Intention and Contract Construction

Question: Discuss about the Intention and Contract Construction. Answer: Introduction: According to the business efficacy test a contract between two parties will include terms and conditions, which are not expressly mentioned in it. These terms and conditions are known as implied terms. These terms will deemed to be included in the contract if the court feels that such terms are essential and obvious and without them the contract will not have a complete meaning. These terms are not included merely if they are wanted and practical (Carter and Courtney 2016). The MOOROCK is a very famous English case, which had put the business efficacy test to use. In this case, the plaintiff had on a basis of a contract, rented a jetty from the defendant to dock and unload his ship. The ship was damaged when the sea level went down due to a low tide. The plaintiff claimed that it was the responsibility of the defendant to ensure the safety of the ship while it was docked at his jetty. The argument made by the defendant stated that there were no such expressed terms in the contract and he could not foresee the circumstances. The court applied the business efficacy test to this case and gave a judgment that it was the duty of the defendant to arrange for the protection of the ship parked at his jetty. In Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another, the question before the court was that whether to include an implied term in a contract between the tenant and the land lore. In this case, the court decided against the introduction of an implied term in the contract and provided that the terms sought by the tenant cannot be included as, the contact was fair initially. Legal principles According to section 2 of the Contracts( rights of Third Parties) Act 2001 a person who is not a party to a particular contract can sue any party who are a part of the contract if: If it is provided in the contract expressly that he has the right to sue any party to the contract In addition, if both these conditions are fulfilled: A person who is not expressly a part of a contract has some benefits related in that contact but is not eligible to sue or enforce his rights with respect to such contact (McKendrick 2014) After proper interpretation of the contract, it is found that the actual parties to a contract did not want the provisions to be enforceable by him (Case and Emery 2015). According to the business efficacy test of common law in terms of contact If a the court comes to a conclusion that a term which is not expressly present in a contract but is apparent to all the parties of a contact and without the inclusion of the term the contract would be incomplete, the court may order for the inclusion of that term as an implied term (Manesh 2013). This term of business efficacy has been used in famous cases like the Moorock case and Foo Jong Peng and others v. Phua Kiah Mai and another. According to section 5 of the Unfair Terms in Consumer Contracts Regulations a term is set to be unfair if The term had not been bargained personally and not made in good faith. If a condition is drafted in advance, that it is said to be not personally bargained. According to section 8(1) of the unfair terms in consumer contracts regulations an unfair term in a contract will not be enforceable by the parties to a contract. According to section 8 (2) of unfair terms in consumer contracts regulations All others terms in the particular contract shall be binding on the parties. According to schedule (2)(1)(a) a organization an exclusion or limitation on the legal right of person to claim compensation in case of death or personal injury cannot be made in a contract. These terms are regarded as unfair terms. According to section 26 (2) of the Workplace, Safety and Health (operations of cranes) regulations it is the duty of the contractor to make sure that the installation and dismantling of a crane is done under his supervision. Application: According to the principles of common law if the business efficacy test is applied in this case, it would be every clear to say that it is the implied duty of Cranes Co (CC) to: Ensure that the labor provided by them is properly trained and skilled to be able to safely dismantle the crane provided by them for the purpose of construction Ensure that while the process of dismantling the crane is operated it does not cause personal injury to any person at the site or to the site itself. CC has violated such provisions as its agent Tower Cranes Pte Ltd (TC) have supplied labor who were not well trained or efficient to go through with the process of dismantling. CC has also violated such provision as during the process of dismantling the crane 3 works at the site had to face personal injuries. According to the provision for the privity of a contract, a person who is not, a party to the contract has no right in the contract unless he has some benefit in the contract and the parties to the contract did not include such clause in it. Although Straits Builders Pte Ltd (SB) is not a direct party to the contract between TC and CC, the particular contact will affects the position of SB it the TC does not fulfill their obligation in accordance to the contract. SB is entitled to claim damages against the action of TC from CC according to section 2 of the Contracts (rights of Third Parties) Act 2001. CC and TC share a principal agent relationship so CC is liable to be sued for any act or omission made by TC. The terms in the clause 6 of the contract between CC and SB provides that CC will not be liable for any personal loss or injury or any kind of damage suffered by an individual due to the tower cranes or due to the process of their dismantling. SB will also not be held liable for any loss arising due to the defects in the crane. Schedule 2 of unfair terms in consumer contracts regulations says that parties to a contact cannot prohibit another to exercise its legal right over, death or personal injury caused to the second party or any of its representatives due to the errors on the parts of the first party. This term included in clause 6 is an unfair term according to section 8(1) of unfair terms in consumer contracts regulations. In addition, according to 8(2) this term is not binding on the contact between them. Another term is schedule 6 of the agreement, which provides that the CC will not be liable if SB suffers any loss due to the stoppage of work by them in compliance to a judicial authority. The term is only valid as far as where the work is stopped in compliance of a judicial authority and not otherwise (Booysen et al. 2016). Conclusion: In the contact between SB and CC, the clause 6 has an unfair term, which is not binding on SB; it is implied and obvious that CC is liable to perform its duty with full care with respect to the contract. CC is liable to pay SB damages in form of compensation. References: Booysen, S., Lai, H.H., Ong, B., Heng, L.L., Chun, J., Hon, T.S., Loke, A., Morgan, G., Tan, B. and Chan, S., 2016. TWENTY YEARS (AND MORE) OF CONTROLLING UNFAIR CONTRACT TERMS IN SINGAPORE.Singapore Journal of Legal Studies,219, p.248. Carter, J.W. and Courtney, W., 2016. Unexpressed Intention and Contract Construction.Oxford Journal of Legal Studies, p.gqw022. Case, T. and Emery, S., 2015. All in agreement? Don't lose your heads.Proctor, The,35(8), p.38. Manesh, M., 2013. Express Contract Terms and the Implied Contractual Covenant of Delaware Law.Delaware Journal of Corporate Law (DJCL),38, p.1. Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd[2015]UKSC 72 McKendrick, E. (2014).Contract law: text, cases, and materials. Oxford University Press (UK). The Contracts (rights of Third Parties) Act 2001 The Moorcock (1889) 14 PD 64 Unfair Terms in Consumer Contracts Regulations 1999 Workplace, Safety and Health (operations of cranes) Regulations 2011