Factors considered in assessing a statement as a term or representation

Discuss about the Relevant Facts Of The Case Between Kalpana And Rafia.

In the given set of circumstances the first issue that has been identified is whether the oral assurance provided to Rafia by Kalpana would have any effect in the contract signed between the parties

It can be stated that the courts generally consider the following factors while assessing whether any statement can be called a term or a representation in a contract.

In written contracts which is signed by the parties the courts generally do not take into consideration any other terms apart from what has been clearly written and agreed upon by the parties. This doctrine can be defined as the parole evidence rule. It has been opined by McKendrick (2014)  that due to the parole evidence rule the courts generally do not take into consideration any verbal statements given by the parties in case of written contracts which have been signed between the parties.

However there are several exceptions to the parole evidence rule. In the case Van den Esschert v Chappell [1960] WAR 114, it had been held that by the court that that the party had relied on the on a statement that had been given by the other party even though such statement had not been expressly mentioned in the written contract. Thus, it was assessed by the courts that such statement constituted a term and not a representation.  

In case of a contract in which a statement has been given by either of the parties who has greater knowledge, such statement is usually considered to be a contractual term rather than representation. This had been held in the case of Dick Bentley v Harold Smith Motors [1965] 1 WLR 623. However, in case the person who receives the information has more knowledge and expertise such statement in the contract would be considered to be a representation. In the aforementioned case the defendant was a car trader. He had been asked to find a vetted Bentley for the plaintiff. He did so and stated that the car he was providing to the plaintiff had only been driven for 2000 miles however, it was later revealed that the car had been driven for 100000 miles after the engine had been refitted. Thus, in this case the court had stated that the defendant more knowledge about cars than the plaintiff.

It can be stated that in case a representee indicates to the person making such representation the importance of the statement, the courts will assess such statement to be a term rather than a misrepresentation. This had been established in the case Schawel v Reade [1913] 2 IR 81. In this case the plaintiff had purchased a horse from the defendant. The plaintiff had mentioned to the defendant that he wished to use the horse for stud purposes. The defendant reassured the plaintiff that the horse was fit and perfectly sound and that there was nothing wrong with the horse. The plaintiff relied on the statement given by the defendant and did not get a vet to check the horse. However, it was later discovered by the plaintiff that the horse had been suffering from hereditary eye diseases and was not fit to be used as a stud. The court held in this case that the statement given by the defendant was to be treated as a contractual term rather than a representation as the plaintiff  had mentioned to the defendant the purpose for which he wished to purchase the horse and had blindly relied on the statement provided by the defendant.

Defining conditions and warranties in a contract

A similar approach of the court in identifying a statement as a contractual term had been illustrated in the case Ecay v Godfrey [1947] 80 Lloyds Rep 286.

It can be stated that any statement given either of the parties to the contract is more likely to be treated as representation rather than a contractual term if a long time has passed between the making of the statement and the entering of the contract by the parties. This had been illustrated in the case Routledge v Mckay [1954] 1 WLR 615. In this case it had been held by the court that the statement was representation and not a term as the registration document was not prima facie evidence of a contractual term. Neither of the parties had expertise of the statement and that the lapse of time between making the statement and entering into the contract gave opportunity to the claimant to check the validity of the information.

 By analyzing the relevant facts of the case, it can be stated that a written contract had been formed between the parties Kalpana and Rafia. The contract required Kalpana to perform ‘traditional Indian Dance’ at the event. However, it can be stated that prior to the contract formation Rafia had notified Kalpana about the importance of the dance to be traditional. She had stated that it was of utmost importance for the event to be successful as that would help USC get the deal with the Indian University. It can be inferred that Rafia would not have entered in to the contract if she had known that the dance to be performed by Kalpana was going to be ‘Bollywood dance’. Therefore, by the application of the findings of the case Schawel v Reade it can be stated that the oral assurance provided to Rafia by Kalpana can be interpreted as a contractual term and not representation.

In the given scenario, it has been provided through the facts that Rafia is an event organizaer and that Kalpana is the principal of a dance academy.. It can be stated that any reasonable man would assume that Kalpana had more expertise on the statement given by her, which was te assurance to perform classical Indian dance. Therefore in this situation the decision of the Dick Bentley v Harold Smith Motors case can be applied. It can thus be stated in accordance with the decision of the aforementioned case that the oral assurance given to Rafia would be regarded as a contractual term rather than a mere representation as Kalpana had more knowledge and expertise.

Determining whether ‘traditional dance’ is a condition in the contract

Further it has been provided that there was not much a time lapse between the making of the statement and entering into the contract. Therefore by the application of the Routledge v Mckay case, the statement would be considered to be a term and not representation.

However, in this given scenario, it can be argued that the contract had been signed by the parties and therefore the parole evidence rule should apply to the contract. In spite of being a written contract signed between the parties, the parole evidence can be subsided in this given scenario as Rafia relied on the oral assurance. This can be substantiated by the decision of the Van den Esschert v Chappell   

Conclusion

Thus, to conclude it can be stated that the oral assurance in would be effective in this scenario.

The main subject matter of the case is to determine the issue whether traditional dance is the terms of the contract and further it is to be decided whether it forms a condition or warranty to the case.

