Unit 48-LO2 Discuss how the contents and the terms of the contract are established-BTEC-HND-Level 4 & 5

Course: Pearson BTEC Levels 4 and 5 Higher Nationals in Business

A contract is something that both of you are going to write. The person who makes the first offer usually shakes hands with the other person and says what they are offering. This can help make sure that there is no confusion later on and people would not have a disagreement because one person might think it was different than what it is.

For any commercial agreement, it is important to know both sides want the same thing before things are exchanged. Don’t give something to one side if they don’t want it or take something from them if they don’t want to give it. Otherwise, one person might find themselves in debt without knowing what is happening. The other might end up with a lot of money without being able to pay back the person who gave them money.

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Also Read: Illustrate the impact of contractual breakdown and suggest remedies available for breach

Incorporation of terms:

By actual notice, signature, reasonable notice, cause of previous dealings

In a contract, actual notice is when someone did something on purpose to give someone else knowledge. The law has many different definitions of this, but usually, it means that somebody made a deliberate effort to tell somebody about something.

You can give notice by either words or actions. It does not need to be a verbal statement; it can be something you do that shows someone you are giving them notice. If they have no such evidence, then they have received “reasonable” notice.

Express and implied terms:

The differences between expressed and implied terms

Express terms are outside the law. Implied terms would be determined by the intentions of a contract. The intention is to avoid a vague contract that can be interpreted in many different ways. This encourages “freedom of contract” and the force majeure principle in legal fields.

Express and implied terms are both important because contracts might not cover every conceivable scenario that could happen. For example, some people think express terms should be more important than implied ones if they are an agreement.

Express terms are agreed upon by parties. Implied terms by courts, by law

Contracts have two kinds of terms: expressed and implied. When you’re reading a contract, it is important to know which one you are looking at because they do not carry the same rights or responsibilities. You need to be aware of what each type of term says about your rights and responsibilities so that you know what you are agreeing to when signing a contract. A legal professional can help clarify these things for both parties to make sure that everything is fair and ethical.

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For example for application e.g. Consumer Rights Act (2015), the seller has the right to sell, describe, bulk, and sample, satisfactory quality

Under the Consumer Rights Act, 2015, sellers can describe products or services in whatever way they want. They can also sell them however they want.

It is not considered a bad trade practice for sellers to do whatever they want with their property. You can buy your own thing without asking someone else’s permission as long as what you are buying is of good quality and the law says so. But if someone doesn’t want to buy from the same seller, then that’s okay because they can decide not to.

The status of contractual terms:

Conditions, warranty, how to determine the status of contractual terms, exemption clauses, and unfair contract terms

Several common clauses, including conditions, warranties, and exemption are now outlined below.


Condition is a contractual term that imposes limits on the ability of one or both parties to terminate the contract before its expiration date. The inclusion of terms such as these into a contract indicates that termination by either party will only be permissible in extreme situations.


The warrantor offers an indemnity for any defects in products sold by him if care has been taken to avoid malfunctions. A warranty provides that the creator/seller guarantees his product for a specific amount of time after purchase if the consumer exercises proper care but sustains damage anyways due to manufacturer error. In this case, remedies may include full or partial refund, repair of the product, or replacement.

Exemption clauses

Exemption clauses are contractual terms that allow a party to cancel a contract if an unexpected event occurs.

Unfair Contract Terms

Any clause that goes against consumer interest is an unfair term and has no place in any contract whatsoever.

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