms of substance, with
the express terms of the contract
•
62 Relationship between the Officious Bystander test and
Business Efficacy test
• After the Marks and Spencer case, it seems that there is no
difference in these two tests for implying a term in a contract.
• Lady Hale’s speech clearly shows that these tests aren’t
particularly separate tests but rather two strands of the same test
to see whether the term can be implied In fact by the courts or
not?
• And the test seems to be both of business efficacy and necessity.
63 Implied terms in law: Courts role
• In addition to implying terms in fact, the courts can also imply
terms in law
• The differences between terms implied in law and fact are:
1.Terms implied in fact are ‘one-offs’ as they apply to the
idiosyncratic facts of that case only.
2.Conversely, terms implied in law establish a precedent that
idiosyncratic facts of that case only.
2.Conversely, terms implied in law establish a precedent that
is applied to all similar contracts
3.Terms implied in fact are based on the unexpressed
intentions of the parties,
4.whereas terms implied in law are not based on the parties’
intentions
• The courts have had difficulty determining a consistent test, with

some judges advocating a test of necessity, whereas others
advocate a test of reasonableness
•
64 Liverpool City Council v Irwin [1977] AC 239 (HL)
• The defendant tenants lived in Haigh Heights, a tower block in
the district of Everton in Liverpool. The plaintiffs, Liverpool City
Council, were their landlords.
• The defendants stopped paying rent for their maisonette on the
ninth and tenth floors of the tower block.
• The plaintiffs brought an action for possession.
• The defendants counterclaimed for nominal damages of £10 for
• (i) breach of the landlord’s duty to repair and maintain the
common parts of the building retained by the plaintiffs, namely
the lifts, staircases, passages, rubbish chutes, playground, etc.
and in relation to the maisonette itself;
• (ii) breach of the covenant for quiet enjoyment; and
• (iii) breach of the implied covenant in section 32(1) of the
Housing Act 1961, specifying defects in and disrepair of the water
closet cisterns, damp, defective door frames, and related matters.
•
65 Decisions of the Trial Court and the CA?
• Trail Judge found held that the plaintiffs were in breach of all
three duties and, while he granted the council an order for
possession, he awarded the defendants nominal damages of
£10.
• The CA allowed the appeal and held that the plaintiffs were not
under any contractual duty to keep the common parts in repair
and, further, that they were not in breach of the implied covenant
in section 32(1) of the Housing Act 1961. and refused to imply
the term that the P owed a duty to keep the commons in repair as
this was too onerous a duty
66
the term that the P owed a duty to keep the commons in repair as
this was too onerous a duty
• The D appealed to the HOL
66 The HOL( SC)
• Their appeal was successful in relation to their claim pursuant to
section 32(1) of the Housing Act 1961 and it was held that they
were entitled to nominal damages of £5.
• In relation to their claim that the plaintiffs were in breach of their
duty to keep the common parts of the building in repair, the
House of Lords held that the plaintiffs were subject to an
obligation to take reasonable care to do so but that, on the facts,
they had not breached that duty.
•
67 Lord Wilberforce ( HOL)
• To say that the construction of a complete contract out of these
elements involves a process of ‘implication’ may be correct; it
would be so if implication means the supplying of what is not
expressed.
• But there are varieties of implications which the courts think fit to
make and they do not necessarily involve the same process.
• Where there is, on the face of it, a complete, bilateral contract,
the courts are sometimes willing to add terms to it, as implied
terms: this is very common in mercantile contracts where there is
an established usage: in that case the courts are spelling out
what both parties know and would, if asked, unhesitatingly agree
to be part of the bargain.
• In other cases, where there is an apparently complete bargain,
the courts are willing to add a term on the ground that without it
the contract will not work—this is the case, if not of The Moorcock
(1889) 14 PD 64 itself on its facts, at least of the doctrine of The
Moorcock as usually applied.
•
68 Which terms ought to be implied?
The test of Necessity…
• The court here is simply concerned to establish what the contract
is, the parties not having themselves fully stated the terms.
• In this sense the court is searching for what must be implied.
• My Lords, in order to be able to choose between these, it is
necessary to define what test is to be applied, and I do not find
this difficult.
• In my opinion such obligation should be read into the contract as
69
this difficult.
• In my opinion such obligation should be read into the contract as
the nature of the contract itself implicitly requires, no more, no
less: a test, in other words, of necessity.
•
69 Reasonableness of the implied term: Lord Wilberforce
• My Lords, if, as I think, the test of the existence of the term is
necessity the standard must surely not exceed what is necessary
having regard to the circumstances.
• To imply an absolute obligation to repair would go beyond what is
a necessary legal incident and would indeed be unreasonable.
• An obligation to take reasonable care to keep in reasonable
repair and usability is what fits the requirements of the case.
• Such a definition involves—and I think rightly—recognition that
the tenants themselves have their responsibilities.
• What it is reasonable to expect of a landlord has a clear relation
to what a reasonable set of tenants should do for themselves.
•
70 Shell UK Ltd v. Lostock Garage Ltd [1976] 1 WLR 1187: the
test for reasonableness?
• Lostock and Shell had a written contract that Shell would supply
petrol and oil to Lostock, in return for Lostock buying its goods
from Shell exclusively.
• In a price war, Shell reduced its petrol prices for some nearby
petrol stations. Customers went there, and Lostock had no choice
but to trade at a loss.
• Lostock sought another supplier and Shell sued Lostock for
breach of contract.
• Judgment
• The Court of Appeal, by a majority, held that no term could be
implied that Shell should not "abnormally discriminate" against
Lostock.
• It was held that Shell would not have agreed to the term[1] and
that the implied term would be too vague.
•
71 Terms implied in law vs In Fact: Lord Dennings opinion in
Shell UK Ltd v. Lostock Garage Ltd [1976] 1 WLR 1187
Test of reasonableness for recognised relationship
• The first category comprehends all those relationships which are