The subject matter of the case evolves with the definition and scope of condition and warranty in a contract. Conditions of a contract are inevitable part and both the parties to the contract are required to bind by the conditions mandatorily. According to general rule of contract, if the conditions of a contract could not maintained properly, the nature and character of contract will be different. Therefore, if a breach to this provision has been observed, the validity of the contract can be repudiated. In the case of Poussard v Spiers (1876) 1 QBD 410, it has been held by the court that the affected parties have all the rights to claim compensation from the wrongdoer regarding the breach made against the conditions of the contract.

On the other hand, warranties are less important compared to the conditions of the contractual agreement. The terms of the warranties are not fundamental for the validity of a contract. Therefore, it can be stated that any breach regarding the warranties of a contract does not empowered the parties to the contract an ability to repudiate the validity of the contract. However, the parties to the contract can claim compensation from the wrongdoer. In the case of Bettini v Gye (1876) 1 QBD 183, the court has held that damage is the only solution for any breach made against the warranty of any contractual terms.

Available remedies for breach of contract

It is very important to analyze whether a term is condition or warranty so that it can be understood the effectiveness of the term. An observation made in Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235, where the court has held that breach of condition results in repudiation of the contract. However, condition is not conclusive even where the parties to the case have expressly designated any particular obligation. Further, in Tramways Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632, it has been held that until the terms of the contract are regarded as strictly followed up, the terms could not be regarded as condition of the contract.

According to the present case, it can be stated that traditional dance was the main intention of the parties. Rafia wanted to perform traditional dance and she had entered into the contract with the view that the contracting parties are good at traditional dance. Even the other party has ensured her that they are good at traditional dance. According to the case of Poussard’s, it can be stated that the terms of the contract that create direct impact on the fundamental character of the contract will be regarded as condition of the contract. Considering the case, it has been observed that traditional dance was the primary object of the contract. Therefore, it can be stated that the term “traditional dance” is the condition of the contract and further the term should be regarded as the part of the contract. Further, it can be stated that if the contracted parties were not good at traditional dance, Rafia would not make the contract with them.

Conclusion:

Therefore, it can be stated that the term “traditional dance” forms a part of the contract and after analysing the effectiveness of the term, it is regarded as the condition of the contract.

The main issue of this case is to determine whether there are any remedies that can be claimed by the USC regarding the breach of contract or not.

The subject matter of the case is based on the remedies available for making breach of the contract. There are various remedies available under the contract law where the affected parties are entitled to claim from the wrongdoer. The remedies can be divided into certain forms such as injunction, rescission, specific performance, restitutionary awards and compensation. The damages are considered as a legal remedy for making breach against any contractual terms due to which the parties to the case could suffer losses. It has been observed in the case of The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196, that damages for a contractual violation depend on the causation and remoteness of the damage. Further, it has been held in Hadley v Baxendale (1854) 9 Ex Ch 341, where the court has held that the affected party can claim for the damage to that extent he faces loss by the acts of the other party. In Payzu v Saunders [1919] 2 KB 581, it has held that the parties to the contract, on suffering loss should try their best to mitigate the problem and they are restricted to mount up the grievance in between them. Awards can also be asked in case of any future risk as per Dunk v George Waller [1970] 2 QB 163. Further, the parties can claim for rescission that are equitable remedy and can be given by the discretion of judge. However, the remedy regarding rescission can be given where certain voidable grounds are proved in the contractual violation. The principle of rescission has been established in the case of Long v Lloyd [1958] 1 WLR 753. Another equitable remedy is specific performance. It is also based on the discretionary power of the judges. According to Nutbrown v Thornton (1805) 10 Ves 159, it can state that the application of specific performance is based on whether the damage against the breach has adequately compensated or not. Further, according to the case of Page One Records v Britton [1968] 1 WLR 157, it can be stated that remedies can be available in the form of injunction. There are three types of injunction can be claimed by the parties such as interim, prohibitory and mandatory injunction.

In this case, it has been proved that the Kalpana has violated breach regarding the condition of the contract and it can therefore be stated that the company can claim remedies from her. However, the types of the remedy are depending on the veracity of the offence. Considering the terms of the contract, it can be stated that it has been assured by the parties that the contract is based on the performance of traditional dance and it has been observed that a breach regarding the same has been happened and it enable the USC to claim damage from Kalpana.

Conclusion:

Therefore, it can be stated that USC can claim damage from Kalpana.

References:

Bettini v Gye (1876) 1 QBD 183

Dunk v George Waller [1970] 2 QB 163.

Hadley v Baxendale (1854) 9 Ex Ch 341

Long v Lloyd [1958] 1 WLR 753

Nutbrown v Thornton (1805) 10 Ves 159

Page One Records v Britton [1968] 1 WLR 157

Payzu v Saunders [1919] 2 KB 581

Poussard v Spiers (1876) 1 QBD 410

Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235

The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196

Tramways Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632

Van den Esschert v Chappell [1960] WAR 114

Dick Bentley v Harold Smith Motors [1965] 1 WLR 623

Schawel v Reade [1913] 2 IR 81

Ecay v Godfrey [1947] 80 Lloyds Rep 286

Routledge v Mckay [1954] 1 WLR 615

McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).