An agreement giving rise to obligations which are enforced or recognised by law. The factor which distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties.

Terms of the contract between the claimants and BP could be said to be both implied and express terms. ‘ In order for a term to be implied it must be obvious and necessary to give business efficacy to the agreement, and thus only those the absence of which would render the contract incomplete will be implied’ (Liverpool City Council v. Irwin [1976]). A statement may also be disregarded as a term of the contract if it has little or no importance attached to it as in Bannerman v. White (1861).

The defendants’ standard terms may be seen as a cross or counter offer in the sense that it was the total opposite of what had previously been negotiated. A cross offer does not turn the original contract into a new offer rather it destroys it. This is the same as a counter offer; it operates as a rejection of the original offer Hyde v. Wrench (1840).

 

Below are the claimants’ negotiated requirements; their agreement to BP’s standard terms was subject to the following:

1. Hard Rain is to have top billing at all concerts or other performances on the tour or associated with the tour.
2. It shall be a condition of this contract that 1 above is honoured.
3. It shall also be a condition of this contract that arrangements with regard to food, accommodation and security for the band shall be as discussed between us from time to time.

When the claimants signed the BP standard terms, they sent it enclosed with the amendment above. Based upon the law in favour of the defendants, incorporation of a contract by signature deems the injured party bound by the terms whether or not they had knowledge of its content; therefore the amendment was a separate offer. On the other hand, prosecution may assert that the acceptance of BP’s contract was a conditional acceptance which was made clear. A conditional acceptance is neither an acceptance of the original offer or the counter offer. This principle is highlighted in the case of Alpenstow ltd V. Regalian Properties plc [1985] The question which then arises is whether the status of the meetings prior to the signing of the contract were just negotiations and not terms of the contract.

The note sent on Dec 24th was considered to be an acceptance of the attached amendment, as it was not stated otherwise. If the defendants knew they had no intentions of meeting the claimants’ requirements, it must be asked whether they implied so in order to induce the claimants into the contract See JEB Fasteners Ltd. v. Marks Bloom & Co. [1983]. The Court may favour the defendants if they had no knowledge of the amendment due to the principle that you cannot accept what you are not aware of (Taylor v. Laird (1856)).

On the assumption that the claimants agreed to BP’s standard terms and the defendants agreed to their amendment, the breech of terms must be established.

Terms of a contract are divided into two parts, warranties and conditions, which have incompatible degrees of significance. A condition is regarded as a major term of the contract, that is, one which goes to the very root of the contract. If a party to a contract goes against this condition, it permits the other party to terminate the contract and sue for damages. A warranty is regarded as an inconsequential part of the contract, one which imposes that a term is purely supplementary to the main thrust of the contract. Breech of a warranty only allows the innocent party to claim damages but cannot repudiate.  

In Poussard v. Spiers and Pond (1876), an actress was sued for breech of contract, and lost her case. It was held that since the opening night of the operetta was regarded as of the utmost importance, her absence amounted to a breech of condition which entitled the producers to terminate the contract. This case is distinguished by Bettini v. Gye (1876).

In the case at hand, the term that Hard Rain was to be the headline band was a condition of the contract as it was the basis of the contract, when this was breeched, the claimants were indeed entitled to terminate the contract as well as claim damages.

‘Very often the parties to a contract may expressly agree to designate a term as a condition or warranty as an indication of the emphasis they wish to place on the importance of the term within the contract. In recent years, however, where no expression of the statutes of a particular term as arising out of the agreement from whatever source, the courts have taken to classify the term as an ‘innominate term’ (referred to by some authorities as an ‘intermediate term’) This is contained in the Sale of Goods Act 1979. The concept of the innominate term first arose in the case of Hong Kong Fir Shipping Co. ltd v. Kawasaki Kisen Kaisha ltd. [1962]. Though the defendants did not lay emphasis on any of their terms, the claimants made it clear that their acceptance of BP’s terms was subject to their amendment.

In order for a party to be able to rely on an exemption clause, he must be able to prove that it has been incorporated into the contract. This can be done in three ways, by signature, by notice or previous course of dealing. When a contractual document is signed, the parties will be prima facie bound by the terms of that contract regardless of whether or not they failed to read it L’Estrange v. Graucob [1934].

A party may be bound by the terms of a contract provided those terms had been brought to his attention. In Parker v. South Eastern Railway Co. (1877), The Court of Appeal held that, for the company to be able to rely on the clause, it had to show that reasonable steps had been taken to bring the clause to the notice of the claimant. The same point was made in the case of Olley v. Marlborough Court ltd [1949]. The more onerous the clause, the more it should be brought to the other parties attention as in the case of Spurling v. Bradshaw [1956].

Once the claimants signed BP’s standard terms, they were bound by it, following the principle in Thornton v. Shoe Lane Parking Ltd. [1971] you do not have to know what the exclusion clause says as long as it is brought to your attention.

Clause no. 29 of BP’s standard terms states that:

‘All liability from any breech of contract, or other default on part of Burden Productions is hereby excluded when such negligence, breech of contract, or other default is the result of activities carried out by third parties’

Though the defendant’s terms could be said to be reasonable, with the above clause, they are excluding liability for negligent acts of their contractual duties. Section 11 of the Unfair Contract Terms Act 1977 provides the requirements of reasonableness in various situations. In the case of Stewart Gill Ltd. v. Horatio Myer and Co. Ltd. [1992], the courts determined the applicability of an exclusion clause when liability arises but retrospectively and assesses its reasonableness at the date the contract was made. The burden of proving that a clause is reasonable will lie in the hands of the defendants BP as they are seeking to rely on the clause.

Conclusion:

In conclusion, two contracts existed in this case, one between Hard Rain and Delta Management and the second between Hard Rain and Burden Productions. Terms were stated from both sides and agreed to, making them binding. Breech of these terms resulted in the breech of condition. For Business people, the Law regards communication between parties as not being intended to be counter offers but merely to arrive at a settle agreement. The courts review this as a mere request for information as in Stevenson, Jacques & Co v. McLean (1880) 5 QBD 346. Where the significance of a term is not credited from the action of some rule of law then one ought to ask the ‘Hong Kong Fir’ question: ‘Has the innocent party been deprived substantially of what it was intended that he should receive under the contract?’ if the answer to this question is positive he can end the contract; if not, he can only claim damages and has no right to terminate.

BIBLIOGRAPHY.

1. Furmston M (2001) Cheshire, Fifoot & Furmstons Law of Contract, Fourteenth Edition, Butterworths.

2. Treitel G.H. (1999) The Law of Contract, Tenth Edition, Sweet & Maxwell.

3. Richards P (1999) Law of Contract, Fourth Edition, Pitman

4. Birds J, Bradgate R, Villiers C, (1995) Termination of Contracts, Institute for Commercial Law Studies, University of Sheffield, Wiley Chancery.

5. McKendrick E, (1997) Contract Law, Third Edition, Macmillan.

6. Office of Fair Trading, (1996) Unfair Contract Terms, Issue 1.

7. Rogers W.V.H., Clarke M.G., (1978) The Unfair Contract Terms Act, Sweet & Maxwell.

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