71
• The first category comprehends all those relationships which are

of common occurrence, such as the relationship of
• seller and buyer, owner and hirer, master and servant, landlord
and tenant, carrier by land or by sea, contractor for building
works, and so forth.
• In all those relationships the courts have imposed obligations on
one party or the other, saying they are implied terms.
• These obligations are not founded on the intention of the parties,
actual or presumed, but on more general considerations ...
• In such relationships the problem is not solved by asking: what
did the parties intend? Or, would they have unhesitatingly agreed
to it, if asked?
• It is to be solved by asking: has the law already defined the
obligation or the extent of it? If so, let it be followed.
• If not, look to see what would be reasonable in the general run of
such cases and then say what the obligation shall be.
• Wider considerations than the ‘necessity’ requirement in Implied
in fact cases…
•
72 Implied in Fact? Test of necessity or reasonableness?
• The second category comprehends those cases which are not
within the first category.
• These are cases, not of common occurrence, in which from the
particular circumstances a term is to be implied.
• In these cases the implication is based on an intention imputed to
the parties from their actual circumstances:
• Such an imputation is only to be made when it is necessary to
imply a term to give efficacy to the contract and make it a
workable agreement in such manner as the parties would clearly
have done if they had applied their mind to the contingency which
has arisen.
• These are the ‘officious bystander’ type of case:
• Based on the idea of Necessity…
• So, depending on the nature of the relationship between the
parties, the Court will either use Necessity or Reasonableness to
imply terms into the contract
73 Terms implied by statute

74
73 Terms implied by statute
74 Implied Terms; B2B contracts
• Prior to the middle of 19th century it seems that the attitude of
common law was epitomised by the maxim ‘caveat emptor’ i.e. let
the buyer be aware.
• There was little protection given to the buyer of goods.
• The approach worked well where the goods were simple, traded
normally and where the buyers had a option of examining goods
before buying.
• Change in law relating to consumers
• SOGA now provides many implied terms into the Contract for the
sale of goods between B2B
• Similar provisions in Pakistani version of the SGA 1930
• The obligations undertaken by the parties to a contract are
defined by the terms of a contract.
• Terms could be either express or be implied.
• Whether terms of a contract are express or implied terms,
contractual terms can be categorised into two other types:
•
•
• CONDITIONS
» These are the more important contractual terms.
» If a party to a contract breaches a condition, the ‘innocent’
party is entitled to treat the contract at an end (repudiate the
contract).
» This will entitle the innocent party to go back, so far as it is
possible to do so, to the position that existed before the
contract came into existence. The innocent party may also be
entitled to damages for breach of contract.
» Poussard v Spiers and Pond [1876] 1 QBD 410
• WARRANTIES
• These are the lesser important terms of the contract.
78
• Why should care be taken when using the terms ‘conditions’ and
‘warranties’ to ensure that they are being used in their correct
legal meaning.
•
78 Terms of a Contract under SOGA 1979( Pakistani SOGA 1925)
• As per section 11 of the SOGA 1979, Breach of condition may

give rise to a right to treat the contract as repudiated.
• And a breach of warranty may give rise to a claim for damages
but not to a right to reject the goods and treat the contract as
repudiated.
• This depends in each case on the construction of the contract;
and a stipulation may be a condition, though called a warranty in
the contract.
79 Implied Terms
• The four main implications made by the act are:
» The seller must have the right to sell the goods (S.12)
» Goods sold by description must correspond to the description
(S.13)
» Goods must be of satisfactory quality (s.14)( Pakistani version
talks about merchantable quality)
» Goods sold by sample, must correspond to the sample in
quality (s.15)
80 Seller’s liability for goods delivered

• All implied terms are treated as conditions
• Remedies
• “acceptance”
• There may be other implied terms, including terms about quality
or fitness for purpose implied by trade usage (s.14(4)).
• Liability under the implied terms is strict (i.e., no fault

requirement)
81 Seller’s right to sell the goods
• S.12:
“In a contract of sale ... there is an implied term on the part of the
seller that in the case of a sale he has a right to sell the goods,
81
“In a contract of sale ... there is an implied term on the part of the
seller that in the case of a sale he has a right to sell the goods,
and in the case of an agreement to sell he will have such a right
at the time when the property is to pass.”
Niblett v Confectioners' Materials Co Ltd. [1921] 3KB 387
Microbeads AC v Vinhurst Road Markings Ltd. [1975] 1 All ER
529
• Remedy for breach

• Implied condition
• Termination
• damages
82 Seller’s right to sell the goods
• S.12(2): Freedom from encumbrances and right to quiet
possession:
“In a contract of sale... there is also an implied term that

(a) the goods are free, and will remain free until the time
when the property is to pass, from any charge or
encumbrance not disclosed or known to the buyer before the
contract is made, and
(b) the buyer will enjoy quiet possession of the goods except
so far as it may be disturbed by the owner or other person
entitled to the benefit of any charge or encumbrance so
disclosed or known.”
• S.12(3)-(5): transfer of limited title
• Warranties only so only remedy is damages
83 Buyer’s Duties
Section 27 SoGA: Duties of seller and buyer
“It is the duty of the seller to deliver the goods, and of the buyer to
accept and pay for them, in accordance with the terms of the
contract of sale.”
• The buyer must pay for the goods
• Cf. definition in s.2(1)
•S.8(2) on “reasonable price”
•S.10 – payment not “of the essence” by default
• Payment usually in cash
• Other means?
Re Charge Card Services Ltd. [1988] 3 All E.R. 702
84
85
Re Charge Card Services Ltd. [1988] 3 All E.R. 702
84 Sec 13, sale by description

