P4: Describe the meaning of terms in a standard form contract P5: Explain the effect of terms in a contract
D1: evaluate the effectiveness of terms in a given contract
In this assignment I will be…
Describing the meaning of terms in a standard form contract. Explaining the effect of terms in a contract
I will also be evaluating the effectiveness of terms in a given contract.
A standard form contract is a contract made between 2 or more parities using their standard set of terms. A contract is a set of mutually agreed promises made between 2 or more parties with the intention of creating a legally binding agreement. It is important that the people involved in signing the contract know exactly what they are agreeing to.
Types of terms
The statements made by the parties under negotiation that are not meant to form part of the contract are called representations. The thing that the parties perform under the contract is called the terms of the contract. For example the co-operative UK breakdown cover has parts in the contract that will benefit both the customer and the insurer. These benefits have been made between the customer and the insurer under negotiation and will have to proceed with the terms of the contract.
There are two types of terms which can be found in a contract, these are… * The express term - Clauses in the agreement that are agreed to by both parties. * The implied term - Part of the contract not necessarily included by the parties but automatically included by the law to protect all parties.
Express terms are statements made between the parties. These statements can either be made by word of mouth or in writing and the parties intend that these terms will create the fundamental part of the contract. For example, when a customer talks to the insurer of the co-operative UK breakdown cover the agreements of the statements that are going to be made can be made by talking about the agreement or writing the agreements down on paper and then signing it. It is more reliable if both the insurer and the customer write down the agreements because at least there is some sort of proof that these contractual terms have been made. Whereas, when talking about the terms and not having any form of evidence that these agreements have been made there will be no reliability in the contract. Express terms can either be conditions or warranties.
A condition is an essential part of any contract, especially in standard form contracts. A condition is a fundamental part of the agreement and is something which forms the root of the contract. For example, when the co-operative UK breakdown cover is going through the contractual terms the condition of the contract would be the insurer selling themselves to the customer and gaining trust so the customer is more likely the sign the contract and both sides of the contractors are equally happy. If the insurer has sign the contract and the contract states ‘ when the vehicle breaks down, the co-operative UK breakdown cover will be there as soon as possible to help them get back on the road’ and then does not do their duties of the contract this is a clear breach of contract. A breach of contract will entitle the injured party to repudiate and claim damages. To repudiate means to treat the contract as if it is over and invalid.
A warranty is a less important term that does not go to the root of the contract. A warranty will only give the injured part in a breach of contract the right to claim back the damages that have been made. The contract itself cannot be rejected. For example, when the insurer of the co-operative UK breakdown cover has promised to offer 24 hour bed and breakfast if and when their vehicle breaks down, so it gives the insurance company a chance to fix the vehicle in need, and then when the vehicle comes back to the owners and they notice extra faults that have been made in the vehicle this is not a vital part of the...
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