Describe the meaning of terms in a standard form contract
A standard form contract is used in a situation where two parties need to make an agreement using specific guidelines. It is used to protect the interest of all parties involved by making sure that the work is completed in time and all the people who are working are compensated for. Within contracts, their are various terms that are essential.There are various duties which have to be included with a contract. These duties will spell out the specific tasks required by each party. Examples of duties that would be included would be to sell it to a third party or the obligation to of a distributor of a product. Also, the duties will discuss what the parties cannot do, for example, the distributor is forbidden from hiring another party.
Furthermore, rights are something that explain what each party are entitled to, if both parties disagree on the quality of work performed or the amount of compensation involved, then the contract may specify that a third-party may be used to settle the dispute between the two parties. Also, sometimes it could discuss the parties rights that they have to sue in case of a breach of contract.
There are various different types of terms, terms are the parts of the contract agreed to by the parties. Terms of the contract are the statements that the parties are bound to perform under the contract, whereas representations are the statements made by the parties under negotiation that are not meant to form part of the contract. The two types of terms that could be found in a contract is; express terms or implied terms.
Express terms are statements that are made by the parties by word or in writing. The parties that state these terms intend for them to create the fundamental part of the contract. Express terms can either be conditions or warranties. Conditions are a fundamental part of an agreement and are something which forms the root of a contract. A breach of condition will mean that the injured party is entitled to repudiate and claim damages. On the other hand, warranties are less important terms which do not form the root of a contract. If either party breach a warranty, this entitles the injured party the right to claim damages, because the contract itself cannot be rejected.
It is also common for businesses to have common key terms within the contract, along with conditions and warranties. These may include; terms allowing parties to vary the contract price, which is known as a price variation clause. Another common key term could be terms relating to the amount of damages that the parties might receive if things go wrong. Also, exclusion clauses which limit the parties responsibilities under the breach of contract.
Implied terms are not actually included within a contract, however they are introduced into the contract by custom, statute and common law. Terms are implied into a contract through statute to protect the parties. The most common example of this is the Sale of Goods Act 1979, because this is implied into the contracts for the sales of goods. This means that in every contract it has to include the following implied terms; in sample sales, there is an implied condition that the bulk order will correspond with the sample, goods sold are of a satisfactory condition and that they are fit for the particular purpose stated, 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.
Agreements could be subject to customary terms, which are not actually specified by the parties. They could be historical, which means that the person who is making the contract should find out if any terms relatable ever exist. If there are any relatable terms, they would be noted. However, that such a customer will be overruled by any express clause to the contrary. These are terms which are implied by custom.
Furthermore, terms that are implied by the common law happen within court. The court will be prepared to imply a term into a contract in order to validate the obvious intentions of the parties. This point was not made clear which could mean that in some circumstances the court will imply such a term in the interest of 'business fairness' to make the contract make sense and change the language into business formal language, so that both parties understand it and there is no chance of the contract being misunderstood.
When the parties negotiate terms of a contract, these are called express terms. If the parties do not fully agree on the terms, they can strike them out and re-negotiate until all terms have been expressly agreed on. The parties have full control over the type of express term their contract contains. Although, implied terms are the ones that the law insists are put into the contract. This is because the parties have no say in the matter and if they wish to do business with each other, they must follow these implied terms properly.
UNIT 21 P5
Explain the effect of terms in a contract
Within this assignment, I will be explaining the effects of terms within a contract. A contract is a set of agreed promises made by two parties. It is extremely important to analyse the terms of the contract thoroughly before agreeing to the contract.
There are various different types of terms, terms are the parts of the contract agreed to by the parties. Terms of the contract are the statements that the parties are bound to perform under the contract, whereas representations are the statements made by the parties under negotiation that are not meant to form part of the contract. The two types of terms that could be found in a contract is; express terms or implied terms.
Express terms are statements that are made by the parties by word or in writing. The parties that state these terms intend for them to create the fundamental part of the contract. Express terms can either be conditions or warranties. Conditions are a fundamental part of an agreement and are something which forms the root of a contract. A breach of condition will mean that the injured party is entitled to repudiate and claim damages. On the other hand, warranties are less important terms which do not form the root of a contract. If either party breach a warranty, this entitles the injured party the right to claim damages, because the contract itself cannot be rejected.
It is also common for businesses to have common key terms within the contract, along with conditions and warranties. These may include; terms allowing parties to vary the contract price, which is known as a price variation clause. Another common key term could be terms relating to the amount of damages that the parties might receive if things go wrong. Also, exclusion clauses which limit the parties responsibilities under the breach of contract.
Implied terms are not actually included within a contract, however they are introduced into the contract by custom, statute and common law. Terms are implied into a contract through statute to protect the parties. The most common example of this is the Sale of Goods Act 1979, because this is implied into the contracts for the sales of goods. This means that in every contract it has to include the following implied terms; in sample sales, there is an implied condition that the bulk order will correspond with the sample, goods sold are of a satisfactory condition and that they are fit for the particular purpose stated, 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.
