Analyzing Types of Contractual Terms

The parties involved in negotiating a contract usually make multiple statements, among which some are intended terms while others represent mere representations. The issue illustrated by this case involves the determination of the contractual terms from mere representations. Whereas the intended terms constitute the fundamentals of a contract, representations made exist as inducements, which if false are misrepresentations that are likely to affect the contractual relation. Since the parties remain bound to perform the promises they contract to undertake, it is essential for them to decide precisely the nature of promises incorporated in the contract (Kelly, Hammer, & Hendy, 2014, P. 29).

When the statements made manifest the major importance that the promisee would not have entered into the agreement without them, they construe as contractual terms. Besides the case revealing an offer and acceptance characterizing a bilateral contract, it incorporates a consideration of the contractual terms comprising condition, warranty and innominate. Evaluation of these terms in this scenario is important owing to the emphasis of English law that the availability of remedies relies upon the type of contractual tern breached. This is contrary to the perception that the right of terminating the contract rests on the severity of the breach (Sivesand, 2005, p. 73). The determination of a statement either as a term or a mere pre-contractual representation is essential in deciding the remedies available. This revealed in the Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962). However, innominate terms occupy the middle ground, whose breach is resolved depending on their nature and effect of the breach.


The circumstance of supply demonstrating the use of the telephones delivered illegal in the UK and their state would not allow modification to attain legal use, presents breach of a condition. A condition presents an integral part of the contractual terms, something that goes to the root of the agreement. In view of this, the breach of such a condition accords the innocent party the sole right of either terminating the contract or exercising nonperformance of their obligation or upholding the agreement and suing for damages (Kelly, Hammer, & Hendy, 2014, P. 130). Failure to comply with the obligation of supplying telephones whose use are legally admissible in the UK constitutes breach of a condition. Consequently, KSE should discharge the contract.

Furthermore, a contractual term is considered a condition if qualified by provisions in the statutes, through agreement of participating parties or through the court process. The circumstance of the supply contradicts the provisions of both the Sale of Goods Act and the Consumer Act. In particular, it contravenes the implied terms established by sections 12-15 of the former. These include satisfactory quality, compliance with the product description and samples, alongsided the fitness for purpose (Sivesand, 2005, p. 73).

In incidences revealing breach of a condition, the innocent party is rightfully to treat the contractual terms as repudiated and seek damages. This reveals in the Poussard v Speirs and Pond (1876), where the plaintiff contracted with the defendants to perform in an opera the latter were producing. The plaintiff was unable to appear owing to the illness that kept her at bay for the first night and several others thereafter. When she finally recovered, her services were refused by the defendants who at the time had contracted a replacement for the entire run. It was held that her absence on the opening night, breached the condition and the defendants could discharge her from the contract (Kelly, Hammer, & Hendy, 2014, P. 130). This implies that KSE has a right to treat the supply of the telephones whose use is illegal in the UK as a breach of the condition that attacks the root of the contract.


The delivery of telephones requiring a task of two minutes to tune each to a particular frequency, constitute breach of warranty to deliver devices immediately suitable for use in the UK. This present violation of a minor stipulation in the contract since the devices are usable after the tuning. It presents a peripheral not running into the root of the delivery contract. Under such circumstances, the breach of a warranty entitles the affected party to seek damages only. This emerges from the fact that the contract remains enforceable, thus binding to the bargain that each party should honor (White, 2011, p. 160). The breach of warranty would require KSE to claim a refund of the payment to made to the technician to perform the tuning amounting to 1000 minutes and continue with the contract.

Contrary to the earlier illustration where the innocent party can treat the condition broken as the substantial failure to the performance of the integral element, breach of warranties entitles claim of damages. This implies that the party can only seek for damages, but must honor the contract. Where the innocent party refuses to honor performance of the contract, such is found to breach the contract (Jones, 2013, p. 250). This was so demonstrated in the Bettini V Cye (1876), where the defendants contracted the plaintiff to undertake several engagements. While the latter had agreed to conduct rehearsals in London for six days, illness affected the schedule. When the defendants refused the services, citing shortened rehearsals, the court held such a breach of warranty. The situation warranted the defendants to recover damages rather than treating the services as discharged (Kelly, Hammer, & Hendy, 2014, P. 130).

Exclusion Clause

The theory, illustrating the freedom accorded in contracts, sets the parties free to contract and protect their individual interests. While it assumes the presence of parity during the creation of the contractual terms, this is rarely the case. The stronger parties may insert favorable terms, thus highlighting the initiation of exemption clauses. In view of this consideration, the insertion of an exclusion clause by the stronger party exempts itself from incurring liability or placing limits to the extent of the liability ascending from the contractual terms. As such is the clause inserted by the Unique Mobile solutions.

Although varying in scope, exclusion clauses attempt to shield one party at the expense of others, upon the occurrence of the outlined event. This arises in the clause outlined at the back of the receipt issued by Unique Mobile solutions. The insertion shields the supplier from ay financial losses either occasioned or caused by the use of the hardware or software products they deliver. Although justified on the theory of freedom exercised in contracts, it must satisfy the court that such an exemption clause is integral to the contract formation. As revealed in the L’estrange v. Graucob (1934), the clause constitutes the terms of the transaction when incorporated into the legal contract. For example, though the machine turned defective after a few working days, the defendant was limited from liability as exemption clause was incorporated in the document outlining the contractual terms. Given that the plaintiff signed the document, the clause was binding (Andrews, 2011, p. 423).

The receipt issued, revealing payment of two-thirds, constitutes performance by KSE on its respective bargain. Although the party is negligent of reading, the court will utilize the common law controls used in assessing the incorporation. Initially, the court will show its satisfaction when the Mobiles Unique Solutions reveals the incorporation if the plaintiff signed the document containing the contractual parties. This was exhibited in the L’Estrange V. Graucob case, despite the negligence of reading the content. The company is discharged from incurring liability through incorporation by notice as held in Parker V South Eastern Railway Co. Additionally, the exemption clause was unsatisfactory since the sale marked the first dealing between the two parties. Finally, the exemption clauses outlined in tickets or receipts do not constitute the basis of a contract. This emerged in the Thomton V. Shoehane Parking Co. Ltd where the receipts containing stipulating the exemption clause were deemed issued after the contract. Consequently, the exclusion clause inserted by the Unique Mobile Solutions was later given and not incorporated by notice and was not displayed at the time of contract or before.

Moreover, the court may utilize the statutory controls stipulated in the statutes. These include the Fair Contract Act, the Sale of Goods Act and the Consumer Act. The software supplied by the Unique mobile company contradicted the above provisions. This was explained in the Contra Proferentem Rule where the interpretation of the exemption clause was applied restrictively in Omar Sale V. Besse and Co. Ltd. Since the supply replicates a similar account where the seller excluded itself from incurring liability, the Unique Mobile solutions have breached the implied conditions in the Sale of Goods Act.

The exclusion clause inserted by Unique Mobile Ltd. loses its validity on accounts of, communicating it by receipt at the end, or in the middle of the contract. Besides, it fails to state fairly that the company is not liable for any financial losses, or other losses however caused or occasioned by using hardware or software products supplied by the company.

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