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Law > Contract > Flashcards

Contract Flashcards

1
Q

What is included in agreement?

A

Offer and acceptance

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2
Q

What defines an offer?

A
  1. A willingness to be bound by the proposal which is agreed

2. Sufficient certainty in the terms of the proposal

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3
Q

What is an invitation to treat?

A

One party is inviting negotiation

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4
Q

What is a bilateral contract?

A

When one party makes a promise in return for a promise from another party

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5
Q

What is a unilateral contract?

A

A one-sided commitment.

A promise in return for an act

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6
Q

What happened in Williams v Cawardine?

A

Reward for information. Claimant knew but didn’t say until threatened. Still can claim reward.

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7
Q

What was established in Pharmaceutical Society of Great Britain v Boots Cash Chemist?

A

That goods on display are generally regarded as invitations to treat and not offers

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8
Q

What is an advertisement? (authority)

A

An invitation to treat

Partridge v Crittenden

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9
Q

When may an advertisement be an offer? (authority)

A

Advertisement of reward

Williams v Cawardine

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10
Q

What happened in Carlill v Carbolic Smoke Ball Co?

A

Newspaper ad stating £100 reward for set of instructions/. Advert was an offer to the world and wording waived need for communication of acceptance.
A unilateral contract

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11
Q

When is a sale complete at an auction?

A

At the fall of an auctioneer’s hammer

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12
Q

What is an invitation to treat in an auction?

A

When inviting for offers

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13
Q

What is an offer at an auction?

A

A bid - can be withdrawn before end of auction

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14
Q

What happens if auctioneer accepts bid?

A

Contract formed between bidder and owner of goods

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15
Q

What is a reserve price?

A

The lowest price that the auctioneer may accept for the lot

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16
Q

What is the authority for ‘without reserve’?

A

Barry v Davies: bid £200 for machines worth £14,000. Auctioneer refused to sell. Claimed £27,600 in damages.

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17
Q

Who do you sue if do not sell with ‘without reserve’?

A

The auctioneer

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18
Q

What occurs with tenders?

A

Request for tenders = invitation to treat
Tenders = offer
Business accepts the offer = bilateral contract formed

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19
Q

What is the authority for tenders?

A

Blackpool & Flyde Aero Club: Aero club sued for breach of an implied promise that they would be considered. Successful

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20
Q

What 3 ways are there for termination?

A
  1. Revocation - withdrawal of offer by offeror
  2. Rejection by offeree
  3. Lapse of time
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21
Q

What is the general rule for withdrawal of offer?

A

As a general rule, an offer can be withdrawn any time before acceptance. However once it has been accepted, it is irrevocable

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22
Q

How must you withdraw an offer? (authorities x2)

A

Must be communicated effectively
Byrne v Tienhoven & Co -withdrawal took effect on receipt
Routledge v Grant - letter saying offer open for 6 weeks. Another offer revoking. This was effective communication of withdrawal

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23
Q

When can a promise to leave an offer open not be withdrawn? (authority)

A

Mountford v Scott: £1 consideration to keep the offer open meant it was irrevocable

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24
Q

How can you revoke an offer to the public?

A

If withdrawn in same channel that is was made and to the same degree as the offer

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25
Q

What about revocations sent to a business? (authority) 3x steps

A

The Brimnes - notice of revocation will be valid if

  1. It arrives during normal office hours
  2. Communication normal to that business
  3. Reasonable in the context
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26
Q

Can revocation be communicated by a third party? (authority)

A

Dickinson v Dodds: Yes
if third party objectively perceived as reliable/
He need not be authorised by offeror

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27
Q

Can you revoke of unilateral contracts? (authority)

A

Yes
However partial performance of a contract is sufficient to prevent revocation by offeror
Errington v Errington Woods; Father who promised house to son if paid payments. Did so and promise was irrevocable if continued to do so would get house

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28
Q

What happens with a counter-offer? [authority]

A

Implied rejection of first offer, therefore destroys contract [Hyde v Wrench]

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29
Q

What happens at a request for information? [authority]

A

Does not affect the offer - it can still stand and can be accepted [Stevenson Jacques and Co]

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30
Q

What occurs at a lapse of time (revocation)?

A

Offer may become incapable of acceptance through a lapse of time
The length of this time is reasonable in the context

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31
Q

What is the definition of acceptance?

A

A final and unqualified express of assent to the terms of the offer

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32
Q

What was established in Entores Ltd v Miles Far East Corp?

A

Acceptance MUST be communicated

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33
Q

Who can communicated the acceptance?

A

Offeree or duly authorised agent

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34
Q

What is the difference between third party withdrawal and third party acceptance?

A 
Withdrawal = reliable third party
Acceptance = duly authorised agent
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35
Q

Can the offeror waive the need for communication? (authority)

A

YES in an unilateral contract

Carlill Smoke Ball

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36
Q

Acceptance and silence?

