Contract Flashcards
(37 cards)
A seller’s standard terms exclude ‘all statutory warranties relating to conformity with description, satisfactory quality, and fitness for purpose’. The boxes delivered are not of satisfactory quality. What remedies are available to the buyer?
The buyer can claim damages and/or terminate the contract and reject the boxes, because the exclusion clause does not cover the breach of condition. The exclusion clause refers to statutory ‘warranties’, but the terms implied by the Sale of Goods Act 1979 are conditions, not warranties.
A yacht broker breaches contract and cannot supply a yacht for £750,000. The buyer obtains the same yacht elsewhere for £725,000. What damages can the buyer claim?
Nominal damages. The buyer has suffered no financial loss as they obtained the yacht for £25,000 less than originally agreed. Damages compensate for loss, and here there is no actual financial loss.
Which circumstance would NOT provide a basis for claiming actionable misrepresentation?
The gallery owner did not mention that the painting had been damaged by water and restored. As a general rule, silence will not amount to a misrepresentation because the law requires a false statement (positive act) and there is no general duty to disclose facts.
A friend agrees to accept £200 in full settlement of a £300 debt, and the debtor relies on this promise. What legal principle prevents the friend from claiming the remaining £100?
Promissory estoppel. This equitable doctrine prevents a party from going back on a promise to accept a lesser sum where the other party has altered their position in reliance on the promise.
A woman mentions on the phone that a caravan would be painted and valeted before sale, but the written contract doesn’t include this. Can the colleague claim for the missing work?
The colleague has no remedy. The Parol Evidence Rule means external evidence cannot add to or vary a written contract. There is a strong presumption that the written contract contains all the terms.
A ship builder demands an extra £200,000 due to currency devaluation and threatens to terminate. The customer pays but wants to recover it two years later. Will they succeed?
Even though this appears to be economic duress, by paying the money and waiting two years to bring a claim, the courts would likely find that the customer had affirmed the contract.
What requirements must be met for a bank’s promise to pay a dealer if an importer fails to pay?
The bank’s promise must be made in writing because this is a guarantee. A guarantee is a promise to pay a debt owed by another party if that party fails to pay, and guarantees must be made in writing.
A friend posts rejection of a bicycle offer on 19 January, then posts acceptance on 20 January. The owner receives rejection on 21 January (unread) and acceptance on 22 January. Is there a contract?
Yes, because an acceptance is effective when it is posted, whilst a rejection is effective when received. Under the postal rule, acceptance creates a contract at the moment of posting.
A man offers to buy a car saying ‘If I hear no more, I consider it mine for £500’. The nephew says nothing but moves the car. Is there a valid contract?
No. The nephew did not communicate his acceptance of the offer. Acceptance must be communicated to the offeror.
In a battle of forms scenario ending with seller’s terms on 4 July and delivery/acceptance on 5 July, which terms apply?
5 July, the seller’s terms apply because the seller’s reply of 4 July was a counteroffer which the buyer accepted by unloading and using the goods. In battle of forms, the last shot usually wins.
A woman offers a reward for her lost dog. A man finds the dog and returns it but hasn’t seen the reward posters. Can he claim the reward?
No. To accept an offer of a unilateral contract by performance, the offeree must be aware of its existence. The man cannot claim the reward as he was unaware of it when he returned the dog.
When will courts not get involved in interpreting an ambiguous contract between a supermarket and pizza manufacturer?
Where the court is unable to conclude that the parties intended to be bound by the contract. Without a ‘meeting of minds’ between the parties, there is no valid contract.
A woman texts an offer to sell her house for £250,000 with completion ‘next Friday’. The man accepts by text. Is there a valid contract?
No, because a contract for the sale of land must be in writing and signed by both parties.
What terms are implied when a heating engineer supplies and installs a new boiler?
Under the Supply of Goods and Services Act 1982, a condition that the new boiler will be of satisfactory quality and terms requiring that the installation will be carried out with reasonable care and skill and within a reasonable time.
What is needed to terminate a written contract where both parties orally agree to end it with no further payment due?
Nothing, because the oral agreement is sufficient to end the contract. Both parties are giving up rights under the contract, providing consideration for the termination agreement.
A seller unknowingly states a car hasn’t been in accidents, but it was previously written off. Can the woman buyer recover damages?
Yes, unless the seller can prove that they had reasonable grounds for making the statement. In non-fraudulent misrepresentation, the burden of disproving negligence is on the person who made the misrepresentation.
A woman owes £3,000 but offers a £2,750 horse box in ‘full and final settlement’. The breeder agrees but later wants the £250 difference. Will they succeed?
No, because payment by another method is sufficient consideration for the promise to forgo the balance of an outstanding debt.
A man refuses to sell his 19th century cottage in a village as contracted. What remedy is most likely available to the woman buyer?
Specific performance. As the property is likely unique, damages would not be adequate and the court would compel the man to sell the cottage as per their contract.
What effect does misrepresentation have on a contract?
The contract is voidable.
In a battle of forms where the seller’s terms include a ‘prevail clause’ but the buyer’s final terms govern the contract, does the seller’s late delivery exclusion apply?
No, clause 9 is a prevail clause. However, the contract has been formed on the basis of the buyer’s terms and conditions so the seller’s exclusion of liability is not part of the contract.
A ship hire contract requires seaworthiness but the ship breaks down repeatedly, leaving only 7 months of a 24-month contract. Can the customer terminate?
No. The term requiring the ship to be seaworthy was an innominate term which only entitled the customer to sue for damages. The customer received 17 out of 24 months’ benefit, so breach is adequately remedied by damages.
What is required to make a contract for the sale of land binding?
The contract is made in writing. A contract for the sale of land is required to be in writing (note: the actual conveyance must be by deed, not the contract).
Three friends agree to pay £200 for decorating work already completed. Can the decorator friend sue successfully for breach when not paid?
No. The work carried out by the decorator friend was carried out before the agreement to pay her. Past consideration is not good consideration for promises in a contract.
In a battle of forms between two businesses using standard form contracts, how do courts decide which terms govern?
There is a valid contract which is governed by the last set of forms sent before performance of the parties’ obligations under the contract began.