Agreements could be subject to customary terms, which are not actually specified by the parties. They could be historical, which means that the person who is making the contract should find out if any terms relatable ever exist. If there are any relatable terms, they would be noted. However, that such a customer will be overruled by any express clause to the contrary. These are terms which are implied by custom.
Furthermore, terms that are implied by the common law happen within court. The court will be prepared to imply a term into a contract in order to validate the obvious intentions of the parties. This point was not made clear which could mean that in some circumstances the court will imply such a term in the interest of 'business fairness' to make the contract make sense and change the language into business formal language, so that both parties understand it and there is no chance of the contract being misunderstood.
When the parties negotiate terms of a contract, these are called express terms. If the parties do not fully agree on the terms, they can strike them out and re-negotiate until all terms have been expressly agreed on. The parties have full control over the type of express term their contract contains. Although, implied terms are the ones that the law insists are put into the contract. This is because the parties have no say in the matter and if they wish to do business with each other, they must follow these implied terms properly.
UNIT 21 D1
Evaluate the effectiveness of terms in a given contract
Dear partners within the business,
Within this email I will be evaluating the effectiveness of terms within a given contract. The contract I will be looking at is the Plates4Less contract.
When a contract is constructed between two parties, its terms are expected to be followed by both parties. The most important terms are the ones which relate to the sellers delivery of the goods and the buyers payment of those goods. Another very important term within a contract would be the quality of the goods delivered. As well as these, terms relating to title or ownership are also key. Terms describing how the parties can avoid or exclude responsibility on the contract are essential and important and effective.
Terms are within contracts, and are something which must be followed by both parties involved in the contract. All the terms are included within Plates4Less contract. There are two types of terms which are found in the Plates4Less contract, express terms and implied terms. Express terms are statement that are made verbally or written as important aspects of the contract. Examples of express terms are conditions or warranties. They are really essential to the contract, because they are considered the root of the contract. If one of the parties don't follow one of the conditions then the contract could be repudiated.
Effectiveness for customer
Strengths of a contract
It states within the contract in section A that the consumer must pay a deposit of 10% of the total purchase price, whether they buy the number plate or not. This benefits the customer because they are putting down some money in order to secure the plate is theres.
In section B it states that the telephone advisers will always use Standard English Phonetic Alphabet to pronounce the letters of the registration mark, so that no customers misunderstand. The purchasers confirmation will be double checked and sought. This is good for the customer because the advisory will repeat the letters of the number plate back for you so that there is no misunderstanding and you don't get the wrong number plate. This is good because the consumer cannot see the number plate as they purchase it over the phone.
In section G it states that Plates4Less cannot dispatch the plates until they receive an original copy of the consumers utility bill, to use as proof of identify. This gives the customer safety of ensuring they are a safe and legit website and business.
Weaknesses of a contract
Putting down a 10% deposit may affect the customer, because if they pull out and do not want to purchase the number plate for some reason, they won't receive their money back and they may give the business hassle if they don't get deposit back.
It can be bad for the customers if the telephone advisors use Standard English Phonetic Alphabet, as some consumers may be foreign and not speak english. This means that some customers may not understand what the telephone advisors are saying and may need to speak to someone who speak their language about an enquiry and they may get the letters misunderstood.
By showing proof of identification before Plates4Less dispatch the plates may cause a dispute with the customers, as some customers are private and do not want to show an unrelated business their private financial documents.
Effectiveness for business
Strengths of a contract
In section G it states that once the consumer has placed they payment and it is secured, the plastic plates are made uniquely for your request. This means that Plates4Less cannot offer a refund or exchange if the consumer changes their mind.
In section C it states that if the purchaser feels they have made an error or wish to change their mind, they normally only have one remedy, off having to instruct Plates4Less to offer their registration mark for sale. This decision is then passed onto the Department for Transport and whatever they decide will be final and non-negotiable. This is effective for the business because they produce unique plates and if a consumer doesn't want the plate, this means they will lose to money are they are uniquely produced for the consumer. Therefore, by getting a second decision by the DFT it allows for them to decide what will have.
Weaknesses of a contract
If the consumer changes their mind and doesn't want the number plate for whatever reason, they are disobeying the Consumer Contract Regulations and this may cause the consumer problems, as they have limited rights.
This is bad for the business because this means that if the DFT agree tho offering the registration mark for sale because the consumer made an error, the plate may not sell. This is because the plates are made uniquely, therefore some specific plates are peoples names and other people wouldn't want to buy that, especially if its extremely expensive. This means Plates4Less will lose out on money.
Conclusion
Overall this contract is extremely effective for securing both parties, due to the terms within the contract. They are not one sided and the contract covers terms of everything. This is done by having separate sections for different aspects of the contract. For example, one section is called order process-distance selling, another is order process. This is to ensure the terms are clear and apply to the business specifically. Both parties are fully secured and this is made clear by the contract. If both parties agree and sign the contract, then they have to abide by the terms within the contract which is why contracts are extremely important. However, if there are issues within the contract from either party, there are warranties that are put in place in order to protect the consumer. If Plates4Less have a problem, depending on how big it is, this can result in them going to court to sort out the dispute.