A

Acceptance cannot usually be inferred from silence

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37
Q

What is the battle of the forms? (authority)

A

Each company tries to use their standard forms

The last shot usually wins (Butler Machine v Ex-Cell-O Corp)

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38
Q

What is the postal rule? (authority)

A

A letter of acceptance which is posted is COMPLETE ON POSTING and contract formed at this point [Adams v Lindell]

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39
Q

What happens if lost in post? (authority)

A

Even if lost, still applies Household Fire and Carriage v Grant

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40
Q

What are conditions of the postal rule? (4)

A
  1. Only applies to acceptances
  2. Must be reasonable for there to be acceptance by post (eg in line with previous communication)
  3. Letter must be properly stamped, addressed and posted
  4. The postal rule CAN be excluded by the offeror, either expressly or impliedly eg must give me notice
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41
Q

What is presumed contractual intention for domestic and social agreements? (authority)

A

No contractual intention
Balfour v Balfour: husband sent money to wife, marriage goes sour and stops sending payments. There was no presumption to be legally binding.

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42
Q

Can domestic/social contractual intention be rebutted? (authority)

A

Yes
Merritt v Merritt - husband and wife signed agreement to pay wife for mortgage. This was commercial agreement so was rebutted

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43
Q

What is presumed contractual intention for commercial agreements? (authority)

A

Presumption that there is an intention to create legal relations (Edwards v Skyways)

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44
Q

When has a commercial agreement been rebutted?

A

Rose and Frank Co v Crompton Bro: included an honourable pledge that it was not for legal relations. Rebuttal successful.

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45
Q

What authority provides the definition for consideration?

A

Currie v Misa

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46
Q

What was established in Chappel v Nestle?

A

Consideration must be sufficient but need not be adequate

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47
Q

What is insufficient consideration (authority)

A

Stopping moaning [White v Bluett]

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48
Q

What was established in Roscorla v Thomas?

A

Past consideration is NOT CONSIDERATION

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49
Q

What are three exceptions to the rule in Roscorla v Thomas?

A
  1. Act must have been done on promisors request
  2. Parties must have a mutual understanding from the offset that the act was to be rewarded in some way
  3. The payment would have been legally enforceable had it been promised in advance
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50
Q

What happened in Lampleigh v Brathwait?

A

Rode to and from king on promisors request. Returned and was promised £100 but not paid. This was enforceable as on promisors request

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51
Q

What happened in Casey’s Patents?

A

Claimant asked to manage certain patents and later promised 1/3 but not paid. It was assumed there would be some sort of reward.

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52
Q

Would duty imposed by the law amount to consideration?

A

Not generally sufficient

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53
Q

What authority for duty imposed by law?

A

Collins v Godefroy - paid to attend court as witness and didn’t receive payment. As enforced by law to attend anyway, this was not consideration

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54
Q

Can a contractual obligation owed to a third party amount to consideration? (authority)

A

YES
Scotson v Pegg: paid twice to unload and carry coal by two different parties. An existing contractual duty can amount to valid consideration to a new promise

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55
Q

Can contractual obligation owed to other contracting party amount to consideration?

A

Generally no, if nothing more has been done
Stilk v Myrick: reduced crew small, promised extra money but had not had to do extra work so no consideration for promise

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56
Q

Can contractual obligation owed to contracting party amount to consideration if some extra is done?

A

YES

Harley v Ponsonby - half crew deserted, perilous work. Extra work will amount to consideration

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57
Q

What is the Williams v Roffey exception? (and what happened in case)

A

Needed extra money to get building finished, defendant gained practical benefit of finishing it.
Therefore if obtain a PRACTICAL BENEFIT then can amount to good consideration

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58
Q

Where may Williams v Roffey not apply?

A

Duress or fraud

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59
Q

What is the general rule for part payment of undisputed debts? (and authority)

A

Part payment is not sufficient consideration for a promise by a creditor to forgo balance (Foakes v Beer)

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60
Q

What exceptions apply to the Foakes v Beer principle?

A

PRACTICAL BENEFIT

  1. Debtor paid early?
  2. Debtor paid using goods or something else?
  3. Part payment is made in discharge for all
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61
Q

What is promissory estoppel?

A

Where are party to a contract has made a promise to forgo a legal right, once acted upon, he will have a good defence to any claim brought by the promisor

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62
Q

What happened in the High Trees Case?

A

Landlord promised reduced rent for war, defendant acted upon this, then after the war claimed all missing rent for years of the war.

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63
Q

What 4 conditions did Lord Denning set out for promissory estoppel?

A
  1. There must be a promise to waive a legal right and the promise must be intended to be acted upon
  2. Promisee must act on the promise (position must change)
  3. Promissory estoppel will act as a shield not a sword (can only be used as a defence)
  4. It must be inequitable/unjust for the promisor to go back on his promise
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64
Q

What is authority for shield not a sword (promissory estoppel)

A

Combe v Combe - tried to bring a claim in promissory estoppel

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65
Q

How does promissory estoppel effect continuous payment contracts?

A
  1. The legal right is suspended and can be resumed with reasonable notice to promisee
  2. If promise intended to last a particular length of time, legal right is enforceable after this event
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66
Q

How does promissory estoppel effect one off payments?

