Contract terms & their status
Once a contract exists you must identify its terms, whether they were incorporated, and how important each term is. Classifying a term as a condition, warranty or innominate term determines the remedies available for its breach.
What "Contract terms & their status" covers
- Distinguish terms (part of the contract) from mere representations (inducements) using factors such as importance, timing, and relative expertise.
- Terms may be incorporated by signature, by reasonable notice given before or at the time of contracting, or by a consistent course of dealing.
- Terms may be express or implied — implied by fact (business efficacy/officious bystander), by custom, or by statute.
- The Sale of Goods Act 1979 implies terms as to title, description and satisfactory quality into non-consumer sales of goods (business-to-business and private sales alike); the Consumer Rights Act 2015 governs trader-to-consumer contracts.
- A condition is a major term whose breach allows termination and damages; a warranty is a minor term giving damages only.
- An innominate term is classified by the effect of the breach: termination is available only if the breach deprives the innocent party of substantially the whole benefit.
- A signed document generally binds the signer to its terms even if unread (subject to misrepresentation and unfair-terms controls).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For contract terms & their status, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Forcing every term into the condition/warranty dichotomy and ignoring the innominate-term approach.
- Applying the Sale of Goods Act 1979 to a consumer contract that is now governed by the Consumer Rights Act 2015.
- Treating a statement as a term when it is only a representation (giving misrepresentation remedies, not breach).
Learn this subtopic in the course
A video lesson, notes and exam-style practice on contract terms & their status.
FAQ
Is contract terms & their status tested on SQE1?
Yes — contract terms & their status is part of the SQE1 Contract syllabus (FLK1) and can appear in single best answer questions.
How is contract terms & their status examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (L'Estrange v Graucob [1934], Poussard v Spiers (1876)) helps.