A warranty is there to protect the consumer, and to give them the right to claim damages if necessary. If the car breaks within a certain period of time, the consumer has the right to claim for damages. This is good for the consumer because it gives them an advantage. This means that if the car breaks in a certain time period of having it, they do not need to pay extra money to get if repaired, the consumer just needs to call Vauxhall's repair department and they will come fix the car free of charge. Warranties are really easy to enforce although, sometimes it can be hard to tell whether the consumer did something to the car or the car is faulty. Warranties aren't really effective for Vauxhall because it means people can just blame damages on the business, and it would be quite hard to tell which one of the parties caused the damage.
Conditions are a fundamental part of an agreement and are something which forms the root of a contract. A breach of condition will mean that the injured party is entitled to repudiate and claim damages. Most businesses will have a term within their contract, which is known as a price variation clause. This is put into contracts to protect the parties from uncontrollable variations. The price that is first agreed when the parties negotiated may have to be changed due to unforeseen rises in perhaps, fuel costs, inflation or production costs. A business will not want to lose money in their business, therefore they will cover such a rise with this term that will help them to increase the price of the contract.
The parties will agree on a date in which the goods will be delivered. This is the fixed delivery date, and if this date isn't met for delivery then the other person will be able to repudiate the contract and sue the other party for damages. Sometimes, they parties don't set a specific time, in this case the law implies that the delivery will take place within a reasonable time. However, it is a good idea to set an agreed time, because this means that the parties will have a date in order to pay it or else. If there is no set date, the other party may try and long it out and the other party has no leg to stand on because they haven't set a specific date for the goods to be delivered.
When the goods have been delivered, it is expected that the goods that were agreed to be delivered are actually delivered. These goods have to match the description of the goods, in terms of quality and quantity. When we talk about quality, the law states that the goods delivered are fit for purpose that they were intended. It states that they should be free from minor defects in terms of appearance and finish. The law also implied that the goods should be safe and last. Before the party agrees on the goods, they will have time to examine the goods before deciding to accept them or to reject them, if they do not meet acquired standards.
If the wrong quantity gets delivered to the buyer, they have various options available for them regardless of what was agreed between the two parties. If the buyer receives a smaller quantity than agreed, they have the option of rejecting the entire delivery, or accepting the smaller quantity delivery but paying the full payment for it. However, if the buyer receive a larger quantity than agreed, they have the option of accepting the quantity expected and reject the rest, reject the entire delivery or accept the entire delivery at a new contract price.
It isn't unusual for a seller to want to protect themselves. They do this by inserting a reservation of title clause into the contract, which implies that the ownership of the goods is not to pass to the buyer until the seller has been paid. A title is a legal right of ownership. An exclusion clause is a term within a contract that tries to exempt or limit the liability of a party who is in breach of that agreement. The Unfair Contract Terms Act 1977 came into place in order to have a parliamentary control over the law relating to exclusion clauses. It was only meant to be used primarily for contract of sales by commercial businesses and not by individuals. This act is an important piece of legislation, there are some contracts where the Act doesn't apply. These include contracts for insurance, land, shares, company promotions, debentures, copyrights and patents. Exclusion clauses are regulated into two different ways, they are rendered void and ineffective automatically because they are unfair. The other way they are regulated is by being made subject to a test of reasonableness however, should they fail the test, they will be deemed unfair. If for some reason there was a dispute, then the reasonableness of an exclusion clause will be a matter for the court to decide. They will take al of the circumstances into consideration, such as relative strength of the parties concerned.
The reasonableness of an exclusion clause will be a matter for the court to decide. They will consider the circumstances of the case though. The act lays down some interpretation guidelines for judges when they are deciding the question. These guidelines are that it is up to the person claiming reasonableness of the term to prove it is reasonable, reasonableness will be judges in light of all the circumstances of the case, any inducements offered must be reviews, any special circumstances requiring special terms should be evaluated, practical considerations should be looked at, there should be resources available to cover liability such as insurance, whether the customer should have known about the term and lastly, the relative strengths of the parties should be looked at. Within the act itself, it lays down some important rules which relate to exclusion clauses which I will explain in detail.
In section 2, it states that a clause restricting liability for death or personal injury is void. Moreover, liability for any other types of damage caused by negligence is subject to the reasonableness test. Furthermore, section 3 excludes liability in standards form contracts as well as consumer contracts. Consumer for the purpose of the act means a person who makes the contract other than in a course of a business. This means that the other party makes the contract in the course of a business and the goods that pass under the contract are the types of goods that are usually supplied for the private use of consumption. Additionally, section 4 excuses liability for indemnity clauses. Exclusion clauses restricting liability must satisfy this reasonableness test. Section 5 deals with guarantees of consumer goods. A distributor or manufacturer cannot restrict their liability in negligence for losses arising fromm defective goods. They are not allowed to restrict liability by means of a term in a guarantee.
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