Prepared by:
Norazla Binti Abdul Wahab
Terms
Exemption
Clause
Conditions
&
Warranties

Statements
Terms:
that govern the rights and
obligations of parties concerned.
They are the elements of the contract and are
binding.
If terms are broken there are legal
consequences.
In order to identify the terms of a contract, one
must analyze both express & implied terms
Terms that are explicitly included in the
contract –
Important to identify what the express terms
are.


have been specifically mentioned and agreed
by both parties at the time the contract is
made. They can either be oral or in writing.

Terms that will be read into the contract and
which were never the subject of express
agreement.
a term which has not been mentioned by
either party will nonetheless be ‘included’ in
the contract, often because the contract
doesn’t make commercial sense without that
term.



Implied terms aren't written down anywhere,
but are understood to exist.
If there's nothing clearly agreed between you
and your employer about a particular matter,
then it may be covered by an implied term.
Terms are implied into a contract for a
number of reasons.
Common Law

A.

Examples:


Contract of service, if no price is fixed-a
reasonable price applied.
If no time is fixed for performance of a contract- it
is implied that the contract will be performed
within reasonable time.
Examples:
1.
2.

Ahmad enter into a contract of hire of a car, and
in this contract, it will be implied term that he will
exercise reasonable care in the use of the car.
Contract of employment- it will be implied that an
employee will exercise the standard care expected
of him.
These terms though NOT expressly found in the
contract- accepted in contract.
Statute
B.
1)



Sale of Goods Act 1979
Section 12: the person selling the goods has to
have the legal right to sell them.
Section 13: if you’re selling goods by description,
e.g. from a catalogue or newspaper advert, then
the actual goods have to correspond to that
description.
Section 14: the goods must be of “satisfactory
quality” – that is, they should meet the standard
that a reasonable person would regard as
“satisfactory”. Also, if the buyer says they’re
buying the goods for a particular purpose, there’s
an implied term that the goods are fit for that
purpose.
Section 15: if you’re selling the goods by sample –
you show the customer one bag of flour and they
order 50 bags – then the bulk order has to be of
the same quality as the sample.
Hire Purchase Act 1967
 implied conditions & warranties



Eg: Implies a warranty that the hirer shall have
and enjoy quite possession of the goods.
Section 7(1)(a).
An implied condition that the owner shall have the
right to sell the goods at the time when the
property is to pass.
Section 7(1)(b)

National Land Code 1965
Tenancy agreements & leases
 Eg: S. 230 & S31- duties for lessee
 Eg: S. S32
- duties for lessor

Not everything that’s said during the
negotiations for a contract end up being
actual terms of the contract; some
information only amounts to
a representation.


Based on the intention of the parties.
Language used
 Expertise / knowledge of the parties
 Precision (ringkasan)of the statement
(depend on the imprecise (tidak tepat) of
the statement-less-TERM).

Example:
 you buy a car from a second-hand car dealer. He
tells you the car has alloy wheels. You buy it, but
you later discover the wheels aren’t alloy, and
they’re starting to rust.
 If the car having alloy wheels was a term of the sale
contract, then clearly the dealer has breached the
contract and you can sue him.
 But if it was just a representation, you might have
more difficulty suing him/ no legal effect.
 Remember, if it’s a term, the buyer always wins
and always gets damages!
Court held:
A statement that made by the D that the car was a
1958 model was a term of the contract.
In fact it was 1953 model.
Thus, the D breach of the contract.
A term which is essential to contract; breach of it
would allow the other party to treat the contract as
repudiated. (s. 12(2) SOGA)


If the condition is breached, the party not in default
entitled to repudiate the contract because the
contract can be deemed to be VOID

A condition is a term or oral written which goes
directly 'to the root of the contract, or is so
essential to its very nature that if it is broken,
the innocent party can treat the contract as
discharged.
That party will not therefore be bound to do
anything further under that contract.
‘Warranty’ – a less vital term of a contract (collateral
to the main purpose) , breach of it would give rise
to a claim for damages, not a right to
discharge/reject the goods.
(s.12(3) SOGA)
If the warranty is breached, the party not in default is
not entitled to repudiate the contract because
it is not voidable
HOWEVER
Party in default is entitled for damages
A warranty is a term of the contract which is
collateral or subsidiary to the main purpose of the
contract.
It is therefore not so vital as to affect a discharge of
the contract.
A breach of warranty only entitles the party to an
action for damages; he cannot treat the contract as
discharge.
Mrs. Poussardwas an opera singer. She agreed to sing
in opera on 28 November. However, , she became ill and
was unable to sing until 4 December.
 The opera company had to hire another singer so that the
opera could start on 28 November. They could only get
another singer if they hired her for all the performances of
the opera.
They did this and refused the services of Mrs Poussard once
she was better. Mrs. Poussard raised a court action, to try to
make the company pay her.


the court held:
that Mrs. Poussard breached a Condition of the contract when
she was unable to perform on 28 November. This was a basic
term of the contract .

Bettini was an opera singer. He agreed to sing in
London in a number of theatres beginning on 30
March. He also agree that he would arrive in
London 6 days before the first performance in
order to practise. Bettini then, became ill and did
not arrive in London until 3 days before the first
performance. The opera company refused to allow
him to sing and said he had breached the contract.
However, the court said:
the part of the agreement about practicing was a
Warranty and not a term. That meant it was not a
basic part of the contract.


Contracting party “ accept no responsibility”
 Not responsible or liable for any loss or
damage or injury
 Term of contract that:
Modify the principal obligation arises under a
contract
 Limit or exclude the liability of the party
which would arise as a result of breach of the
contract.



The A ordered paper board from a company
in New York and arranged their shipment for
consignment to the A at Penang on the R’s
ship.
The ship was due on Dec 25, 1973 but the
goods were not loaded on the ship but had
be put on another ship of R which arrived on
June 13, 1974.
The A then claimed from the R because of the
delay.
The court:
Give effect to the exemption clause stated in
the bill of lading that “the carrier shall not be
liable for any loss or damage arising or
resulting from delayed or early arrival of the
goods and that any under or over carriage
shall not be considered a deviation
(menyimpang) or vitiate (merosakkan) any
terms of the bill of lading”.


However , not applied on the case of
“fundamental breach” whereby the
party that seeking to rely on the
exemption clause will loss its
protection.



Case of international carriage of goods by sea
Any unjustifiable deviation involves the loss of
protection by any exemption clause contained in
the contract.
The vessel may not depart or deviate from the
contracted or customary route even though the
goods are ultimately carried to the agreed
destination.
England/ UK:
 Unfair Contract Terms Act 1977
Unfair Terms in Consumer Contracts Regulations
19991
- Limit the effectiveness of the EC in consumer
protection.


Australia:
 Trade Practices Act 1974
 Victorian Goods (Sales & Leases) Act 1981
 South Australian Consumer Transactions
Act
1971
-restrict or modify the application of such terms=
void.

Malaysia?
-existing: SOGA 1957 (S.62) & HPA 1967 (S. 34) .
-contract Act 1950- nil.
 Malaysian Parliament has passed the Consumer
Protection (Amendment) Bill 2010 (“the Bill”). Section 1(3) of the Bill provides that the new Part
IIIA applies to contracts entered into after the Bill
comes into force. However, presently no indication
as to when the Bill will come into force.

the Malaysian Parliament had opted to amend the
existing Consumer Protection Act 1999 (“the CPA”),
by inserting a new Part IIIA entitled “Unfair Contract
Terms”.
