A contract is a legally binding agreement comprising terms that obligate one party to another (unilateral) or bind two or more parties to each other (bilateral). However, not every statement in a contract is legally enforceable. Some provisions may merely constitute representations, which do not carry the same legal weight as contractual terms.
The Distinction Between Terms and Representations
Confusion between contractual terms and representations can lead to disputes. It is essential at the drafting stage to differentiate between the two.
Example of a Representation:
A seller includes a statement in a contract saying, “The car was recently serviced and is in good condition.” This statement, unless explicitly incorporated as a term, is a representation. If the car is later found to require significant repairs, this does not necessarily constitute a breach of contract unless fraud or misrepresentation is proven.
Example of a Contractual Term:
A clause stating, “The seller guarantees that the car will function without major defects for a period of one year from the date of purchase,” is a contractual term. If the car breaks down within the specified period due to major defects, the buyer can claim a breach of contract and seek remedies.
Representations, even when included in a contract, do not automatically become enforceable obligations. However, failing to adhere to a contractual term constitutes a breach, entitling the aggrieved party to legal remedies.
Express Terms and Implied Terms
To further understand contractual terms, it is important to distinguish between express and implied terms.
Express Terms
Express terms are explicitly agreed upon by the parties and documented in the contract. These terms are the written expressions of the parties’ intentions and form the core of the agreement.
- Example of an Express Term:
In a service contract, a clause might state, “The contractor shall complete the renovation by April 30, 2025.” This is an express term, and if the contractor fails to meet the deadline without justification, they are in breach of contract.
Implied Terms
Implied terms are not explicitly written in the contract but are introduced by law (statutory) or derived from customary practices in a particular industry or relationship. Courts may impose implied terms to ensure fairness or to reflect the presumed intentions of the parties.
Example of an Implied Term (Statutory):
Under consumer protection laws, a seller is typically required to ensure that goods sold are of satisfactory quality. Even if a sales contract for a refrigerator does not explicitly state this, it is implied by law.
Example of an Implied Term (Customary):
In the hospitality industry, it is customary that hotel rooms include basic amenities like clean towels. Even if this is not explicitly stated in the booking confirmation, it is an implied term based on industry standards.
The Role of the Contract Drafter
A well-drafted contract hinges on the drafter’s ability to accurately capture the parties’ explicit agreements while being mindful of implied obligations.
For instance, if the parties agree that a software developer will provide post-launch support, the drafter must include a term such as, “The developer shall provide technical support for six months following the launch at no additional cost.” This eliminates ambiguity and ensures the provision is enforceable.
Conclusion
A clear understanding of the difference between representations and enforceable terms is essential for avoiding disputes. By explicitly distinguishing between the two and carefully considering both express and implied terms, a contract drafter can create a robust agreement that reflects the parties’ intentions and minimizes the risk of litigation. Incorporating precise examples and clear language is not only a hallmark of professional competence but also a practical step toward ensuring a legally sound and enforceable contract.
