BTEC Level 5 –Contract and Negligence
Cases on Terms of Contract-
7th October 2013 class
THE PAROL EVIDENCE RULE
Burgess v Wickham (1836) B&S 669
It was held that a person who takes out a policy of marine insurance can show that the insurer knew the ship to be unseaworthy, and so negative the usual implied warranty of seaworthiness.
Pym v Campbell (1856) 6 E&B 370
A written agreement for the sale of a patent was drawn up, and evidence was admitted of an oral stipulation that the agreement should not become operative until a third party had approved of the invention.
City & Westminster Properties v Mudd  Ch 129
The defendant, who had been a tenant of the premises for six years, had resided at the shop. When the lease fell for renewal, the plaintiffs inserted a clause for use of the premises to be for business purposes only. The defendant asked if he could sleep there, was told that he could and he signed the lease. Even though this assurance contradicted the lease, evidence of it was held admissible to prove a collateral contract which the tenant could plead in answer to a claim for breach of contract.
IMPLIED TERMS implied terms law
Hutton v Warren (1836) 1 M&W 466-The tenant of a farm was given six months’ notice to quit. His landlord insisted that he continue to cultivate the land during the notice period in keeping with custom. The tenant successfully argued that the same custom entitled him to a fair allowance for the seeds and labour he used on the land.
The Moorcock (1889) 14 PD 64-The owner of a wharf agreed to provide mooring facilities for ‘The Moorcock’. The ship was damaged when it hit a ridge of rock at low tide. Although the defendants had no legal control over the river-bed, they could ascertain its state but they had not done so. The court held that honesty of business required an implied undertaking on the part of the wharf owner that it was a reasonably safe place to moor a ship. The wharf owner had broken his implied undertaking and was, therefore, liable in damages to the ship owner.
REPRESENTATIONS AND TERMS
Routledge v McKay -In the written contract, signed a week later, no mention was made of the date of the model. It was held, on this point, that what the parties intended to agree on was recorded in the written agreement, and that it would be inconsistent with the written agreement to hold that there was an intention to make the prior statement a contractual term.
Birch v Paramount Estates (1956) 167 EG 196-The defendants made a statement about the quality of a house. The contract, when reduced to writing, made no reference to the statement. The Court of Appeal regarded the statement as a contractual term. But here the defendants had special knowledge.
Harling v Eddy  2 KB 739-The vendors of a heifer represented that there was nothing wrong with the animal but, in fact, it had tuberculosis from which it died within three months of the sale. A contributory factor leading the Court of Appeal to decide that the statement was a term of the contract was that the vendors were in a special position to know of the heifer’s condition.
CONDITIONS AND WARRANTIES
Poussard v Spiers (1876) 1 QBD 410
Poussard was engaged to appear in an operetta from the start of its London run for three months. The plaintiff fell ill and the producers were forced to engage a substitute. A week later Poussard recovered and offered to take her place, but the defendants refused to take her back.
The court held that the defendant’s refusal was justified and that they were not liable in damages. What chiefly influenced the court was that Poussard’s illness was a serious one of uncertain duration and the defendants could not put off the opening night until she recovered. The obligation to perform from the first night was a condition of the contract. Failure to carry out this term entitled the producers to repudiate Poussard’s contract.
Bettini v Gye (1876) 1 QBD 183
Bettini, an opera singer, was engaged by Gye to appear in a season of concerts. He undertook to be in London at least six days before the first concert for the purpose of rehearsals. He arrived three days late because of a temporary illness. He gave no advance notice and Gye refused to accept his services.
It was held that the plaintiff had been engaged to perform for a 15-week season and the failure to attend rehearsals could only affect a small part of this period. The promise to appear for rehearsals was a less important term of the contract. The defendant could claim compensation for a breach of warranty but he could not repudiate Bettini’s contract.
The Mihalis Angelos  1 QB 164
The owners of a ship let it to charterers, undertaking that the ship would be expected ready to load about 1 July, would proceed to a certain port for the loading of cargo, and that the charterer would have the option of cancelling the charter if the ship was not ready to load by July 20. The charterer was unable to get a cargo by July 17 and cancelled the charter, alleging that it was frustrated. The ship itself was not ready until July 23. At trial it was argued that the charterer was entitled to avoid the contract on July 17 because of a breach of contract by the shipowner, i.e. he had impliedly promised that he had reasonable grounds for believing that the ship would be ready to load on July 1, and that there were no such grounds. The trial judge held that there was a breach of this term, but the term was not a condition and the breach was not so fundamental as to give the right to terminate the contract.
The Court of Appeal held that the term was a condition and that the charterer had properly avoided the contract even though he had done so on the ground that the contract was frustrated when this was not the case. Lord Denning stated that “The fact that a contracting party gives a bad reason for determining it does not prevent him from afterwards relying on a good reason when he discovers it.” Megaw LJ, discussing the term “expected ready to load… ” stated:
“… such a term in a charterparty ought to be regarded as being a condition of the contract, in the old sense of the word “condition”; that is that when it has been broken, the other party can, if he wishes, by intimation to the party in breach, elect to be released from performance of his further obligations under the contract; and he can validly do so without having to establish that, on the facts of the particular case, the breach has produced serious consequences which can be treated as “going to the root of the contract” or as being “fundamental,” or whatever other metaphor may be thought appropriate for a frustration case.”
The Hansa Nord  QB 44
Citrus pulp pellets for use in animal food had been sold for £100,000 under a contract which provided for “shipment to be made in good condition.” Part of the goods had not been so shipped and in addition the market value in such goods had fallen at the delivery date. The buyers rejected the goods which were later resold pursuant to a court order and eventually reacquired by the original buyers for just under £34,000. The buyers then used the goods for the originally intended purpose of making cattle food, though the defective part of the goods yielded a slightly lower extraction rate than sound goods would have done.
The Court of Appeal held that rejection was not justified. The term as to shipment in good condition was neither a condition nor a warranty but an intermediate term; and there was no finding that the effect of its breach was sufficiently serious to justify rejection. The buyers seem to have tried to reject, not because the utility of the goods was impaired, but because they saw an opportunity of acquiring them at well below the originally agreed price. In these circumstances their only remedy was in damages: they were entitled to the difference in value between damaged and sound goods at the agreed destination.
BTEC Level 5 –Contract and Negligence