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SQE - Elmina M > Contract > Flashcards

Contract Flashcards

1
Q

What 3 things are required to form a binding contract?

A

Offer & acceptance
ICLR
Consideration

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2
Q

What’s the difference between a bilateral and unilateral contract?

A

Bilateral: both parties assume an obligation to each other
Unilateral: one party makes an offer in terms which call for an act to be performed by one or more other parties

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3
Q

What are the requirements for a valid offer?

A
  1. Clear & certain
  2. Display an intention to be bound (unequivocal acceptance)
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4
Q

What is an invitation to treat and 5 examples of it?

A

The 1st step in negotiations that can’t be accepted to form a binding contract
1. Ads (not where there is a unilateral offer)
2. Displays of goods
3. Invitation to tender
4. Auctions
5. Websites

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5
Q

When is agreement made for self-service shops?

A

Offeror = customer
Offeree = storekeeper
Agreement made when scanned through

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6
Q

When will an invitation to tender NOT be treated as an invitation to treat?

A

Where the ITT expressly contains an undertaking to accept the highest or lowest bid
It’s a form of unilateral contract

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7
Q

When would there be a binding contractual obligation to consider tenders?

A

Tender solicitor from specified parties known to them; absolute deadline for submission; requestor laid down absolute/non-negotiable conditions for submission

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8
Q

What happens with a ‘without reserve’ auction where the auctioneer refuses to sell to the highest bidder?

A

Could be sued for breach of unilateral contract: promise auction is without reserve
Highest bona fide bidder entitled to damages but NOT the goods (as this was dictated by a bilateral contract)

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9
Q

How can an offer come to an end?

A
  1. Rejection - counter-offer seen as a rejection
  2. Lapse - not in time prescribed or not within a reasonable time
  3. Revocation - any time before acceptance upon actual notice of it reaching the offeree (if by post, moment received by offeree)
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10
Q

For unilateral contracts, when can revocation take place?

A

Prior to completion of completed act
For ones made to the whole world, it’s effective where offeror takes reasonable steps to bring revocation to attention of all who may have read it
Where it’s been partly performed & they are willing/able to complete, revocation not effective

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11
Q

What are the requirements for valid acceptance?

A
  1. Only offeree can accept
  2. Acceptance is unqualified - mirror image
  3. Valid mode (if mode prescribed)
  4. Communicated to offeror - effective from time communicated: for post, time it was properly posted; for instantaneous means, when received by offeror
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12
Q

When does the postal rule apply?

A

Where acceptance delayed/lost in post
Does Not Apply: if not contemplated post would be used; incorrectly addressed; letters revoking offers; disapplied by offeror

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13
Q

If acceptance was not received and the offeree was at fault, what is the consequence? And if offeror at fault? And if nobody at fault?

A

Offeree: no contract
Offeror: contract prevails
Nobody: no contract

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14
Q

What is consideration and its 2 types?

A

An exchange between the parties
1. Executory: parties make promises to each other to perform something in the future
2. Executed: at start of contract, consideration has already been performed

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15
Q

What 7 rules/principles are there on consideration?

A
  1. Must not be past
  2. Must move from promise
  3. Need not be adequate
  4. Must be sufficient (must have some value)
  5. A pre-existing public duty
  6. A pre-existing contractual obligation owed to promisor
  7. A pre-existing contractual obligation owed to a 3rd party
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16
Q

What is the rule of ‘consideration must not be past’ and what is the exception?

A

If act/forbearance took prior to promise, can’t be exchange for that promise
Exception: where some prior act was provided by promisee at promisor’s request & always understand they’d be paid
(i) Act done at promisor’s request
(ii) Parties understood that the act was to be rewarded by some benefit
(iii) Benefit must have been legally enforceable had it been promised in advance

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17
Q

What is the principle of a ‘pre-existing contractual obligation owed to promisor’ in relation to consideration?

A

General Rule: when party promises additional payment for existing contractual obligations, not good consideration
Exception: factual consideration - nothing new promised but party still getting sth out of reshaped deal

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18
Q

What are the requirements for factual consideration?

