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Breach of Any Implied or Express Terms in This Contract

Info: 3099 words (12 pages) Law Essay
Published: 12th Aug 2019

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Jurisdiction(s): Australian Law

Intention to create legal relationship:-

This is the first element of contact law . intention is to create a legal relationship between two or more parties which are legally enforceable by law. To determine whether there is an intention to create legal relation, the law looks at the nature of the agreement. if an agreement is of a social or domestic nature, the law has created a presumption that such agreement do not have an intention to create legal relation. A presumption is a conclusion or inference about the truth of some fact.


This is the second elements required to have a valid contract there must be a meeting of minds. There must be an offer made by one party and an acceptance of that offer by another party.


This is the third element of contract law if this is not there then its not a valid contract. Consideration can be defined as a mutual promise from both sides of parties. The term promisor and promisee are used to describe the parties to a contract in which consideration is present. The promisor is the person undertaking to perform the consideration, the promissee is the receipt of the consideration. It is essential to every contract. Consideration can be present or future but not past, must be capable of being performed and there are many more number of rules with respect to consideration.

Capacity of Parties:-

The fourth element required to constitute a contract is the capacity of parties. The parties to a contract require capacity or ability to contract. There are four types of people who come under limited capacity to make contracts.


Minor is any person who has not reached the age of eighteen years.

Persons of unsound mind and intoxicated persons:-

Persons of unsound mind and intoxicated persons have limited capacity to make contracts. The law seeks to protect persons who may enter agreements without understanding the nature of the obligations imposed on them because of their state of mind.


A declaration of bankruptcy does not remove an individual’s contractual capacity. However, the bankruptcy Act 1966 (Cwlth) provides that in certain cases, bankrupts must disclose their bankruptcy prior to entering a contract.


A corporation is regarded by the law as a legal entity capable of suing, being sued and owing property. Unlike a natural person, it is an artificial legal entity. It only has the power to contract through individuals.

Reality of Consent:-

Reality of consent is the fifth element required to constitute a contract. When parties enter an agreement, their consent must be genuine. If an agreement is reached because of a mistake, misrepresentation, duress undue influence or unconscionability, the injured person may be entitled to rescind the contract.


A party may enter an agreement under a mistaken belief. Certain mistakes will render a contract void.


A misrepresentation is a statement of fact that is untrue.


Duress is another ground for alleging that reality of consent is missing from an agreement. Duress will occur when a person enters a contract because of actual or threatened violence to this person or to a person with whom they have close relationship.

Undue Influence:-

An allegation of undue influence is another ground for alleging that reality of consent is absent from a contract. It occurs when a person uses their influence over another to force the other to enter a contract.

Legality of object:-

The sixth and final element necessary to create a valid contract is legality of object. The object or purpose of a contract must be legal. Contracts may be illegal either at common law or pursuant to a statue.

Terms of a contract

The terms of a contract are its contents. The terms define the obligations of each party. Sometimes it is necessary to determine whether a statement or representation is a term of a contract.

Often it is easy to identify the terms of a contract. They are written or oral, and either express or implied. The law draws a distinction between statements that are mere representation and statements that are terms of a contract. An example of a latter includes a statement where a party promises or warrants that a statement is true. The distinction is important because of the remedies available if the statement is untrue. At common law, damages can be awarded for an untrue statement that is a term of a contract, but can not be awarded for a breach of a mere representation.

Collateral Contracts:-

If a statement made prior to the contract being made is regarded as the ‘mere representation’ rather than a term of a contract, this will leave the representee with no remedy to sue for breach of contract. In order to overcome this disadvantage the courts have created the concept of collateral contracts. The court will recognise that the statement is not term but was seriously made , and without it the main contract may not have been entered. The statement or promise is regarded as being collateral to the main contract and may in certain circumstances be enforceable as a contract in its own right. The consideration of a collateral contract is the entering into of the main contract by the person to whom the statement was made.

The terms we have been discussing are called express terms of a contract. They are expressed either in writing or orally or by combination of both. There are also various ways of classifying the terms.

Classification of express terms:-

Express terms are classified by the law into two broad categories which is called a condition or a warranty depending on the importance.

Whether a term is a condition or a warranty must be determined by considering the facts of each case. If a party entered a contract because of a existence of a particular term, this will indicate the term a condition.

