Chapter 7: the terms of a contract
I. The content of a contract
Terms: contractual terms can be expressed or implied.
oExpress terms: a provision of a contract that states a promise explicitly
(Ex: price, quantity, warranties…)
oJudicial interpretation of express terms:
Vague or ambiguous language: any vague or ambiguous wording
or language from the drafter will be construed against that party in
favor of the other party.
•In case the language is too ambiguous to understand, the
contract will not be enforceable.
•Rules of construction: guiding principles for interpreting
or “constructing” the terms of a contract.
oThese principles often conflict. (Ex: plain-
meaning rule vs. parties’ intention) It’s impossible
to predict the judges’ decision.
•Implied term: a provision that is not expressly included in
a contract but that is necessary to give effect to the parties’
intention (a judges will put these terms in if he’s satisfied
that not all of the terms the parties intend to include are
actually included in the contract)
oBusiness efficacy: a judge is entitled to imply terms
necessary to make the contract workable.
oCustoms in the trade of the transaction: relying
on trade custom to imply a term is rarely successful
since it must be proved that the custom is so
notorious that the contract must be assumed to
oPrevious dealings between the parties: if parties
have contracted in the past, it may be possible to
imply that their current contract contains the same
oStatutory requirements: certain terms are a
mandatory part of every contract for the sale of
goods unless specifically excluded by the parties
(sales of goods act)
In general, it’s not easy to imply a term except in
routine transactions or unless the sale of goods
act applies, or both parties are clear in their
intentions to put the terms in.
oContractual quantum meruit: awarding one party
a reasonable sum for the goods or services provided
under a contract.