A

Can be used for one-off payments

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67
Q

What was established in DC Builders v Rees?

A

The promisee must have clean hands

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68
Q

What was established by Re Selectmove? and what happened?

A

Winding up order for Re Selectmove in arrears for tax. Company appealed as said could pay back in installments
This was not a practical benefit as it is almost always a practical benefit for a creditor to get some money back

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69
Q

What is the doctrine of privity of contract?

A

Only parties to the contract can acquire rights to it

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70
Q

What statute was introduced for third parties to a contract?

A

Contracts (Rights of Third Parties) Act 1999

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71
Q

What did the Contracts (Rights of Third Parties) Act 1999 introduce?

A

Allows a third party to enforce a contract term if

  1. The contract expressly provides that he may
  2. The term purports to confer a benefit on him
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72
Q

How may a third party be named in a contract?

A

Expressly

Member of class (employee etc)

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73
Q

What is actual authority for an agent?

A

Expressly appointed agent to carry out specific parts of a contract

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74
Q

What is apparent/ostensible authority for an agent?

A

Implied permission but no actual authority.

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75
Q

What is ratification?

A

Can validate the unauthorised acts of the agent and back-dates the authority
- Must be done with reasonable time

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76
Q

What is a breach of warranty of authority?

A

If an agent acts outside their authority

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77
Q

What is the business efficacy test? (authority)

A

Moorcock

Court should consider whether a term is necessary to make a contract work commercially

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78
Q

What is the officious bystander test?

A

Term could only be implied if the point was so obvious that it went without saying that was what the parties intended

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79
Q

What 2 other assumptions can be made by the courts? (and authorities)

A
  1. Local custom or trade usage (Hutton v Warren)

2. Previous court dealings (Spurling v Bradshaw)

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80
Q

What are the three statutes that govern implied terms?

A

Sales of Goods Act 1979
Supply of Goods and Services Act 1982
Consumer Rights Act 2015

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81
Q

What types of contract are included in the Sales of Goods Act 1979?

A

Business to business
Consumer to business
Consumer to consumer

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82
Q

What types of contract are included in the Supply of Goods and Services Act 1982?

A

Contracts for services and work materials

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83
Q

What types of contract are included in the Consumer Rights Act 2015?

A

Contracts between trader and consumer

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84
Q

What is a trader?

A

A person acting for purposes relating to trade, craft or profession

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85
Q

What is a condition?

A

A major term

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86
Q

What is a warranty?

A

A minor term

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87
Q

What is an innominate term?

A

It will look at the effects of the breach to decide whether there are relevant remedies available

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88
Q

What is the effect of a breach of a condition?

A
  • Can terminate
  • Can get damages

Even if there has only been a minor breach

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89
Q

What is the effect of a breach of a warranty?

A
  • Can get damages

Even if major breach

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90
Q

What is the authority for an innominate term?

A

Hong Kong Fir Shipping v Kawaski Kisen Kaisha: ask if the breach of an innominate term had deprived the innocent party substantially of the whole contract

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91
Q

What is an authority for rebuttal of a condition?

A

Schuler v Wickman Machine Tool Sales: said it was condition in contract but HoL decided that it was not meant in a strict legal sense

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92
Q

What are the three ways to incorporate a term in to an exemption clause?

A
  1. By signature
  2. By notice or unsigned document
  3. By previous consistent course of dealing
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93
Q

What is the authority for incorporation by signature?

A

L’Estrange v Graucob - clause was regrettably small but had been signed so incorporated

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94
Q

What situations may arise where incorporation by signature wouldn’t be incorporated?

A
  1. If the clause is ineligible

2. Misrepresentation [Curtis v Chemical Cleaning and Dying]

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95
Q

What three things must be included in incorporation by notice or unsigned document?

A
  1. Document. must be contractual in nature
  2. Innocent party must know of the clause or must take reasonable steps to bring it to notice
  3. Must be shown before contract is finalised
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96
Q

What happened in Chapleton v Barry? (and test)

A

Deck chair ticket not contractual in nature

Test: would a reasonable person expect that type of document to contain some terms of contract

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97
Q

What may a court consider for incorporation by notice? (4)

A
  1. Clause must be legible
  2. Position of the clause
  3. Prominence of clause on document
  4. Type and nature of the clause
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98
Q

What must be done for an onerous or unusual exemption clause?

A

Must be drawn attention to by the other party in a more explicit way

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99
Q

What happened in Thornton v Shoe Lane Parking?

A

Claimant given car parking ticket which excluded liability for injury. Onerous and did not do enough to make aware

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100
Q

What authority is there for timing for exemption clause?

A

Olley v Malborough Court Ltd: made contract with hotel at reception guest, exemption clause fo lost or stolen goods in the room was too late

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101
Q

What amounts to consistent and course of dealings? (x2 authorities)

A

Kendall (Henry) & Sons: previous course of dealings, had plenty of opportunity to read clause
Hollier v Rambler Motors: only 3-4 times over 5 years. Not consistent

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102
Q

What is the contra proferentum rule?