Conditions precedent and conditions subsequent:-

The word condition is used by the law in another context. Other than to denote an essential term of a contract. A contract may be subject to a condition, Conditions in this sense, fall into one of two categories: conditions precedent and condition subsequent.

Conditions precedent:-

A condition precedent is one that must be satisfied before the contract can exist and be enforced.

Conditions subsequent:-

A condition subsequent is a term contained in a contract which provides that on happening of a particular event the contract will terminate. That event may either the happening of the named event or particular act of a party to the contract.

(Higgs v. Hodge Industrial Securities (1966) 111 SJ) (Higgs’s case at 272 Fundamentals of Business law M. L BARRON 6th Edition)

Implied Terms:-

Terms of a contract that are not express are implied.

There are three types of implied terms:-

1) Term Implied by courts

2) Terms implied by statute

3) Terms implied by custom or trade usage

Terms implied by the courts:-

It is possible for a court to imply a term into a contract where clearly the parties intended it to be a term for some reason was omitted from the contract. Five conditions must be satisfied before the courts will do so. In order to satisfy these conditions, the term must:

Be reasonable and equitable

Be necessary to give business efficacy to the contract(the contact would be inefficient without it)

Be so obvious that it goes without saying

Be capable of clear expression

Not contract any express term of the contract

At common law, there are several types of contract into which the law will imply terms. For example, in contracts of employment, the courts will imply a term that the employer can not require the employee to do anything unlawful. In contracts for hire of goods, tshe contracts will imply a condition that the goods will reasonably fit for the purpose for which they have been hired.

Terms implied by statue:-

Some statues imply specific terms into certain contracts. Examples are the states’ sale of goods acts and the Trade Practices Act 1974 (Cwlth). They imply terms that goods will be of merchantable quality, correspond with their description and be fit for the purpose for which they have been purchased.

Terms implied by custom or trade usage:-

Courts will imply terms into a contract where there is an established practice or custom in respect to certain agreements. There requirements must be satisfied before a court will imply terms:

The custom or usage is certain, reasonable a and notorious.

The custom or usage will not be implied if it is in consistent with any express term in the contract.

The custom or usage alleged must not offend any statutory principle.


In certain situation the law impose a duty on a person to act with care towards others. If this duty exists and if there is a failure to act carefully and another suffer loss then the tort of negligence is committed.


This is the first element in tort law. A duty of care is legal obligation imposed on an individual to maintain the standard of reasonable care while performing an act that can foreseeable harm others there a different situation where duty of care applies .


The second element required to proof negligence is that a duty of care has been breached . there must be an expected standard of care that has been breached. The standard of care is the amount of care that must be taken in particular circumstances. The standard required is that of a reasonable person. The question must be asked is whether a reasonable person would have foreseen harm in the circumstances and would have taken step to prevent foreseeable harm. Before determining whether there has been a breach a number of facts must be taken into consideration.


One more factor relevant to determine whether the standard of care has been met is the amount of effort that would be required to eliminate the risk. If it is relatively easy to remove the risk and would cause little expense and in convenience, then this maybe required. A failure to do so may result in a breach of duty of care.


The amount of risk of injury is so small that a reasonable person would have disregarded it then there be no breach of duty of care.


One factor taken into consideration when determining whether a breach of a duty of care has occurred is to consider the extent of injury that would result should a breach occur.


This is the third element that must satisfied to prove negligence is that the damages that the plaintiff has suffered was caused by the negligence of a defendant. The law has created a test that determines the issue of causation.


The purpose of damages is to enable the innocent party to get monetary compensation from the party responsible for the breach of contract. In assessing what damages will be paid by the party who breached the contract. The court required to assess the loss for which the guilty party should be liable .


There is a further limitation on the plaintiff’s ability to claim damages from the defendant. The defendant is not liable for damages that are too remote. The law place a limit on liability. The defendant is not liable for every act that caused by negligence. The test used to determine the limit of liability is one of reasonable forces ability. If the damages were reasonably foreseeable by the defendant then liability will flow.


These are common law remedy. They will not always be appropriate as compensation for a breach of contract. The law of equity provides other remedies that may be claimed when damages are inadequate.

