Chapter 3

Question 1

3 types of discharge of contract

Answer 1

Performance
Frustration
Breach

Question 2

Performance discharge

Answer 2

Contract comes to and end as both parties have fulfilled their obligations

Question 3

Frustration

Answer 3

Imposssible to perform contract but at no fault of either party

Question 4

Quantum mercuit

Answer 4

As much as he deserved action to claim for the amount of work already completed

Question 5

Planche v Colburn 1831

Answer 5

Claimant had a green to write a book on armour for Defendants library. He was to receive £100 for completion but D abbandonned the series

Claimant was entitled to £50 on a quantum mercuit basis

Question 6

Factors of frustration

Answer 6

-contract must’ve been legal and possible at point of entry

-if a contract includes a force majure clause to deal with contracts which have become impossible to perform after the contract is entered, the clause will come into play

-a contract will not be discharged where another mode of performance is still available

Question 7

Examples of frustration discharge

Answer 7

Destruction of the subject
Personal incapacity to perform a contract
Government introduction: where an outbreak of war or new legislation prevents further performance
Non-occurrence of an event which is the sole purpose of the contract

Question 8

The law reform (frustrated contracts) act 1943

Answer 8

The act applies unless the contract expressly provides otherwise. The consequences of the act are

-any money paid under contract before the frustrating event are to be repaid
-any sums of money due for payment cease to be payable

• if either party obtained a valuable benefit under the contract the court could make you share

Question 9

BP exploration (Libya) v Hunt (no2) 1982

Answer 9

Hunt owned a BP concession in Libya - BP were contracted to explode an exploit potential oil fields for a share

BP’s investigations revealed a large oil field. Libyan government then cancelled concession

BP were entitled to £35m as Hunt gained a valuable benefit of a £85m increase in value of his concession

Question 11

Lawful excuses for breach of contract

Answer 11

Where he had offered performance but this had been rejected

Other party has made it impossible for performance

Pathos have by agreement permitted non performance

Question 12

Repository breach

Answer 12

Significant breach where breach deprives the injured party and the whole benefit of the contract

Question 13

Anticipatory beach

Answer 13

Where one party renounces his contractual obligations explicitly or implicitly in advance by showing he has no intentions of performing them

Where the breach is serious the injured party may chose to either

treat the contract as discharged immediately and sue for damages OR
Allow the contract to continue until there is an actual breach and take action at the time

Question 14

Rochester V De La tour 1853

Answer 14

D engaged c as a courtier to accompany him on a European tour commencing on 1 June
On May 22 d said he no longer needed c
C commenced legal proceedings for anticipatory BOC
Courts determined this was correct

Question 15

Remedies for breach of contract

Answer 15

Of the innocent party elects to test the contract as discharged he must notify the other - this may be by way of refusal to accept further performant or refusal to performed his own obligations. In this case the following apply:

-He is not discharged from the contractual obligations which were due at the time of termination but is discharged from future ones

• need not accept not pay for further performance
• he may be able to refuse to pay for partial or defective performance
  -can reclaim money already paid for defective performance.
  -can still claim damages

Question 16

Purpose of Damages

Answer 16

To put parties in position that they would have been in if the contract had taken place

Question 17

Remoteness of damages

Answer 17

How far downs the chain of causation we go - under rule of Hadley v Baxendal - damages may only be awarded in respect of the losses which may fairly and reasonably be considered as either

Naturally arising or to have been in contemplation of both parties at time of making contract

Question 18

Hadley v Baxendale

Answer 18

Claimant owned a mill - the mill shaft broke. It is. It is normal business practice for them to have a spare one. Claimant ordered Defendant to deliver a new one. This was delayed as D didn’t know that C didn’t have a spare one

Therefore loss of profits wasn’t a natural consequence of the delay as Defendant didn’t know it would be the result of not having a shaft as they were meant to have a spare

Question 19

Victoria laundry v Newman industries

Answer 19

D contracted to sell a large boiler to c for immediate use but were late. D was aware of the nature of C’s business. C tried to sue for normal damages of loss of profits and for abnormal as they lose a lucrative deal

Loss of normal profits was successful but abnormal wasn’t as D had no knowledge of this.

Question 20

Expectation interest

Answer 20

Put the person in the place they would have been if the contract took place

Question 21

Reliance interest

Answer 21

Put person in the position they would e been in if he had not relied on the contracf

Question 22

Reliance interest

Answer 22

Put person in the position they would e been in if he had not relied on the contract

Question 23

Angela TV vs Reed

C engaaged an actor to appear in a film they were making for TV. He pulled out last minute and projected was scrapped
Claimant claimed preparing expenditure such as hiring other actors and researching suitable locations

Answer 23

Angela TV used reliance interest as its hard to see how well film would’ve done so they couldn’t use expectation interest

Question 24

Jarvis v Sean tours

Jarvis entered into contract with ST at a winter spots centre l. What was provided was significantly inferior to what was promised in the brochure. Damages on the financial loss were £32 -

Answer 24

The damages should be increased to £125 to compensate for the disappointment and distress as the principle purpose of the contract was to provide pleasure

