Contract: Agreement - UI ✅ Flashcards

Question

What is executed consideration?

Answer 1

@ time of formation, consideration ALREADY BEEN performed

Answer 2

1. Must not be past 2. Must move from promisee 3. Need not be adequate 4. Must be sufficient

Answer 3

🎒A supported B’s education, B married C, C promised A would repay A’s loan for education, C failed to do it. Not good consideration

Answer 4

1. Act done at promisor’s request 2. Parties understood act to be rewarded by payment/benefit 3. Payment must have been legally enforceable had it been promised in advance

Answer 5

TP who x provided consideration, cannot bring action to enforce contract. 💍 Promise between fathers or bride and groom to pay money to bridegroom, not paid, groom could not enforce as not provided any consideration - consideration was between fathers.

Answer 6

🍬Nestle wrapper had no value and thrown away upon receipt, but this irrelevant - peppercorn = good consideration even if don’t like pepper.

Answer 7

Must have some value in eyes of law 🏠Executor agreed to transfer house to deceased’s widow in return for payment of £1/year and widow’s agreement to keep house in good repair ^^irrelevant that value of consideration vs value of house not equal

Answer 8

1. Exciting Contract with Same Parties 2. Public Duty 3. Existing Contract with Third Party

Answer 9

✅If goes beyond contractual requirements (legal consideration) ❌Not if just do what contractually bound to do

Answer 10

⚡Except - Williams v Roffey introduce PRACTICAL BENEFIT idea (i.e. Factual consideration) - practical benefits in that case where avoidance of late completion payment in main contract, more efficient working arrangement and avoiding need to find alternative contractor to do work:

Answer 11

1. If A has entered into a contract B to do work for, or to supply goods or services to, B in return for payment by B; and 2. At some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain; and 3. B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time; and 4. As a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and 5. B’s promise is not given as a result of economic duress or fraud on the part of A; then 6. The benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding

Answer 12

General rule: merely carrying out public duty imposed by law will not amount to sufficient consideration Case where a private individual offered reward for information - police officer came forward with information - contract enforceable as although police have duty to prevent crime, no duty to provide information to private individuals so went beyond public duty.

Answer 13

✅ Promisee obtains benefit of direct obligation which can enforce - performance of pre-existing duty owed to TP will be sufficient consideration for promise given by promisor.

Answer 14

⛔Part payment of a debt is not good consideration (Foakes v Beer)

Answer 15

Foakes will not apply where: 1. Introducing new element - e.g. if the creditor requests some new element be introduced, this will be a good consideration, court will not question the value of new element – might be a different place, different time, different thing in place of money. 2. Payment of lesser sum BY THIRD PARTY - e.g if agreement between TP and creditor for TP to pay less sum than debt in full satisfaction of debtor’s obligation, creditor cannot sue for difference. 3. Practical Benefit - Has been held that Roffey does not apply to cases where creditor agrees to accept lesser sum in settlement of debt - this created 🧠 Clear dividing line – between promises to pay more for an existing contractual obligation, where practical benefit can be applied, and promises to accept less than your legal rights, where it cannot. Note though, various cases questioning whether practical benefit in absence of duress is sufficient to make a promise to accept less binding. MWB case blurred lines saying the landlord's oral agreement to reschedule rent payments was binding as got practical benefit of keeping the tenant in property rather than having vacant space.

Answer 16

Equitable doctrine: allows promise to be enforced despite no consideration Where a promise made that intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on, then the promise would be binding. Tenants could rely on defence of promissory estoppel to prevent landlords going back on their promise to accept reduced rent during war years when flats were not let.

Answer 17

NO - cannot be used as a cause of action, can only act as a SHIELD, not sword

Answer 18

1. Acts as SHIELD not sword 2. CLEAR and UNEQUIVOCAL promise that strict legal rights will not be fully enforced 3. Change in POSITION in RELIANCE on the promise 4. INEQUITABLE to allow promisor to go back on their promise.