A
  1. Entered into contract
  2. Before A has completed obligations, B doubts where A will complete his own
  3. B promises A extra payment so A performs on time
  4. B obtains in practice a benefit, or obviates a disbenefit
  5. B’s promise not due to economic duress or fraud
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19
Q

What is a ‘pre-existing contractual obligation to a third party’?

A

Performance will be sufficient consideration but party offering to do this is risking double liability

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20
Q

Is a debtor promising to pay part of a debt in return for release of remainder of liability good consideration?

A

No
Exceptions: introducing new element into payment; payment of a lesser sum by a 3rd party; practical benefit argument

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21
Q

What is promissory estoppel?

A

Protecting a party’s reliance on a non-bargain promise, commonly used for debts
(i) Acts as a shield, not a sword
(ii) Clear, unequivocal promise that strict legal rights won’t be fully enforceable
(iii) Change of position in reliance on the promise (need not show detriment)
(iv) Inequitable to allow promisor to go back on the promise

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22
Q

What is ICLR?

A

An intention to enter into a contract with legal ramifcations

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23
Q

When are assumptions as to ICLR made?

A

Commercial: there’s intention
Domestic: no intention
Both can be rebutted

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24
Q

What does the term ‘subject to contract’ mean?

A

Not binding until formal execution

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25
Q

What is capacity?

A

Persons over 18 years old, of sound mind & not suffering from factor ruling out capacity e.g. drunkeness

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26
Q

What is the rule on minors and capacity, and exceptions?

A

Person not bound by contract entered into under age of 18 even if other side didn’t know or they lied
1. Contract concerns necessaries (if for their benefit, pay a reasonable price)
2. Contract of employment, apprenticeship or education (if for their benefit)

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27
Q

When does someone lack capacity>

A

Where they’re unable to make a decision for themselves at time contract is made

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28
Q

What is the effect of entering a contract with someone lacking capacity?

A

Person w/o capacity still remains liable to pay a reasonable price for necessaries
In any other case, position is binding unless (i) person prove they didn’t understand what they were doing and (ii) other side knew this

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29
Q

How does drunkeness affect capacity?

A

If so drunk, can’t understand what they’re doing, have to pay reasonable price for necessaries but not bound by any other contract they make

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30
Q

What is privity of contract?

A

No person can be sued or sue on a contract unless they are a party to it

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31
Q

What 4 methods are there for circumventing privity?

A
  1. Agency: principal named & clear agent acting on their behalf; authorised to act as agent; consideration moved from principal
  2. Assignment
  3. Actions in tort
  4. Other judicial attempts
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32
Q

What is the albazero principle?

A

A contracting party can recover in relation to losses suffered by a 3rd party, if 3rd party has no other means of recourse

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33
Q

What is the effect of the Contracts (Rights of Third Parties) Act 1999?

A

Clear exception to privity by allowing 3rd parties to enforce a contract term they are not a party to
Can do where contract provides they can, OR, contract attempts to convey a benefit on them & doesn’t appear that parties didn’t intend a 3rd party could enforce it

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34
Q

To enforce a term, how must a 3rd party be identified?

A

Expressly in the contract by name, as a member of a class, or as answering a particular description (need not be in existence at time contract entered)

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35
Q

Where does the Contracts (ROTP) Act not apply?

A

Where parties did NOT intend a term to be enforceable by a third party e.g. with an ‘exclusion of third party rights’ clause

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36
Q

What remedies are available to third parties?

A

Any remedy available as if he had been a party to the contract

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37
Q

When can contracting parties not vary/rescind a contract without permission from a third party?

A

(a) 3rd party communicated assent
(b) promisor aware 3rd party relied on the term
(c) promisor can reasonably be expected to have foreseen 3rd party would rely on the term & 3rd party has relied on it
Unless express provision in the contract

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38
Q

What are the 3 types of statements that can be made during negotiations?

A

Mere Puffs (no legal significance)
Representations: statements of fact/law which parties don’t intend to be binding but help induce making of the contract
Term: statements of fact parties intend to be binding

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39
Q

Can a statement be both a representation and a term?

A

Yes

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40
Q

How does one determine whether something is a representation or a clause?

