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This question demands for the discussion of one of the core elements of the contract law,
terms and exclusion clause. In this question we can see that Terence went to the company, Rides
Ltd to rent a bicycle for the day. We must discuss about Rides Ltd’s liability for breach of
contract and whether or not they can rely on the exclusion clause to restrict their liability.
Before discussing about the principle of the concept terms, first we must know what is a term.
A term is a provision or a list of obligations that each party undertakes to do in relation to a
contract. Terms in a contract are important because it sets out the limit to each party what will
be done in the contract, litigation may result if this is breached. Terms are classified into two
categories i.e., express terms and implied terms. Express terms can be written or oral form,
these are the terms agreed by the parties when entering into the contract. Implied terms are
those which gets incorporated into the contract with the express terms depending on the type
of contract. From the facts of the question, we must see if there is ant breach of express and
implied terms. There is no breach of express terms in this question. To verify if a statement is
a term or a representation, a cartography test is being applied. The test has five guidelines on
the strength, importance, written, lapse of time and expert knowledge.
For this question, we must determine what type of contract is formed between the parties. As
Terence is a consumer renting a product from Rides Ltd ( a business), for his own use it is
considered to be a business to consumer contract. We know that if a contract is formed between
the parties statutory terms are applied in the contract as statutory controls. For this instance,
the Consumer Rights Act 2015 (CRA) will be applied. From the question we can see Terence
rented a bicycle from Rides Ltd for his use. After renting the bicycle from them, the brakes of
his bicycle failed. We must check what are the implied terms breached here. Terence went to
rent the bicycle for his use but the purpose was not satisfied for the failing of the brakes in his
bicycle. That means section.9 of CRA 2015 (Goods to be of satisfactory quality) and section.10
of CRA 2015 (goods to be fit for purpose) were breached. And the service was without any
reasonable care and skill (section.49 of CRA 2015) because it was their duty to take care of
their product before it was given for rent to the consumers. Terms can be of three types i.e.,
condition, warranty and innominate terms. Condition is the root terms of the contract; it is
considered to the most important one. Warranties are the lesser important ones than that of
condition. And innominate terms are the least important ones in the contract. Here a breach of
condition occurred as the most vital parts of the contract was not being satisfied.
In order to exclude liabilities, exclusion clauses must be incorporated into the contract.
Exclusion clause is a concept in contract law where the parties in a contract tries to exclude
or limit their liability. Now the question comes, are the clauses incorporated into the contract
or not. There are three ways by which a term is incorporated into a contract i.e., Signed written
contract, incorporation by notice and incorporation through previous course of dealing. The
rule of signed written contract is established in the case L’Estrange v Gracoub. In this case,
it was it was stated that if a party signs a document containing the terms of the contract, it
doesn’t matter whether the party signing the contract reads the terms or not, the term will be
incorporated into the contract. In accordance to the rule, incorporation by notice, two rules have
seen set out. Firstly, it must be seen that the terms are included in the document where normally
all the terms are present or not. Secondly, we must check if there was reasonable attention
provided to the term or not. For this rule, Chapelton v Barry Urban District Council, is used.
Then comes the rule, incorporation through previous course of dealing. In this rule, it was stated
that sometimes in some instances where giving notice is not necessary. As it is considered that
the parties are already aware of the terms and conditions in the contract as they have already
