#17246 - Incorporation Of Supplementary Terms - GDL Contract Law

Those which increase the responsibility inherent in the contract’s performance, typically through the addition of a positive guarantee of some kind.

Distinguish:

• Representations – these remain outside the contract

• Warranties – contractual term, the breach of which allows a claim for damages.

The basic test for whether an assurance has become part of the contract is whether the parties intended that it should do so.

• Heilbut v Buckleton [1913] – shares in a rubber company.

  • Holt CJ: no fixed test. “The intention of the parties can only be deduced from the totality of the evidence, and no secondary principles of such a kind can be universally true”

As a result a large number of subsidiary tests have developed:

• Bannerman v White (1861) – Plaintiff produced note assuring that no sulphur had been used on cultivating the crop. Held this was a term of the contract.

• Oscar Chess v Williams [1957] – part exchange, D got new car from P in exchange for his old 1948 model (confirmed date in reg book). Later transpired it was a 1939 model, P sued.

  • Held this was a representation, a statement of belief not a contractual promise. The plaintiffs knew that the defendant had no greater knowledge of the car’s date of manufacture than they had themselves.

  • Matter of intention, and placement of parties to provide guarantee.

  • Morris LJ, dissenting, considered that the age of the car was a vitally important matter, and therefore a condition of the contract.

• Dick Bentley v Harold Smith (Motors) [1965] – Bentley asked car-dealer to find him a ‘well-vetted’ Bentley. D found one stating it had only done 20k miles since new engine was fitted. It had in fact covered many more.

  • Held this was a warranty. Denning MR: If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.

  • A statement will more readily be found to be a term of the contract if it is made by a person who, to the knowledge of both parties, is well-placed to guarantee its accuracy.

• Schawel v Reade [1912] - Prospective buyer of a horse was told by the seller that he need not continue to examine the animal because if anything were wrong the seller would have informed him

  • Lord Moulton that there could be no clearer evidence that the statement was meant as a term of the contract.

• Ecay v Godfrey (1947) - seller of a motor cruiser appeared concerned to know whether the buyer would have a survey done or not, Lord Goddard CJ: seller clearly not willing to take responsibility for condition.

• Inntrepreneur Pub v East Crown [2002]

  • Timing is important – said closer to the conclusion if more likely a term.

  • Where the parties have drawn up a written contract, and made no reference in it to an earlier statement, there is a presumption that it is not intended to have contractual effect.

Incorporation of Conciliating Terms:

• Problem with incorporating a term that conflicts with other terms of the contract.

  • No issue in oral contracts. But issue in written contracts.

• The Parol Evidence Rule:

  • Jacobs v Batavia [1924]- prevents the adducing of extrinsic evidence to “add to, vary or contradict” the terms of a written contract.

• Two excpetions:

  • (a) a pre-contractual statement may be said to enter the contract, despite inconsistent terms within it, as an express oral assurance which overrides the inconsistent terms, or

  • (b) it may be regarded as a collateral contract.

• Pre-Contractual...