1.0 Terms
Whether or not a
statement becomes a term of the contract depends substantially on the intention
of the parties. Some statements do not form part of the contract but may have
been influential in having a party enter into a contract. Such statements are
not part of the contract but if found to be false can give rise to an action on
the basis of misrepresentation.
2.0 Express Terms
Express terms are
those terms that are contained in a contract and are openly articulated by the
parties to the contract. Of course, there is always the issue that what was
said is actually what the parties intended it to mean. The courts usually take
an objective approach to ascertaining what the parties intended by the words they
used in the contract.
.
3.0 Incorporation
by Express Reference
Terms can be
incorporated into an agreement by express reference to a third party document.
Hence a reference to a term such as ‘CIF’ as defined by INCOTERMS in a contract
is sufficient to incorporate the meaning ascribed in INCOTERMS as part of the
express terms of a contract.
4.0 Implied Terms
Terms may be
implied in a contract: (1) based on custom or usage; (2) as the legal incidents
of a particular class or kind of contract; (3) based on the presumed intention
of the parties where the implied term must be necessary to give ‘business
efficacy’ to a contract; (4) as meeting the ‘officious bystander’ test as a
term which the parties would say, if questioned, that they had obviously
assumed.
Whatever may be the
precise legal criterion for implying terms into a contract upon which the
parties have not expressly agreed, it would always be necessary for a court of
our legal tradition to be very cautious about the imposition on the parties of
a term that, for themselves, they had failed, omitted or refused to agree upon.
Such caution is inherent in the economic freedom to which the law of contract
gives effect. Absent some statutory or equitable basis for intervention, it is
ordinarily left to the parties themselves to formulate any agreement to which
they consent to be bound in law. As MacKinnon LJ,
who is usually
credited with inventing the fiction of the ‘officious bystander’, admitted:
‘[I]n most …cases the Court has … to find … the obvious common agreement, upon
a matter as to which it must have the strongest suspicion that neither party
ever thought of it at all, and that, if they had, they would very likely have
been in hopeless disagreement what provision to make about it’. As far as
implications in fact are concerned, there is the proposition that resort to the
fiction of testing a propounded implied contractual term by reference to what
an ‘officious bystander’ would regard as self-evident may unduly restrain the
importation of implied terms proper to a particular case. The officiousness of
the bystander merely explains the intervention of that fictional person in the
private business of the parties. It says nothing about the attitude or approach
of the bystander concerned. There is no reason why officiousness and
reasonableness could not go together. But the time may be coming where the
fiction is dispensed with completely and the courts acknowledge candidly that,
in defined circumstances, the law to which they give effect permits, according
to a desired policy, the imposition upon parties of terms and conditions for
which they have omitted to provide expressly.
Clarion Limited
and Others v National Provident Institution [2000] 1 WLR 1888;
Terms grounded in
custom or usage in the industry can be implied on the basis that the usage is
notorious, certain and reasonable so that the parties to the contract would
have understood that the custom being relied upon was applicable.
Lancaster v Bird (2001) 73 Con LR
22
Terms can be
implied as a legal incident to a particular class or kind of contract as
‘necessary’ for the very existence of the contract. This category of implied
terms is distinguishable by its disregard for the actual or presumed intention
of the parties. Terms implied are those that would necessarily be implied in
all such contracts of a particular category or class.
Canadian Pacific
Hotels Ltd v Bank of Montreal [1987] 1 S.C.R. 71
In business
transactions, what the law desires to effect by the implication of a term is to
give such business efficacy to the transaction as must have been intended at
all events by both parties. The court will not imply a term to give efficacy to
a contract on the simple basis that it is reasonable to do so; nevertheless,
consideration of what is reasonable is important in determining whether or not
a term should be implied into a contract to give it efficacy. The court may
imply a term if such an implication necessarily arises that the parties must
have intended that the suggested stipulation should exist. It remains that the
term implied into the transaction must be required to give efficacy to the
contract.
Liverpool City
Council v Irwin and Another [1977] A.C. 239 (H.L.)
Royal Caribbean
Hotels Ltd v Barbados Fire & General Insurance Co and Another; Bank of Nova
Scotia v Royal Caribbean Hotels Ltd (1992) 44 W.I.R.
81
Historically, the
two major tests for implication of terms by the courts have been described as
the officious bystander test and the business efficacy test. Both have
contributed to the composite test now applied by the courts.
Arthur Edmond
Dovey v Bank of New Zealand [1999] N.Z.C.A. 328
Terms can be
implied in a contract largely on the basis of statute.
Sale of Goods Act
Chapter 82:30 (Revised Laws of Trinidad and Tobago, 1980) as amended by Act No.
