1. BTEC NATIONAL
UNIT 21- ASPECTS OF CONTRACT &
BUSINESS LAW
“Meaning and effects of ‘Terms’ in a
standard form contract.”
By Jane Akinyebo

2. Contractual Terms
A contract is equally agreed promises made
between 2 or more parties with the intention of
creating a legally binding agreement.
Statements made by the parties under
negotiation that are not meant to form part of
the contract are called representations, whilst
the things that the parties are bound to perform
under the contract are called the terms of the
contract.

3. Types of Term
There are two types of term which can be found
in a contract:
•The express term
•The implied term

4. Express Terms
Express terms are statements made by the
parties either by word of mouth or in writing
and the parties intend that these terms will
create the vital part of the contract. Express
terms can be either conditions, warranties or
innominate Terms .

5. Conditions
A condition is a fundamental part of the
agreement and is something which forms
the root of the contract.
A breach of condition will entitle the
injured party to repudiate (treat the
contract as if it is over and invalid) and
claim damages.

6. Warranties
A warranty is a less important term that does
not go to the root of the contract. A breach of
a warranty will only give the injured party the
right to claim in damages; the contract itself
cannot be rejected.

7. Warranties
It is common in business contracts to not only
have express terms relating to conditions and
warranties, but also to have express key terms
included in the contract such as:
•Exclusion clauses
•Clauses relating to damages
•Price variation clauses

8. Innominate Terms
Contractual term that may turn out to be either
a condition (is integral to the contract) or a
warranty (is incidental to the contract)
depending on its effect on the injured or
innocent party.

9. Implied Terms
Implied terms are not actually stated in a contract
but are introduced into the contract by statute,
custom and common law.

10. The Difference Between Express
and Implied Terms
Express terms will be those terms in the contract that
the parties have negotiated and expressly agreed.
Parties can strike these terms out and re-negotiate until
all terms have been agreed. The parties have total
control over the type of express terms their contract
contains.

11. The Difference Between Express
and Implied Terms
On the other hand, implied terms are those that
the law insists are included in the contract. Here
the parties have no say in the matter and if they
wish to do business with each other must follow
these implied terms precisely.

12. To protect parties, terms are implied into a contract by
virtue of legislation. A main example of this is the Sale of
Goods Act 1979 - which is implied by statute into contracts
for the sale of goods. According to this Act:
•Every seller has the right to sell goods
•Where there is a sale of goods by description there is an
implied condition that the goods will correspond with that
description
•Goods sold are of a satisfactory condition and that they are
fit for the particular purpose stated
Terms Implied by Statute

13. Terms implied by Statute
The Supply of Goods and Services Act 1982 deals with
implied terms that apply to contracts where one person
agrees to bail goods to another person by way of hire.
•S7: defines that there is an implied condition that the
bailor has the right to transfer the goods
•S8: provides that when there is a contract for the hire of
goods by description, there is an implied condition that the
goods will match that description
•S9: states that where goods are hired in the course of a
business, there is an implied condition that the goods are
of a satisfactory quality and reasonably fit for the purpose
hired

14. Terms Implied by Custom
An agreement may be subject to customary
terms not actually specified by the parties.
These could be historical; therefore, a person
making a contract should try to find if any such
terms are in existence. It should be
noted, however, that such a custom will be
overruled by any express clause to the contrary.

15. Terms Implied by the Common
Law
The courts will be prepared to imply a term into
the contract in order to validate the obvious
intentions of the parties. This may be a point
that has been overlooked or may not have been
clearly stated by the parties. In such
circumstances, the court will imply such a term
in the interests of 'business fairness' so that the
contract makes commercial common sense.

16. Terms that can have impact on my
contract
• Time for performance and rejection of goods
• Price Variation
• Payment terms
• Quality and quantity of goods delivered
• Reservation of title
• Exclusion clauses

17. Time for Performance & Rejection
of Goods
This is an chosen amount of time that allows the
buyer to return items after received, this is typically
14 – 31 days. In my contract this is underlined as
number 9 and labelled as “Your right of
cancellation”. This is a fair term as it does not limit
the liability or disadvantage the consumer. The
consumer protection regulations (2000) would
affect this as it states the amount of days allowed
for rejection of goods. Louis Vuitton have chosen 7
days.

18. Price Variation
This is allows a business or a company to sell
goods or services at different prices. An example
of this would be petrol, as the price changes
daily. In my contract this is underlined as
number 5 as “Price” in the paragraph it also
includes payment terms. Within this contract
this is a fair term as the company have set a
standard rate for 12 months that will not be
changed. This is fair as it does not disadvantage
the customer.

19. Payment Terms
This is a clause that shows how the customer
will pay the company that it has brought goods
or a service from. This would typically be via a
monthly charge via the credit card. In my
contract this is this is underlined as number 6 in
the quick summary page. This is a fair term as it
does not disadvantage the customer. The
consumer protection regulations (2000) would
affect this as it states what information is.

20. Reservation of Title
This is a clause under a contract for the supply
of goods. It states that ownership of the product
will remain (be reserved) with the supplier until
goods have been fully paid for, only if this is
agreed by all parties and stated in the contract
at the time of supply.

21. Exclusion Clauses
Louis Vuitton have added an exclusion clause
in their contract in an effort to limit its liability
to a fixed sum. The use of exclusion clauses is
governed by the Unfair Contract Terms Act
1977 [amended by the Supply of Goods and
Services Act 1982].