A

Determine whether parties intended to be bound: what would a reasonable person understand to be the intention of the parties, having regard to all the circumstances?
If yes, statement = term
If no, could be representation or mere puff
Where a statement is made to induce the other party to enter the contract, presumption that it’s binding but can be rebutted

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41
Q

What factors should be considered to determine if a something is a representation or a term?

A

Importance of the statement: injured party considered it so important, it wouldn’t have entered into the contract but for it
Timing of Statement: if made at time of contracting, more likely to be a term
Reduction of Contract into Writing
Special Knowledge/Skill of Person Making the Statement
Assumption of Responsibility

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42
Q

What 2 types of terms are there?

A

Express: statements made by parties by which they intend to be bound
Implied: law deems they exist

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43
Q

What different ways are there to demonstrate an intention to be bound?

A
  1. Signed written contract (except for docs singed not intended to have any contractual effect or if a clause was orally misrepresented)
  2. Incorporation by notice: must clearly bring terms to other’s attention; doc giving notice must be intended to have contractual effect
  3. Incorporation by Course of Dealing: must be consistent over a period of time and have been regular
  4. Other ways of agreeing: in conversation or terms set out in writing and other party agrees
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44
Q

What are entire agreement clauses?

A

A clause providing that a particular document(s) constitutes the entire agreement
Unlikely to be effective in excluding liability for misrepresentation

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45
Q

What are the 2 types of implied terms?

A
  1. Terms Implied in Fact: give effect to presumed but unexpressed intentions of the parties, asking what would the reasonable person understand the contract to mean (business efficacy, trade customs, course of dealing)
  2. Terms Implied in Law: by common law or by statute
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46
Q

What implied terms are there under SGA 1979?

A

S12 Title: seller has right to sell the goods
S13(1) Description: goods will comply with their description
S14(1) Satisfactory Quality: that a reasonable person would regard satisfactory
S14(3 Fit for Particular Purpose
S15 Bulk of Goods must Correspond with Sample

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47
Q

How are the implied SGA terms classified?

A

All as conditions

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48
Q

What is a breach of s13-15 SGA subject to?

A

S15A: where breach is so slight it would be unreasonable for buyer to reject/repudiate, breach is treated as breach of warranty, so only damages allowed
Burden of proof on seller

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49
Q

How can a seller’s liability under SGA be excluded or restricted?

A

By agreement of parties, subject to UCTA 1977
S12 title cannot be excluded/restricted
Others can subject to reasonableness

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50
Q

What does the SGSA provide for?

A

Transfer of property in goods
Hire of Goods
Supply of services
Only B2B

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51
Q

What implied terms are there under SGSA for hire & transfer of goods?

A

Title/Right to transfer possession
Description
Quality or fitness
Sample

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52
Q

What implied terms are there under SGSA for supply of services?

A

S13 Care and Skill: supplier will carry out service
S14 Time of Performance: supplier will carry out service w/in a reasonable time
S15 Consideration: pay a reasonable charge

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53
Q

How is S13 care and skill under SGSA classified?

A

As an innominate term

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54
Q

What 3 parts are there to the CRA?

A

Goods
Digital Content
Services

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55
Q

What implied terms are there under CRA for goods?

A

Satisfactory quality
Reasonably fit for purpose (which consumer makes known to trader)
Match description

56
Q

What remedial options are there for consumers for contracts for goods under CRA?

A
  1. Short term right to reject - 30 days
  2. Right to repair/replacement: unless impossible or disproportionate; within a reasonable time & w/o signif inconvenience to consumer
  3. Right to price reduction or final right to reject (only where 2 is not possible)
57
Q

What implied terms are there under CRA for digital content?

A

Satisfactory quality
Reasonably fit for purpose
Match any description

58
Q

What remedial options are there for consumers for contracts for digital content under CRA?

A
  1. Right to repair/replacement (same conditions as others)
  2. Right to Price ReductionL only where consumer can’t require repair/replacement or not done so w/in a reasonable time
  3. Right to receive a refund (14 days)
59
Q

What implied terms are there under CRA for services?

A

Reasonable care and skill
Reasonable price to be paid
Provided in a reasonable time

60
Q

What remedial options are there for consumers for contracts for services under CRA?

