7.4 Terms of a contract

1. Express terms

Express terms are the explicit, written or spoken provisions of the contract that the parties themselves include and agree upon. They are usually the most prominent and critical terms of the contract. Express terms can cover various aspects, such as:

1. Price: The cost or value of goods or services to be exchanged.
2. Quantity: The specific quantity or volume of goods or services.
3. Duration: The length of time the contract will be in effect.
4. Performance: The obligations and responsibilities of each party.
5. Payment terms: The schedule and method of payment.
6. Delivery terms: The terms related to the delivery of goods.
7. Warranties and guarantees: Promises regarding the quality, condition, or performance of goods or services.
8. Termination provisions: Conditions under which the contract can be terminated.
9. Implied terms

Implied terms are not explicitly stated but are assumed to be part of the contract based on the law, custom, or the nature of the transaction. Implied terms can include:

1. Terms implied by statute: Certain laws automatically insert terms into contracts to protect consumers or ensure fairness in transactions. For example, the Sale of Goods Act may imply terms of merchantability or fitness for a particular purpose into contracts for the sale of goods.
2. Terms implied by custom or trade practice: Some industries have established customary practices that are assumed to be part of contracts within that industry.
3. Terms implied by prior dealings: If the parties have a history of similar transactions, the terms of previous contracts may be implied into subsequent contracts.
4. Terms implied by necessity: Certain terms may be implied to make the contract workable or reasonable. For instance, a contract for the sale of perishable goods may imply a term regarding the delivery timeframe.

3. Conditions and warranties:

Terms in a contract are often categorized as conditions or warranties, which have different legal consequences:

• Conditions: These are fundamental terms that are essential to the contract’s purpose. A breach of a condition allows the innocent party to treat the contract as repudiated and seek remedies.
• Warranties: These are less critical terms that are not fundamental to the contract’s purpose. A breach of a warranty allows the innocent party to claim damages but does not entitle them to terminate the contract.