Question 25

Mitigation of loss

Answer 25

In assessing the amount of damages it is assumed the claimant will take all reasonable steps to reduce or mitigate their loss No risky measures required Burden of proof is on the defendant to prove the claimant didn’t do this

Question 26

Pausing Saunders 1919 Parties had entered into a contract for the supply of goods to be delivered and paid by installments When c failed to pay first installments D decided to make no further deliveries unless C paid cash in advance C refused to accept deliveries on these terms

Answer 26

D had no right to repudiate original contract and was therefore liable in damages. However, C should’ve mutated the loss by accepting the cash payment

Question 27

Liquidated damages

Answer 27

Pre estimate of potential damages written into contract Effective provided it is a genuine attempt to pre estimate losses

Question 28

Penalty cause

Answer 28

Where the liquidated damages are excessive the penalty cause is not enforceable

Question 29

Ford motor v Armstrong D had undertaken not to sell Cs cars below list price, not yo sell Ford cars to other dealers and not to exhibit any Ford cars without permission. A £250 penalty was payable for each breach

Answer 29

Was in nature of a penalty therefore not enforceable

Question 30

Parking eye v Bevois There were signs around a 2hr feee car park to warn of £85 parking fine if exceeded. Bevis didbt pay after staying for 3 hours as it was a fine

Answer 30

Supreme Court ruled that the charge was a detract rather than a penalty fine and it was not excessive as there was a legitimate interest to keep traffic moving freely

Question 31

When is specific performance available

Answer 31

-will only be awarded when damages are an adequate remedy -only available if damages (£) don’t fix problems -not where it would require supervision of performance (ie building contract) -not for a personal service (employment)

Question 32

3 types of injunction

Answer 32

Mandatory Prohibitory Asset freezing

Question 33

Mandatory injunction

Answer 33

Taking positive steps to undo something they have done in breach of contract ie demolish a building

Question 34

Prohibitory injunction

Answer 34

Stopping you doing something in the first place

Question 35

Asset freezing

Answer 35

Stopping the sale / disposal of key assets until matter is settled in court

Question 36

Exclusion clause

Answer 36

Any clause that aims to restrict or exclude liability for breach of contract or negligence To be enforceable the exclusion clause must be an integral part of the contract

Question 37

If the contract is signed the exclusion clause is binding however if it is unsigned…

Answer 37

Courts will take timing and communication into account - (If when and where they were made aware of the exclusion clause) If there is any ambiguity then it is interpreted against the person who intends to rely on it

Question 39

Olly v Marlborough court Husband and wife arrived at a hotel and paid for it in advance - on arrival they noticed a sign disclaiming any liability for loss of valuables unless handed to management for safe keeping. A theif then stole valuables from their bedroom

Answer 39

Hotel weren’t able to rely on the disclaimer as the contract was made when the guest checked in so it was not a timely exclusion clause

Question 40

Unfair contract Terms Act 1977

Answer 40

Act only applies to B>B relationships and aims to restrict the effectiveness of exclusion clauses in the contract Declaring them to be void all together or void unless reasonable

Question 41

Exceptions to UCTA

Answer 41

Doesn’t apply to insurance contracts or contracts to transfer land Doesn’t apply to contracts between private individual Doesn’t apply to contracts between consumers and businesses (consumer rights act 2015)

Question 42

Key provisions of UCTA 1977

Answer 42

Any clause that attempts to exclude liability for death or personal imjsy arising from negligence is void Any clause that attempts to restrict liability for other loss or damage arising from negligence is voidable unless reasonable In contracts of sale or hire purchase a clause that purports to exclude or limit liability for breach of the undertakings as to tittle of the seller or owner implied by sale of goods act 1979 is void

Question 44

Burden of proving reasonableness is on the person seeking to rely on the clause Statutory guidelines to assist the determination of reasonableness are :

Answer 44

Relative strengths of the parties bargaining position Whether any inducement offered Whether the innocent party knew or should’ve known of the term Whether insurance was in place or available to the third party relying on the clause Whether any misrepresentations were made

Question 45

Consumer rights act 2015

Answer 45

Act applies to consumer contracts and consumer notices eg signs in a carpark and ccintracts betweeen consumers in trade Also applies to traders who engage in an act which is incidental to the business. Eg owners of an import export business buying a company car for the first time

Question 46

What is void under consumer rights act 2015

Answer 46

A provision in a contract that excludes liability for death or personal injury arising from negligence or which restricts consumers legal rights under the act will automatically be void and will be unenforceable Other clauses will only be enforceable by the trader if they are fair

Question 47

Fairness in exclusion clauses in contracts

Answer 47

A term is unfair if contrary to the requirement of good faith, it causes a significant imbalance between the parties rights and obligations to the detriment of the consumer

Question 48

Considerations of exclusion clauses

Answer 48

Terms should be written in plain intelligible language and should be prominent Circumstances when the contract was signed Nature of contract

Question 49

Severable contract

Answer 49

A contract that provides for payment at various stages of the contract