Chapter 7

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Department
Marketing and Consumer Studies
Course
MCS 3040
Professor
Joseph Radocchia
Semester
Winter

Description
The Terms of a Contract Chapter 7 Express term: - A provision of a contract that states a promise explicitly. Examples include price, quantities and warranties. Only terms, not assumptions, have legal weight. - Problems of interpretation: vague or ambiguous language. Court assigns as reasonable a meaning as possible. Example: “what is best quality” -> Court reasonably decides, such as ‘highest quality available’ Rules of Construction: - Guiding principles for interpreting the terms of a contract. Can often be conflicting; on one hand court is supposed to uphold reasonable meaning of terms, yet, courts are to give effect to the parties’ intentions. If there was a natural disaster per say, a party would want the court to use plain-meaning rule standing alone. Implied term: - A provision that is not expressly included in a contract but that is necessary to give effect to the parties’ intention. - Occurs when an event arises that is not addressed in the contract through express terms. Judge will imply a term in order to give effect to the party’s intention. Courts will imply terms based on a number of grounds: 1) Business efficacy: judge is entitled to imply terms to make the contract workable. 2) Customs in the trade of the transaction: rarely successful, since it must be proved that the custom is so notorious that the contract in question must be presumed to contain such an implied term. 3) Previous dealings between the parties: if parties have contracted in past, it may be possible to imply that their current contract contains the same terms. 4) Statutory requirements: important source of terms implied by statute is found in provincial sale-of-goods legislation, which is largely uniform across the country. This legislation provides that certain terms are a mandatory part of every contract for the sale o goods unless specifically excluded by the parties Ontario Sale of Goods Act: 29. (2): Where the seller delivers to the buyer a quantity of goods larger than the seller contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or may reject the whole, and if the buyer accepts the whole of the goods so delivered, the buyer shall pay for them at the contract rate. Entire contract clause - A term in a contract in which the parties agree that their contract is complete as written. It is the clearest way for parties to signal intention. Contractual quantum meruit - Awarding one party a reasonable sum for the goods or services provided under contract. The Parole Evidence Rule - A rule that limits the evidence a party can introduce concerning the contents of the contract. - 3 possible forms contracts can take: 1) Entirely oral 2) Entirely written 3) Both - Written contracts are the best at proving existence. However, written contracts may trigger the parol evidence rule when a court is asked to determine what a contract means and includes. This forbids outside evidence as to the terms of a contract. Entire contract clauses are used to ensure application of the parol evidence rule to the contract in question. - Emphasizes the sanctity of the written agreement and means that the parties should ensure provision of all terms important to them. - If the contract is intended to be partly oral and partly written, this rule has no application. Using contractual terms to manage risk – planning function of law permits a businessperson to use contractual terms as a buffer against future, uncertain events as well as a way of limiting liability. Changed Circ
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