Contract terms and disputes
Contract Terms
Entering into contracts is an everyday event for all of us, be it in the course of a business, or simply entering into the local shop to buy your daily newspaper. Not all contracts need to be in writing, they can be oral or simply implied by conduct.
A contract cannot incorporate every eventuality, and in commercial disputes it is all too common for parties to a dispute to claim that the written contract does not deal with all the agreed terms, or that what was agreed was varied thereafter.
Contract Disputes
Whenever a dispute arises, it’s important to look back at how the contract was formed, who were the parties to the contract and what were the obligations intended by the contract.
A contract can incorporate:
Express terms - those actually recorded in a written contract or openly expressed in an oral contract at the time the contract was made.
Implied terms - not stated in the contract but arise by implication to reflect the parties’ intention at the time the contract was made. Depending on the type of contract, there may also be terms implied by statute e.g. under the Sale of Goods Act 1979 there is an implied term that the goods supplied under the contract are reasonably fit for that purpose.
Interpretation of Contracts
The courts have long been tasked with the unenviable job of interpreting contracts in the event of a dispute, and is something they have again considered in the case of Dear and another v Jackson where the Court of Appeal refused to imply a term to a contract where a sensible bargain could have been made without that term. Thus the onus is on those drafting contracts to ensure what is intended is clearly stated rather than ask a court to infer an agreed term afterwards.
Courts may imply terms if necessary to create business efficacy or where the parties have acted in a way which has clearly indicated a change to the terms initially agreed. The courts will attempt to discover from the terms of the contract the common intention of the parties to the contract.
This must be approached objectively by working out what the contract means:
- To a reasonable person
- At the time of contracting
- With all the relevant background knowledge that would reasonably have been available to the parties at that time.
A word of warning
The courts will not intervene simply to make a “bad bargain better.” It is not their role to re-write the contract if one of the parties have failed to negotiate adequate terms - the courts are there simply to give effect to the intention of the parties, as far as this is possible to do so. So before entering into a contract it is important to take good advice on the terms.
Resolving contract disputes
Here at Redress we are experts at dealing with all sorts of Contract Disputes, business or individual. It is usually best to get things right before contracts are signed, but if a dispute arises it is always best to seek advice as soon as possible to consider the best course of action and any appropriate steps necessary to mitigate your losses.
