| Contract types | Upstream provide client with resources to carry on business Downstream contracts under which client passes on + exploits fruits of labour; contracts for supply of goods and services by business |
| Formation | Ads, estimates, brochures, price lists, enquiries / RRIs, LoIs/ HoTs/MoUs; anything marked ‘subject to contract’ NOT usually offers Offer can be ended by rejection, counter-offer, lapse of time, death or revocation Other party must accept terms unconditionally or counter-offer Terms of acceptance must be ‘mirror image’ of offer / counter-offer Must be supported by consideration; may be small but cannot be past performance of existing duty |
| Contractual Certainty | Parties must be specific about terms; if fails to address key area (price), will be void for uncertainty Courts may fix badly drafted contract if clause severable or parties’ intention clear Courts will not enforce ‘agreement to agree’ ‘Lock-out’ agreements enforceable; ‘lock-in’ agreements not |
| Terms and Representations | 3 types: innocent, negligent, fraudulent; primary remedy is rescission but damages possible under Misrepresentation Act 1967, s. 2(1); test is whether maker honestly believed statement was true and had rble grounds for belief |
| Battle of the Forms | Occurs when both parties are attempting to impose their standard terms on the other Courts apply ‘last shot wins’ doctrine Traditional offer / acceptance model, not relationship / conduct of parties (Tekdata Interconnections) |
| Standard terms and conditions | The goods to be delivered are on time, preferably to own premises; and S to be liable for any defects. They have flexibility for late delivery if it is to be let down by its own suppliers; B preferably collects the goods from its factory; and They are not liable for every trivial problem (will usually accept some liability for defects). | Lack of flexibility; Effective training and procedures essential; Incorporation difficulties/ ‘battle of the forms’. Need for regular review; Legal constraints (e.g. UCTA 1977). | |
| Drafting and content of commercial contracts | Analysis of client’s instructions; Establishing client’s objectives; Not losing sight of C’s commercial aims; Adapting precedents to fit C’s instructions (not other way around). | Commencement and date; Parties to contract; Recitals (if any); Definitions and interpretation; Conditions precedent (if any); Agreements; Representations/warranties; Operative part Indemnities; Limitations and exclusions; ‘Boiler plate’ clauses; Execution clause and signature; Schedules. | |
| Recitals | Recitals useful to help put contract in context or explain reason for a contract being entered into Alternatively, may set out factual background to an exclusion clause by explaining decision of parties to impose risk of loss on one rather than the other |
| Definitions clause | Basic rules: Should give no more than give a clear meaning to defined terms; All defined terms should start with a capital letter; Defined terms should be listed alphabetically for ease of reference; Should be used only where they are recurrent in body of agreement (or where danger of ambiguity); All defined terms should be defined in the definitions section; Definitions must meet the requirements of the agreement; Care should be taken in defining things which might be subject to change during the contract. |
| Interpretation clause | Contract interpreted according to common intention of parties even if not literal meaning If one party intended contract to have particular meaning, and at time of contract’s conclusion other party could not have been unaware of first P’s intention, contract is to be interpreted in way intended by first party If intention cannot be established, contract interpreted according to meaning that could reasonably be understood by peers of parties in same circumstances |
| ‘The operative part’ |
| Conditions precedent | |
| Agreements | Define rights and obligations of parties E.g. in sale of goods contract, S promised to sell + deliver goods of certain description + quality |
| Representations and warranties | |
| Indemnities | One parties promises to make good another’s loss If A incurs loss as a result of occurrence of particular event, B will indemnify A |
| Limitation & exclusion of liability | |
| ‘Boiler-plate clauses’ |
| What are they? | |
| Prevail clauses | States that, in the event of a dispute, one party’s terms shall prevail Legally ineffective; bluff value |
| Entire/ whole agreement clauses | Provides that all obligations of the parties are recorded in one document (SPA) Intended to prevent oral terms being included in contract (statements by sales reps) Danger that it may exclude external docs (e.g. price list) Destroyed by counter-offer; must be re-included May attempt to exclude for non-fraud misrep. but must be clearly worded and rble (MA 3) |
| Non-Reliance clause | Undermines conclusion that statement is a misrepresentation by showing it did not induce contract Generally (not universally) accepted as effective to protect parties against misrepresentation arising Clause should exclude liability for non-fraudulent misrepresentation However, subject to MA 1967, s .3: subject to UCTA reasonableness test |
| ‘No authority clause’ | |
| Cancellation Clause | Provides that one or both parties may cancel under a range of circs Must not be too wide; may invalidate contract If permits B to cancel contingent on payment of % of price, must ensure enforceable |
| Waiver | |
| Buyer becoming insolvent | |
| Choice of law/ Jurisdiction | |
| Service of Notices | Should provide for places notice is to be served, method of service, time at which deemed served Most will require notice in writing rather than orally Typically require notice to be served during business hours if served in person Principles of ECL (PECL) page 10 &11 |
| Force Majeure | Intended to suspend/ terminate contractual obligations for occurrence outside control of parties E.g. fire, flood, storm etc. Usually for benefit of S / deliverer of goods If 1+ specified events occurs, contractual performance suspended for specified period of time |
| No Partnership Clause | Seeks to ensure that agreement cannot be construed as partnership between parties to agreement Avoids disadvantages of partnership law (such as liability for partner’s debts) However, s1 of PA 1890 determines whether partnership in existence, NOT wording of clause |
| No assignment, no subcontracting | If B has selected a specific supplier, will not that supplier to subcontract work to unknown TP This clause prevents that happening |
| SCHEDULES |
| What are they | |
| PERFORMANCE |
| Post-contractual Variation | Any variation of the contract must be supported by consideration (unless waiver – negative promise not to enforce other party’s obligations, although right to reinstate terms at rble notice) Person making variation must have authority to bind S Not enforceable if made under economic duress |
| Effort | Absent agreement, parties must ‘the effort necessary to achieve the obligation’, however onerous May agree different standard in contract, e.g. ‘best’ or ‘reasonable’ endeavours |
| INTERPRETATION AND IMPLICATION |
| Courts | |