Answer 19

NO - enough that promisee made change in position on reliance on promise so that inequitable for promisor to go back on promise

Answer 20

▶️ Scenario 1: right to periodic payments may resume once period over which promissory estoppel operates ceases (as envisaged in High Trees e.g. landlord could recover rent for last 2 quarters of 1945) ▶️ Scenario 2: Promisor may resume their full legal rights after giving reasonable notice of their intention to do so [💼 Tool Metal v Tungsten].

Answer 21

OBJECTIVE test = would REASONABLE person regard agreement as intending to be binding, in light of actions of parties and circumstances.

Answer 22

⏩ PRESUMPTION THAT INTENTION EXISTS! Rebutting required clear words - ‘subject to contract’ is strong inference not intend to be bound until formal contract

Answer 23

⏩ PRESUMPTION THAT INTENTION DOESN’T EXIST! Agreement before relationship breakdown = generally upheld Agreement between spouses in process of separating or separated when agreement reached = willing to rebut Lack of formality indicated no intention to be bound re mother’s promise to daughter that if left job in USA and came to Bar in london mother would pay her

Answer 24

⭐General rule: under 18s 🔞not bound, even if other party not know their age, or minor lied about it

Answer 25

1. Necessaries - goods suitable to condition in life of minor - minor bound by contract to supply necessaries to them if contract is for their benefit 2. Contracts of Employment/Education - only bound if for their benefit - e.g. onerous football club not enforceable against minor Only if one of the TWO exceptions apply can contract be enforced against minor.

Answer 26

YES - if they ratify contract at 18, then it is binding on them.

Answer 27

Person lacks capacity if ‘he is unable to make a decision for himself in relation to the matter’ at the time the contract is made, whether impairment is permanent or temporary. Unable to make decision for self = unable to: Understand information relevant to the decision Retain information use/weigh that information as part of process of making decision; or Communicate decision (whether by talking/sign language/other) Information relevant to decision includes info about reasonably foreseeable consequences of: Deciding one way or another; or Failing to make a decision. Note, whether or not someone has capacity has to be asked in relation to a particular decision 🧑‍⚖️Court can make declarations re person’s capacity and ability to contract in specific citations. 1. Necessities - If supplied to person lacking capacity to contract for supply, they must pay reasonable price for them. 2. OTHERWISE, contract BINDING unless person claiming incapacity can establish: They did not understand what they were doing; and That other party knew that to be the case. If this is established contract VOIDABLE

Answer 28

If so intoxicated (drink or otherwise) do not understand what doing, will have to pay reasonable price for necessaries BUT Will not be bound by any other contract they make

Answer 29

A coercing B into contract: consent not present or not given freely in some way. Contract entered into under duress is voidable -> wronged party may be able to take action to have it set arise and to have parties returned to position they were in before contract was entered into.

Answer 30

1. DURESS TO PERSON 2. DURESS TO PROPERTY 3. ECONOMIC DURESS

Answer 31

Must amount to actual or threatened violence Duress NEED ONLY BE ONE FACTOR influencing wronged party’s behaviour

Answer 32

Threat to seize owner’s property or to damage it ([ 💼 The Sibeon & The Sibotre]. BUT FOR TEST: Must show contract would not have been entered into if there had not been the duress (i.e. ‘but for’ test. Unlikely to be enough to show that duress is one factor (but not decisive factor) that influenced the wronged party’s behaviour.

Answer 33

[ 💼 DSND Subsea v Petroleum Geo Services: Pressure… Whose practical effect is that there is compulsion on, or a LACK OF PRACTICAL CHOICE, for the victim, which is ILLEGITIMATE, and which is a SIGNIFICANT CAUSE SIGNIFICANT CAUSE inducing the claimant to enter into the contract = BUT FOR TEST (note: must be shown that agreement would not have been entered into if there had not been the duress).

Answer 34

Duress makes contract VOIDABLE i.e. it still remains in force unless some action is taken, the party subject to duress may choose to avoid the contract after the duress has ceased. The remedy is rescission (i.e. basically returning parties to the situation that each was in prior to the contract being entered into). Note, if the party AFFIRMS THE CONTRACT, then remedy of rescission may be lost as affirmation acts as bar to rescission. NOTE: court might conclude contract is affirmed if, after duress has ceased, innocent party fails to challenge the contract in a timely way and/or acts in compliance with its terms.

