Chapter 3
The terms of the contract
The terms of a contract define the obligations which the parties to the contract have
undertaken. This chapter begins by examining the ways in which terms can arise, and
explains the difference between express and implied terms. Next the different types of
terms are considered. Breach of some types of terms gives the injured party the right to
terminate the contract, whereas breach of other types does not. Breach of any term always
gives a right to sue for damages.
Exclusion clauses are terms which attempt to exclude liability for breach of contract or
for breach of a tortious duty of care. This chapter concludes by considering the special rules
which apply to exclusion clauses.Nature of terms
A contract is made up of terms. All of the promises which the contract contains, whether
they were made expressly or impliedly, will be terms. If any of these promises are not kept,
one or more terms of the contract will have been breached. The injured party will then
always have a remedy for breach of contract.
Terms can find their way into contracts in one of two ways: they can be expressed in
speech or writing or they can be implied. Express terms are actually agreed by the parties
in words. Implied terms are implied either by the court (on the grounds of the presumed
intention of the parties) or by a statute.Figure 3.1 The ways in which terms arise