A

If a party tries to rely on a clause which is ambiguous or unclear then the court will interpret this against them

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103
Q

What is an example of the contra proferentum rule?

A

Houghton v Trafalgar Insurance: exempted liability for car with ‘excessive load’. This was unclear

104
Q

How can an exemption clause cover negligence?

A

Must be very carefully worded.

105
Q

What is authority for covering negligence?

A

Monarch Airlines v London Luton Airport: exemption clause said omission, neglect or default. This was clear enough to cover negligence

106
Q

Can an exemption clause cover a very serious breach?

A

YES

if worded correctly

107
Q

What is a limitation clause?

A

One that limits liability, not excludes it

108
Q

Who is the burden of proof on to prove reasonableness?

A

Party seeking to rely on the exemption clause

109
Q

What 5 guidelines are in Schedule 2 of UCTA?

A
  1. Bargaining strength
  2. Did the customer receive a benefit?
  3. Did the customer know or ought to have known the extent of the clause
  4. Was there reasonable time at the time of the contract to expect compliance with a condition
  5. Were the goods manufactured to a special order
110
Q

What was established in Stewart Gill?

A

Court should consider the clause as a whole and not just the part relied on

111
Q

What was established in Watford Electronics v Sanderson?

A

Exemption clause could be split in to two if two parts served a distinct purpose

112
Q

What were the Smith v Eric Bush guidelines?

A
  1. Equal bargaining power
  2. Reasonably practical to obtain advice from elsewhere
  3. How difficult is the task being undertaken for which liability is excluded?
  4. What are the practical consequences of the decision (sums of money at stake and parties bearing loss)
113
Q

What is the general rule for exemption clauses and third parties?

A

Exemption clause cannot protect a third party due to the doctrine of privity

114
Q

What is an exception to the general rule for exemption clauses and third parties?

A

Contracts (Rights of Third Parties) Act 1999
- Expressly provides that he may acquire a benefit
- The terms purports to confer a benefit on him
Must be expressly identified in the contract by name or as a member of class

115
Q

What is essential to claim for damages?

A

Breach must have caused LOSS

116
Q

What is the aim of damages?

A

To put the claimant in the same position that would have been had the contract been performed

117
Q

Why include a damages clause? (2)

A
  1. To help provide certainty

2. Avoid cost of going to court

118
Q

What is a specified damages clause?

A

A genuine attempt to pre-estimate loss which is likely to be caused by a breach

119
Q

What is a penalty clause?

A

An attempt to put pressure on a party to perform the contract

120
Q

What is the difference between a specified damages clause and a penalty clause in courts?

A

Specified

  • Binding
  • Amount paid regardless of actual loss
  • Rules of remoteness mitigation etc will not apply

Penalty

  • Not enforceable
  • Court is free to assess damages in normal way
  • Principles of remoteness and mitigation will apply
121
Q

Why may a party want to argue for a penalty?

A

Innocent party may want to argue if specified is less than actual loss
Party in breach may want to argue if specified is more than actual loss

122
Q

What was set out in Dunlop Pneumatic Tyre Co Ltd v New Garage Motor? (3)

A

How to decide penalty or specified?
1. If sum is extravagant in comparison with greatest loss = penalty
???????
3. If a single lump sum in the clause is made payable on the happening of one or more events, some which may be minor and some major = penalty

123
Q

What is the wording for remoteness in damages?

A

The breach must have been within the reasonable contemplation of the parties

124
Q

What happened in Hadley v Baxendale?

A

Mill shaft broke, delayed in delivering new shaft didn’t know that mill would be idle in that time - therefore too remote.

125
Q

What is the Hadley v Baxendale test for remoteness? (2)

A
  1. Loss which arises naturally from the breach will normally be within the parties reasonable contemplation
  2. Unusual loss will be within the parties’ reasonable contemplation only if the special circumstances giving rise to this loss are known by both parties
126
Q

Should a party have implied knowledge of a claimant’s business practices?

A

No, the general rule is that contracting parties should not be presumed to have knowledge of all techniques used in each other’s business practices
However the simpler the activity the more likely the courts will imply knowledge

127
Q

What happened in Balfour v Beatty Construction?

A

Interruption in electricity supply meant continuous pour of concrete stopped and project ruined. Did not need to know this so too remote.

128
Q

What happened at Victoria Laundry v Newman?

A

Launders, 6 month late boiler. Could recover for natural losses but not lucrative contract as defendant did not know about this

129
Q

What two types of knowledge are there?

A

Imputed knowledge - knowledge which everyone as a reasonable person should have
Actual knowledge - defendant needs to have actual knowledge of special circumstances

130
Q

What was established in The Heron?

A

Reasonable contemplation of parties for remoteness

Tort is wider than contract as in contract you know who you’re dealing with and can tell them so.

131
Q

What happened in Parsons v Uttley?

A

Hopper for pigs, installed wrong food mouldy and bigs died.

Some harm was reasonable, meaning that the full extent of the harm could be recovered

132
Q

What is expectation loss?