In the given case study its clear that first three elements of contract law is present that means there is a contract between FTT and BCC LTD .An employee of BBC and driver of FTT are signing the dockets and according to the terms and conditions on the back side of the docket it clearly say “FTT does not accept any responsibility for any loss or damages to any goods carried pursuant to the contract however such loss may arise or be caused whether by negligence or otherwise” because the driver was negligent towards the service of the brake and wrongly parked the truck on the hill as a result breaks slip and truck hurtles down the hill and damaged the delivery of bitumen and to other parked vehicles. On the other hand, he was on the different route. In my opinion I think BBC can claim for the damages that has caused by the driver’s negligence .Driver owes some duty of care towards his work. As the driver is an employee of the FTT. FTT is liable for the loss of bitumen.


Duty of care

Standard care of duty


Condition subsequent


(Higgs v. Hodge Industrial Securities (1966) 111 SJ) (Higgs’s case at 272 Fundamentals of Business law M. L BARRON 6th Edition)

Donoghue v. Stevenson(1932)AC 562 (Donoghue’s case at 67 Fundamentals of Business law M. L BARRON 6th Edition)



The first part of the question is about the breach of an express term. Conditions subsequent is an express term and FTT has breached that term. According to the contract law FTT should give him the amount whatever loss was suffered by the BBC. If FTT does not negotiate with BBC then that would be beneficial for BBC because BBC’s case is strong & more chances of winning. The contract was written & there was a breach of express term which shows that FTT is responsible for that breach and if BBC goes to court then it would be more expensive for FTT. Contracts formed expressly are created by express words, either written or spoken. For instance, a contract for the sale of a house for $300000 is created by standard form of written contract. An example of an express verbal contract would be an agreement made by Sandra to paint Peter’s portrait for $750.One case example which can make easier to understand it. This example shows that how we can use express terms in the contract. The agreement for $750 was a verbal one because normally people do not go for written agreements for small amounts. But on the other hand, if you see that the contract for the $300000 was written because the amount was huge and any person can deceive to the other person. According to law student if a plaintiff has not got any proof he can not get justice in the court. So it is better to go for written contracts instead of just oral ones. An example I have given here of condition subsequent so that you could understand it easily. In this given case there was a contract in between the car dealer and finance company. The contract was about the introduction of a new business but the other party could not do so. There was breach of conditions subsequent which means they do not have contract any more & the contract is terminated.

(Higgs v. Hodge Industrial Securities (1966) 111 SJ) (Higgs’s case at 272 Fundamentals of Business law M. L BARRON 6th Edition)

The second part of the question is about the negligence. The driver of FTT who was on his job. He went for the lunch with one of his friend during his job, not only he parked his truck on the hill, but when the truck hit with the other parked cars, when it was coming down the hill because the brakes were not working well. which was became the reason of big damage for the BBC. BBC said that FTT is responsible for our loss. But FTT refused to compensate BBC. The driver was doing that job for FTT. So FTT is the one who can help BBC in recovering their loss. FTT who has written clearly in the contract that he is not responsible for anything or for any loss except the negligence. It was obvious that the driver was negligent. The driver supposed to go for his job instead of having lunch with his friend. So I would say it is clearly the fault of FTT and their driver. They should have checked the brakes and everything of the truck before. In every profession whosoever is doing job for some one, that person should be mature & very sincere towards his job. I can clear my point by giving two case examples from different books of law. In the Donoghue’s case one customer bought a ginger beer and gave to his friend what happened there was a decomposed snail in the ginger beer. when the drink was drunk by his friend he got ill and he sued the factory owner for the negligence. On the other hand, Thomas’s case plaintiff did the same and sued for the negligence.

Donoghue v. Stevenson(1932)AC 562 (Donoghue’s case at 67 Fundamentals of Business law M. L BARRON 6th Edition)



In all the given above cases & written material, I have confirmed that there was a breach of an express term & court has given the case in the plaintiff hand of conditions subsequent one.Higgs’s was won that case because there was a breach from the other party. On the other hand, Thomas’s case and Donoghue’s case, both cases was won by the plaintiff. FTT is the one who was negligent in the contract. The breach was from the FTT side. The driver was working for FTT. FTT should negotiate with the BBC. They both have been working together. If this time when it is obvious that it was FTT’s negligent act and even then FTT was refusing to pay. Then according to me if BBC goes for court then BBC can win thsis case easily. So it is better for FTT to avoid the court & negotiate with BBC & give him Compensation.

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