A
  1. Right to Require Repeat Performance: within reasonable time & without signif inconvenience
  2. Right to Price Reduction: only where repeat performance impossible/disproportionate or done w/in reasonable time etc
61
Q

What is the 3-stage test to determine where a party can rely on an exemption clause?

A
  1. Incorporation: is it part of the contract - normal rules
  2. Construction: does the clause cover the alleged breach & resulting loss
  3. Statutory Controls: UCTA 1977 or CRA 2015
62
Q

How is construction determined?

A

Exclusion clauses construed contra proferentum: if there’s any doubt as to meaning/scope of clause, ambiguity resolved against party seeking to rely on it
Less common for commercial contracts
For attempts to exclude liability for negligence, must use clear words

63
Q

What guidelines are followed to determine construction when excluding liability for negligence?

A

a) does clause expressly say negligence?
b) are words wide enough to cover negligence?
c) are they too wide? could head of damage be based on some ground other than negligence

64
Q

What is the difference between a condition and a warranty?

A

Condition: important term going to root of the contract
Warranty: less important term not going to root

65
Q

How does one distinguish between a condition and a warranty?

A

Ask whether parties intended, at time of contracting, that any breach of the relevant term could result in the innocent party terminating?

66
Q

What are the respective consequences for breach of condition or warranty?

A

Condition: right to repudiate & damages
Warranty: only damages

67
Q

What is the starting point for determining the classification of a term?

A

Has term been classified by (i) statue (ii) the parties or (iii) previous judicial decision
If not, look at contract to determine if it goes to root
If can’t determine, apply test for innonimate term

68
Q

What is the test for an innominate term?

A

Does breach deprive the innocent party of substantially the whole benefit from the contract?
If yes = condition
If no = warranty

69
Q

What vitiating factors are there?

A

Misrepresentation
Mistake
Unfair Contract Terms
Duress & Undue Influence
Illegality

70
Q

What are the requirements for an actionable misrepresentation?

A
  1. Unambiguous: must be clear
  2. False: not if substantially correct
  3. Statement of fact
  4. Addressed to Claimant
  5. Induces C to Enter into Contract
71
Q

What is a statement of fact NOT?

A

Statement of opinion
Statements of intention
Silence

72
Q

How does one determine if a misrepresentation ‘induced C to enter contract’?

A

Ask: was the representation material? Did it relate to an issue that would’ve influenced a reasonable person - if yes, inducement inferred & burden shifts to D to rebut this
OR representee shows it personally was induced by statement

73
Q

Where is there no inducement for misrepresentation?

A

Statement not actually communicated to representee
Statement did not affect representee’s decision to enter
Statement known to be untrue to representee

74
Q

What is the position on inducement where representee made their own investigations?

A

If they relied on their own investigations, not the misrepresentation, cannot bring a claim

75
Q

Is there a duty to check a misrepresentor’s statement?

A

No but if they didn’t where court considered it reasonable to, or they carried out a negligent investigation, defence of contributory negligence may be possible
The more commercial they are, the likelier court will consider it reasonable

76
Q

When may statements of opinion form a claim for misrepresentation?

A

If representor considered to have a greater knowledge than representee, than the implied statement that there are facts which justify opinion can mislead

77
Q

When can statements of future intention form a claim for misrepresentation?

A

Where representor states they intend to do something but at that time, they knew they couldn’t or had no intention to do so - they misrepresented their existing intention

78
Q

When can silence form a claim for misrepresentation?

A
  1. Half-Truths: technically true statements but misleading
  2. Continuing Representations: at beginning of negotiations, statement is made but becomes false prior to entering the contract, representor must correct the representation
  3. Contracts uberrimae Fidei: duty to disclose material facts in some contracts where one party is in a particularly strong position to know material facts
79
Q

What is the effect of misrepresentation on a contract?

A

Makes contract voidable - must take action to rescind

80
Q

What are the different categories of misrepresentation and their definitions?

A
  1. Fraudulent: made knowingly or w/o belief in truth, or recklessly (flagrant disregard for truth) - failure to disclose must be deliberate/dishonest
  2. Negligent: representor fails to show reasonable grounds to believe, or did believe up to time contract was made, that statement was true - an easier claim but treated liked fradulent
  3. Representor proves they had reasonable grounds to believe in truth and did so until time of contract
81
Q

What remedies are there for misrepresentation?