A

Claimant can recover for ‘lost expectation’ of the contract being completed - therefore anything they would have gained if the contract had been carried out

133
Q

Can claimant recover pecuniary damages under expectation loss ?

A

Yes any goods, services, loss of profit

134
Q

What is authority for loss of opportunity?

A

Chaplin v Hicks: talent contest, final 50 not told location - entitled to damages

135
Q

Can claimant recover non-pecuniary damages under expectation loss ? (authority)

A

Very unlikely
Addis v Gramophone: Dismissed from job and sought damages for distress suffered
Not possible to recover

136
Q

What exception is there to this rule for non-pecuniary damages?

A

Anything for pleasure, entertainment or enjoyment

137
Q

What happened in Jarvis v Swans Tours?

A

House party holiday but nothing of the sort

Could claim for non-pecuniary loss for enjoyment

138
Q

What happened in Ruxley Electronics v Forsyth?

A

Built swimming pool, not exact same dimensions. Sought full damages but pool was no less valuable. Decided because lack of enjoyment could recover SOME damages

139
Q

What is reliance loss?

A

Any losses incurred in reliance on the contract being performed (eg before to prepare for the contract)

140
Q

What happened in Anglia Television v Reed?

A

Defendant was to play leading role, but pulled out last minute. Could not get anyone to replace so all money spent preparing was claimed and awarding was successful

141
Q

What is mitigation?

A

There is a requirements for a claimant to take reasonable steps for his loss to be kept to a minimum

142
Q

Can claimant recover losses for steps taken to mitigate?

A

YES

143
Q

Who is the onus of proof on for mitigation?

A

Up to the defendant to prove that the claimant has not mitigated his loss

144
Q

What is authority for mitigation ?

A

British Westinghouse Electric v Underground Electric Railway

145
Q

What else can be used as a defence for damages?

A

Law Reform (Contributory Negligence) Act 1945. If negligent breach then can be reduced

146
Q

What is an action for an agreed sum?

A

If a contract provides that one party shall pay a sum of money to the other, if the duty to pay arises and the payer refuses to pay can bring an claim for agreed sum

147
Q

When can the innocent party terminate the contract?

A

Breach of condition

Major breach of innominate term

148
Q

What is a repudiatory breach?

A

A breach so serious is renders the contract useless and termination is possible

149
Q

Does the innocent party have to terminate a contract?

A

No can affirm it

150
Q

What is the effect of termination and what must innocent party do? (3)

A
  1. Future obligations discharged
  2. Party can also sue for any damages suffered
  3. Innocent party must communicate this with other party
151
Q

What is the effect of affirmation? (2)

A
  1. Contract continues and both parties should continue to perform contract
  2. Can still sue for damages
152
Q

What is an anticipatory breach? and what can be done?

A

When a party gives an advance warning that he is not going to perform his contractual obligations
Innocent party can
1. Terminate the contract and sue for damages
2. Treat contract as continuing and hope by the time it needs to be completed the party in breach will change their mind

153
Q

What is an order of specific performance?

A

An order from the court which requires a party to perform his contractual obligation
Can also claim damages

154
Q

What are the 4 restrictions on specific performance?

A
  1. Damages are an adequate remedy (can substitute what is not provided easily)
  2. Requires continuous supervision in court
  3. Contracts involving services (as depend on trust and confidence and this has usually broken down)
  4. Only if just and equitable to do so (if claimant has acted equitably and the hardship it would ensue)
155
Q

What are the two types of injunction?

A

Prohibitory - stop from doing something

Mandatory - requires person to put right a breach

156
Q

What happened in the Warner Brothers Pictures Incorporated?

A

Actor entered int o contract to not engage in other services while under contract
- Granted injunction that she was able to get another job, juts not in acting

157
Q

What happened in Page One Records v Britton?

A

Sacked manager of band who tried to enforce injunction that they could have no one else as manager. Rejected injunction as would have to remain idle with no manager

158
Q

What will the courts consider when granting an injunction?

A
  • Length of time of the injunction

- Whether granting the injunction will have a serious effect on the party’s career

159
Q

What is the reason for a claim in restitution?

A

Arises as a result of a breach of contract or where no contract has come in to existence

160
Q

What 2 situations may arise where restitution will be used?

A
  1. Recovery of money where there has been a total failure of consideration
  2. Compensation for work done or goods supplied
161
Q

What is authority for restitution?

A

British Steel Corp v Cleveland Bridge: asked to make steel nodes, contract never formed but they received money for work done

162
Q

What is the doctrine of complete performance?

A

Provides that a contractor is only entitled to the price for work done, if performance is complete and precise

163
Q

What is authority for complete performance?

A

Cutler v Powell: had agreed to be paid once voyage complete. Died 2 weeks before. Not entitled to any payment

164
Q

What are the 4 exceptions to a doctrine of complete performance?

A
  1. Substantial performance
  2. Divisible contract
  3. Voluntary acceptance of past performance
  4. Wrongful prevention of performance by other party
165
Q

What is the exception of substantial performance?

