General Flashcards
(98 cards)
1
Q
What are the three requirements for a contract?
A
- Agreement
- Intended to be legally binding
- For consideration
2
Q
What are three examples of contracts that require writing?
A
- Contract for the sale of land
- Consumer credit agreement
- Guarantee - eg where someone agrees to be guarantor for another.
NB - electronic contract is seen as contract in writing.
3
Q
What contracts require a deed?
A
- Transfer of land (ie. conveyance), cf contract for the sale of land.
- When there is no consideration made by one of the parties.
4
Q
What is the time limit for breach of contract formed by deed?
A
12 years
Cf all other contracts for which the limitation is 6 years
5
Q
What are the three conditions of a valid offer?
A
- Undertaking, commitment or promise (cf invitation to treat)
- In certain terms (as to be enforceable)
- Communicated to the offeree
6
Q
What 2 kinds of communications do no amount to an offer?
A
- Response to request for information
- Invitation to treat
7
Q
What are examples of invitations to treat?
A
- advertisements;
- price lists;
- items on display in a shop
- auction
- tenders
Offer happens when person responds to the ad, price list, or display
8
Q
What is a unilateral contract and when is it made and accepted?
A
A promise for A to do something if B does something in return and B actually does it.
A becomes bound ONLY when B performs.
eg. Please find my doggo. Reward £50
9
Q
How can an offeror revoke their offer indirectly?
A
BY
- Correct information
- From a reliable source
- Of acts by the offeror which would indicate to a reasonable person that offeror no longer wishes to make the offer.
10
Q
When can an offeror usually revoke their offer?
A
BEFORE acceptance of the offer
10
Q
When can an offeror NOT revoke their offer pre acceptance? Three relevant circumstances
A
- There is a collateral contract to keep the offer open - Offeree MUST have provided consideration for this collateral contract. eg I’ll pay you £10 to keep the offer open for a week.
- In the case of a unilateral contract. Once communicated and offeree starts performance, it canot be revoked.
- In the case of a bilateral contract. Here IF offeror does not set out what amounts to acceptance, performance will amount to acceptance AND cannot be revoked.
NB - unilateral contract - performance does not amount to acceptance BUT does mean offeror can’t revoke.
11
Q
How can an offeree reject an offer?
A
- Express rejection
- Counteroffer amounting to a rejection (cf mere enquiry which would render a reasonable person to believe that the original offer was still open)
- Lapse of time (w/in reasonable period) whatever amounts to a reasonable time - depends on goods (eg are they perishable?)
12
Q
In what circumstances can an offer be revoked by operation of law?
A
- death
- illegality
- destruction
- failure of a condition contained in the offer
13
Q
Who may accept an offer?
A
Usually only someone who the offer was made to.
However, note that could be accepted under agency rules as long as agent is accepting on behalf of the offeree.
14
Q
What is a valid method of accepting an offer?
A
Usually any reasonable means to communicate.
IF specific method set out in the offer, usually NOT accepted if not in the stipulated way EXCEPT if no less advantageous
15
Q
Can silence amount to acceptance?
A
Usually not! Must take positive step. V rare exceptions to this which are not covered.
16
Q
What amounts to acceptance of offer of a unilateral contract?
A
ONLY when performance is complete is the offer accepted.
17
Q
Does offeror of a unilateral contract need to notify offeree?
A
NOT to let them know that they have started performance
BUT should notify within reasoable period AFTER performance.
18
Q
What is the postal rule and why is it relevant for acceptance?
A
Postal rule dictates that valid offer is made when received, valid rejection is made when received, and valid acceptance is made when posted.
19
Q
When does the postal rule apply?
A
It applies unless
- The offeror stipulated a different method of acceptance
- The postal acceptance is incorrectly addressed/posted
- It was not reasonable for acceptance to be made by post.
20
Q
What is the battle of the forms?
A
When parties send their own terms. the last set of terms sent before performance is deemed to have won the battle of the forms.
21
Q
What is a prevail clause and when is it effective?
A
Prevail clause states that one party’s terms will prevail.
BUT rarely enforceable because of the battle of the forms - last word wins.
22
Q
How is the presumption that friends do not intend to enter into legally binding contracts rebutted?
A
Courts have found that friends joining together to enter into a race/contest intend to be legally binding.
23
Q
How is the presumption that commercial contract are inteded to be legally binding rebutted?