Answer 35

I.e. no practical alternative but to acquiesce to the demand 🌬️ 🔒 🛢️🛢️🛢️[ 💼 Carillion Construction Ltd v Felix: CC subcontracted work for F, F’s work delayed, F got CC to agree to pay ++. Held: CC had paid sum under duress. If CC were to complete the main project on time, and avoid heavy fees for late completion, it had no viable alternative to agree to F’s demand. ^^ There was an illegitimate pressure or a threat, the practical effect of which was that CC had no practical choice but to enter into the agreement 🚚🚚🚚 [ 💼 Atlas Express v Kafco: C contracted w D to deliver cartons to different UK stores. . Manager of C’s firm fixed the contract price based on an estimate that each load would consist of 400-600 cartons, but the first load was only about 200. C wanted lower price, D agreed as was small organisation, heavily reliant on contract with store, and unable to find another carrier. Later refused to pay and C sued, D lodged claim of economic duress. where a party has no alternative but to accept revised terms that were detrimental to its interest, this amounted to economic duress. 🧍🧍🧍 [ 💼 B & S Contracts and Design Ltd v Victor Green Publications Ltd: since cancellation of contract would have caused serious damage to D’s economic interests, they had no practical choice but to pay the sum demands by Ps. Ps therefore not entitled to extra £4500 which Ds paid under economic duress - situation where stands being put up before big event, P’s workmen went on strike week before exhibition refusing to work until pay demand met. 🍶🍶🍶[ 💼 Kolmar Group AG v Traxpo Enterprises PVT Ltd: D agreement to sell methanol to C at fixed price within set time. D gave C a ‘take it or leave it’ proposal of less methanol for higher price, knowing D dependant. Held: C had no alternative but to accept the revised proposal. Ds had made demands that they knew would cause Cs loss that were backed by coercive and unlawful threats that they would not perform their obligations, and the Cs had complied with those demands as a result of those threats.

Answer 36

Court will take into account a range of factors, including: 1. WHETHER THERE HAS BEEN AN ACTUAL OR THREATENED BREACH OF CONTRACT BOC = failure to comply with terms of contract/ Could also be threat to Examples: 💼Carillion (Felix’s late completion of works was BOC) and 💼 Atlas (refusal to carry further loads of goods). 2. WHETHER THE PERSON ALLEGEDLY EXERTING THE PRESSURE HAS ACTED IN GOOD OR BAD FAITH? Threat made in bad faith will = finding of duress In 💼Carillion and 💼Atlas, party exerting pressure was threatening to breach its contract. Threat made to extort money from the other contracting party that they were not entitled to. No legitimate basis for demand; it was a claim in bad faith amounting to duress. CONTRAST: 💼 DSND - pressure found to be exerted in good faith. DSND threatened to suspend its work under contract with PGS until PGD provided insurance and indemnity covering the safety of deep-sea divers under contract was clarified. Court said pressure exerted by DNSD was ‘reasonable behaviour by a contractor acting bona fide in a very difficult situation’ 3. WHETHER VICTIM PROTESTED AT THE TIME? Victim should demonstrate evidence of protest at time alleged duress exerted [💼Carillion - before paying money, CC wrote letter protesting against F’s demands. CC registering their dissatisfaction was material to claim succeeding [💼 North Ocean Shipping v Hyundai Construction Co: H agreed to build tanker for NO but refused to deliver ship unless NO paid 10% more than contract price. Held: This was an illegitimate threat to breach the contract, but NO’s claim failed as they had failed to protest at threatened breach - not until 18 months later that claimed return of extra 10%. 4. WHETHER VICTIM AFFIRMED AND SOUGHT TO RELY ON THE CONTRACT? Fact that the shipping company waited 18 months before taking steps to avoid the contract meant they lost the right to have a new contract for increased payments set aside. They had, in effect, affirmed variation to contract. Unless the victim of duress takes immediate action once pressure has ceased to operate, they may be taken to have affirmed the contract. Good example: 💼 B&S Contracts v Victor Green - VG deducted extra £4500 paid under duress from B&S Contracts’ invoices, thereby avoiding new agreement and satisfying criterion that victim takes steps to avoid contract as soon as possible.

