Paper 3- All topics

Question 1

contract introduction/ definition

Answer 1

A contract is a legally binding agreement between two or more parties. There are four key components to a contract: offer, acceptance, consideration, and intention to create legal relations. There are also two types of contract: unilateral, where only one party has an obligation to fulfill, and bilateral, where both parties have an obligation to fulfill.

Question 2

Define offer

Answer 2

An offer is a statement of all the terms which you are willing to be bound by. It must be clear certain and communicated (Gibson vs MCC)

Question 3

Offer side rules

Answer 3

• Counter offer- rejects the original and creates a new offer (Hyde vs Wrench)
• Revocation- can be withdrawn any time before acceptance takes place, but this must be communicated- even if by a third party (Dickinson vs Dodds)
  -Rejection- must be a clear rejection and must be communicated (Stevenson vs Mclean)
  -Lapse of time- if the offer has a time limit and that runs out, otherwise it will end after a reasonable period of time (Ramsgate vs Victoria Hotel)
  -Death- of the offeror but the offer can still be accepted until the offeree knows about the death.

Question 4

Define ITT

Answer 4

An invitation to treat is not an offer. It simply invites the other party to make an offer which can then be accepted or rejected.

Question 5

3 types of ITT

Answer 5

1- Adverts will be an offer if (Partridge vs Crittenden)- unless they are made to a specific group of people, or it is a unilateral offer
2- Items on display (Fisher vs Bell)
3-Auctions (BCA vs Wright)

Question 6

Request for information

Answer 6

(Harvey vs Facey) rules that a request for information and a response to this request is not an offer
-Exam tip= after request for info is made, check for offer later on in scenario

Question 7

define acceptance

Answer 7

Acceptance is the agreement to all of the terms of an offer. It is valid as soon as it is communicated. Acceptance can take place in any form except for silence (Felthous vs Bindley), but it must be done by positive conduct (Carlill vs Carbolic Smokeball)
- apply- has acceptance taken place

Question 8

Acceptance side rule 1

Answer 8

-Postal rule- A letter of acceptance takes effect at the moment it is sent (Adams vs Lindsell)
-The postal rule only applies if:
-Post is the usual or expected method of communication
-Letter is correctly stamped and addressed
-The claimant must be able to prove that the letter was posted
- Side rule= only way you can avoid the postal rule is by making a term in the contract that acceptance will only take affect when it is communicated to them

Question 9

Acceptance side rule 2

Answer 9

• Electronic and other forms of communication- acceptance takes place once it is received (Entores vs Miles Far East).
  -If the communication is to a business and it arrives out of office hours, it will be communicated at the start of the next working day.

Question 10

Consideration definition/ intro

Answer 10

Consideration is the “Thing” that each party puts into the contract. It is the benefit and detriment on both sides (Currie vs Misa) It must be real (White vs Bluett), and must be sufficient, but need not be adequate (Chappell vs Nestle)The parties that give consideration will be privy to the contract and therefore have rights under it (Tweddle vs Atkinson)

Question 11

Consideration side rule 1

Answer 11

• Performance of an existing contractual duty- if you only do what you were already bound to do, then this is not good consideration (Stilk vs Myrick). There are two exceptions:
  1- If you do something extra, then this is good consideration
  (Hartley vs Ponsonby)
  2- If the party gains an extra benefit (Williams vs Roffey)

Question 12

Consideration side rule 2

Answer 12

• Past consideration is not good consideration- By the time that the agreement takes place, the consideration is already done. Where the consideration is past, there will not be a valid contract (Re McArdle)
• Exception- Where there is an implied promise to pay for a particular task before the consideration is done, then this is enforceable (Lampleigh vs Braithwaite)

Question 13

Consideration side rule 3

Answer 13

• Part payment of a debt is not good consideration. This is a rule from Pinell’s Case- if you agree to only part payment of the debt owed to you, then you can still claim the rest. There are three exceptions to the rule:
  1- Accepting something other than money for the debt
  2- Paying a smaller amount on a date earlier than originally agreed
  3- Repay part of the debt on the due date at a different place at the
  request of the debtor.
• Finally, Promissory estoppel can be used which is an equitable remedy, if you make a promise that another person relies on to their detriment the promisor is “Estopped” from breaking the promise.

