The Terms of a Contract

The Terms of a Contract

The terms of a contract identify the rights and obligations of each

party under that contract. A contract is merely a collection of terms

– duties and rights and penalties, some of which may be in writing and

some of which may be oral. Terms create contractual obligations for

breach of which an action lies.

Terms may be either express or implied.

Express terms.

Express terms are those which are specifically agreed by the parties.

Implied terms.

Implied terms are those which form part of the contract but they have

not been specifically agreed between the parties during the

negotiations for that contract. Terms may be implied into the contract

in a number of ways;-

Terms implied through custom and practice.

Perhaps a most obvious example here would be the fact that contracts

in the baking industry that make reference to the term ‘dozen’ may

actually mean thirteen rather than twelve as that is a custom within

that industry.

“It has long been settled that, in commercial transactions, extrinsic

evidence of custom and usage is admissible to annex incidents to

written contract, in matters with respect to which they are silent…

and this has been done upon the principle of presumption that, in such

transactions, the parties did not mean to express in writing the whole

of the contract by which they intended to be bound, but a contract

with reference to those known usages.” (Baron Parke – Hutton v Warren

(1836) 1 M&W 466)

British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd (1975) 1

ALL ER 1059. Both parties were engaged in the business of hiring out

he...

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...the phrase "shall be entitled to repudiate the contract"

or in some other sense as in Wickman v Schuler. The next question is

whether the breach of the relevant term creates a right to repudiate.

This may arise either from statute or as the result of judicial

decision on particular contractual terms e.g. the "expected ready to

load stipulation" in The Mihailis Angelos where the courts have

decided that breach will ipso facto give rise to a right on the other

party to repudiate. In these two classes of cases the consequences of

the breach are irrelevant or, more accurately, are assumed to go to

the root of the contract. There remains the non-specific class where

the events produced by the breach are such that it is reasonable to

describe the breach as going to the root of the contract and so

justifying the repudiation."