Answer 37

💼 Huyton SS v Peter Cremer GmbH & Co: The minimum basic test of subjective causation in economic duress ought, it appears to me, to be A ‘BUT FOR’ TEST. The illegitimate pressure must have been such as to actually cause the making of the agreement, in the sense that it would not otherwise have been made either at all or, at least, in the terms in which it was made. In that sense, the pressure must have been DECISIVE or CLINCHING.

Answer 38

If variation is to be binding, it must demonstrate all characteristics of valid contract - consideration, intention to create legal relations and agreement If X does something above and beyond its original contractual obligations, it may amount to good consideration. In 💼 Williams v Roffey Bros & Nicholls CA shows willingness to look imaginatively at doctrine of consideration, identifying practical benefit as good consideration to make Roffey’s promise to pay more binding. However, even where such practical benefit exists, the promise will not be enforceable where duress has been exercised to extract the promise to pay more ❗

Answer 39

Where transaction produced in such way that CONSENT OUGHT NOT FAIRLY TO BE TREATED AS EXPRESSION OF A PERSON'S FREE WILL, THEN TRANSACTION WILL NOT BE ALLOWED TO STAND -> Aim: ensure influence of one person over another is not abused ❗ Undue Influence: developed in COURTS OF EQUITY (vs Duress: common law doctrine) Where there is doubt as to whether a particular act of coercion is duress or undue influence, C should bring action on both grounds.

Answer 40

Undue influence exists where ‘a person’s consent to a transaction was produced in a way such that the consent ought not fairly to be treated as the express of their free will’.

Answer 41

1. OVERT ACTS OF IMPROPER PRESSURE OR COERCION SUCH AS UNLAWFUL THREATS 2. SITUATION WHERE A HAS INFLUENCE/ASCENDANCY OVER B, AND A TAKES ADVANTAGE OF THAT INFLUENCE/ASCENDANCY

Answer 42

1. 🤥😞🤡 Deceitful/fraudulent behaviour = must be ‘one’ of factors inducing C, but not need to be decisive factor 2. NOT deceitful/fraudulent = but-for test applies

Answer 43

Here, the underlying relationship is sufficient for undue influence to be exercised. Note: lack of coercion of pressure make this quite distinct from duress ❗ TEST: Relationship of trust and confidence (or presumably one of the categories of irrebuttable presumption) AND also a ‘transaction which requires explanation’ Party wishing to allege they are victim of UI = must prove❗❗ If both present, then UI present, unless wrongdoer can produce evidence to convince court no such UI exists.

Answer 44

NOTE: 🧠 Some relationships introduce IRREBUTTABLE PRESUMPTION that one party has influence over another - no definitive list but includes e.g. ✅ parent and child, ✅ guardian and ward, ✅ parent and adult child ❌ husband and wife (do not give rise to presumption) ⚠️ Must be that relationship is TAKEN ADVANTAGE of in said transaction, not just that relationship exists ⚠️

Answer 45

Where does not fit with what usually expected of relationships e.g. Suspicious TYPE of transaction Suspiciously HIGH VALUE Note: in most cases, husband/wife offering their interest in 🏠 as security for loan to spouse’s business is ❌ transaction requiring explanation - so party arguing UI would need to prove that unfair advantage taken of relationship Note even when someone fully understands a transaction having received independent legal advice, it is possible that their consent to it is still being given only as a result of undue influence.

Answer 46

IMPACT: Undue influence once proved can mean a contract (or gift by deed) can be set aside , but relief is equitable and therefore discretionary. Court may not allow relief: if innocent party has DELAYED making claim as ‘delay defeats equity’ OR where the C’s CONDUCT has been underhand as those who come to equity must come with clear hands 🖐️⏲️

Answer 47

E.g. victim persuader to enter into guarantee/surety contract with bank/other creditor on basis of some UI, misrep or other legal wrong, not by bank/creditor (i.e. not by party to transaction) but by some TP e.g. spouse.