11 of 1983
14 (1) In a
contract of sale … there is an implied condition on the part of the seller that
in the case of a sale he has the right to sell the goods …
(2) In a contract
of sale, …there is an implied warranty that –
(a) the goods are
free, and will remain free until the time when the property is to pass … and
(b) the buyer will
enjoy quiet possession …
16 (2) Where the
seller sells goods in the course of business, there is an implied condition
that the goods supplied under the contract are of merchantable quality, except
that no such condition –
(a) as regards
defects specifically drawn to the buyer’s attention before the contract is
made; or
(b) if the buyer
examines the goods before the contract is made, as regards defects which that
examination ought to reveal.
5.0 Conditions
Conditions are
terms that are considered to be critical to a contract, the breach of which may
entitle a party to terminate the contract and seek redress from the courts.
Poussard v Spiers
and Pond (1875–76) L.R. 1 Q.B.D. 410
6.0 Warranties
Warranties are
generally considered to be terms that while of importance in their own rights
does not destroy a contract if breached and therefore the offending party may
be held liable for damages but the contract cannot be terminated by the injured
party.
Ter Neuzen v Korn [1995] 3 S.C.R.
674
7.0 Exemption
Clauses
It is now common in
contracts to see a party seeking to limit or remove liability with respect to
particular aspects of that party’s performance of its contractual obligations.
A party relying on an exemption clause that limits or excludes liability must
from the start demonstrate that the clause is incorporated in the contract (by
signature, notice or course of dealing) governing his performance of the
contract and that it provides protection against the consequences of the breach
of contract for which he is accused. Unfortunately if these considerations are
established in favour of the person in breach, there are still several hurdles
that must be overcome in order to establish the operability of the exemption
clause. The law of exemption clauses has been revolutionised by the Unfair
Contract Terms Act, which precludes exemption clauses which purport to exempt
liability for personal injuries caused by someone acting negligently. Further,
where damage has been caused to property excluding liability on the part of a
negligent party, this can only be relied upon where notice of the exemption
clause has been reasonable.
Roger Rahamut and
National Insurance Property Development Company Limited v Airport Authority of
Trinidad and Tobago H.C.A. No. S-732 of 1995
8.0 Certainty of
Contract
For a contract to
be binding it must be certain and not suffer from vagueness or obvious
incompleteness.
iSOFT Group plc v
Misys Holdings Ltd & Another [2002] E.W.H.C.
2094
Speedy Service
Liquors Ltd v Airports Authority of Trinidad and Tobago (H.C.A. No.586 of
1984) and Jacqueline Paryag v Airports Authority of Trinidad and Tobago (H.C.A.
No. 936 of 1984)
Boggess and
Another v Badder Hassan (1991) 46 W.I.R. 72
9.0 Capacity
For a contract to
be binding, it must be made by parties with the requisite capacity, that is the
legal ability to make the contract. There are several factors that may impact
on a person’s ability to contract. A mentally ill person or a drunk person may
argue that they are not bound by a contract made during a period of illness or
drunkenness. This argument would be based on the reasoning that at the time of
the making of the contract they lacked the capacity to understand the
implications of the contract and therefore ought not to be bound by the
contract. In the case of minors, there may be no issue of the intelligence of a
minor but the courts have expressed a desire to protect those that have not yet
attained the age of majority.
9.1 Minors
A contract with a
minor may be rendered enforceable or void by the courts. The courts in
addressing contracts with minors have attempted to articulate certain key
principles. If the entire contract or a particular term of a contract is so
disadvantageous to the minor to render the entire contract unfair, the court
will not enforce the contract. It is clear that the true question is whether
the particular stipulation complained of is so unfair as to make the entire
contract disadvantageous to the infant. One may find in any contract a clause
which by itself is not to the advantage of the infant; but that is not enough:
the contract as a whole must be disadvantageous. The basic principle of the
present law is that a minor must be protected against his immaturity in his
dealings with other persons. At the same time the policy of the law is to
mitigate some of the hardships that might be imposed on persons dealing with a
minor, so as to encourage them to enter into contracts that are for the minor’s
benefit.
Mercantile Union
Guarantee Corporation, Limited v Ball [1937] 2 K.B. 498
(C.A.)
First Charter
Financial Corp Ltd v Musclow 49 D.L.R. (3d) 138 (B.C. Sup Ct, Craig J,
1974)
The contract of a
man, too drunk to know what he is about, is voidable only, and not void, and
therefore capable of ratification by him when he becomes sober.
