Fundamentals of Business

Contractual terms

Contractual terms A contractual term is "any provision forming part of a contract". Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract.

Classification of Term
Condition

Contracting: Major term (central point) or the 'essence' of a contract. A condition
(1) invests or divests the rights and duties of the parties to the contract, or
(2) stipulates that the occurrence or non occurrence of a certain event creates or terminates a contract.

An actual or stipulated condition is called an express condition or condition in deed, and a condition deemed to be automatically present is called an implied condition or condition in law. Breach of a condition constitutes breach of the contract, and entitles the aggrieved party to call for setting aside (rescission) of the contract, and to claim for damages. A minor term (incidental point) of the contract is called a 'warranty', breach of which may call for damages as compensation but not rescission of the contract. See also condition precedent, condition subsequent; in nominate term, and intermediate term.

Warranty
General: Legally binding assurance (which may or may not be in writing) that a good or service is, among other things,
(1) fit for use as represented,
(2) free from defective material and workmanship,
(3) meets statutory and/or other specifications.

A warranty describes the conditions under, and period during, which the producer or vendor will repair, replace, or other compensate for, the defective item without cost to the buyer or user. Often it also delineates the rights and obligations of both parties in case of a claim or dispute. A warranty is not so imperative so the contract will subsist after a breach. Breach of either will give rise to damages.