Answer 48

Actual Notice: If a contracting party (e.g. the bank) has actual notice i.e. is aware of the undue influence, the contract will be affected. However, it is highly unlikely the bank will have actual notice of undue influence. More likely = that there are circumstances which might lead the bank to realise that transaction carried risk of UI

Answer 49

Constructive Notice: Important to know when a bank/creditor will have constructive notice. 🧠 Two important reminders: Relationship between spouses is not one where there is an irrebuttable presumption. Spouse will therefore need to prove such a relationship most likely by establishing that they placed trust and confidence in their spouse. parties offering security must show more explicitly how their spouse’s influence has been used unduly. If undue influence is shown, issue of notice of bank will be relevant… 💼 Barclays Bank pls v O’Brien: Held: Bank was aware that parties were husband and wife and as such were put on notice that influence may be exercised. Bank had failed in its duty to take reasonable steps to warn the wife of the risks she ran in entering into the surety contract nor had it properly advised her to seek independent legal advance. On this basis, the bank was fixed with constructive notice of the misrepresentation made by husband to induce his wife into the surety contract and therefore the wife was entitled to have the legal charge set aside. 🪃 🪃Creditor would be put on notice when: ‘a wife offers to stand surety for her husband’s debts by the combination of 2 factors: Transaction is on its face not to the financial advantage of the wife; and There is a substantial risk in transactions of that kind that, in procuring the wife to act as surety, the husband has committed a legal or equitable wrong that entitles the wife to set aside the transaction It follows that unless the creditor who is put on inquiry takes reasonable steps to satisfy himself that the wife’s agreement to stand surety has been properly obtained, the creditor will have constructive notice of the wife’s rights.

Answer 50

ANY NON-COMMERCIAL: 💼 RBS v Etridge (No 2) - extended principles of constructive notice beyond cases of spouses stating ‘the only practical way forward is to regard banks as put on inquiry in every case where the relationship between surety and debtor is non-commercial’. Bank is put on inquiry whenever one party in a non-commercial setting is standing as surety for the other party. ^^ confirmed the approach taken in CIBC Mortgages plc v Pitt - husband used borrowed money to speculate on stock market, lost everything, wife tried to set aside mortgage on family home on grounds of undue influence, signed mortgage without reading it under pressure from husband. Held: rejected wife’s claim. Loan was for a holiday cottage, there was nothing to put the lender on notice that the transaction was anything other than a normal advance for the couple’s joint benefit.

Answer 51

Reasonable steps are: 1. No obligation on the creditor to have seen the wife itself as it is ordinarily reasonable to rely on a confirmation from a solicitor that they have advised the wife in an appropriate manner, unless the creditor is aware that this has not been done. It is for the solicitor to determine whether there is a conflict of interest if the wife’s solicitor also advises the husband. 2. Creditor must provide solicitor with sufficient information about the transactions for the solicitor to be able to explain it fully to the wife 3. If the creditor is aware, either actually or constructively, that the wife may have been misled, then the creditor must tell the solicitor of this.

Answer 52

Solicitor should warn wife that their involvement may be relied upon by bank to counter allegations that she could not properly understand the transaction or had given her consent to it If wife consents to advice being given, core minimum: 1. Explanation of documents and their practical consequences, including the risk that the wife may lose her home 2. Seriousness of risk, including the duration and terms of the security and the wife’s assets and means 3. Fact the wife has a choice Solicitors should then obtain any necessary information from the lender/creditor. If the solicitor fails in duty to the wife, the wife will have access to negligence against the solicitor, but she will have no recourse to the lender/creditor which is entitled to assume that the solicitor has properly advised the wife.

Contract: Agreement - UI ✅ Flashcards

Agreement / Consideration/Intention to Create Legal Relations/ Capacity/ Duress/ Undue Influence