As we have already seen, a contract comprises a set of
promises which the law will enforce. The obligations
undertaken by the parties are known as the terms of the
contract. If a dispute arises, the terms will become the
object of intense scrutiny as the parties seek to justify
their positions. The first task for any court is to establish
exactly what was agreed by the parties. This may appear
to be a relatively simple matter where the details of the
agreement have been enshrined in a written contract,
but even then problems can arise. The parties may have
failed to express their intentions clearly; they may have
omitted to mention a particular matter which later
assumes great importance; or the written document may
contradict what was said during the course of oral nego-
tiations. Where the contract is made wholly by word of
mouth, the job of ascertaining the contents of the con-
tract becomes even more difficult.
The terms of a contract are essentially a matter of
express agreement between the parties. It should be
noted, however, that additional terms can be implied
into an agreement, even against the wishes of the parties,
and certain terms which have been clearly stated, such as
exclusion clauses, can be rendered completely ineffect-
ive by operation of the law.
In this chapter we examine the basic requirement of
certainty of terms for the creation of a contract, how the
contents of a contract are determined and the relative
importance that may be attached to the duties and ob-
ligations undertaken by the parties. Finally, we will con-
sider the effect of clauses which purport to exclude or
limit the liability of one of the parties.Certainty of terms
The terms of an agreement may be so vague and in-
definite that in reality there is no contract in existence
at all.279
Chapter 9 The terms of business contracts
Learning objectives
After studying this chapter you should understand the following main points:
■the terms of an agreement must be certain or capable of being made
certain for a contract to be formed;
■the distinction between puffs, representations and terms, and the
remedies available for false and misleading statements;
■the distinction between express and implied terms, and the
circumstances in which terms may be implied into a contract;
■the ways in which the law regulates exemption clauses, and proposals for
reform.Scammellv Ouston(1941)Ouston agreed to buy a new motor van from Scammell.
When placing the order for a particular type of van,
Ouston wrote: ‘This order is given on the understanding
that the balance of the purchase price can be had on hire-
purchase terms over a period of two years.’ Scammell
accepted the order but no discussions subsequently
took place about the details of the hire-purchase arrange-
ment. Scammell later refused to deliver the van and
Ouston sued for damages for non-delivery. Scammell de-
fended the case by arguing that a contract had never been
concluded. The House of Lords held that the phrase
‘hire-purchase terms’ was so vague and indefinite that