Representations and Terms All the matters discussed during the negotiation process do not mount for the formation of the contract. Therefore, courts have identified two types of statements that are made in a negotiation process; Terms Representations Terms – This is a promise or an undertaking given in the process of a negotiation. Such statements need to be included in the contract. If a term is broken, the remedy will be an action for the breach of Contract.

Representations – Representations are statements made by a party which induces/ encourages the other party to enter in to a contract, BUT does not form part of it. If a representation becomes false, the remedy will be an action for misrepresentation.

Not all terms of a contract are of Equal Importance. Therefore, law has classified these terms in to Two main categories according to their importance. Conditions Warranties Conditions are used to describe Very Important terms of a contract. Also, it can be used to describe an event upon which the existence of the contract depends. Breach of a contract conditions will enable the injured party to discharge the contract as well as to claim for damages.

Latest Development in Determining Terms and Warranties – The court does not look at the terms of the contract as it is and decide which category to put. Instead, now courts look at the final outcome of the breach and then decide whether the term is a condition or a warranty.