Contract Law

Question 1

What are the four essential parts of a contract?

Answer 1

1. Offer
2. Acceptance
3. Consideration
4. Intention to create legal relations

Question 2

What is a consideration?

Answer 2

Something of value which is exchanged in the contract

Question 3

What statuses can a contract hold?

Answer 3

1. Valid 2. Voidable - can be rescinded by injured party 3. Void - never part of law, always illegitimate and non-binding

Question 4

Explain Merritt v Merritt. What year was the case heard?

Answer 4

1970 Husband leaves wife for another woman, promising to pay his wife £40 per month until she paid off the mortgage Once she had paid off the mortgage, he would transfer the house to be in her name She paid off the mortgage, but he did not transfer He claimed that the agreement was made in a domestic context and was therefore not binding legal agreement, as set out in Balfour v Balfour (1919) It was adjudged that because they were separated and not on good terms, the agreement was therefore binding and he should transfer the house

Question 5

What year was Balfour v Balfour heard?

Answer 5

1919

Question 6

What is a ‘mere puff’?

Answer 6

A statement that is clearly exaggerated and not meant to be legally binding

Question 7

What is a representation?

Answer 7

A specific factual statement made outside of the contract that may entice you into the agreement

Question 8

What types of misrepresentation are there?

Answer 8

1. Fraudulent: a deliberate lie, remedied by damages and/or rescission 2. Negligent: carelessly made, remedied by damages and/or rescission 3. Wholly innocent: genuinely believed representation to be true. Remedied by damages or rescission

Question 9

Explain Carlill v Carbolic Smoke Ball Company. What year was the case heard?

Answer 9

1892 Defendant brought out a flu treatment, with advertisements that said that if anyone tried it for 3 times a day for 2 weeks and got the flu, they could receive £100 They also said that £1000 had been deposited in a bank, to demonstrate sincerity Carlill followed these conditions and contracted the flu, so applied for her compensation Defendant ignored letters, and eventually asked claimant to come and use the Smoke Ball in the office; she took them to court Judges found that it was not a unilateral offer to the world, because it was specific to those who carried out the conditions, which the claimant had The offer was clearly meant to be taken seriously, and therefore they should pay the defendant

Question 10

Explain Spice Girls v Aprilia. What year was the case heard?

Answer 10

2002 Aprilia agreed with Spice Girls to sponsor them for a couple of their tours in 1998 At the time of the agreement being made, the Spice Girls were aware that Geri Halliwell was to leave the group in May 1998 This was considered a misrepresentation because Aprilia would be unable to reap the benefits of the sponsorship and their merchandise Spice Girls ordered to pay damages

Question 11

What is an express term?

Answer 11

A term specifically mentioned in the contract

Question 12

What is an implied term?

Answer 12

A term implied into the contract by custom, obviousness or statute

Question 13

What is a condition? What can be claimed if conditions are breached?

Answer 13

A major term in the contract. Damages and/or rescission

Question 14

What is a warranty? What can be claimed if warranties are breached?

Answer 14

A less important term in the contract. Rescission only

Question 15

What is an innominate term? How do we clarify the situation if innominate terms are involved?

Answer 15

A term which could be a warranty or a condition We ask whether the breach of this term has deprived the injured party of the whole benefit of the contract: if so, it is a condition; if not, it is a warranty

Question 16

What are the key parts of the Sale of Goods Act? What year is the act from?

Answer 16

1979 S.2(1): when the act is implied S.12(1): seller has the right to sell the goods S.13(1): good must correspond with its description S.14(2): satisfactory quality S.14(3): goods are fit for purpose

Question 17

What is a contract?

Answer 17

A legally binding agreement that can be enforced in court

Question 18

Where are indictable offences tried?

Answer 18

Crown Court

Question 19

What is the difference between an agreement and a contract?

Answer 19

An agreement is not necessarily legally binding, it may be an understanding that cannot be enforced; a contract is legally binding and can be enforced by the courts

Question 20

What does privity of contract mean?

Answer 20

A contract cannot confer rights or impose obligations on persons who are not party to the contract

Question 21

What is an invitation to treat?

Answer 21

A non-binding invitation to others to make an offer

Question 22

How may an offer be accepted?

Answer 22

1. Silence
2. Action
3. Written
4. Oral

Question 23

What is the postal rule?

Answer 23

If acceptance is communicated by post, the acceptance is legally effective from the moment it is sent, not from the moment it is received

Question 24

What is an exemption clause?

Answer 24

A term in a contract which limits a party’s contractual duties

Question 25

Which statute governs exemption causes?

Answer 25

Unfair Contract Terms Act 1977

Question 26

In what ways can a contract be discharged?

Answer 26

1. Performance: the full completion of contractual obligations by both parties
2. Breach of a condition
3. Agreement: both parties agree to give up rights and obligations of the contract
4. Frustration: due to changes in circumstances, the contract is either impossible to perform, or has been deprived of its purpose due to actions by third parties

Question 27

What is volenti non fit injuria?

Answer 27

A defence in tort: ‘no wrong can be done to he who consents’. Where the claimant has consented to harm or the risk of harm, they cannot claim

Question 28

Explain Pharmaceutical Society of Great Britain v Boots Cash Chemists. What year was the case heard?

Answer 28

1953

Defendants introduced a new system in which customers would take products off the shelf and put them in the basket rather than go to the pharmacist’s station and ask for them

The claimant’s argued that this was a breach of the law that said a pharmacist must be present at the point of sale

It was ruled that the sale was not effective until products were taken to the till; items on the shelves were invitations to treat rather than offers

Question 29

Explain Fisher v Bell. What year was the case heard?

Answer 29

1961

The defendant advertised a knife in the window of his shop with a price tag

It was argued that this constituted an offer, which would have been illegal because of laws about weapons.

However, it was ruled that the display of the knife with a price tag constituted an invitation to treat, not an offer

Question 30

Three tests for a consumer contract

Answer 30

1. Seller is acting in course of a business
2. The buyer is not acting in course of a business
3. Goods that are the subject of the contract are of a type normally sold for private use or consumption

Question 31

Explain Egan v Motor Services (Bath) Ltd. What year was the case heard?

Answer 31

2007

Claimant bought a car from the defendant, but said that it had faulty steering

The defendant ran tests and adjustments and argued that there was nothing wrong with it, and refused to take the car back

Claimant said that the car was not of satisfactory quality and claimed for the price of the car

Case was ruled in favour of the defendant because the claimant’s idea of satisfactory quality was clearly not reasonable

Question 32

What did the “Contracts (Rights of Third Parties) Act” 1999 change?

Answer 32

Third party can sue if:

• Expressly named in contract
• The contract purports to confer a benefit on him
• Contract expressly provides that he can sue

Question 33

Explain Tweddle v Atkinson. What year was the course heard?

Answer 33

1861

Claimant was marrying the defendant’s daughter

Defendant and claimant’s father agreed to pay a sum to the couple after the wedding

Defendant died without paying the money, and then the claimant’s father died as well

Son attempted to sue the defendant’s executor, but failed because he was not party to the agreement