Contract Terms

Introduction

Once the parties have formed a binding agreement (Chapters 1–6), the next question is: **what have they actually promised, and what happens if those promises are broken?** The answer lies in the **content of the contract** — its **terms**. This chapter takes you through the whole life-cycle of a contractual term: distinguishing a **term** from a mere **representation**; classifying terms as **conditions, warranties or innominate terms**; the rules of **incorporation** (signature, notice, course of dealing); **implied terms** (at common law and under the **SGA 1979**, **SGSA 1982** and **Part 1 CRA 2015**); the construction of **exemption clauses**; and the statutory controls under **UCTA 1977** (B2B) and **Part 2 of the CRA 2015** (B2C).

Assessment focus

Contract terms sit at the heart of the FLK1 contract-law syllabus. For SQE1 you must be able to identify whether a statement is a **term or a mere representation**, classify a term as **condition, warranty or innominate term**, decide whether an unsigned set of terms has been **incorporated**, and apply the statutory controls on exemption clauses under the **Unfair Contract Terms Act 1977 (UCTA 1977)** for **B2B** contracts and under **Part 2 of the Consumer Rights Act 2015 (CRA 2015)** for **B2C** contracts. SQE1 MCQs routinely test the **statutory implied terms** (s.9 CRA 2015 satisfactory quality; s.14(2) SGA 1979), the **contra proferentem** rule, the **reasonableness test** under s.11 UCTA 1977, and the **fairness test** under s.62 CRA 2015. Questions are single best answer questions (SBAQs) set in realistic client scenarios; you must **apply** the rules, not merely recall them. This is a closed-book assessment.

Study tips

1) Memorise the **four factors** distinguishing term from representation (importance / timing / writing / special knowledge). 2) Master the **three-tier classification** of terms and the test for innominate terms ('substantially the whole benefit', Hong Kong Fir). 3) Learn the **incorporation-by-notice** four-limb test and the **'red hand' rule** (Interfoto). 4) Keep **B2B and B2C** apart: **SGA 1979 / SGSA 1982 + UCTA 1977** govern business contracts; **Part 1 CRA 2015 (implied rights) + Part 2 CRA 2015 (unfair terms)** govern consumer contracts. 5) For any exemption-clause problem, run the **fixed sequence**: incorporation → construction (contra proferentem; Canada Steamship) → statutory control (UCTA 1977 OR Part 2 CRA 2015).