85 Seller’s liability for goods delivered
• Goods must correspond with description (s.13)
• applies to all sales by description.
• s.13(3)
Beale v Taylor [1967] 1 WLR 1193
• Mostly where the BUYER has not seen the Goods but relies on
the seller’s description of the Goods.
• Goods must be sold with reference to description***
• What kind of description would fall within sec 13?
•
86 Application of sec 13
• Section 13 is largely self-explanatory.
• In the simplest type of case, if a seller describes a jacket as a
leather jacket but it is made from material that is not leather there
will be a breach of s 13.
• Similarly, if a car is described as a 2016 model but turns out to be
a 2014 model there will also be a breach of the section.
• The seller is under a general obligation to provide the goods
contracted for and will be in breach of this performance obligation
if he fails to do so.
• Description of the commercial characteristics of the goods
Ashington Piggeries Ltd. v Christopher Hill Ltd.[1972] AC 441 (
the herring meal for Birds case)
Reardon Smith Lines v Hansen Tangen [1976] 1 WLR 989 ( the
Ships name case)
•
•
87 Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441
(HL)
• FACTS: A mink-breeder, Christopher Hill Ltd (‘CH’), contracted to

purchase from Ashington Piggeries Ltd (‘Ashington’) a
consignment of ‘Norwegian herring meal fair average quality of
the season’, with which to feed its mink.
• Ashington added a preservative to the food, which reacted with
the season’, with which to feed its mink.
• Ashington added a preservative to the food, which reacted with
the herring to form a chemical (DMNA) that was harmless to most
animals but fatal to mink.
• As a result, thousands of CH’s mink died.
• CH refused to pay for the food and Ashington sued for the
contract price.
• CH counterclaimed, alleging that the terms implied by ss 13(1),
14(2), and 14(3) had been breached.
•
88
• HELD: The House of Lords held that the implied terms as to
satisfactory quality (s 14(2)) and fitness for purpose (s 14(3)) had
been breached.
• However, the term implied by s 13(1) had not.
• Lord Guest stated: ‘the fact that the herring meal was
contaminated by DMNA did not result in a different substance
from the herring meal in the description.
• There was no loss of identity. In my opinion, no breach of section
13 by [Ashington] occurred.’
• Lord Diplock agreed, stating: ‘the occurrence of this reaction may
affect the quality of the meal. It does not alter its identity as
“herring meal”
•
89 Brewer v Mann [2012] EWCA Civ 246
• FACTS: Mann advertised for sale a ‘1930 Bentley Speed Six’

motorcar.
• Brewer obtained the car on hire-purchase terms.
• Brewer later argued that the car did not conform to this
description because the engine was not an original Bentley
engine but a Bentley engine that had been modified to Speed Six
specifications.
• Brewer further argued that the bodywork had been altered.
•
90
• HELD: The Court of Appeal held that the description of the car in
the hire-purchase contract did not require it to be an original 1930
Bentley Speed Six.
• Consequently, alterations to its engine and bodywork did not
90
Bentley Speed Six.

