Types of express term
The most common types of express term, which are
often a particular feature of standard form contracts, are
exemption clauses, liquidated damages clauses and price
variation clauses.
Exemption clause – generally
This term is used to describe an express term in a con-
tract or a statement in a notice or sign which seeks to
exclude or limit the responsibilities that might otherwise
belong to a party.
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Example 1 (sales brochure)
‘We reserve the right to change component type, manu-
facturers, sources of supply and technical specifications
at any time. Dimensions, weights and colours contained
in this brochure are approximate. Products and prices
may be altered without notice at any time.’Example 2 (car park ticket)
‘Entry to or use of this car park is subject to the current
terms and conditions of the company. These conditions
contain limited exemption clauses affecting all persons
who enter or use the car park. Entry to and use of this
car park is at your own risk.’The legal effect of exemption clauses will be examined in
detail later in this chapter.
Liquidated damages clause
This is a term in a contract which lays down the amount
of damages that will be payable in the event of a breach
of contract. Cancellation charges are an example of a
liquidated damages clause.
Price variation clause
Calculating a contract price in a period of inflation can
be a very hit-and-miss operation. A contractor may find
himself bound by a fixed price which has failed to take
sufficient account of increases in the cost of raw materi-
Example 1 (holiday brochure)
‘Our prices are based on known costs and projections
at 1 March 2009 and we do not expect to make any
changes. However, we reserve the right to increase
prices at any time until 30 days before departure to allow
for variations in: (a) exchange rates, (b) transportation
costs, and (c) increases in tax rates imposed in any
country including dues, taxes or fees chargeable for ser-
vices such as landing taxes or embarkation or disem-
barkation fees at ports and airports. Even in these cases
we will absorb an amount equivalent to 2 per cent of the
price. Any increase will be calculated by reference to the
total cost of the variation, to be divided by our best estim-
ate of the number of passengers likely to be affected,
so as to arrive at an increase for each passenger. If this
means paying more than 10 per cent on the price, you
will be entitled to cancel with a full refund of money paid.
Should you decide to cancel because of this, you must
exercise your right to do so within 14 days from the issue
date printed on the invoice.’Example 2 (building contract)
‘Unless otherwise stated the contract price is based on
the cost of labour, materials and all necessary services
at the date of the quotation and increases or decreases
in any such costs shall be a net addition to or deduction
from the contract price.’Implied termsIn general, the contents of a contract are determined by
agreement between the parties. Nevertheless, there are
various circumstances in which additional terms may be
implied into the agreement.1 By custom.A contract must always be examined in
the light of its surrounding commercial context. The
terms of a contract may have been negotiated against the
background of the customs of a particular locality or
trade. The parties automatically assume that their con-
tract will be subject to such customs and so do not deal
specifically with the matter in their contract.als, wages or overheads, such as business rates. One
solution to this problem is to insert a term in a contract
which allows a variation in the contract price under
certain circumstances.claimant successfully sued the auctioneer for damages.
The Court of Appeal held that the auctioneer was bound
by his oral guarantee despite the contents of the written
conditions of sale.