Ch 7 The Terms of a Contract.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Frederick King

The Terms of a Contract 10/23/2012 8:23:00 AM Chapter 7 The Content of a Contract  Terms – contractual terms can be express or implied o Express terms – a provision of a contract that states or makes explicit one party’s promise to another  Judicial interpretation of express terms  Vague or ambiguous language – the policy rationale is that the drafter should bear the risk of unclear language  There is a point where language is so ambiguous that the contract will fail for uncertainty and none of the promises it contains will be enforceable  Rules of construction – guiding principles for interpreting or “constructing” the terms of a contract, there are two methods:  Plain meaning rule – courts rely primarily on the plain meaning of the words the parties have chosen  Parties intentions – take into consideration when the underlying intentions of the contract are o Implied terms – a provision that is not expressly included in a contact but that is necessary to give effect to the parties’ intentions  The plaintiff carries the burden of proof if they are the one that insists there was an implied term o Business efficacy – a judge is entitled to imply terms necessary to make the contract workable o Previous dealings with the parties – if parties have contracted in the past, it may be possible to imply that their current contract contain the same terms o Statutory requirements – an important source implied by statute is found in provincial sale-of-goods legislation, which provides that certain terms are a mandatory part of every contract, unless excluded by the parties o Entire contract clause – a term in a contract when parties agree that their contract is complete as written o Contractual quantum merit – awarding one party a reasonable sum for the goods or services provided under a contract  Where one party doesn’t pay whatever the other party demands, but pays a reasonable amount determined by a judge  Contracts can take three possible forms: o Entirely oral – terms are based on conversation o Entirely written – terms are contained in a written contract o Both oral and written  The form a contract takes does not affect its enforceability – as long as someone can prove there is a contract, there is one  The parol evidence rule – a rule that limits the evidence a party can introduce concerning the contents of the contract o The rule forbids ou
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