A

Rescission: put parties back in position before contract - only awarded where this is possible
Damages: greatest for fraudulent, but neg will often match; C must mitigate; damages in lieu of rescission available for neg/innocent
Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given

82
Q

Are exemption clauses allowed for misrepresentation?

A

Only if it is reasonable

83
Q

What is an operative mistake?

A

Prevents a contract from taking legal effect - contract void from outset

84
Q

What are the 3 categories of mistake?

A
  1. Common Mistake: both parties suffering from same mistake
  2. Mutual Mistake: both parties mistaken but about different things
  3. Unilateral Mistake: 1 party mistaken and other knows
85
Q

What are the requirements for common mistake?

A

Must be sufficiently fundamental to affect validity of contract
Mistake about quality of goods does not void contract
Will not operate where: mistake not sufficiently fundamental; one party is at fault; contract makes provision for this issue

86
Q

What is the test for mutual mistake?

A

What a reasonable 3rd party would believe the agreement to be, based on words and conduct of themselves

87
Q

What are the rules regarding unilateral mistake of identity?

A

Where seller intended to deal with person in front of them & that’s what happened, NOT void for mistake, voidable for misrepresentation
Where seller can show that identity, not attributes, was of vital importance = VOID for mistake

88
Q

What happens where a fraudulent buyer sells goods onto a 3rd party?

A

Where fraudster has voidable title, & title has not avoided at time of sale, 3rd party acquires good title where bought in good faith so C can’t take goods back
Where void for mistake, it’s void & ineffective from outset so 3rd party must return goods even if bought in good faith

89
Q

What is presumed where parties contract face to face?

A

Seller intended to deal with person in front of them - difficult to rebut

90
Q

What are the rules on exemption clauses on UCTA for different types of breaches/liability?

A

Liability for Death/PI from Negligence: void, cannot do so
Other losses from Negligence: valid if reasonable
Breach of Statutory Implied Terms (S13-15 SGA): valid if reasonable
Breach of Contract: doesn’t apply if term is in a negotiated contract; valid if reasonable for terms in a party’s ‘standard terms’

91
Q

What is the reasonableness test under UCTA?

A

Term is fair & reasonable to be included in light of circumstances known/ought reasonably, or in contemplation of the parties when contract made
Guidelines:
- Bargaining powers
- Where customer received an inducement to agree to the term or had similar contract opportunities with other persons
- Customer knew/ought reasonably of existence/extent of term
- Reasonable at time to expect compliance is practicable
- Goods manufactured, processed or adapted to special order

92
Q

What are the rules on exemption clauses on CRA for different types of breaches/liability?

A

Death/PI from Negligence: cannot do so, not binding on customer
Breach of Statutory Implied Terms of Goods & Digital Content: not binding
Breach of SIT on Services - attempts to entirely exclude: not binding; restrict/limit liability = not binding if prevents recovery of price paid
Terms other than exemption clauses: not binding if unfair

93
Q

Are use of parallel/secondary contracts to avoid CRA permitted?

A

Generally, no

94
Q

What are the 3 types of dures?

A
  1. Duress to the Person: actual or threatened violence; one factor influencing decision to enter contract (need not be decisive)
  2. Duress to Property: seizure or damage to owner’s property (or threat) - but for duress, agreement would not have been entered into
  3. Economic Duress: pressure with (a) lack of practical choice for victim (b) which is illegitimate (c) is a significant cause inducing C to enter contract (but for test)
95
Q

What considerations are there to determine if pressure is illegitimate for economic duress?

A

Has there been actual or threatened breach of contract?
Has person exerting pressure acted in good or bad faith?
Did victim protest at time?
Has victim affirmed or sought to rely on it?

96
Q

If there’s doubt as to whether an act amounts to duress or undue influence, what should a C do?

A

Bring action on both grounds

97
Q

What is undue influence?

A

Where a person’s consent to a transaction was produced in such a way that consent ought not to be treated as expression of their free will

98
Q

What are the 2 types of undue influence?

