First Principles of Business Law

2.1. The importance of identifying different kinds of statement

During the process of making a contract, the parties may communicate either orally or in writing, exchanging information and negotiating the terms of their agreement. Sometimes very little needs to be said: in other cases, many statements are made before the contract is finalised.

In all cases it is important to know whether a particular statement made during negotiations has become part of the contract, and enforceable at law, or not. This depends on the nature of the statement in question, and on the context in which the statement is made. Not everything that is said will become a 'term of the contract', that is to say, a legally enforceable promise or undertaking. Some statements might amount only to 'opinions', 'puffery' or 'representations' and these do not become terms of the contract.

This section of the module will explain how to identify these different types of statement.