With a modern world governed by contracts, often, the devil is in the detail – which in the majority of contracts, means the small print. Despite this, according to the Money Advice Service, 84% of people do not read the terms and conditions before signing a contract. This blog will explore the importance of the small print and the consequences of a breach of contract as a result.
For additional information in connection with the formation of a contract, please refer to our previous blog, available here.
What are the basic principles of a contract?
The situation will be different for a consumer and a commercial client respectively. Consumers (often individuals transacting for their own personal requirements) are afforded additional protection in a contract, in particular, if the contract is formed online. This is by virtue of the relatively-new consumer regulations which have come in to effect. Either way, once a contract has been formed you are bound to it. It is therefore very important that you are aware of your duties and obligations under the contract to ensure you comply with it – these are often nestled away in the small print terms and conditions attached to your order/contract.
- For example, you may wish to purchase a new car with the intention to own the car at the end of the contract period. You may be given the choice to enter into either a hire purchase agreement or a personal contract purchase agreement (often referred to as a ‘PCP’). It is important to read the terms of the contract and the small print as usually at the end of a PCP contract you do not automatically own the car unless you make a further ‘balancing’ payment.
- Another example could be taking a loan from a bank. It is important to read the terms of the contract to be aware of the duties you must adhere to and familiarise yourself with the additional charges if you default on payments. As you may be aware, default on repayments or breaching some of the loan terms may have serious consequences, in particular, if you or someone else have offered to stand as guarantors.
In both scenarios above, the terms of the contract and/or the small print may contain important information that you should be aware of together with information about what the bank or the car representative respectively, are allowed to do to recover the monies from you.
What are the consequences of a breach of contract?
As a matter of law, a breach of contract gives the innocent party a right to claim damages (i.e. a sum of money) following the basic principle of ‘putting the innocent party in the same position he/she/it would have been had the contract not been breached’.
In practice, it is important to always read the terms of the contract as these usually provide what would constitute a breach and what are the rights of each respective party in such circumstances where there is a breach.
Therefore, whilst it may be arduous, reviewing the small print and making sure you are 100% happy with the contract you are entering in to, is an essential consideration whenever you are entering into a contractual commitment – especially those of a large or expensive nature.
If you think you may have a right to claim under a contract or, by contrast, you think you might have breached a contract, we strongly recommend you seek legal advice.
The Corporate Commercial Department here at Fisher Jones Greenwood LLP can assist you with the preparation or variation of a contract, offer you advice on current contracts and their legal implications or any other related services; as well as assist you with the preparation of any other documentation required and guide you through the transaction.
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