A
- By stating that is agreement in honour only OR
- By stating it is subject to contract - that is pending the written and signed agreement.
24
In what circumstances is a contract with a minor enforceable?
1. When it is ratified at age 18
2. When it is for acquisition of property
3. When for ‘necessaries’
NB - for acquisition of property will be binding unless minor express repudiates the contract
25
What remedies are available for when minor renders contract void for intention?
Under the Minors Contract Act 1987 - can recover property transferred to minor under void contract, if it is just and equitable
26
When does intoxication render a contract void?
When NOT a contract for necessaries AND person entering into contract knew that the other party was intoxicated.
27
What is the difference between executed and executory consideration?
Executed - where consideration complete
Executory - where consideration is outstanding
28
What is enough consideration for a contract?
It must be **sufficient but need not be adequate.**
It should **not be wholly illusory**
ie doesn't have to be market value, or a good deal
29
In what **2 circs** will **performance of an existing duty** amount to **good consideration**?
EITHER
when it **goes beyond the work agreed** (eg complete the work in **one week rather than two**)
OR
When it provides a **practical benefit** to the other party - eg avoidance of monetary sanction
30
When will performance of an existing statutory duty amount to good consideration?
NEVER - eg paying police to maintain law and order. Police not providing good consideration.
HOWEVER - possible for police to go above and beyond their stat duty, that would amount to fresh consideration.
31
When will act previously performed amount to good consideration?
When there was **implied agreement that paymnet would be made following performance.**
**THREE conditions:**
1. Act done **at promisor's request**
2. Both parties u**nderstood that the act would be remunerated,** and
3. payment/benefit must have been **legally enforceable had the promise been made in advance**
32
In what circumstances will an agreement to part payment of a debt amount to good consideration, and therefore be enforcable?
1. Bone fide payment - **honest belief** that correct amount
2. Some **other benefit** - ie paid at a different time, by different means, at a different place.
3. Payment made by **third party** - who **honestly** **believed** it would satisfy the debt
4. **Uncertain** what the debt was – uncertain amount
5. **Creditors agreement**
33
What is promissory estoppel and when is it applicable?
When it would be unjust for promisor to go back on their promise. **Shield NOT sword** - cannot basis for a claim, **only a defence.**
**Conditions:**
1. **Unequivocal promise** by promisor
2. **Relied** up by promisee to their detriment
3. It **would be inequitable** for promisor to go back on promise
34
When (4 circs) does the Contract (Rights of Third Parties) Act 1999 apply?
1. When third party **expressly granted right t**o enforce in the contract
2. When contract purports **benefit on third party** **AND reasonable that parties intended** for **third party to enforce**?
3. When the **Act has not been contracted out**
4. When **NOT an employment contract**
35
In what 3 circs can contracts that benefit third party NOT be varied or rescinded to their detriment?
1. If **third party communicated agreement** to the benefit
2. If t**hird party relied** on the benefit and **promisor knew O**R
3. Promisor reasonably expected to **foresee** that third party would rely **AND third party has relied.**
36
In what 5 circs will a third party be able to enforce a contract under the common law
1. Agency (but not really by third party, just on behalf of one of the parties)
2. Assignment - BUT can only assign benefit of a contract, not the burder
3. Subrogation - eg where insurer steps into shoes of the policy holder
4. Collateral contract - basically fresh contract
5. Trust - A and B agree that B will hold on trust for C. C can enforce.
37
What 3 consideration will the court use to assess whether term or representation?
1. **Importance** - would the party have entered into the contract but for the statement? If no, then likely a term.
2. **Timing** - made at the time of the contract or during preliminary negotiations?
3. **Special knowledge? I**f statement of fact/based on special knowledge, it's likely to be a term. IF based on belief then likely to be a representation.
38
What is a condition v a warranty?
**Condition -** goes to the root of the contract. Breach is often called repudiatory breach because the effect is repudiation of the entire contract. Innocent party can terminate contract and claim damages.
**Warranty -** Does not go to root of the contract. Cannot terminate contract as a result. May claim damages.
39
What is an innominate term, and what will the court consider to determine how to clasify it?
Term where it's not clear whether it was condition or warranty.
Court will consider whether breach amounts affects **substantially the whole benefit of the contract** or whether it is **only incidental to the overall purpose**
40
How will the Court consider delay when determining the severity of a breach?