Matthews v Baxter (1872–73) L.R. 8
Ex. 132 Ex Ct
Blomley v Ryan (1956) 99 C.L.R.
362
9.3 Mentally Ill
A contract made by
a person of unsound mind is not voidable at that person’s option if the other
party to the contract believed at the time he made the contract that the person
with whom he was dealing was of sound mind. In order to avoid a fair contract
on the ground of insanity, the mental incapacity of the one must be known to
the other of the contracting parties. A defendant who seeks to avoid a contract
on the ground of his insanity, must plead and prove, not merely his incapacity,
but also the plaintiff’s knowledge of that fact, and unless he proves these two
things he cannot succeed.
The Imperial Loan
Company, Limited v Stone [1892] 1 Q.B. 599 (C.A.)
10.0 Mistake
If one, or both, of
the parties to a contract enter into it under some misunderstanding or
misapprehension, in certain circumstances, the courts are prepared to permit
the parties to rely on the defectiveness of the contract on the basis that if
the parties had known of the correct fact, they would not have entered any
contractual arrangement. Mistakes can be unilateral or mutual but in both
instances relief against a contract can be granted by the courts.
Great Peace
Shipping Limited v Tsavliris (International) Limited ‘Great Peace’/’CapeProvidence’
[2002] E.W.C.A. Civ No. 1407 (C.A.)
Aircool Awning Co,
Ltd v Silvera (1966) 10 W.I.R. 14
Yambou Development
Co Ltd v Kauser (2000) 59 W.I.R. 141
Kimraj Dass v
Arthur Samm, Vashmatie Sieunarine (H.C.A. No. Civ
751 of 1981)
1. John Siphoo (“JS”) contracted with
Nadie Mohammed Swimming Pool Co. Ltd. (“NM”) for the construction of an
enclosed swimming pool in his garden. The contract terms required that the
maximum depth of the pool should be 7'6". In fact it was later discovered
to be only 6'9" as a maximum, and only 6' at the diving point. JS refused
to pay the balance outstanding on the contract price for the construction of
the swimming pool and NM sued for the unpaid balance. JS then claimed damages for the cost of correcting the deficiency
in the dept of the pool of the purchase and loss of amenity. Is JS entitled to the remedies claimed.
2. Chandrouti Maraj decided to take her mother, Basso Maraj, to visit the doctor for her monthly examination as she was suffering from chronic arthritis. On the way to the doctor, Chandrouti decided to stop at Ecliffe’s Supermarket to purchase a couple items. She drove into a car park next door and noticed a sign saying “Vehicles parked at Owner’s risk. There shall be no liability against the owners of the car park for loss of damage whatsoever”. She paid the attendant the required fee without getting a parking ticket or receipt. The attendant told her as she was returning in a few minutes that there was no need for the “paper work”. Chandrouti rushed into the supermarket and picked up the items she wanted, one of which was a bottle of Johnny Walker Black Whisky. While she was cashing, the Manager came up and informed her that the Whisky was not for sale as it was promised to another customer and it was the only bottle in stock. Chandrouti angrily slammed down all her groceries and stormed out saying, “You will hear from my lawyer!” In the car park, there was neither attendant nor her car (the attendant had seen a young lady and decided to follow her to secure a date). On seeing her car missing, Chandrouti collapsed in shock, hitting her head and suffering a lacerated scalp. Another person saw her lying on the ground and called for help from his Ericsson KF788. The police, in search of the vehicle, found Basso at the side of the road with a broken leg. They radioed for an ambulance and continued the pursuit until they discovered the car five miles away from the scene in perfect condition and parked carefully and the side of the road. It transpired that Basso had panicked and jumped out of the car. Chandrouti was ordered by her doctor to remain in bed for one week.
Can Chandrouti bring any action against the supermarket and / or the car park owners? Can Chandrouti recover damages for fees that she would have earned if she were able to keep a conference appearance the next day? Can Basso bring an action against the car park owners?
3. Spock Co Ltd of Trinidad & Tobago
(Spock) entered a joint venture with Shatner Inc of Canada to develop a special
software for processing check payments.
After the software was developed Spock Ltd obtained a lucrative contract
to implement and maintain the system for the Government of Trinidad and Tobago
for the processing of pensioners’ checks. Spock decided to recruit trainee
technicians to be sent to Canada to be trained by Shatner. Among the candidates included, Rudy
Matthias, Rohan Ramlogan, Esha Roopnarine, Mona Ramlackhan and Joy Seepersad
all of whom were interviewed and successful.