• Consequently, alterations to its engine and bodywork did not
constitute a breach of its description.
• The identity of a vintage car was to be ascertained by the normal
customs of the vintage car trade and, on the evidence of both
experts, the car did correspond with its description as a ‘1930
Bentley Speed Six’.
•
91 Implied term as to Quality
• S14(2)
• 'Where the seller sells goods in the course of a business, there is
an implied term that the goods supplied under the contract are of
satisfactory quality'.
• This provision does not apply to private sales, but only when
someone sells ‘in the course of business’. Stevenson v
Rogers [1999] 1 All ER 613
• S61(1)
• Rogers v Parish [1987] QB 933
• Merchantable quality( the Pakistani standards) vs Satisfactory
quality
•
92 Satisfactory Quality
• 3 subsections define and explain 'satisfactory quality:-
• S14(2A) '... goods are of satisfactory quality if they meet the
standard that a reasonable person would regard as satisfactory,
taking account of
• any description of the goods,
• the price (if relevant) and
• all the other relevant circumstances'.
• Bramhill v Edwards [2004] EWCA Civ 403 – CA decision on
reasonable person
• BS Brown & Son Ltd v Craiks Ltd [1970] 1 WLR 752
• Thain v Anniesland Trade Centre 1997 SLT (Sh Ct) 102
• S14(2B) '... the quality of goods includes their state and condition
and the following (among others) are in appropriate cases
aspects of the quality of goods –
• (a) fitness for all the purposes for which goods of the kind in
question are commonly supplied,
• (b) appearance and finish,
question are commonly supplied,
• (b) appearance and finish,
• (c) freedom from minor defects,
• (d) safety, and
• (e) durability.
• Remedies:
• Breach of condition – reject – repudiate – recover damages
• S14(2C) The term implied by subsection (2) above does not
extend to any matter making the quality of goods unsatisfactory (
defence for the seller) -
• (a)which is specifically drawn to the buyers attention before the
contract is made,
• (b)where the buyer examines the goods before the contract is
made, which that examination ought to reveal, or
• (c)in the case of a contract for sale by sample, which would have
been apparent on a reasonable examination of the sample.
•
95
Fitness for Purpose
• Section 14(3) inserts a term into all contracts for the supply of
goods in the course of a business that the goods are reasonably
fit for the purpose for which they were bought.
• Griffiths v Peter Conway Ltd [1939] 1 All ER 685
• Objective strict liability standard
• Frost v Aylesbury Dairy Co [1905] 1 KB 608 (CA)
• Reliance on seller
• Grant v Australian Knitting Mills [1936] AC 562
• Rebut presumption if not relying on seller’s skill and judgement
• Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd [1968] 2 QB
545
•
96 Comparison
• S14(2) and s14(3)
• Can be a breach of both terms
• 14(2) ‘fitness for all the purposes for which the goods are
commonly supplied’
• 14(3) ‘goods are reasonably fit for the purpose for which they
97
96
commonly supplied’
• 14(3) ‘goods are reasonably fit for the purpose for which they
were bought’
• Jewson Ltd v Boyhan [2003] EWCA Civ 1030
• Remedies – condition – reject, repudiate and recover damages.
97 Goods to Correspond to Sample
• Section 15 – where goods have been sold by sample-
» The bulk should correspond with the quality of the sample.
» The goods should be free from any defect, making their quality
unsatisfactory, which would not be apparent on reasonable
examination of the sample.
• The word sample was elaborated upon by Lord Macnaghten in
James Drummond & Sons v E.H. Van Ingen & Co (1887) 12
App.Cas. 284
“After all, the office of a sample is to present to the eye the real
meaning and intention of the parties with regard to the subject-
matter of the contract, which, owing to the imperfection of
language, it may be difficult or impossible to express in words.
The sample speaks for itself.”
• Steels & Bucks Ltd v Bleecker Bik & Co Ltd.[1956] 1 Lloyd's
Rep. 228
• Godley v Perry [1960] 1 WLR 9
98 B 2 C contracts and Consumer protection
99 Punjab Consumer protection Act 2005
LIABILITY ARISING FROM DEFECTIVE PRODUCTS
• 4. Liability for defective products.– (1) The manufacturer of a

product shall be liable to a consumer for damages proximately
caused by a characteristic of the product that renders the product
defective when such damage arose from a reasonably anticipated
use of the product by a consumer.
• (2) A product shall be defective only if–
• (a) it is defective in construction or composition as
provided in section 5;
• (b) it is defective in design as provided in section 6;
• (c) it is defective because an adequate warning has not
been given as provided in section 7; and
• (d) it is defective because it does not conform to an
express warranty of the manufacturer as provided in section 8.
•
100
express warranty of the manufacturer as provided in section 8.
•
100
• Sec 5 Defective in construction or composition.– A product shall
be defective in construction or composition if, at the time the
product was manufactured, a material deviation was made from the
manufacturers’ own specifications, whether known to the consumer
or not.
•
• 6. Defective in design.– (1) A product shall be defective in
design if, at the time the product left its manufacturer’s control–
• (a) there existed an alternative design for the product that
was capable of preventing the damage to a consumer; and
• (b) the likelihood and gravity of damage outweighed the
burden on the manufacturer of adopting such alternative design
and any adverse effect of such alternative design on the utility of
the product.
• (2) When the manufacturer has used reasonable care to
provide adequate warning to the users or handlers of the product,
it shall be considered in evaluating the likelihood of damage
arising from the design of a product.
•
101 Obligations of the manufacturer
• 18. Prices to be exhibited at the business place.– Unless a price
catalogue is available for issue to customer, the manufacturer or
trader shall display prominently in his shop or display-centre a
notice specifying the retail or wholesale price, as the case may be,
of every goods available for sale in that shop or display-centre.
• 19. Receipt to be issued to the purchaser.– Every manufacturer or

trader who sells any goods shall issue to the purchaser a receipt
showing –
• (a) the date of sale;
• (b) description of goods sold;
• (c) the quantity and price of the goods; and
• (d) the name and address of the seller.
• 20. Return and refund policy.– Return and refund policy of a
seller shall be disclosed to the buyer clearly before the transaction
is completed by means of a sign at the point of purchase.
•
102
•
102 Unfair practices
• 21. False, deceptive or misleading representation.– No person
shall make a false, deceptive or misleading representation that–
• (a) the products are of a particular kind, standard, quality,
grade, quantity, composition, style or model;
• (b) the products have particular history or particular previous
use;
• (c) the services are of a particular kind, standard or quality;
• (d) the services are provided by a person having a requisite
skill or qualification or experience;
• (e) the products were manufactured, produced, processed
or reconditioned at a particular time;
• (f) the products or services have any sponsorship, approval,
endorsement, performance, characteristics, accessories, uses or
benefits;
• (g) the products are new or reconditioned or have been in
use for a particular period of time only;
• (h) the seller or producer of products or provider of services
has any sponsorship, approval, endorsement or affiliation;
• (i) the products or services are necessary for somebody’s
well being;
• (j) concerns the existence, exclusion or effect of any
condition, guarantee, right or remedy; and
• (k) concerns the place of origin of products.
•
103 Terms implied by Custom and usage
104 Implied terms by custom and usage
105 IMPLIED TERMS
Pakistani case law
106 Terms Implied by Custom/Usage:
• Terms Implied by Custom/Usage:

• Section 1 of the Contract Act states that it will not affect any
custom/usage:
• “Nothing herein contained shall affect the provisions of any
Statute, Act or Regulation not hereby expressly repealed, nor
any usage or custom of trade”
• Caselaw:
any usage or custom of trade”
• Caselaw:
• 1967 PLD Karachi 714: relevant as it states that terms may be
implied by custom.
• The defendants agreed to purchase a quantity if cotton seed.
• It was custom for the buyer to make a demand for delivery,
supply bags, and to depute an agent to take delivery of the seed,
but the buyer refused to do so, claiming that this was not
specified under the contract.
• The court incorporated custom into the contract as an implied
term and held that the buyer was required to make the demands
to effect delivery.
•
107 Nothing can be implied into the contract which is contrary to
the express terms:
• Nothing can be implied into the contract which is contrary to the

express terms:
• Caselaw:
• 1992 SCMR 19: “nothing can be implied in a contract which is
inconsistent with its express terms”.
• The housing societies took out a loan from the corporation to
build multi-story buildings.
• The corporation discovered that the money was being put to
other use by the societies and successfully sued to have the
money returned with interest.
• The corporation claimed compound interest, which was objected
to by the societies since the agreement states that the
corporation could only recover simple interest.
• The court stated that it did not have the power to imply terms
into the contract; only simple interest was to be paid by the
societies and not compound interest.
•
108
109 Terms, warranties and innominate terms

110 The classification of terms into minor undertakings and major
undertakings
• A contractual term is a ‘primary’ obligation.
• Every breach of a ‘primary’ obligation gives rise to a ‘secondary’
obligation to pay damages for the loss caused.
109
110
• Every breach of a ‘primary’ obligation gives rise to a ‘secondary’

obligation to pay damages for the loss caused.
• In some cases this is the only remedy, but in others there is the
further remedy of ‘terminating’ (ending or rescinding) the contract.
• That is to say, some breaches of contract provide the injured
party with an option. He or she can either
• (a) terminate the contract and claim damages or
• (b) affirm the contract (accept the breach and insist on continued
performance of the contract) and claim damages.
111 Terms
• Major and minor undertakings or obligations in contracts.
• Conditions: ‘important term of contract’—breach will entitle the
injured party to be discharged from the contract and sue for
damages.
• Breach of a condition entitles the injured party to repudiate the
contract even when they do it with an ulterior motive e.g. in order
to avoid a bad bargain.
• Warranty: ‘lesser important term of contract’—breach leads to
damages and not termination of contract.
112 Why does the classification matter?

• The classification of terms is important because
1.the injured party is only given this option to rescind the contract
or claim damages or do both, when the term breached is a
condition or
2.there is a sufficiently serious breach of an innominate term .
3. The injured party is not given the right to terminate the contract
for breach of a term that is a warranty.
•
113 Uncertain Term
If an uncertain term is actually meaningless, then exceptionally the
court may be prepared to sever the provision if it is clearly
superfluous.
A contract for sale of goods contained the words “I assume… that
the usual conditions of acceptance apply”.
As there was no usual condition of acceptance, the court of appeal
held that the words were meaningless and could be ignored.
Nicolene Ltd v Simmonds, CA [1953]
114 Conditions, Warranties and Innominate Terms
115
114 Conditions, Warranties and Innominate Terms
115 Types of Conditions
Contingent Condition:
• A condition subsequent provides that a previously binding
contract shall come to an end on the occurrence of a stipulated
event.
Example: I promise to pay £50 a month to my daughter Rachel
until she gets married, the occurrence of her marriage will
determine the contract between us.
• A condition precedent provides that the contract shall not

become binding until the occurrence of a specified event.
• Example: an agreement to buy a car provided that it shall not
become binding until the car passes a road test; if the car
fails the road test no contract comes into existence.
116 Conditions and warranties
• This classification into conditions and warranties was extensively
used by the drafters of the Sale of Goods Act 1979 (and the
Pakistani SOGA ), where the principle is that the most important
terms are conditions and the less important ones are warranties.
• ‘Condition’ is another word used in several senses: the present
sense is highly artificial, but more important for our purposes than
the natural meaning of a ‘suspensive’ condition.
117 Test to determine whether a term is a condition or a
Warranty?
• At common law, however, it is clear that the ultimate test is the
parties’ intention:
• if the intention is clearly expressed, a term will be a condition,
however unimportant it is.
118 Conditions; case law

• An example of a term deemed by the courts to be a condition can
be found in Bunge Corp v Tradax Export SA (1981).
• A seller had contracted to ship 5,000 tons of US soya bean meal
by the end of June 1975,
• with the buyer taking responsibility for arranging for the ship to
transport the goods.
• The buyer was supposed to give ‘at least 15 consecutive days’
notice of probable readiness of vessel’ but in fact only gave
notice on 17 June.
notice of probable readiness of vessel’ but in fact only gave
notice on 17 June.
• The seller might have been able to load in 13 days rather than
15.
• However, the House of Lords held that it was clear that the
seller’s obligation to ship the produce before the end of the month
was a condition, so that the buyer could terminate if loading was
not finished until 1 July.
• It therefore followed that the buyer’s obligation to give notice was
a condition, because in a contract of this kind it would be unfair to
deprive sellers of their full period of notice.
119 The Mihalis Angelos (1970)
• In The Mihalis Angelos (1970) the owners of a ship hired it out by
a charterparty (the name for the contract document in such a
case).
• The document contained the clause ‘expected ready to load
under this charter about 1 July 1965’.
• In fact the ship could not have been ready by this time, and in the
event was not ready until 23 July.
• The owners were obviously in breach of the term, but whether the
charterers could terminate the contract depended on what sort of
term it was.
• The House of Lords decided that an ‘expected readiness’ clause
in charterparties was a condition.
120 The Courts rationale?
• The judges based their decision on the fact that in previous sale
of goods cases, similar undertakings had been construed as
conditions,
• and that in commercial agreements, made by companies that
bargain as equals, predictability and certainty are vital
ingredients,
• and parties need to know the likely outcome of breaching any
term before they can confidently agree to it.
121 Condition in statute