The Court will consider whether time is off the essence.
PResumed in commercial contract.
IF time is of the essence - delay is breach of condition.
IF time is NOT of the essence - delay is breach of warranty
41
What is an entire agreement clause?
It confirms the parole evidence rule - that the written document is the entire agreement
42
What four terms are implied into commercial contracts as a result of the Sale of Goods Act?
1. That seller has **legal right** to the product and can **sell it**
2. That the goods are **fit for purpose**
3. That goods are of **satisfactory quality,** and
4. That goods **match their description**.
43
In what circumstances can parties contract out of the Sale of Goods Act and the Supply of Goods and Services Act?
Subject to the Unfair Contract Terms Act which imposes a reasonableness test. High hurdle. Hard to contract out.
44
What is the meaning of ‘satisfactory quality’ under the SGA?
That the goods are fit for purpose, without minor defects, and durable.
45
What kind of terms does the Supply of Goods and Services Act imply into contract?
That the goods/services were made with r**easonable care and skill and within a reasonable time.**
These are **innominate terms.** Court will assess impact/importance of the breach to determine effect.
46
How can parties contract out of Consumer Rights Act?
They CANT.
47
What kind of terms are implied into consumer contracts under the CRA?
* fit for purpose
* reasonable care and skill
* reasonable price and time - if not previously agreed
* satisfactory quality
48
In what circumstances with the courts imply terms into a contract?
VERY LIMITED CIRCS
1. Only to give contract **business efficacy** and if **SO obvious to reasonable person that it goes without saying** (**officious bystander** test)
2. If parties dealings demonstrate **regular and consistent course of dealing -** court will **imply the same terms.**
49
When will the **courts not get involved** to interpret a contract?
1. If court is **unable to conclude what the parties intended** OR
2. If parties expressly agreed to agree later. Eg ‘**to be agreed’**
50
In what FOUR circumstances will the Court get involved to interpret and uphold a contract?
1. If there are **mechanisms within the contract to deal with uncertainty** - eg Party A will determine how this will be done.
2. Contract where **future performance left to be adjusted** as necessary
3. **Commercial contract where parties are familiar with the trade**
4. **Partial performance** where one party has relied to their detriment.
50
What are the three requirements for binding exclusion clauses?
1. Must be **incorporated** into the contract
2. Must be **construed to exclude liability**
3. Must **not** be **prohibited** by statute
51
In what 3 ways can an exclusion clause be incorporated into a contract?
1. By signature
2. By notice, or
3. Through custom or previous dealings of the parties.
52
What are the **two defences to signing a contract subject to an exclusion clause.**
1. If **oral misrepresentation** made **at the time of signing**
2. ***Non est factum*** **-** the party had n**ot understanding of the doc they signed** AND **fundamental difference between** doc signed and doc they thought they'd signed.
53
What notice will render exclusion clause incorporated into contract?
Must take reasonable steps to bring it to attention of the other party BEFORE or at the time of entering into the contract.
The more unusual the term, the more steps should be taken to bring it to their attention.
IF contractual document, then it must actually be referred to in the contract - receipt is not enough and too late.
54
In what circumstances will customs or regular dealings render exclusion clause incorporated into contract?
Where party can demonstrate **regular and consistent** dealings subject to the same exclusion clause.
BUT **3 to 4 dealings in 5 years was found to be insufficient.**
55
What is the contra preferentum rule?
Any ambiguity is interpreted against the party trying to enforce the term.
this applies to exclusion clauses where the court interprets ambiguity against the party trying to enforce the exclusion.
56
What is required for an exclusion clause to be properly construed?
Wording must be clear and unambiguous.
57
Under UCTA what 2 liabilities CANNOT be excluded?
1. Liability for **death or personal injury caused by negligence**
2. Liabilty for breach of **implied condition as to title**
58
Under UCTA what 3 liabilties can only be excluded IF REASONABLE?
1. Liability for any negligence (other than resulting in death and personal injury)
2. Liability for breach of quality, description, fitness under SGA
3. Liabilty for breach of contract through standard terms and conditions
59
How will the courts determine the reasonableness of an exclusion clause under UCTA?
Reasonableness of the **exclusion clause being** ***included*** **in the contract.**
The courts will require that the term is fair and reasonable to be included, **having regard to the circumstances which were or ought to have been known to or in the contemplation of the parties at the time of the contract.**
60
What 5 things will the court consider to determine the reasonableness of an exclusion clause?
