It is a settled principle of law that parties are bound by the terms of their contract. In a nutshell, the terms of contract are those specific obligations that make up the agreement between all the parties to it.
They are also referred to as the duties and responsibilities of the parties to the contract. The moment a contract is signed, sealed and delivered, all the parties to it are strictly bound to its terms.
No part of the contract can be altered or varied except as provided for under the contract itself.
Types
The terms of a contract are of two (2) types, namely;
- Express Terms and
- Implied Terms
Express Terms
Express terms of a contract are those salient parts of a contract which have been specifically agreed to. They are spelt out in writing. The import of express terms of a contract is that where contractual parties fail to agree on them and also have them highlighted in the agreement, the terms not so spelt out cannot be invoked against any party to the contract.
For example, ‘consideration’ is an express term of a business contract because it is the benefit accruing to the party entitled to it in the contract. If the consideration (cost) is not stated in the contract, it is believed that it is not an integral part of the contract and thus cannot be enforced.
Express terms cannot be implied.
Implied Terms
These are the opposite of the express terms of the contract. They are conditions of the contract that need not be specifically stated in the contract but are merely expected to be part and parcel of the contract.
For example, in a contract of sale of land, where a party covenants to sell as a beneficial owner of the land, there is an implied condition or term that he is selling the land free of any defect to the title.
Conclusion
Finally, knowing that parties become bound, in a strict sense, to the terms of their contract, it is imperative to critically review the terms of the contract before agreeing to be bound by them.
Anything short of this will expose the vulnerable party to litigation risk as a result of a breach of the terms of the contract.
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Benita Ayo is a Seasoned Corporate Commercial Counsel with over 9 years post-call experience. She has handled myriads of briefs in Corporate/Commercial, Employment Law as well as Property Transactional Practice.