CT 2.3 TERMS OF CONTRACT
Various representations are made to induce one party to enter a contract. “Oga, this bicycle na confam German o no be China”. Or “Gentleman, this store is authenticated by Apple. You can buy any of our laptops or phones without issues”. It all goes on. But from the legal perspective, the issue is; what if representations turn out to be false?
:: To determine liability for representations, it is imperative to distinguish between a term and a mere representation and look at the relative importance of the statement to the contract. The court usually considers certain factors like:
- The intention of the parties.
- The time the statement was made.
- The professional knowledge of the person representing/making the statement. In Dick Bentley Productions Ltd V Harold Smith Motors the court held that the statement made by the car dealer, (a professional) (that a Bentley car had only done 20,000 miles when in actuality it had done more than 100,000 miles) amounted to a term of the contract.
- Whether the representation/statement was reduced into writing. In Routledge Mackay, the court held that the earlier statement of the representor was not reduced into writing.
So once you have determined whether it is a term or mere representation, we look at what the Sale of Goods Act provides; it classifies a term into conditions and warranties.
:: A condition is an essential term which goes to the root of a contract.
:: A Warranty is an agreement relating to the subject matter but collateral to the contract and breach entitles the innocent party to just damages (i.e. compensation)-Section 62
:: Section 11(1) provides that breach of a condition can entitle the innocent party to treat the contract as repudiated except;
- Where the contract is not severable and the buyer has accepted the goods or a part thereof.
- Where title in specific goods have passed to the buyer. Section 11(1c). Unless there is a term to the contrary.
Section 35 of the act provides that the buyer is deemed to have accepted the goods when he;
- Intimates (discloses) to the seller that he has accepted them.
- Does an act in relation to the goods which is inconsistent with the right of the seller.
- Unreasonably retains the goods without communicating his rejection to the seller (A similar provision may be found in Order 18 Rule 4 of the Of the Sale of Goods Act).
In these situations, the buyer is expected to treat a breach of a condition as a breach of warranty that means he should just sue for damages. But where there is a breach of a condition and the buyer has not done any of the acts listed in S 11 and 35 of the Sale of Goods Act, then he can (in addition to possible damages) repudiate the contract.
Section 11(2), provides that the innocent party may waive the condition and sue for just damages-Oscar chess ltd V. Williams; Sanday and Co V. Keighley Maxsted and Co.
By Section 10 (1) of the Sale of Goods Act: Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of essence of a contract of sale.
The parties can make time essential and failure to perform within the specified time can make it a breach of a condition. Just note the following:
- Time is generally not of the essence.
- A mere stipulation of time may not make time of the essence (depending on the nature of the contract).
- Time must be stipulated and the term couched in mandatory diction to show that the party intends time to be of the essence.
In Bekederemo V. Colgate Palmolive Nigeria Ltd; the term of the contract expressly and compulsorily made time for payment a condition of the contract thus entitling repudiation. Also, Hartley V Hymans.
In Amadi V. Thomas Aplin and co ltd The court held that the buyer could reject the stock fish which were not delivered in June and July in contravention of the term stipulating the time of delivery.
In Sanday and co V. Keighley Maxsted and co the court held that the innocent party may elect to treat the breach as a warranty-Section 11(2). In Charles V. Oppenheim, the court held that the buyer can (again) make time of the essence after waiving his right by giving reasonable notice to the seller.