Question 14

Consideration side rule 4

Answer 14

Privity of contract- only those who give consideration have rights under the contract (Tweddle vs Atkinson)
-Exception- Contracts (Rights of Third Parties) Act 1999- A person who is not a party to a contract can enforce the contract if he is named in the contract or he gains a benefit from it.

Question 15

Intention to create legal relations intro/ definition

Answer 15

Both parties must intend to create legal relations. This means that they both intended to be legally bound. There are two types of agreement: Social/domestic agreements, and business/ commercial agreements.

Question 16

Intention to create legal relations- type 1

Answer 16

-Social and domestic agreements- the starting presumption is that the parties did not intend to be legally bound (Merritt v Merritt)/ (Balfour v Balfour), unless there is proof of otherwise.

Question 17

Intention to create legal relations- type 2

Answer 17

• Business and commercial agreements- The starting presumption is that the parties did intend to be legally bound, unless there is proof of otherwise (Jones v Vernon’s Pools)

Question 18

Intention to create legal relations- side rules for social situations

Answer 18

Side rule 1- Money changes hands (Simpkins vs Pays)
Side rule 2- The parties put their financial security at risk (Parker vs Clarke)

Question 19

Breach intro

Answer 19

A breach of contract is where a valid contract has been formed an exists, but something has gone wrong. There are two types of breach: Actual and Anticipatory.

Question 20

Breach type 1

Answer 20

Actual breach= this is where a party has failed to perform their obligations under the contract. However, it depends on what type of term has been breached:
- Breach of a condition (Poussard vs Spiers)- the contract is ended
and/ or sue for damages
-Breach of a warranty (Bettini vs Gye)= The contract must carry on, but damages can be claimed

Question 21

Breach type 2

Answer 21

Anticipatory breach- This is when a party to a contract gives notice in advance to the other party that he or she will not be performing or completing the contract.
Breach of a condition or a warranty= claimant chooses whether to sue immediately, or wait for the consequences of the breach to happen, and then sue. (Hochester vs De la Tour)

Question 22

Compensatory damages definition

Answer 22

• C must prove that the damage was caused by the D’s breach. Damages are meant to place the claimant in the same position as they were if the contract had been performed

Question 23

Explain test for compensatory damages

Answer 23

1- Loss that is a natural consequence of the breach- objective test
2- Did the parties have specific knowledge of any potential losses when the contract was made- subjective test (Victoria Laundry vs Newman industries Ltd)
-Application= always apply test 1, and only apply test 2 if relevant

Question 24

List/ explain the different categories of recoverable loss

Answer 24

-Loss of a bargain- this includes the profits that C would have expected to receive had the contract had been performed. You can claim for the loss of chance- (Chaplin vs Hicks)
- Reliance loss- This is wasted expenditure by a claimant who relied on a contract being performed. They are expenses spent in advance of a contract.
- Liquidated damages- Where the amount of damages has been fixed by a term in the contract. However, the sum identified in the contract must represent an accurate and proper assessment of loss and not be exorbitant.

Question 25

Compensatory damages side rule

Answer 25

- The duty to mitigate the loss: -The injured party must take reasonable steps to minimise the effects of the breach. This is the mitigation of loss. However, a claimant is not bound to go to extraordinary lengths to mitigate the loss, only to do what is reasonable in the circumstances.

Question 26

Equitable remedies- introduction/ definition

Answer 26

- Equitable remedies are awarded where damages is an inadequate remedy and justice would not be served merely by damages. Equitable remedies are available at the courts discretion.

