Express terms are those specifically agreed by the parties, either verbally or in writing. They can be contained in a signed document, oral discussion, or pre-contract statements.

Incorporation of terms:

Terms must be properly brought to the other party’s attention before or at the time of contracting.

Key methods of incorporation:

• By signature: Signing a document usually binds a party to its terms, even if unread (L’Estrange v Graucob [1934]).

• By notice: Reasonable steps must be taken to make terms known (Parker v South Eastern Railway [1877]).

  • Terms must be available before or at the time of contracting (Olley v Marlborough Court Hotel [1949]).

• By course of dealing: Terms may be implied from consistent past dealings (Spurling v Bradshaw [1956]).

Collateral contracts: A separate, binding promise made alongside the main contract (Shanklin Pier v Detel Products [1951]).

Implied terms are not expressly agreed but are inserted by law, custom, or the nature of the contract to make it workable or fair.

(a) Terms implied in fact – inserted to reflect the parties’ unspoken intentions.

• The Moorcock [1889] – Terms implied for “business efficacy.”

• Shirlaw v Southern Foundries [1939] – The “officious bystander” test: the term is so obvious that “it goes without saying.”

(b) Terms implied by law – inserted automatically for certain types of contract (e.g. employment, sale of goods).

• Liverpool City Council v Irwin [1977] – Landlord’s duty implied in law.

(c) Terms implied by custom or trade usage – common industry practices recognised by the courts (Hutton v Warren [1836]).

(d) Statutory implied terms:

• Sale of Goods Act 1979: goods must be of satisfactory quality and fit for purpose.

• Consumer Rights Act 2015: applies to consumer contracts; ensures fairness and quality standards.

The seriousness of a breach depends on the type of term broken.

• Condition: A major term going to the root of the contract. Breach allows termination and damages (Poussard v Spiers [1876]).

• Warranty: A minor term. Breach allows damages only, not termination (Bettini v Gye [1876]).

• Innominate term: Intermediate importance. The remedy depends on the seriousness of the breach (Hong Kong Fir Shipping v Kawasaki [1962]).

Not every statement made before a contract is a term.

• A term is a binding promise forming part of the contract.

• A representation is a pre-contract statement inducing entry into the contract but not itself binding.

If a representation is false, it may give rise to misrepresentation, not breach of contract (Oscar Chess v Williams [1957]).

Parties sometimes include clauses limiting or excluding liability for breach. These are subject to strict controls.

Common law controls:

• Clauses must be clearly incorporated and unambiguous (Hollier v Rambler Motors [1972]).

Statutory controls:

• Unfair Contract Terms Act 1977 (UCTA) – restricts exclusion of negligence or breach of implied terms in business contracts.

• Consumer Rights Act 2015 (CRA) – bans unfair terms in consumer contracts.