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DEPARTMENT OF LAW
UNIVERSITY OF JAFFNA
SRI LANKA

CONTRACT LAW

ALLCC21024

IN-COURSE ASSIGNMENT – 01

Registration Number : 2020/L/097

examiner’s comment :

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word count : 2036 (excluding table of content,bibliography,footnotes)

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TABLE OF CONTENT

1. Introduction

2. What is a Contractual Term of a Contract ?

3. What is a Mere Representation of a Contract ?

4. Diferencess Between a “Contractual Term” and a “Mere Representation”

5. Tests used by the Courts to Distinguish a “Term” and a “Mere Representation”

6. Conclusion

7. Bibliography
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Yes, I agree with the statement mentioned in the question.

Introduction

A contract is a legally binding agreement which recognizes and governs rights and duties of

parties to the agreement. An agreement 1 typically involves exchange of goods, services, money

or promise of any of those. There are so many types of contracts.2 Term of a contract is a part

of a contract which is an element found in all types of contracts. Mere representations can also

see in a contract. But mere representation not a part of contract. There is no hard and fast rule

to distinguish this contractual term from a mere representation.

In this report, let’s examine how the court distinguishes contractual terms and mere

representation.

What is a Contractual Term of a contract ?

We can define contractual term as fundamental obligations of the seller or buyer under the

contract. In a contract we can see number of terms. Terms related to main purpose of contract

and whatever the statements or words used to describe the fundamental obligations of the party

to the contract are “Contractual Terms”.

What is a Mere Representation of a Contract ?

Mere representation is a statement of fact made by one party which encourage the other party

to made a contract but not itself part of a contract. If it turns out to be incorrect innocent party

can sue for misrepresentation3 .

1 All
contracts are agreement but all agreement are not contracts.
2 Adhesion contract, condition contract, implied contract, fixed-price contract, unsociable contract
3 Misrepresentation- The giving false information by one party to other before the contract is made, which

induces them to make the contract.

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Let’s identify differences between a contractual term and a mere representation.

Differences between “Contractual Term” and a “Mere Representation”

The term of a contract describes duties and obligations that every party assumes below their

agreement. All the things said by seller in a contract are not contractual terms. Basically,

contractual term can be divided into two parts namely express terms and implied terms.Express

terms are the terms written in agreement. There are two types of express terms namely, Oral

statements4 and written statements5 . Implied terms are the terms not written in agreement.

There are two types of implied terms namely operation of the common law 6 and operation of

the statute7 .

If a term describing fundamental obligation of a contract is violated, aggrieved party can take

a legal action. Term is created under someone who has good knowledge about the matter or

product related to the contract. Because term is related to obligation, legal action can be taken

if it is breached.

Mere representation is not related to an obligation. So,it is not a part of a contract. Mere

representations are presented to create an impression in the other party about the matter related

to the agreement and interest in agreeing to contracts. If the person presenting the contract does

not present his opinions with knowledge, it does not fall under the term. If these opinions or

representations are proved to be untrue that can give a rise to an action for misrepresentation.

In a misrepresentation claimant can claim for damages.

The following example shows the difference between a term and a mere representation.

4 Example: communication and negotiation

5 Example: brochure and email
6 Example: employer has a duty of care to take care of his employee’s health.
7 Example: SALE OF GOODS ACT 1979, The goods are of satisfactory quality.
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A man went to a spare parts shop. He asked shop owner for genuine side mirror imported from

Japan for his car. Shop owner said it was a genuine side mirror imported from Japan and it

would be fitted free of charge. After the sale, the buyer discovered the followings.

i. That part was not imported from Japan.

ii. It’s not a Genuine spare part.

iii. Seller did not fitted it free of charge.

According to the above incident, can the person take legal action regarding the incident?

Yes, he can take legal action because his obligations were not served by it. He wanted a genuine

spare part imported from Japan. But the seller cheated him and sold him a local spare part.

Besides, he was told that it would be fixed free of charg,but it was not fixed.

Entity can take leagal action for breached of the first two points 8 . Because those two things

breached the contractual terms of the contract.

