BLAW10001 Chapter Notes - Chapter 5: Puffery, Bailment, Parol Evidence Rule
15 May 2018
School
Department
Course
Professor
Principles of Business Law
• Tutorial 5
• Week 5
• The Contents of a Contract
• The iportace of a cotract’s cotets
• if a dispute arises about what was promised, or whether the parties have done what
they have promised to do, the dispute can only be resolved by first establishing the
contents
• Terms, opinions, puffery and representations distinguished
• During the process of making a contract
o Parties can communicate orally or in writing
o Exchange communication
• A statement made during the formation of a contract becomes a binding term of the
contract if it can be inferred from the circumstances that the statement was
intended by the parties to be legally binding
o Statements made explicitly in the form of promises make this intention clear
• Condition
o Used to describe the most important terms in a contract
o Conditions are those terms without which the party for whose benefit they
were included would not have entered the agreement
▪ Fundamental, go to the root of the contract
• Warranty
o Used to describe all those terms of a contract that are of lesser importance
than conditions
o The promise to deliver the computer after lunch the next day is likely to be a
mere warranty
• Sometimes courts do not lways classify terms as warranties or conditions
o Leae partiular ters uaed, or ioiate or treatig the as
iterediate ters
▪ If a breach of an innominate term severely affects the intended
outcome of the contract, then it will be treated as a breach of
condition
▪ If consequences were minor, will be treated as warranty
• Representations
o Statements made about particular facts, but not in the form of a promise
▪ Only become terms of the contract if they were made in
circumstances from which it can reasonably be inferred that the
parties intended what was said to be contractually binding
o If a representation proves untrue, it is referred to as a misrepresentation
• Opinions
o i y ie
o I eliee
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o I thik
o indicate that X is expressing an opinion, and may not be correct
▪ therefore, are not intended to be legally binding
• Puffery
• An exaggerated praise that suppliers of goods and services often use to excite buyers
and encourage sales
o Are not intended to be taken seriously
o Ko as hot air
• Express and implied agreement to terms
• Reaching an agreement on particular terms involves:
o An exchange of information about the terms in question
o A signal of assent to those terms
• Inclusion of terms in signed documents
o A is certainly bound by the terms that are expressly contained in the printers
document she has signed
▪ Does not matter if you read them or not
▪ Law asks whether a reasonable observer would conclude, in the
circumstances, that A appeared to consent to the terms in question
o When a person signs a document they know contains contractual terms, they
objectively appear to be agreeing to be bound by those terms, and this is
sufficient to bind them
• Inclusion of terms after formation
• Terms cannot be added to a contract after it has been made
o A contract includes only those undertakings for which the parties have
intended to make themselves liable at the moment of formation
o Any additional undertakings would have to be the subject of a new contract
which would itself need to meet all the requirements of formation
• Inclusion of terms by reference to other documents
• Law allows terms to be incorporated into a contract simply be referring to them and
making them clear where they may be found, rather than setting them out in full
o Usually irrelevant that one party has not taken the opportunity to examine
those terms
• Inclusion of terms in tickets
• Terms referred to on a ticket may be regarded as incorporated into the contract
o Appropriate because it is common knowledge that certain types of contract
contain terms of a particular type, and it is widely expected that notice of
these terms may be given on tickets
• Inclusion of terms in dockets or receipts
• Not reasonable to expect A to read what is printed on the docket, or to assume that
she assented to the terms, whatever they were
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