- The essence of terms in a contract
- The difference between conditions and warranties
THE ESSENCE OF TERMS IN A CONTRACT
The essence of contract terms includes understanding the key elements that define the rights, obligations and expectations of the parties involved. The following is a general summary of common important components found in contracts, including references to common sections and cases:
1. Offer and acceptance: Offer is provided for under section 2 while acceptance under section 7. When an offer made by one party and it is accepted by the other party is the basis of a contract.
2. Intention to establish legal relations: this an either be implied or express and it is where the parties must intend that the contract will have legal consequences, distinguishing it from a social or family agreement.
3. Consideration: this can be seen under section 25 and it is where the parties must enter into a valuable exchange or detriment to support the enforceability of the contract.
4. Legal capacity: this is provided under section 11and it js where the parties must have the legal capacity to enter into the contract, ensure they are of sound mind and are free from certain legal impediments.
5. Legality of purpose: section 23 provides that the purpose and object of the contract must be lawful and not contrary to public policy.
6. Certainty and possibility of performance: Section 29 provides for certainty while possibility of performance is provided for under Section 32 and it is where the terms of the contract must be clear and certain, and performance must be feasible.
7. Express and implied terms: Express terms is seen under Section 9 and implied terms under section 10 where the terms may be expressly stipulated by the parties, or they may be implied by law or custom.
8. Conditions, warranties and unnamed terms: Conditions under aection 12, warranties under section 14 and unnamed terms under section 13. This is the distinction between conditions, warranties and innominate terms determines the seriousness of a contractual commitment and the remedies available in the event of breach.
9. Waivers and unfair contract terms: Immunity Clauses is provided for under section 74 and unfair contract terms under section 16. This talks about the clauses that limit liability or alter the normal rules of a contract may be subject to fairness review.
10. Contractual relationship: Interrelationship is provided for under section 2(1) and it talks about when only the parties to a contract usually have the rights and obligations under the contract.
11. Performance and Discharge: Manifestation is seen under section 37 while discharge under section 73 and this talks about the fulfillment of contractual obligations leads to rescission of the contract, while breach of contractual obligations may lead to remedies.
12. Breach of contract: this is provided for under section 73 and it talks about the failure to perform contractual obligations results in breach of contract and triggers remedies.
13. Remedies for Violations: damages under section 73, specific performance under section 10 and injunctions all talks about various remedies which exist for breaches, including monetary damages, specific performance, or injunctive relief.
THE DIFFERENCE BETWEEN CONDITIONS AND WARRANTIES
The distinction between conditions and warranties in contract law is crucial, and it is often based on the importance of the terms within the contract. Below is a summary with reference to relevant sections and cases:
1. Conditions: Conditions are fundamental terms that go to the root of the contract. A breach of a condition gives the innocent party the right to terminate the contract and claim damages. See the case of Poussard v. Spiers and Pond (1876) and section 12 which defines conditions as essential terms.
2. Warranties: Warranties are less vital terms that are collateral to the main purpose of the contract. A breach of warranty gives the innocent party the right to claim damages, but not to terminate the contract. See the case of Bettini v. Gye (1876) and section 12 that also defines warranties as non-essential terms.
3. Time Element: Generally, conditions are often associated with the timing of performance while warranties are usually related to the quality, nature, or performance of the product or service over time.
4. Importance of the Term: The importance of conditions is such that the innocent party would not have entered the contract had they known it would be breached while the importance of warranties is not as crucial to the core purpose of the contract.
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