• Certain types of term are held by law to be conditions. For
example, the Sale of Goods Act 1979 states that certain terms
relating to title to goods and their quality are not only implied into
consumer contracts for sale, but are usually regarded as
conditions as opposed to warranties.
122
121
consumer contracts for sale, but are usually regarded as

conditions as opposed to warranties.
• Case law also lays down that certain terms are to be regarded as
conditions whenever they appear.
122 Pakistani law on innominate terms
• INNOMINATE TERMS
• The SOGA does not define or allude to innominate terms;
Soomro’s Contract Law book also simply referred to the Hong
Kong Fir Shipping case and there are no Pakistani cases where
the term “innominate” was used.
•
123 CONDITIONS AND WARRANTIES:
• Whether a term is a condition, or a warranty can be determined

by statute:
• Covered by Section 12 and 13 of SOGA
• CASELAW
• PLD 1958 Dacca 512: relevant as it refers to the Act and
explains that, in case of a breach of condition, the buyer has the
option to repudiate the contract or treat the breach as a mere
breach of warranty (only claim damages).
• The main issue was found not to be relevant to this distinction,
and the judges instead referred to other sections of SOGA which
were very specific to the facts of the case.
124 The facts of the case:
• The buyer accepted delivery and paid for of part of the contract
(17 bales instead of the 50 agreed under the contract) but
refused to purchase the 33 remaining bales when they were
given at a later date.
• The seller claimed that the buyer must accept the bales and then
sue for damages for delayed delivery by the S;
• The S relied on the fact that he had not rejected the lower
quantity of 17 bales meant that the buyer had construed the term
relating to quantity as a warranty and not a condition,
• therefore The buyer could not now repudiate the contract by
rejecting the remaining 33 bales.
• Section 12 lays down that breach of a condition will give rise to a
right to treat the contract as repudiated, whereas breach of
warranty will only give rise to a claim for damages but not to a
right to reject the goods and treat the contract as repudiated.
warranty will only give rise to a claim for damages but not to a
right to reject the goods and treat the contract as repudiated.
• The buyer claimed that he was not entitled to purchase the
remaining 33 bales.
• The court agreed with the buyer and held that the buyer was not
entitled to accept the remaining 33 bales.
• It referred to section 37(1) of SOGA, which states that the buyer
may accept part-delivery by paying for the goods that have been
actually delivered. It also referred to section 38(1) which states
that the buyer is not liable to accept delivery by installments,
unless otherwise agreed. Therefore, there was no breach of
condition when the buyer refused to accept the 33 remaining
bales.
•
125 2.2 Exclusion Clauses & Interpretation of Contracts
126 Exclusion Clause
A ‘clause in a contract or a term in a notice which appears to
exclude or restrict a liability or a legal duty which would otherwise
arise.’ (Yates, 1982, 1)
•
Example: ‘No liability is accepted for any damage, howsoever
caused, to any goods during the course of transit’.
•
•
127 Functions of Exclusion Clauses
1.Allocation of risks under the contract.
2.Exclusion clauses can help reduce litigation costs by making
clear the division of responsibility between the parties.
3.Exclusion clauses are often used in standard form contracts
which, by enabling people, to mass-produce their contracts,
helps reduce the cost of negotiations and of making contracts.
4.But powerful parties may use exclusion clauses to exclude
liability towards the weaker party, thereby leaving the weak
without a remedy
5.
•
128 Issue with exclusion clauses
• The courts do not have the power, at common law, to invalidate
128 Issue with exclusion clauses
• The courts do not have the power, at common law, to invalidate
an exclusion or limitation clause on the ground that it was
unreasonable.
• In UK we have the UCTA that now determines the regulation of
the exclusion clauses. But absent a statutory provision, generally
the courts cannot invalidate a written/ express exclusion clause.
• Judges like Lord Denning did attempt to formulate such a
jurisdiction but his attempts in this regard were firmly rejected by
the House of Lords.
• In the absence of a direct power to regulate unreasonable
exclusion clauses the courts resorted to indirect means.
• The principal indirect means were the rules relating to the
incorporation and interpretation of exclusion clauses
•
129 Outline of the Law
(1)Incorporation (was the clause part of the contract?);
(2)Construction (does the wording of the clause actually cover the
liability in question?); and
(3)Statutory Control, principally in the form of the Unfair Contract
Terms Act 1977 (UCTA), the Consumer Rights Contract Act
2015
130 Incorporation
• Signatures
• Notice
• Must be contained in a contractual document
• Previous dealings
131 Signatures
Signed documents containing exclusion clauses are binding.
L’Estrange v Graucob CA [1934]

• The case of L’Estrange v Graucob concerned a woman who had
signed a hire-purchase agreement for a cigarette vending
machine, without reading it.
• The agreement contained, in very small print, a broad exemption
from liability for the product.
• When the machine proved defective, it was held that signing the
contract meant that the woman was bound by the exclusion
clause, and therefore had no remedy.
132
contract meant that the woman was bound by the exclusion
clause, and therefore had no remedy.
132 Misrepresentation and Incorporation