1. The strength of the **bargaining positions**
2. **inducement**
3. whether **party knew/ought to have known (the extent of) the clause**
4. whether **compliance was practical**
5. whether the contract was for a **special order**
61
Who has the burden of proof to establish the reasonableness of an exclusion clause?
The party wanting to rely on the exclusion clause.
62
What is an **unfair term** under the Consumer Rights Act?
It is a term which is **contrary to the requirement of good faith**, causes **significant imbalanace** to the **detriment of the consumer**
63
What are prohibited terms under CRA?
1. Exclusion of liability for **death/personal injury as a result of negligence**
2. Exclusion of liability as to breach of **quality, title, fit for purpose, compliance with description**\*\*\*
3. Exclusion of liabilty for **statutory duties**, including requirement to exercise reasonable care and skill
\*\*\*NB that these terms are subject to reasonableness test under UCTA but **PROHIBITED under CRA.**
64
When will term NOT be subject to fairness test under CRA?
When the term specifies the **main subject of the contract AND** it is **transparent, intelligible** and **prominent.**
65
What 2 reasons give rise to a void contract?
1. Mistake
2. Illegality/contrary to public policy
66
What 3 reasons give rise to a voidable contract?
1. duress
2. undue influence
3. misrepresentation
67
What are the 4 kinds of mistake? Define each.
1. **Common mitsake** - parties are mistakes about the same thing - void
2. **Mutual mistake** - parties both mistaken but differently - void
3. **Unilateral mistake** - one party mistaken, other party knew/ought to have known - void
4. **Mistaken identity** - ONLY void IF identity was fundamental to contract.
68
In what circumstances can parties rectify a mistake?
Where **they agree** on the term but it is merely **reflected incorrectly in the contract.**
69
What are the three kinds of duress?
1. **Duress of the person** - eg threat to kill/physical violence
2. **Duress of goods** - maintaining control over other party's goods
3. **Economic duress** - illegitimate pressure, economic inbalance, such as to vitiate consent of the weaker party.
NOTE ALL MUST HAVE illegitimate pressure to succeed
70
What 5 factors are considered by the courts when determining whether economic duress has taken place?
1. Whether the pressure was in **bad faith**
2. whether pressure was **illegitmate/legal**
3. whether the threat deprived the innocent party of a **practical choice**
4. Whether **party affirmed the contract** - harder to rescind
5. Whether **party protested -** indication of duress
71
What are two kinds of undue influence?
1. **Actual undue influence** - pressure (less than duress) which mean party did not **truely consent**. **Need not be principal reason** for entering into the contract. **Need not be illegal or in bad faith.**
2. **Presumed undue influence** - as a result of special relationship of trust and confidence - abuse of power
72
What four relationship gives rise to relationship of trust and confidence? What one relationship does not?
1. child/parent
2. guardian/ward
3. doctor/patient
4. solicitor/client
BUT **spousal relationship not automatically.**
73
How can you establish presumed undue influence? How can it be rebutted?
(1) special relationship AND (2) relationship does not fully explain the transaction - eg gift is too big
REBUT by showing that party had **informed consent** and obtained **independent advice.**
74
When does third party undue influence arise?
When third party knew/ought to have known that there was undue influence and did not take reasonable steps.
Eg - UI on wife. Bank does not check that wife has independent legal advice.
75
What are the five types of illegality, rendering a contract void?
1. Illegality by statute
2. Illegality by common law
3. contrary to morality and institution of marriage
4. damage to government
5. interference with justice
76
In what 3 circs will silence give rise to a misrepresentation?
1. In contract of utmost good faith - **Uberrimae fidei**
2. **Partial disclosure** rendering the representaiton misleading
3. **Failure to correct** a representation (eg following change of circs)
77
What is the difference between fraudulent and negligent misrep?
**Fraudulent** - **knew or careless (reckless and did not care whether true or false)**
**Negligent** - **no reasonable grounds** to believe that statement to be true.
78
When is rescission NOT available for misrep?
