Contract – what contract?

It is a common theme of many disputes surrounding a contract that the parties involved will argue that the terms included in the contract do not reflect all the terms that were reflected between the parties or alternatively that the contract was varied after execution. In this respect, it is very important to be able to differentiate between contracts which are to be used between a business and another business and one between a business and a consumer. It is also worth considering that the law sometimes allows terms to be implied into contracts.

In contracts which are between a business and a consumer, there are some statutes which implicitly imply terms into the contract. This is regardless of the written terms of the contract and is in place in order to safeguard the consumers. A few examples of these statutes are the Supply of Goods and Services Act 1982, the Sale & Supply of Goods to Consumers Regulations 2002 and the Unfair Contract Terms Act.

If a business deals regularly with consumers and is unaware of these statutes it may be damaging in that they are leaving themselves exposed in relation to litigation being brought against them by the consumer, potentially they may look really bad in court if they are including overly onerous and unfair clauses in their contracts and this may ultimately lead to consumers being put off from dealing with them.

Conversely, in a contract between a business and another business, the courts are generally less likely to imply terms as it is believed by the courts that a business is in a much better position to negotiate with another business and there does not need to be the same safeguards in place as there are with consumers. The courts are a lot less concerned with a business entering into an onerous and potentially unfair contract as they are with a consumer. It can be seen in case law that the bigger the business involved in a contract the less likely it is that a court will interfere. That is not to say that the courts will never interfere and the courts may still imply terms if they believe it is necessary to create business efficacy or in circumstances where a party has acted in such a way that it is clear there has been a change to the original terms which were agreed.