• Curtis v Chemical Cleaning and Dyeing Co (1951)
• MsCurtis took a wedding dress for cleaning and was asked to
sign a document exempting the cleaners from liability ‘for any
damage howsoever arising’.
• She queried the document, but was told it simply meant the
cleaners would not accept liability for any sequins or beads on
the dress.
• She then signed.
• When she collected the dress, it had a stain which was not there
before, but the cleaners denied liability, relying on the exclusion
clause.
• The Court of Appeal held that the statement made about sequins
and beads misrepresented the effect of the clause, and therefore
the cleaners could not rely on it, even though Ms Curtis had
signed the document.
•
133 Misrep and Incorporation of the clauses
• Thus, in Wilton v Farnworth (1948) the court observed:
• In the absence of fraud or some other of the special
circumstances of the character mentioned, a man cannot escape
the consequences of signing a document by saying, and proving,
that he did not understand it.
• Unless he was prepared to take the chance of being bound by
the terms of the document, whatever they might be, it was for him
to protect himself by abstaining from signing the document until
he understood it and was satisfied with it.
• Any weakening of these principles would make chaos of every-
day business transactions.
•
134 Incorporation by Notice
• If separate written terms are presented at the time a contract is
made – by handing over a ticket, or listing them on a sign, for
example – those terms only become part of the contract if it can
be said that the recipient had reasonable notice of them.
135
134
example – those terms only become part of the contract if it can

be said that the recipient had reasonable notice of them.
• Many of the rules on reasonable notice arise out of what are
called the ‘ticket cases’, which occurred during the nineteenth
century with the rise of companies providing public transport by
rail.
•
135 Notice
Where the document is unsigned but merely delivered to the third
party, then reasonable and sufficient notice of the existence of the
exclusion clause must be given.
Two requirements must be satisfied:
i) the clause must be contained in a contractual document.
Acknowledgement of payment e.g. voucher or receipt is not a
contractual document; and
ii) the existence of the exclusion clause must be brought to the
notice of the other party before or at the time the contract is
entered into.
136 Parker v SE Railway [1877]
If separate written terms are presented at the time a contract
is made, those terms only become part of the contract if the
recipient had reasonable notice of them.
• The Plaintiff left his bag in a station cloakroom, paid the fee of 2d
and received a cloakroom ticket in return.
• On the front of the ticket was printed details such as opening
hours of the office, and also the words: ‘See back’.
• On the back there was a clause limiting to £10 the company’s
liability for the loss of property left with them.
• When the plaintiff returned to collect his bag, it had been lost. The
bag was worth £24 10s, so Mr Parker claimed that amount from
the railway company;
• the company maintained that their liability was limited to £10.
• The Court of Appeal said that a party could be deemed to have
had reasonable notice if they knew of the clause, or if reasonable
steps were taken to bring the clause to their notice.
• On the facts of the case the limitation had been incorporated into
the contract, and the train company was only required to pay £10.
•
137
•
137 Parker v SE Railway [1877]
• If it is proved that, at the time the contract is made, the claimant
has actual knowledge of the existence of a term, then s/he will
be bound by it.
• If it is proved that, at the time the contract is made, claimant has
no actual knowledge of the existence of a term, then s/he will
not be bound by it, unless s/he is deemed to have such
knowledge and s/he will be so deemed if s/he was given
reasonable notice of it.
•
138 REASONABLE STEPS TO INCORPORATE THE CLAUSE
• In deciding whether reasonable steps have been taken, the
courts will look at
1.when the notice was given,
2.what form it took, and
3.how serious and unusual the effect of the exemption clause is.
•
139 Time of notice
• As a rule, an exemption clause is only incorporated into the

contract if notice is given before or at the time of contracting.
• In Olley v Marlborough Court Ltd (1949)
• a married couple booked into a hotel for a week, and then went to
their allotted room.
• On the wall of the room they found a notice stating that the hotel
accepted no liability for loss of guests’ property.
• While the couple were out, Mrs Olley’s fur coats were stolen.
• The hotel disclaimed liability, relying on the words of the notice,
• But the Court of Appeal held that those words had not been
incorporated into the contract, because they came to the Olleys’
notice too late.
• The contract was made at the reception desk, and a new term
could not then be imposed on them when they reached their
room.
•
140 Thornton v Shoe Lane Parking 1971
• The defendants ran a car park which motorists entered by taking