On the day of the interview Rudy Matthias appeared very nervous and
almost in a daze. He was questioned as
to his state of mind and replied that he was just nervous. One of the interviewers thought he might
have been intoxicated, while the others accepted his explanation. Due to his impeccable qualifications, he was
successful at the interview. All five
candidates signed a contract to work exclusively for Spock immediately after
the interview and within 2 weeks departed for Canada to be trained for 6 months
at an individual cost of CDN$50 000 per person. Further, the contract stipulated that upon leaving the employ of
Spock none of the software specialist would work in the field of software
application for a period of two years.
On their return home, all five were happily employed until Peter Pan Ltd
made its entry into the Trinidad and Tobago market selling similar software for
the processing of checks. They made
lucrative offers to all five employees and four submitted their resignations in
anticipation of immediately joining Peter Pan Ltd. Rohan Ramlogan produced evidence that he lied when he said he was
age 18 at the time of the interview, the legal age of majority, when he was in
fact 17 years and 10 months. He claimed
that his employment contract was null and void due to the fact that he was a
minor at the time of the execution.
Rudy Matthias claimed that he was drunk at the time he executed his
contract and he was not aware of the terms therein. Esha Roopnarine offered to repay the amount spent on her training
and claimed that this would entitle her to work for Peter Pan Ltd. It turned out that Peter Pan Ltd met with
her prior to her resignation and offered her money to pay for her training with
an additional amount as a bonus for joining Peter Pan Ltd. Mona Ramlackhan did
not seek employment with Peter Pan Ltd but obtained a job with Macrosoft Ltd in
their department dealing with children’s software.
Discuss the legal issues raised.
4. On May 7, Roy, a minor, a resident of Smithton, purchased an automobile from Royal Motors, Inc., for $12,750 in cash. On the same day, he bought a motor scooter from Marks, also a minor, for $750 and paid him in full. On June 5, two days before attaining his majority, Roy disaffirmed the contracts and offered to return the car and the motor scooter to the respective sellers. Royal Motors and Marks each refused the offers. On June 16, Roy brought separate appropriate actions against Royal Motors and Marks to recover the purchase price of the car and the motor scooter. By agreement on July 30, Royal Motors accepted the automobile. Royal then filed a counterclaim against Roy for the reasonable rental value of the car between June 5 and July 30. The car was not damaged during this period. Royal knew that Roy lived twenty-five miles from his place of employment in Smithton and that he would probably drive the car, as he did, to provide himself transportation.
Discuss Roy's action against Royal Motors, Inc.; the counterclaim of Royal Motors Inc. against Roy; and Roy's action against Marks.
5. Rajcoomar Construction Equipment Rental Company
Limited (“RC”) was in the business of renting equipment including road paving
equipment. Badwork Limited was awarded
a contract to build a road from Sacamar to Ocot on the island of Carabobo. After being awarded the contract, Badwork
placed an order with RC for the delivery of a heavy duty Asphalt Spreader. The Spreader was delivered promptly to
Badwork and the Managing Director of Badwork was informed that a printed form contract
would follow on the “usual terms and conditions of such hire”. Badwork in the past had rented equipment
from many rental companies and they all had a standard contract but it was the
first time equipment was being rented from RC.
The printed from contract arrived with a clause making Badwork liable
for all damages that may occur to the equipment during its use and requiring
Badwork to indemnify RC for all such damages.
However, prior to the contract being signed, the Spreader sank in marshy
ground. Badwork claimed that the term
providing for liability and indemnification was not incorporated into any
contract of hire. Further, after the
Spreader sank in the marshy ground, barely the tip was showing and Badwork
placed a small hazard light and a notice warning people of the presence of the
Spreader. Harry Ramnath drove his car
onto the tip of the Spreader where he received numerous injuries, and damage to
his new Elantra.
Advise RC as to their legal
position with respect to the indemnification for losses due to the Spreader.
Does Harry Ramnath have any legal
recourse for the damages he suffered to person and property caused by the
accident with the Spreader?
6. On 9 February 1995, Sherry Balla parked her car in Car Park B at the
Triarco Airport. She had asked the
attendant whether it could be left for three days and the cost of doing so. She
was then given a car park ticket, which sets out certain ‘conditions of
parking’ on the reverse side. On 12 February 1995 the Sherry returned to the
car park where she discovered her car was missing. The car was later discovered
in a damaged condition. On 13 February
1995, Sherry reported the matter to the police and sought to negotiate a
settlement for damages to her vehicle. This was futile. She then filed a claim for negligence. Sherry claimed that she was not aware of a
sign/notice on the eastern wall of the car park showing the rates. There was no
warning sign on the guard booth or a disclaimer sign. She did not see a
disclaimer in block letters. She got the ticket after she parked the car. She did not look at the words on the ticket
‘PTO for conditions of parking’. Please
advise Triarco Airport as to the merits of defending the claim filed against it
by Sherry especially in light of the Unfair Contract Terms Act 1985.