A
  1. Overt Acts of Improper Pressure or Coercion - where behaviour is deceitful/fraudulent, it’s a factor in inducing C; if not decietful, but for test applies
  2. Relationship where 1 has influence over the other which could be taken advantage of
99
Q

What relationships is there an irrebuttable presumption of influence?

A

Parent and child
Guardian and ward
Trustee and beneficiary
Solicitor and client
Doctor and patient

100
Q

What relationships are there where there is no presumption of influence?

A

Parent and adult child
Husband and wife
Influence will need to be positively shown

101
Q

What are the requirements to show undue influence where there is a relationship where 1 has influence over the other?

A
  1. Relationship of trust and confidence (if not irrebuttably presumed)
  2. Transaction which requires explanation
    Burden then shifts to D to show no UI
102
Q

What is the remedy for undue influence?

A

Rescission (but can be lost if contract affirmed, and equitable principles apply)

103
Q

What are 4 methods of discharging a contract?

A

Performance
Agreement
Breach
Frustration

104
Q

What is discharge by performance and 4 exceptions?

A

Complete performance of obligations - a promisor who performs part doesn’t discharge
1. Acceptance of Partial Performance: defaulting party paid on quantum merit basis
2. Substantial Performance: defaulting party obtains contract price with deduction to reflect cost of remedying defect
3. Divisible Obligations: performing party paid for each part performed
4. Wrongful Prevention of Performance by Other Party: entitled to payment despite not completed; innocent party can sue for damages or claim a quantum meruit

105
Q

What is the meaning of ‘substantial performance’?

A

Does defect go to root of the contract?

106
Q

What is the defence for failure to perform?

A

Tender of Performance: promisor shows they unconditionally offered to perform their obligations in line with contract terms but promisee refused
Doesn’t discharge but creditor can’t claim interest/damages

107
Q

How can a contract be discharged by agreement?

A
  1. By a subsequent binding contract between the parties: requires a) agreement obligation is released (accord); b) consideration for promise to release (satisfaction)
  2. By operation of an original contract term: condition precedent or subsequent
108
Q

Where one party has completed its obligations but other hasn’t, what can be done for discharge by agreement by subsequent binding contract?

A

Completed party can release other’s obligations under deed OR accept something else in place of former obligation

109
Q

What is the meaning of a condition precedent?

A

Condition which must be satisfied before any rights come into existence - contract suspended until condition satisfied

110
Q

What is the meaning of a condition subsequent?

A

Term providing for the termination of a contract in event of specified occurrence

111
Q

What remedies are there for breach of contract?

A

Compensatory damages
Specific Performance
Injunction

112
Q

What are the 2 types of breach?

A
  1. Repudiatory Breach: breach of condition (or innominate treated as such) entitling other to treat contract as terminated - party can either affirm & claim damages, or terminate & claim damages
  2. Anticipatory Breach: party indicates they won’t perform obligations in advance - innocent party has automatic right to ‘accept’ the renunciation and treat contract as terminated
113
Q

What must be shown to treat contract as terminated for an anticipatory breach?

A

That if breach occurred at time performance was due, it would have been repudiatory

114
Q

What are the risks of wrongful termination?

A

Court could later find term was a warranty/treated as one which means they would’ve had no right to terminate = wrongful termination
Wrongful notice seen as serious breach
Risk particularly high for terms not defined as conditions and depending on test

115
Q

What are benefits of affirming a contract?

A

Contract survives & rights of innocent party preserved
Commercial reasons
Innocent party doesn’t sacrifice opportunity to claim for damages

116
Q

How can one affirm?

A

Must be evidence of a very clear and unequivocal commitment to continuing the contract

117
Q

What limitations are there for the right to affirm?

A
  1. Cooperation of breaching party required for continued performance
  2. Innocent party must have a legitimate interest, financial or otherwise, in affirming and continuing
118
Q

What is frustration and what’s its effect?

A

Events that are beyond control of either party, that occur after formation of the contract, and render performance radically different
Effect: relieves a party from further obligations under the contract - contract ends automatically

119
Q

How may performance be rendered radically different?