A

When the job has been finished but it is slightly defective - may be entitled to full amount minus the price to rectify the defects

166
Q

What are authorities for substantial performance? (2)

A

Hoenig v Issacs: Defendant had completed work which was faulty. The cost of repair was 1/14th - substantial
Bolton v Mahadeva - Faulty work. 1/3 price - not substantial

167
Q

What is the exception of divisible contracts?

A

If payment has been agreed for distinct parts/stages of the work, each part is treated like a separate contract and is entitled to each one has completed

168
Q

What is the exception of voluntary acceptance of party performance?

A

If the defendant has accepted part performance out of choice, then has to be payable for the work done

169
Q

What is authority for acceptance of part performance?

A

Sumpter v Hedges: Builder abandoned work done worth £333 when meant to be £565. However defendant had had no choice but to accept work. Did have a choice regarding left materials so was entitled to recover damages for them.

170
Q

What is the exception of wrongful prevention of performance by the other party?

A

If the other party has prevented you from completing your contractual obligations you can recover losses.

171
Q

What would a party who has been wrongly prevented from performance claim? (2)

A

Can claim damages
Can claim a quantum meruit for work done [Planche v Colburn]

Damages better as all losses arising from breach, whereas quantum meruit for work actually done

172
Q

What is discharge by agreement?

A

If parties agree to end a contract

173
Q

What is a frustrated contract?

A

If an unforeseen event occurs after the contract has been formed, which was not the fault of either party and which makes the contract impossible to perform, or performance of the contract radically different

174
Q

At what point does a frustrated contract come to an end?

A

From the point of the frustrating event, not obliged to perform future obligations

175
Q

What is a force majeure clause?

A

A clause that excuses both parties of a contract if a specific event occurs

176
Q

What are the 5 examples of frustration?

A
  1. Unavailability of a specific thing or person vital to the contract
  2. Non-occurrence of a fundamental event
  3. Government intervention
  4. Delay
  5. Illegality
177
Q

What are two authorities for unavailability of a specific thing or person vital to the contract?

A

Taylor v Caldwell: claimants hired music hall, destroyed days before by fire. Contract was discharged by frustration as no hall
Morgan v Manser: music artist called up to military service so could not carry out his contract frustrated

178
Q

What three factors will the court consider when deciding if unavailability of specific thing is vital to a contract?

A
  1. Length of contract
  2. Length of period of absence
  3. Must it be the individual who carries out the work or substitute?
179
Q

What are the two authorities for non-occurrence of specific event?

A

Both to do with King’s Coronation
Krell v Henry: Defendant hired room to watch procession - only day. Sole purpose = frustrated
Herne Bay Steamboat v Hutton = Defendant hired boat to see coronation, also to see naval review. As able to perform part of contract = not frustrated

180
Q

What is the authority for government intervention?

A

Metropolitan Water Board v Dick Kerr: Contract to build reservoir in 6 years but had to help in war effort = frustrated

181
Q

What factors should courts consider deciding if delay frustrates a contract? (4)

A
  1. Whether contract mentions delay
  2. The length of delay
  3. Any time set for obligations to be completed
  4. If contract resumed after delay, whether radically different
182
Q

What is authority for delay?

A

Tsakiroglou v Noblee Thorl: Nuts to be delivered, delayed due to Suez Canal being shut. Performance not radically different so not frustrated

183
Q

What is authority for illegality of a frustrated contract?

A

Fibrosa case: manufacture machinery for Polish company - invaded by Poland and illegal to trade with the enemy. Therefore frustrated

184
Q

Can a contract for a lease of land be frustrated? (authority)

A

Yes

National Carriers v Panalpina: leased warehouse for 5 years, after 5years entrance blocked off - frustrated contract

185
Q

What happened in Davies Contractors v Fareham Urban District Council?

A

Agreed to build 78 houses, due to work and material shortages took 22 months to complete. Not frustrated as not radically different

186
Q

What restrictions apply to frustration? (2)

A
  1. Must not be foreseen by parties

2. Event must be beyond control of the parties

187
Q

What comes under event being foreseen by the parties?

A

Force majeure clause prevents frustration

No express provision but could be foreseen in the opinion of the courts

188
Q

What comes under event must be beyond control of the parties?

A

Party whose act or election has given rise to the event cannot claim frustration

189
Q

Authority for event must be beyond control of the parties?

A

The Super Servant Two: had two boats to transport rig, one sank before delivery date, other used in contract. This was not frustrated as had a choice.

190
Q

What is the effect of frustration?

A

Contract ends at the moment of the frustrated event. Neither party is in breach and no future obligations

191
Q

What does section 1(2) of the Law Reform (Frustrated Contracts) Act 1943 enforce?

A
  • Money paid before the frustrating event can be recovered
  • Money due and payable before the frustrating event does not have to be paid
  • The court may allow the payee to recover expenses from performing the contract before the frustrating event, OUT OF THE MONEY PAID BEFORE THE EVENT
192
Q

What happened in the Gamerco v ICM case?