Even third matter9 was breached, no legal action can take because it is a mere representation.

It is clear that there is no specific rule to distinguish these two and it is based on the facts and

circumstances of the case.

In such cases , the court does not follow a hard and fast rule to distinguish between a term and

a mere representation.

In the following section, we will examine what methods the court uses to distinguish these two.

8 contractual terms
9 mere representation
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Tests used by the courts to distinguish a “Term” and a “Mere representation”

Court wants to see whether a statement is a “Term” or a “Mere representation”. At the time

court will apply these five different tests.

(1) Strength of the statement

(2) Importance of a statement to the party

(3) Relative degrees of knowledge

(4) Timing of statement

(5) Written Contract

(1) Strength of the statement

Statement will not be regarded as a term of a contract, if the person who make the statement

suggests the other party should check the statement. If the person who make the statement

strongly making the statement,other party think it should not check again.That statement will

be a contractual term as it is a dogmatic statement. Dogmatic in the sense strength of that

statement is high and it is a strong and assertive statement.

Following two case laws give an idea of how to identify a strength of the statement in a contract.

Ecay Vs Godfrey

In this case law, a person went to buy a boat. Seller showed a boat and said that it was in good

condition and ask to check it before buying. This makes it clear that seller has not taken this

statement as a term in the contract.

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Schawel Vs Reade

The buyer is looking for a good horse that can race well for his needs. The seller says that the

horse is perfect for his needs and take it without inspection. Buyer relied on the statement and

he brought the horse. After that it is proved the horse is not fit for racing.

The statement mentioned by seller was considered as a contractual term because that statement

was dogmatic and strong. So, buyer was entitled to claim damages from seller.

(2). Importance of the statement to the party

In the situations where the buyer or the injured party of a contract clearly mentioned the

essential and the important part in the statemenet it will be considered as a term of a contract.

Arcos Ltd vs E.A Ronansen & sons

This case was about a contract for ½ inches thick staves which buyer needs half inches staves

to make wooden barrells for purpose of store wine . When buyer received the staves , he found

that only 5% of the staves were ½ inch thick.

Court held that buyer clearly mentioned ,1/2 inches thick staves are the most important and

essential to make wooden barrels.As it is the most important , essential part of the contract it

can be considered as a term and here the term was breached.

Bannaerman Vs White

The claimant agreed by contract to purchase some hops to use for making beer,asked the seller

if the hops had been treated with sulphur and told him if they had he wouldn’t buy them as he

wouldn’t be able to use them for making beer if they had. The seller assumed him that hops

had not been treated with sulphur. In fact they had been treated with sulphur.
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Court held that hops had not been treated with sulphur was a term of the contract rather than

a representation as the claimant had communicated the importance of the term and relied on

statement.

(3). Relative Degrees Of Knowledge

If any statement is made by an expert or skilled person who having a higher knowledge in that

relevant subject, tendency to become that statement a contractual term is high. In another way

if the seller who is making the statement has a special knowledge compared with other party ,

the statement become a term.

Below case laws depict how the factor of relative degrees of knowledge helps to determine a

contractual term.

Cammell Laird Co Ltd Vs. Manganese Brenze And Brass Co Ltd

In this case seller was an expertise in field of propeller production. He agreed to manufacture

two ship propellers for buyer. Two ship's propellers' mechanical specifications, design, and

thickness were left to sellers' skill and judgement. Statement of seller was “Company will

manufacture perfect propellers for the ship”. After receiving items, purchaser discovered that

one of propellers had some defects.

Court held that seller had some special skill and knowledge on manufacturing propellers and

he made a statement to confirm that their company was expert in this, so buyer considering that

statement bought propellers .Therefor statement can be consider as a contractual term.

Cauchman vs Hill

The buyer wanted to buy a cow , but he mentioned to seller that he don’t want a pregnant cow.

Seller who is the owner of the cow , had a knowledge about cow said that cow was not

pregnant.After buying the cow as result of pregnancy cow died.

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Court held that seller libale and buyer can sue for the breach of contract as statement made by

seller can be consider as a term and it was breached.