A

Performance is impossible, illegal, or common purpose is frustrated i.e. can’t be carried out

120
Q

What is a frustrating event not?

A

Merely an increase in expense/onerousness
Caused by party’s default
One which parties could’ve reasonably foreseen
Provided for in the contract i.e. force majeure clause

121
Q

What happens to obligations arising to frustrating event?

A

Money paid before can be recovered & money that should’ve been paid no longer need to be
Expenses of payee can be recovered at discretion of the court
Where benefit was non-monetary, a party who received it may be required to pay a just sum for it

122
Q

What is restitution interest and the requirements for it?

A

Represent’s C’s interest they have in restoration of benefits which defaulting party has acquired at its expense - i.e. account for profits
1. Inadequacy of other remedies
2. C has legitimate interest in depriving D of their profit

123
Q

What is the default approach to damages and 2 ways of calculating it?

A

Put innocent party in position they would’ve been in had the contract been performed
1. Expectation Interest
2. Reliance Interest

124
Q

What are the different ways of calculating expectation interest?

A
  1. Cost of Cure: cost of substitute/remedial work required - C must act reasonably
  2. Diminuition in value: difference in value between performance received & performance promised
  3. Loss of Amenity: where loss is not in economic value, but still has value to them
125
Q

What is reliance interest and how is it calculated?

A

Putting C in position they would’ve been in had contract never been entered into
Reliance Measure: C can recover expenses they incurred in preparing for or in part performance of the contract - only for wasted expenditure prior to breach
Most likely to be used where expectation damages are highly speculative

126
Q

What are the requirements for reliance interest?

A

C would’ve recouped those expenses had contract been properly performed - D must prove this wouldn’t be the case

127
Q

What losses have special rules and exceptions?

A
  1. Mental Distress: damages not awarded unless for where a major object of contract was to provide pleasure, relaxation & peace of mind
  2. Loss of Reputation: damages not awarded unless an employment contract contains implied term of trust and confidence such that employer must carry out work in honest way
  3. Loss of Chance: recoverable in damages if lost chance is quantifiable in monetary terms & there was a real chance opportunity may have come to fruition
128
Q

Can damages be recovered on behalf of another?

A

No

129
Q

What is a liquidated damages clause?

A

Stipulates a certain sum payable on particular breach

130
Q

How are liquidated damages clauses interpreted?

A

Starting point = upheld
Courts intervene will strike it out where it’s a penalty clause, & C will be entitled to unliquidated damages

131
Q

What is the test for determining whether a liquidated damages clause is a penalty clause?

A
  1. Clause a Primary or Secondary Obligation? Primary = party of primary obligations of contract; Secondary - obligation triggered by breach to compensate
  2. If secondary, clause penalty if it imposes a detriment out of all proportion to any legitimate interest
132
Q

What is specific performance and when is it awarded?

A

Requires D to carry out its obligations under a positive term of the contract
Only in exceptional cases, where damages are not an appropriate/adequate remedy
Equitable principles apply

133
Q

What is an advantage of specific performance?

A

Breach of SP has more severe consequences than breach of contract

134
Q

What principles are there for specific performance?

A

Not awarded where it would cause undue hardship
Promise given for no consideration is not specifically enforceable
Not awarded for breach of employment contracts, breach of a contract not binding on both parties or for breach of an obligations to perform acts which would need constant court supervision

135
Q

What is a prohibitory and interim prohibitory injunction?

A

Prohibitory Injunction: court order restraining a party from breaching a negative term
Interim: temporary order to protect a party until a matter reaches rial
Equitable principles apply, only granted where Just and convenient, and damages not appropriate

136
Q

What is the effect of not complying with an injunction?

A

Be in contempt of court

137
Q

What limiting factors are there on damages?

A
  1. Causation: factual (dominant cause) and legal (no NAIs that break chain)
  2. Remoteness: loss of a type ordinarily and naturally arising from breach; and if losses are too unusual, D must have had sufficient actual knowledge to be aware of risks of these losses
  3. Mitigation: injured party should take reasonable steps to minimise effect of breach - no obligation to but losses attributable to failure to do so aren’t recoverable

SQE - Elmina M (9 decks)

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