A

Promoters agreed to promote concert for Guns n Roses. Paid alot of money up front. Venue was shut seeked to reclaim money. Successful

193
Q

What does section 1(3) of the Law Reform (Frustrated Contracts) Act 1943 enforce?

A

If one party has received a valuable benefit, the court may order them to pay a just sum not more valuable than the benefit

194
Q

.

A

.

195
Q

What are the weaknesses of section 1(2)? (2)

A
  1. The amount recoverable is limited to the total sums paid before the event —> if money not paid then not recoverable
  2. At the courts discretion could lead to inconsistencies
196
Q

What are the weaknesses of section 1(3)?

A

If only valuable benefit, in the event of a fire etc could result in an awarding of nil.

197
Q

What are the two parts of contractual certainty?

A

Vagueness

Incompleteness

198
Q

What is the first test to consider for negligent misstatements?

A

Look for the common intention of the parties if a term or a representation

199
Q

What are the 4 tests for the court to consider for false preliminary statements?

A
  1. Greater skill or knowledge
  2. Oral statement repeated in the written contract
  3. Tells to verify statement
  4. Lapse of time between contract
200
Q

What is meant by greater skill and knowledge? (authority x 2)

A

The greater the skill and knowledge, the more likely it is to be a term.
Dick Bentley v Harold Smith: Car dealer to private individual (more expertise)
Oscar Chess v Williams; two private car sellers (less expertise)

201
Q

What is the difference between a term and a representation?

A

a term will be contractually binding whereas a representation will not

202
Q

What is meant by oral statement repeated in the contract? (authority)

A

If written, more likely to be a term

Routledge v McKay: oral term not included in written contract - therefore representation

203
Q

What is meant by tells to verify the statement? (authority)

A

If told to verify, more likely to be a representation

Ecay v Godfrey: seller of boat asked buyer if he was going to have it surveyed - this indicated representation

204
Q

What is meant by lapse of time between the contract?

A

The longer the lapse of time, the more likely to be a representation

205
Q

What is the definition of a misrepresentation?

A

A false statement of fact made by one contracting party to another, before the contract was made to induce the other party in to a contract

206
Q

Can silence amount to a misrepresentation?

A

Not usually

207
Q

What are 4 exceptions to silence amounting to a misrepresetation?

A
  1. Fiduciary relationship
  2. Utmost good faith (insurance)
  3. Half-truth (Curtis v Chemical Cleaners)
  4. Statement of fact was true but circumstances have changed
208
Q

What is meant by false statement must be fact not opinion? (2x authority)

A

If opinion, then representation
Smith v Land and House Property Corp: desirable tenant not an opinion but fact as knew in arrears
Bisset v Wilkinson: number of sheep an opinion as had never held sheep

209
Q

What does Edginton v Fitzmaurice represent?

A

That the intention was never held

They said borrowing money to expand business but actually to pay of arrears

210
Q

What is meant by the statement must have been one of the factors which induced the party to enter the contract?

A

Need not be sole inducement but must encourage them

211
Q

Who is the burden of proof upon for a misrepresentation?

A

The party who alleges the misrepresentation

212
Q

What is the effect of rescission?

A

Makes the contract voidable

213
Q

What is the aim of rescission?

A

To restore both parties as far as possible back to their pre-contract positions
- Each party should return money or property transferred under the contract back to the other party

214
Q

How to rescind a contract?

A

Must notify the other party as that he is aware of the rescission.
If has disappeared can apply for a court order

215
Q

What are the 4 bars to rescission?

A
  1. If innocent party acquires interest before contract is rescinded
  2. Affirmation (express or implied)
  3. Undue delay
  4. When impossible to substantially restore goods
216
Q

What is the difference in undue delay for fraudulent and non-fraudulent contracts?

A

Non-fraduluent - from when SHOULD have been discovered

Fraudulent - when WAS recovered

217
Q

What happened in Leaf v International Galleries?

A

Claimant bought painting, 5 years, later found out not artist he thought. Too long a delay as had chance to check days after purchasing

218
Q

What is authority for SUBSTANTIALLY restore goods?

A

Erlanger v New Sombrero Phosphate: mine had been worked on but still able to rescind - can have changed a bit

219
Q

When can indemnity be claimed and what can be claimed?

A

If contract is rescinded can claim for expenses necessarily incurred as a result of the contract

220
Q

When can damages in lieu for rescission be claimed? (Statute)

A

Claimant can ask the court, may award damages

s2(2) Misrepresentation Act

221
Q

When will the court likely use damages in lieu of rescission?

A

When there has been a minor breach and it would be unjust to allow for the other party to rescind the contract

222
Q

What two ways can you get damages for misrepresentation?

A

Fraudulent misrepresentation

Non-fraudulent misrepresentation

223
Q

How does a claim in damages for fraudulent misrepresentation work?

A
  • All consequential losses
  • Do not have to prove remoteness
  • How much claimant is out of pocket if misrepresentation had not happened
  • Burden off proof is on the claimant to prove fraud
224
Q

How does a claim in damages for a non-fraudulent claim work?

