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In another question it was claimed that everything in a contract is a term or warranty. It has got to be more complicated than that. For example is the title of the contract a term? Is the execution line "sign below to agree to the terms" a term in itself? If the contract includes a statement of the number of terms in it or contact information, presumably these wouldn't be terms.

What exactly is a term and what is not?

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An example of the distinction is Bettini v Gye (1876) 1 QBD 183, where Bettini agreed to perform in London between March 30 to July 13 1875 and was supposed to be in London 6 days before rehearsals. He arrived on March 28 ready to perform but Gye refused to accept the performance. The court held that arriving 6 days before was not a "condition" (term) of the contract, so breach did not "go to the root of the contract". The contract did not state anything like "if you are not here 6 days before the contract is cancelled". The court made this distinction:

Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one; or they may think that the performance of some matter, apparently of essential importance and primâ facie a condition precedent, is not really vital, and may be compensated for in damages, and if they sufficiently expressed such an intention, it will not be a condition precedent.

Breach of a condition allows the offended party to repudiate the contract, but breach of a warranty does not enable a contract to be repudiated. The Sale of Goods Act 1979 section 11 encodes the distinction thus:

Whether a stipulation in a contract of sale is a condition, the breach of which may give rise to a right to treat the contract as repudiated, or a warranty, the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract; and a stipulation may be a condition, though called a warranty in the contract

In other words, you can tell if something is a term vs. a warranty if there is a breach and you try to repudiate the contract, and the court says "No you can't do that", and that's how you know that it was a warranty and not a term. (There are probably better ways, but it's like Fair Use in its subjectivity).

  • There must be a way to stipulate the distinction within the contract itself. – Mowzer May 24 '16 at 23:07
  • One would hope. Something like "if you are not here 6 days before, the contract is cancelled". Since damages would be the preferred option for breach, I would suppose that the courts really want you to clearly identify what would lead to repudiating the contract, and not make them decide what's important to the parties. – user6726 May 24 '16 at 23:19
  • @Mowzer You can be as explicit as you want about if a clause is a term or a warranty - this helps but it also makes for bulky and unreadable documents. – Dale M May 25 '16 at 0:31

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