1. Statements: Terms v Representations****

Some promises made during contract formation will not form part of the contract itself, but merely are made in order to induce the other party into entering the contract.

Such pre-contractual statements are known as representations.

1.1 How to distinguish between terms and representations?

• If a statement is of such importance that the promisee would not have entered into the contract without it, it shall be considered a term.

• Where there is a time gap between the statement and contract formation, the statement is more likely to be interpreted as a representation.

• If an oral statement is omitted from a later written contract, its exclusion will suggest that it was a representation.

• Should a party to the formation be an expert, or possess special skills or knowledge, statements made by them will be terms.

1.2 Why this distinction?

Someone might subsequently find that representations made to him were incorrect or misleading. If so, there is NO breach of contract because the representations are not a part of the contract. Instead, there might be a legal action for misrepresentation and the remedies available for misrepresentation are different and lesser from those for breach of contract.

If a term is breached, there will be a breach of contract.