Which principle determines if a representation is a term of a contract?

The principle that determines if a representation is a term of a contract is the reasonable person test. This principle is based on how a reasonable person would interpret the representation in the context of the parties' discussions and the overall circumstances surrounding the agreement.

When assessing whether a statement made during pre-contractual negotiations amounts to a contractual term, the reasonable person test evaluates whether a reasonable person would regard the statement as significant enough to influence their decision to enter the contract. If a reasonable person would view the representation as a key factor in the agreement, it may be classified as a term of the contract, thus creating legal obligations.

The intention to create legal relations pertains to whether the parties intended to enter into a legally binding agreement but does not specifically determine if a statement is a term. Pre-contractual negotiations focus on what has been discussed before the formal agreement but lack the definitive criteria needed to classify a representation. The merger principle deals with how terms can be integrated into a contract and how prior representations may be merged into the final written agreement, but it does not address the categorization of representations themselves.

Therefore, the reasonable person test is crucial in establishing the status of a representation as a contractual term, grounding its interpretation in the context of typical understanding and expectations in contractual relationships