BSB250 · Business Citizenship
Contract Terms, Consent & Remedies
Once a contract exists, BSB250 asks the follow-up question: what is actually in the deal, how important each promise is, and what can unravel or remedy it. You learn to sort promises into conditions (essential) and warranties (minor), tell a binding term apart from a mere representation, spot vitiating factors that defeat consent, and read off the right remedy for a breach. This is the highest-yield contract material on the open-book, ILAC-style final exam, because every problem ends with "name the term type, then match the remedy."
What this chapter covers
- 01Express vs implied terms
- 02Conditions, warranties & intermediate (innominate) terms
- 03Term vs representation — the Dick Bentley three factors
- 04Written-contract rules: signed binds & the Parol Evidence Rule
- 05Collateral contracts & exclusion / disclaimer clauses
- 06Vitiating factors: misrepresentation, duress, unconscionability
- 07Breach & the remedies map (damages, specific performance, injunction)
Classify the terms, then match the remedy
- +1Issue: for each failed promise, is the term a condition or a warranty, and what remedy follows? The class of the term dictates the remedy on breach.
- +1Law: a condition is an essential term — would the party have entered the contract without it (Associated Newspapers v Bancks)? Its breach lets the innocent party terminate AND/OR claim damages. A warranty is a minor/incidental term (Bettini v Gye); its breach gives damages only, with no right to terminate.
- +1Apply (cake): a 200-guest gala plainly turns on having the cake delivered and set up before the reception begins — the events company would not have booked without timely delivery. This is essential, so it is a CONDITION; late delivery at 8pm is a breach going to the substance of the deal.
- +1Apply (napkins): the swan fold is incidental decoration that does not go to the root of the catering contract — it is a WARRANTY, so the failure to fold them is a minor breach.
- +1Conclude & match remedy: for the late cake (condition) the events company may terminate AND/OR claim damages; for the flat napkins (warranty) it is limited to damages only. Note that a clause merely labelling a promise a "condition" is not decisive — the court tests how essential it really was.
Key terms
- Condition
- An essential term of a contract — one the party would not have entered the deal without. Breach lets the innocent party terminate AND/OR claim damages (Associated Newspapers v Bancks).
- Warranty
- A minor or incidental term. Breach gives the innocent party damages only, with no right to terminate the contract (Bettini v Gye).
- Term vs representation
- A statement made before contracting is a binding term (sounds in contract) or a mere representation (a non-contractual inducement). The Dick Bentley test weighs three factors: time before agreement, importance to the listener, and the maker's special skill or knowledge.
- Parol Evidence Rule (PER)
- Where a contract is a complete signed writing, extrinsic (e.g. oral) statements that would add to, vary or contradict the document are excluded — and a party who signs is bound even if unread (L'Estrange v Graucob).
- Vitiating factor
- A defect in consent — misrepresentation, duress or unconscionability — that can make a contract void or voidable, letting the innocent party rescind even though the contract was properly formed.
- Exclusion clause
- A term limiting or excluding liability. It binds only if incorporated with reasonable notice (Thornton v Shoe Lane Parking), read narrowly against the party relying on it (contra proferentem), and not misrepresented (Curtis v Chemical Cleaning).
Contract Terms, Consent & Remedies FAQ
What is the difference between a condition and a warranty in contract law?
A condition is an essential term: if breached, the innocent party can terminate the contract AND/OR claim damages (Associated Newspapers v Bancks). A warranty is a minor term: breach gives damages only, with no right to terminate (Bettini v Gye). The exam move is to classify the term first, because the class dictates the remedy.
How do you tell a term from a representation?
Use the Dick Bentley three-factor test (objective, reasonable-person): (1) the time gap between the statement and the agreement, (2) how important the statement was to the listener, and (3) whether the maker had special skill or knowledge. Breach of a term sounds in contract; a false representation routes you to misrepresentation instead.
What are the three contract remedies, and when does each apply?
Damages (common law, available as of right) put the innocent party in the position as if the contract had been performed — the expectation measure, subject to causation, remoteness and mitigation. Specific performance (an order to perform) and injunction (an order to refrain) are equitable and discretionary, granted only where damages are inadequate (e.g. unique subject matter like land) and the claimant's conduct is clean.
Why do BSB250 problems often say 'do not discuss the ACL'?
The Australian Consumer Law implies powerful consumer guarantees, but exam problems frequently instruct you to answer on common-law contract only. If the rubric says ignore the ACL, classify the term and reason from the common-law cases — do not reach for statutory consumer remedies. Always read the instruction.
If a pre-contract promise is excluded by the Parol Evidence Rule, can it still be enforced?
Possibly, by two escape routes. A collateral contract (De Lassalle v Guildford) treats the promise as a separate side contract whose consideration was entering the main deal — breach gives damages but not specific performance of the main contract. Alternatively, if the statement was false and induced the contract, it may be actionable as a misrepresentation, with rescission and possibly damages.
Exam move
Run every contract-terms problem on one rail and the marks follow. (1) Confirm a contract exists (agreement + intention + consideration). (2) For each disputed statement, ask: is it a term or a representation? Apply the Dick Bentley three factors. (3) If it is a term, classify it as a condition or warranty (Bancks / Bettini v Gye) — write the class in capitals. (4) Check the gatekeepers: does the Parol Evidence Rule exclude an oral promise (signed writing, L'Estrange v Graucob), and is any exclusion clause incorporated, read contra proferentem, and not misrepresented (Curtis)? (5) If the statement is not a term, try a collateral contract or misrepresentation. (6) Match the remedy to the term — condition → terminate + damages, warranty → damages only, equity only where damages are inadequate. Because the exam is open-book, prepare a one-page case-and-remedy table; your time goes into APPLYING the rule to the facts, not recalling it.