A
  • Same as in fraudulent
    HOWEVER
  • REVERSES THE BURDEN OF PROOF
  • All the claimant has to do is prove a misrepresentation which has caused him loss.
  • Defendant must only prove he honestly and reasonably believed what he said to be true
225
Q

Why may you want to sue for a fraudulent representation instead of fraudulent?

A

Same way of claiming

Except do not have to prove fraud, as burden is reversed

226
Q

What are the advantages of claiming in a tort of negligence for misstatements?

A
  • Statement need not to amount to a misrepresentation as such
  • Need not be a contractual relationship
  • Need not be a statement of fact
227
Q

Why may you still sue in contract?

A

IF CAN PROVE MISREPRESENTATION

- No remoteness test

228
Q

What is a general rule for illegality?

A

Contracts will be void if they are illegal (under statute or common law)

229
Q

What about incidental illegal acts?

A

these will unlikely affect the contract

230
Q

What is common mistake?

A

Where both parties have made the same fundamental mistake

231
Q

What happened in Lever Bros v Bell?

A

Bell had traded for personal profit contrary to contract. Without knowledge offered redundancy and pay off. No cause of action as had simply forgotten about previous breaches so common mistake.

232
Q

What is a cross-purpose mistake? [authority]

A

Where parties are at cross-purposes about crucial aspect of contract [Raffles v Wickelhais: two ships named peerless that sailed at different times. Too ambiguous so no contract]

233
Q

What is a unilateral mistake?

A

When one party is mistaken

234
Q

When may there be a unilateral mistake?

A

Mistaken identity of other contracting party

235
Q

What is the difference between misrepresentation and mistake?

A
  1. If parties face to face then misrepresentation

2. If in writing then can be construed as a mistake

236
Q

What is the definition of duress? (authority) (3)

A

Carillion Construction v Felix

  1. Whose practical effect was that there was a compulsion on or lack of practical choice for the victim
  2. Which was illegitimate
  3. Which was a significant cause inducing the claimant to enter in to the contract
237
Q

What will the court take in to account when deciding if illegitimate pressure? (5)

A
  1. Actual or threatened breach of contract
  2. Whether the person allegedly exerting the pressure has acted in good or bad faith
  3. Whether there was any practical alternative
  4. Whether the victim protested at any time
  5. Whether he affirmed or sought to rely on the contract
238
Q

What happened in Atlas v Kafco?

A

Illegitimate pressure and had no practical alternative for delivery as needed to deliver to larger contract

239
Q

What was additionally said at Atlas v Kafco?

A

Atlas had given no consideration for their promise. The practical benefit that they received could not be supported by Williams v Roffey as obtained by fraud or duress

240
Q

What is the remedy to duress?

A

Rescission

241
Q

What is common about duress with rescission?

A

Usually it is the variation in the contract that has been obtained under duress. In this case, the original contract will still stand

242
Q

What is an example of a case where rescission was barred in duress?

A

The Atlantic Baron: 8 months late asked for repayment of money

  • Had accepted contract (affirmation)
  • 8 months (delay)
243
Q

What is undue influence?

A

Undue influence occurs when one party is in a position to influence another and takes unfair advantage of that position

244
Q

What is actual undue influence?

A

Necessary for claimant to prove affirmatively that the wrongdoer exerted undue influence
Hard to show on facts as word v word

245
Q

When was actual undue influence proven?

A

Daniel v Drew: Mrs Drew was forced to sign contract by nephew. As witness, easy to prove

246
Q

What two things need to be proven for presumed undue influence?

A
  1. A relationship of trust and confidence

2. The transaction calls for explanation

247
Q

What is the authority for presumed undue influence?

A

RBS v Etridge: mortgage guarantees by wives for husbands

248
Q

Who comes under a relationship of trust and confidence for undue influence?

A
  • Solicitor client
  • Doctor patient
  • Parent child
    NOT
  • Husband wife
249
Q

What would suggest a transaction must call for an explanation?

A 
No advantage (and significant disadvantage) to the innocent party
Not explanable for ordinary moves of ordinary people
250
Q

What is the general view about creditors and undue influence?

A

A creditor will be tainted by the undue influence of a third party debtor if they had actual or constructive notice

251
Q

What is actual notice?

A

‘Influence which goes beyond what is regarded as acceptable’

252
Q

What is constructive notice?

A

If the relationship between the surety and debtor is non-commercial and the transaction is not for their joint benefit

253
Q

What happens if there is constructive notice for the creditor?

A

They are put on inquiry

254
Q

What does being put on inquiry entail?

A

Must take reasonable steps to ensure the surety understands the implications of the transactions

255
Q

What steps must be made when on inquiry? (3)

A
  • Told extent of her liability
  • Warned of the risk she is running
  • Urged to take independent legal advice
256
Q

Does a bank have to have a face to face meeting?

A

It does not have to be them who does it but they have to arrange and ensure that it happens

257
Q

What is a case when it wasn’t a husband and wife?

A

Credit Lyonnais v Burch: Employer and employee. Employee remortgaged flat to secure liabilities for a business she had no interest in

Law (4 decks)

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