Contract interpretation—when is a statement a representation or a contractual term?
Contract interpretation—when is a statement a representation or a contractual term?

The following Dispute Resolution guidance note provides comprehensive and up to date legal information covering:

  • Contract interpretation—when is a statement a representation or a contractual term?
  • What are contractual terms?
  • When a statement is not a term of the contract
  • Contractual terms distinguished from representations
  • If not a contractual term is the representation enforceable as a collateral contract?
  • When might a representation give rise to a waiver or estoppel?
  • When pre-contractual representations can be referred to

What are contractual terms?

The terms of a contract define the existence and scope of the parties’ respective rights and obligations to one another.

A contractual term is a statement that amounts to a promise or undertaking and forms part of a contract. If the term is breached, the innocent party will be able to bring a claim against the party in default for damages for breach of contract.

Contractual terms may be either express or implied:

  1. express terms—are terms which are actually recorded in a written contract or openly expressed in an oral contract at the time the contract is made

  2. implied terms—are not stated in the contract but arise 'by implication' to reflect the intention of the parties at the time the contract was made. Terms may be implied by fact, law or custom

For more details on express and implied terms, see Practice Note: Express and Implied terms.

When a statement is not a term of the contract

Not all pre-contractual statements will form part of the parties’ contract. Whether they do will depend on a number of factors (see Practice Note: Contract interpretation—admissibility of pre-contractual negotiations and statements).

Even if such statements do not become contractual terms, they may be legally enforceable in other ways by the party seeking to rely on them, namely:

  1. as actionable misrepresentations (where