Introduction to Business Law and Ethics Implied Terms

Question: Discuss about theIntroduction to Business Law and Ethics for Implied Terms. Answer: Introduction A contractual term is that part provision that forms part and goes to the root of a contract.[1] It forms the main purpose of the contract. A term is an integral part of a contract that its breach entitles the innocent party to claim damages or repudiation. It is common practice not to specifically mention all terms in the contract document. Terms not expressly mentioned are known as implied terms. Was it a Term of Contract? A contractual term can either be a condition or a warranty. A condition is normally the substantial part of any contract as it forms the main purpose for which the contract was formed. Where a party breaches a condition, the innocent party has the right to apply to the court for the contract to be terminated and a payment of damages resulting from such breach.[2] In Poussard v Spiers[3], the applicant and the respondent negotiated a contract where the applicant was to perform as a singer for a period of three months. However, the applicant became sick and was unable to perform in the first four nights. She was consequently replaced with another person. The court held that the applicant was in breach of a condition and therefore the respondent was within her right to terminate the contract. A warranty is that minor or insignificant term that does not form the basis or the reason for which the contract was negotiated.[4] A breach of a warranty therefore only entitles the innocent party to claim for damages but not a termination of the contract. In Bettini v Gye[5], a contractual agreement between the parties required the plaintiff to perform in the defendants play as a singer for a term of three months. The plaintiff however became seriously sick and had to miss the rehearsals. The defendant consequently terminated her contract. The court found that the defendant was not entitled to terminate the contract as the plaintiff was in breach of a warranty and not a condition. Rehearsals did not go to the root of the contract and therefore the defendant was only entitled to damages but not a termination. Therefore, it was never a contractual term that the almond flour was supposed to be gluten free. Whether there was an Implied Term A contractual term could either be implied or be express. Express terms appear in writing in the contract document as what the parties agreed on. Implied terms do not appear anywhere in the contract document. They are implied to protect the weaker party where the other party has more negotiating power and uses such power to frustrate the weaker party. Terms are implied by statute, common law or by courts.[6] Courts are however reluctant to imply terms since they endeavour to refrain from writing contracts for parties and encourages the principle of privity of contract. In commercial contracts, terms are implied through customs or usage especially where there is a particular type of trade where such practice has been developed over time. The court would imply such a term in a contract of a similar trade. In Hutton v Warren[7], the parties entered into a tenancy agreement where the plaintiff by an agreement was to plant corn and barley on the defendants land. But prior to harvesting, the defendant had the tenancy agreement terminated. The plaintiff produced a bill to the defendant of the works done and the cost of the seeds used in the fields. The defendant unfortunately refused to make payments on the grounds that the contract did not provide for payments for such expenses. The court held that it was a common practice in contracts for farm work for such payments and therefore it was implied to form part of the contract. From the Foregoing, it Was therefore Implied in the Contract that the Cake Would be Gluten Free. Terms can also be implied through fact[8], where such term is necessary in a contract so as to give sense to a business. Such business or contract would lose the purpose if such term is omitted. For instance, in Moorcock[9], the plaintiff moored a ship at the defendants wart located along Thames River. Thames is a tidal river and when the tide occasionally goes out, the ship is likely to touch the rocky and rugged river bed. The ship eventually got damaged. The defendant on attempts to avoid liability argued that there was no warranty on the rivers condition and was therefore not liable. The court held that it was an implied term that the rivers bed needed to be safe for any ship to moor. The test used by the court was that of business efficacy so that the business could make sense. Whether the Icing Colour was a Condition or a Warranty It can be said that the colour of the cake was in the circumstances a warranty. A warranty does not form the main part of a contract.[10] It includes statements made during contract negotiations to entice the other party to enter into a contract. The icing colour was not integral part of the contract since a cake of a different colour however not suitable for a sports celebration would not in any case prevent the celebrations from proceeding anyway. The icing colour on the cake does not necessitate a termination of the contract and therefore it falls under a warranty. In Bettini v Gye[11], a contractual agreement between the parties required the plaintiff to perform in the defendants play as a singer for a term of three months. The plaintiff however became seriously sick and had to miss the rehearsals. The defendant consequently terminated her contract. The court found that the defendant was not entitled to terminate the contract as the plaintiff was in breach of a warranty and not a condition. Rehearsals did not go to the root of the contract and therefore the defendant was only entitled to damages but not a termination. Whether Mikaela Bears Responsibility for the Icing on the Cake Mikaela would still be held liable for the difference in the specifications required as to the colour of the cake. Kimala had an expectation that the cake he placed an order for would be the exact one that Mikaela would make. It was the assurance by Mikaela that such cake would be available that induced Kimala to enter into such contract. A variation on the specifications would defeat the purpose for which the cake was intended. Kimala is therefore likely to undergo some emotional injury due to the ridicule he is likely to be subjected to by the participants. Such emotional injury cannot pass without compensation from the guilty party, Mikaela. Mikaela cannot however claim the protection from the exclusion clause which he did not take reasonable steps to bring to the attention of Kimala either before or during contract negotiation. In Thornton v Shoe Lane Parking[12], the plaintiff sustained injuries inside the defendants car park. He had accessed the parking using a receipt obtained from a machine after dropping money into the said machine. It was indicated on the receipt that parking was to be done according to terms on display inside the park. A display in the park was to the effect that the park would not be liable for injuries sustained inside the park. The court held that the displays were not availed to the plaintiff at the time of entering into the contract and could not be used to avoid liability. Kimala can therefore claim damages for the breach of a warranty that the icing on the cake would correspond to the specifications given by him.