(4 circs)
1. When party has **affirmed the contract** - (affirmation = knowledge of misrep + affirmation by conduct or words)
2. **Lapse of time** - clocks starts running when part becomes aware (ought to be aware) of misrep
3. **Rescission not possible** - not possible to return parties to pre-contractual state
4. If third party has **obtained rights under the contract -** bone fide third party
79
How can contract be **discharged or varied** by agreementWhta**?**
1. **Parties agree AND consideration.**
Two circs - **both parties have outstanding performance** - that will amount to **consideration** for both
OR
**One party has outstanding performance.** If **no consideration** by that party, then **will need deed.**
80
In what 4 circs is a contract discharged by performance?
1. **Full** performance
2. **Substantial performance** (exceptionally accepted)
3. **Divisible** performance - part of contract is performed and it is divisible
4. **Partial performance by variation** - Must be consideration to be valid.
81
What is required for discharge by frustration?
1. Performance impossible or radically different
2. Both parties are innocent - events outside parties' control.
82
What 3 circs do NOT give rise to frustration?
1. Events that are foreseable
2. Events that render performance more difficult/expensive but still possible
3. Events arising from fault of one of the parties (self-induced frustration)
83
How does the Law Reform (Frustrated Contracts) Act create fairer remedies for contracts discharged by frustration? When is it not available?
Fair because monies paid before frustrating event are recoverable. Monies due following frustrating event NOT owed.
**NOT available:**
1. **Express terms** in the contract
2. Sale of **goods** - goods that have **perished**
3. Charterparties - **carriage of goods at sea**
4. **Contracts for insurance**
84
What is a force majeure clause?
Included in most modern contracts - allocates risk of any events outside control of the parties.
85
What is the difference between expectation interest and reliance damages and when is each available?
**Expectation** - damages to put the innocent party in the position they would have been in **but for the breach.**
**Reliance** - damages to put the innocent party in the position they would have been in **but for the contract -** i.e. recover expenses paid in reliance.
Reliance available when expectation too difficult to calculate.
86
When are damages for non-monetary losses available?
* Physical injury (but usually not mental injury)
* Loss of amenity - if sole purpose of contract was entertainment
* Loss of reputation
87
What is the difference between a liquidated damages clause and a penalty clause?
**Liquidated damages** - **genuine pre-estimate** of loss
**Penalty** - aims to penalize the party in breach, imposing a detriment **out of proportion** - not enforceable.
88
When will specific performance NOT be granted
(5 circs)
1. When would amount to undue hardship
2. When disproportionate to the consideration offered by other side
3. When no consideration outstanding from other side (no mutuality)
4. In contracts of employment/services
5. If supervision by court is required.
89
What defences are available to a claim for equitable remedies?
(3 defences)
1. C does not have **clean hands**
2. C agreed to a **waiver**
3. **Unreasonable delay** by C in bringing the claim
90
What are restitutionary remedies?
**Unjust enrichment** -
1. D is enriched
2. At the expense of C
3. It was unjust
4. there are no defences
91
What remedies are available for unjust enrichmetn?
**Property or money**
If needs to be valued -
***Quantum merruit*** - reasonable remuneration for services
OR
***Quantum valebat*** - reasonable value for goods
92
When does the postal rule (for acceptance) not apply?
the postal rule does not apply **where the offer states that acceptance will not be effective until received.** In that case, **acceptance is effective only upon receipt.**
93
In what circumstances will a variation without consideration be enforceable?
If equitable doctrine of waiver applies -
1. **Party waived right** in respect of non-performance, AND
2. Has not reinstated the right with **reasonable notice.**
**SO - possible to reinstate if not conisderation BUT only with reasonable notice.**
94
How are damages for construction defects calculated?
In the case of **construction contracts,** there are two different measures of damages:
(1) **how much it would cost to cure a defect,** and
(2) the **difference in value between what was contracted for and what the innocent party actually received.**
IF the c**ost of curing the defect is disproportionate** to the benefit that would be gained. In cases such as these, the **courts have recognised the loss in the value of what was contracted for, or have awarded damages for loss of amenity**
95
When will common mistake render a contract void? When will it not?
If the common mistake is in relation to the **existence** of the contract - **void**
If the common mistake is in relation to the **quality of the subject matter** of the contract - **not void.**
96
When can party withhold payments?
You can only withhold payment if you can establish a breach of contract from the other business. Once the breach is established, you usually have three methods that will allow you to withhold payment. These methods are:
a right to set-off;
establishing pre-conditions to payment; and
refusing payment because of incomplete or defective work.