Oscar Chess Ltd vs Williams

William sold a 1948 model car to a Oscar ltd as it was stated so in the car’s registration book.

The price was inflated so the car was actually a 1939 model. Oscar Ltd made a claim for

contract breach after finding that the car was a 1939 model.

The court held that the statement that the car was a 1948 model was not intented to be a term.

William had no sufficient knowledge about the model year. So, Oscar Ltd’s claim was rejected

by court.

(4). Timing of statement

The more time between statement and conclusion of contract, less likely statemenet to be held

a term of contract. If statement is otherwise strong and important then this may override

significant delay between when it was made and when contract made.

Following case laws give an idea of timing of statement.

Routledge Vs Mckay

Plaintiff and defendant negotiated the sale of a motorcycle belonging to defendant. On October

23, defendant notified plaintiff regarding the model of the motorcycle, which was said to be a

1942 model based on the registration book. On October 30, that is, one week after negotiation,

contract was silent on model of motocycle in question. Plaintiff later found out that it was a

1930 model and argued that defendant’s statement that it was a 1942 model was a term and

therefore, there had been a breach of contract.

Court rejected the plaintiff’s argument, inter alia, on the ground that contract was only enterd

into one week after negotiations.

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(5). Written contract

Any statement mentioned in a written agreement that forms a contract considered as a term.Any

prior oral representation that is not repeated in written agreement will usually be considered as

a representation, because it is assumed that parties did not consider a statement to be important

if it is not contained in a written agreement.

Duffy & Ors Vs. Newcastle United Football Co Ltd

In this case, the court of appeal held that accompanying promotional material and media

commenets didn’t constitute terms of the contract.They were mere representations. These

representations had not been false as there was nothing in any of the club’s literature or media

statements which amounted to a binding representations that claimants would have an absolute

right to use of their setas for the lifetime of the bond.

Applying these 05 tests , The Court Distinguishes a “Term” And a “Mere Representation”.

Conclusion

According to all facts mentioned above, it proved that all statements mentioned in an agreement

are not terms. Court will not use a hard and fast rule to distinguish this. It’s very clear from the

above case laws. The court will apply above mentioned tests to the matter related to case. Then,

based on facts and circumstances of case, court will decide whether it is a term or a mere

representation. In the end, it’s clear that court does not use a hard and fast rule to distinguish

a contractual term from a mere representation.

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Bibliography

❖ Primary Sources
• Cases
o Ecay vs Godfrey (1947) 80 Lloyds Rep 286
o Schawel vs Reade (1913) 2 IR 81
o Arcos Ltd vs E.A Ronansen & sons (1933) AC 470 House of Loards
o Bannaerman Vs White (1861) 10 CBNS 844
o Cammell Laird Co Ltd vs. Manganese Brenze And Brass Co Ltd (1934) AC 402
o Cauchman vs Hill (1947) 1 KB 554
o Oscar Chess Ltd vs Williams ( 1957) 1 WLR 370
o Routledge vs Mckay (1954) 1 WLR 615
o Duffy & Ors vs. Newcastle United Football Co Ltd (2000)

• Statues and Statutory Instruments

o Sales Of Goods Act 1979

❖ Secondary Sources
• Books
o Catherine Elliott & Frances Quinn: Contract Law (first published 1996,greate
britain) 7th Edition
o Beatson J.,Burrotw A.,Cartwright J. “Anson’s Law of Contract”Oxford University
Press 29edn

• Websites And Blogs

o Law Teacher, Free Law Study Resource<https://www.lawteacher.net/. > last
access on December 25,2022
o Studoc, Free Law Study Resource <https://www.studocu.com/row/document/the-
university-of-warwick/contract-law/terms-and-representations/4693540 > last
access on December 24,2022
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o Quora,< https://www.quora.com/What-is-the-difference-between-a-term-of-a-
contract-and-a-mere-representation> last access on December 26,2022

o e-lawsources.com.co.uk,< http://www.e-lawresources.co.uk/Contractual-term-or-
representation.php> last access on December 26,2022

Thank You !