7. The respondent is an obstetrician and gynaecologist and has practiced
artificial insemination (“AI”) since 1974.
The appellant was a psychiatric nurse.
She participated in the respondent's AI program from 1981 until January
21, 1985, during which time she underwent about 35 AI procedures. It was agreed that the appellant became
infected by HIV as a result of the AI procedure on January 21, 1985. The respondent did not warn the appellant of
the risk of HIV infection resulting from the AI procedure (also referred to as
"the risk"). The first report
of HIV in female sex partners of men with AIDS appeared in early 1983. At that time, heterosexual intercourse was
seen as a potential source of infection.
However, there was no link between AI and HIV. In December 1983, for the first time, the risk of contracting
AIDS was related to blood transfusions.
In October 1983, an important letter was published by Dr. Mascola in the
New England Journal of Medicine suggesting that there was a risk of
transmitting sexually transmitted diseases ("STDs") through AI. However, this prestigious journal was not
widely read by gynaecologists and the respondent did not read this letter. It appears that Dr. Mascola was the first
person in the world to express a concern about the possibility of transmitting
HIV through AI. The first documented
case in the world of HIV transmission through AI was published in the lay media
in July 1985 and in a medical journal in September 1985. None of the obstetric literature mentioned
AI as a mode of transmission of HIV and no article summarized the disease risks
of AI before 1986. Can their be an
implied term of the contract for the AI procedure that the semen used would be
free from all defects including HIV?
8. Mary Ann
Boggess (the first appellant) a farmer and rancher resided in Hereford,
Texas. She was involved in farming in
the USA before she came to Belize in 1971.
On her arrival, she bought a farm known as Rancho Grande. She also purchased a further 25 acres of
land on which there was a dwelling-house, and another building which was used
for the purposes of a restaurant/bar/dance floor. Her third acquisition some six or seven years later was another
farm of 162 acres. All those properties
were purchased with her own funds. Soon
after her arrival in Belize the first appellant met the respondent, they
developed a relationship and were very soon living together. They also began to work the Rancho Grande
farm together. Relations which the
first appellant described as ‘good’ at first gradually deteriorated until they
parted company in 1987. Name of the
first appellant only. The first
appellant left Belize in 1987 after what she described as a final break. On 15 September 1987, she wrote to the
respondent offering to sell him her share of the ranch on terms. The respondent claims that he accepted this
offer by word of mouth over the telephone.
The terms of the telephone contract was reduced to writing as follows: ‘Badder,
‘Received the cheque, opened an account for Nazira in the bank in
Canyon. She is doing so well adjusting
to college and making friends and seems to be enjoying it all. Her classes are going well and she is working
hard to make good grades and get a scholarship for next semester. I talk to her a couple of times a week.
‘The payment schedule for her tuition, room
and board are as follows:
2nd September $705.00 pd.
16th September $735.00 pd.
14th October $735.00
11th November $735.00
Plus books $100.00 pd.
Ins. $155.00 pd.
Other fees $200.00 pd.
‘I
have come up with what I hope is a reasonable figure for my share of the ranch,
$150,000. It is the amount which I paid
for the land. I would like to have my
personal effects from the house also.
‘The $150,000 could be paid as follows.
Down-payment – yearly payments balance in five years and 10 percent
interest on the balance after the down-payment. ‘Guess you will let me know so we can go from there.
Best of luck to you
My love to the girls
Mary Ann.’
Can Badder proceed with an action against Mary Ann to enforce the terms
of the letter as reproduced above?
9. The
defendant, the Board of the Blanch Primary School employed Catherine Poohari as
a welfare assistant at its school for children with physical disabilities.
Poohari allegedly injured her back whilst helping to carry a student from the
school's swimming pool in May 1998. In
September 2000, Poohari's solicitors sent the Board a letter, which was the
first intimation that a claim would be made. In October 2000, there was a
meeting between a teacher who was present at the time of the accident, the
school's head teacher and a claims inspector with the Board's insurers. The
Board's insurers did not accept the accuracy of the basis on which Poohari's
claim was advanced in the letter of September 2000, however they thought that
liability should be admitted in light of what they thought then was the only
way in which Poorhari could have sustained her injury. Accordingly, in January
2001, the Board had admitted liability through its insurers. The Board has
since discovered that Poohari’s injury could have been caused by other factors
and that it had mistakenly admitted liability.
The Board would like advice as to whether it can rescind the
admission of liability contract.