140
• The defendants ran a car park which motorists entered by taking

a ticket from a machine, which triggered the raising of an
automatic barrier.
• Mr Thornton did this, and parked his car, but when he returned to
the car park later, there was an accident in which he was injured.
• The ticket stated that parking was subject to the conditions
displayed on the premises, and various notices in the car park
stated that the company did not accept responsibility for damage
or personal injury (the latter claim would be inoperative now
under the Unfair Contract Terms Act 1977).
• When the plaintiff sued for damages, the defendants argued that
they were exempt from liability, because of the clause.
• In deciding whether the clause was in fact part of the contract,
• Lord Denning analysed the transaction in terms of offer and
acceptance, in order to decide when the contract was complete.
• He reasoned that the offer was made by the car park proprietors
placing the machine ready to receive money.
• Acceptance took place when the customer drove up to the
machine, and the contract was then complete.
• The terms printed on the ticket which was delivered a moment
later by the machine therefore came too late.
141 EFFECT OF THE CLAUSE?
• Many modern cases have stressed that the more unusual or
onerous a particular term is, the greater the degree of notice
required to incorporate it.
• Highly unusual or onerous clauses cannot be incorporated simply
by handing over or displaying a document containing the clause;
• the party seeking to impose the clause must take special steps to
draw attention to it.
• This principle formed part of the reasoning in Thornton: although
it was fairly common for car park conditions to exclude liability for
damage to cars, exclusion of liability for personal injury was not a
term that motorists would usually expect in such a transaction.
• Consequently, even though the steps taken by the proprietor
might have been sufficient to incorporate the more usual clauses
excluding or limiting liability for property damage, they could not
be deemed to have given reasonable notice of the more unusual
term concerning personal injury.
•
142
•
142 Interfoto Picture Library v Stiletto Visual programs 1988
• The defendants were an advertising agency which borrowed
some photographs from the plaintiffs, a picture library.
• These libraries provide pictures to companies who have
requested particular types of picture. The photographs are left
with the client for a specified period for approval, with a
reproduction fee to be paid if any of the pictures are published,
and then returned to the library.
• The Stiletto agency had not dealt with Interfoto before but, on
request, the picture library delivered 47 photographs, along with a
delivery note.
• This stated that the pictures should be returned within 14 days,
and included a list of conditions, one of which was that
companies who kept the pictures longer than 14 days would be
charged a holding fee of £5 per picture per day until they were
returned.
• The advertising agency, apparently without reading the
conditions, decided that the pictures were unsuitable for their
project, put them aside, and did not return them until almost a
month later.
• When they did so, Interfoto submitted an invoice for £3,783.50,
the holding fee.
•
143 The courts in Stilleto:
• The Court of Appeal held that Stiletto were not contractually
bound to pay the charge, stating that as the term concerned was
‘very onerous’, the other party’s attention had to be drawn to it
very explicitly for it to be incorporated by reasonable notice.
• The court echoed a previous statement by Lord Denning that:
• ‘Some clauses which I have seen would need to be printed in red
ink on the face of the document with a red hand point- ing to it
before the notice could be considered sufficient.’
• In this case, although the clause was not hidden in any way – it
was plainly printed on the delivery note – it was sufficiently
onerous to require that the picture library should take action to
ensure that the agency knew about it, rather than just assuming
they would read it.
• Picture libraries frequently do impose charges for late return, but
£5 per transparency per day would be considered expensive
even today, let alone at the time when the case took place, and it
144
£5 per transparency per day would be considered expensive
even today, let alone at the time when the case took place, and it
seems that the high price made the court consider the term
particularly onerous
•
•
144 Previous Dealings
Even where there has been an insufficient notice, an exclusion
clause may nevertheless be incorporated where there has been a
previous course of dealing between the parties on the same terms.
145

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10/23/23

1 Terms of the Contract

2.1 Terms of the Contract

• The important question here is whether pre-contractual

7 Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256?

• Such terms are usually in writing

• Some statements will amount to mere ‘puffs’ that have no legal

• Many advertisements contain such puffs (e.g. whiter than white)

• Terms, if not complied with, allow the non-breaching party to sue

• Mere representations are statements made to induce the other

• Representations, if not complied with, do not give rise to an

• The courts use an objective test to distinguish between terms and

• Thake v Maurice [1986] QB 644 (CA) (the vasectomy case)

• To ensure consistency, there are a number of factors the court

• The basic distinction between a representation and a Term is that

• Prior to the enactment of the Misrepresentation Act 1967, and the

So how do we determine the intention of the parties

• The contract was between ESSO ( via their employee mr Lieth)

• Bannerman v White (1861) 10 CBNS 844

• However, this rule is not absolute

• If a statement is of such importance that a party would not have

• J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1

• The claimant, Bannerman, formed a contract with the defendant,

• Parties are bound by the express terms of the contract where

• The principle is that written agreements are binding irrespective

• The parol evidence rule provides that evidence cannot be

• However, the rule merely provides a presumption that a written

• The parol evidence rule is subject to numerous exceptions and

"This agreement (together with the documents referred to in it)

42 PAROL EVIDENCE RULE

• when it is implied into the contract in order to give effect to what

• This test was laid down by MacKinnon LJ in Shirlaw v Southern

55 Spring v NASDS (1956)

• In this case a trade union claimed that it was an implied term of

• The courts have had difficulty determining a consistent test, with

• The first category comprehends all those relationships which are

• The first category comprehends all those relationships which are

73 Terms implied by statute

• As per section 11 of the SOGA 1979, Breach of condition may

80 Seller’s liability for goods delivered

• Liability under the implied terms is strict (i.e., no fault

• Remedy for breach

“In a contract of sale... there is also an implied term that

84 Sec 13, sale by description

• FACTS: A mink-breeder, Christopher Hill Ltd (‘CH’), contracted to

• FACTS: Mann advertised for sale a ‘1930 Bentley Speed Six’

Bentley Speed Six.

• 4. Liability for defective products.– (1) The manufacturer of a

• 19. Receipt to be issued to the purchaser.– Every manufacturer or

• Terms Implied by Custom/Usage:

• Nothing can be implied into the contract which is contrary to the

109 Terms, warranties and innominate terms

• Every breach of a ‘primary’ obligation gives rise to a ‘secondary’

112 Why does the classification matter?

• A condition precedent provides that the contract shall not

118 Conditions; case law

121 Condition in statute

consumer contracts for sale, but are usually regarded as

• Whether a term is a condition, or a warranty can be determined

L’Estrange v Graucob CA [1934]

132 Misrepresentation and Incorporation

example – those terms only become part of the contract if it can

• As a rule, an exemption clause is only incorporated into the