Question 27

Explain the equitable remedy- injunctions

Answer 27

- An injunction is a court order telling you to stop doing something or forcing you to do something. An injunction is only awarded if damages would not have been enough and it is in the public interest (Miller vs Jackson). An injunction can also be tailored to meet the needs of the situation (Kennaway vs Thompson)

Question 28

Explain the equitable remedy- specific performance

Answer 28

- This is ordering one party to performs his or her contractual obligations - You cannot claim this remedy if damages would be adequate or in contracts for personal services (Page One Records vs Britton) - Specific performance will not be granted if it would lead to unfair hardship on the C (Patel vs Ali)

Question 29

Explain the equitable remedy- Restitution

Answer 29

- This is simply the repayment of any money or other benefits passed to the defendant in advance of the contract that is breached.

Question 30

Explain the equitable remedy- Rescission

Answer 30

- The idea of rescission means that the parties are returned to the positions they wee in before the contract was made. it is then as if the contract was never made. However you cannot claim rescission if it is impossible to return the parties back to their original position.

Question 31

Consumer rights introduction

Answer 31

The Consumer Rights Act (CRA) 2015 applies to all contracts between traders and consumers. It covers all all contracts for good, services, and mixed contracts (Both).

Question 32

CRA 2015- section 9

Answer 32

- Section 9 rules that the goods must be of a satisfactory quality. Which is what a reasonable person would consider satisfactory- s9(2) given the price, description, state and condition, fitness for purpose, appearance and finish, freedom from minor defects-S9(3) - However, section 9 will not apply if -9(2): - The fault is drawn to the consumers attention -The consumer examines the goods and this should have revealed the fault. - Goods supplied by sample and inspection of the sample was inspected.

Question 33

CRA 2015- section 10

Answer 33

- section 10 rules that the goods must be fit for purpose. - If the buyer makes known a particular purpose for goods, or the purpose is obvious, or the salesperson has recommended the goods, then there is an implied term that the goods were fit for that purpose. - If the goods were recommended by the trader, the consumer must have relied on the skill and judgement of the trader and it must have been reasonable for them to do this (Baldry vs Marshall)

Question 34

CRA 2015--section 11

Answer 34

- Section 11 rules that the goods must be as described. This can be an implied description. - Side rule- This section also applies to how the goods are packaged (Moore&Co Ltd)

Question 35

CRA 2015- How may an exclusion clause be incorporated

Answer 35

1- To be valid the exclusion clause must be properly constructed, in that it must be clear and free from ambiguity 2- To be successfully incorporated into the contract, this can be done by: - Signature (Curtis vs Chemical cleaning) - reasonable notice (Olley vs Marlborough Court Hotel) -Previous course of dealing- as long as they were consistent (Hollier vs Rambler Motors) -Exam tip= only explain and apply the ones that are relevant to the scenario

Question 36

CRA 2015- section 31

Answer 36

- Under section 31, a trader cannot exclude or limit liability with regards to section 9,10,11.

Question 37

Remedies Under CRA 2015 for Goods

Answer 37

- Section 20- Short term right to reject the goods- claim a full refund within 30 days of delivery, must be issued within 14 days, with the trader bearing any costs. - Section 23- The right to repair or replacement- must be within a reasonable time and without significant inconvenience to the consumer. - section 24- The right to a price reduction or a final right to reject. This is allowed if after the repair or replacement the goods do not conform to the contract.

Question 38

Consumer rights side rule- privity of contract

Answer 38

- privity of contract- only those who give consideration have rights under the contract (Tweddle vs Atkinson) - Exception- Contracts (Rights of Third Parties) Act 1999- A person who is not a party to a contract can enforce the contract if he is named in the contract or he gains a benefit from it.

Question 39

CRA 2019- section 49

Answer 39

- Section 49 rules that the service must be carried out with reasonable care and skill. This is the same standard as negligence- skill of an ordinary and competent person. - The standard is higher for those with special skill and experience (Thake vs Maurice)

Question 40

CRA 2015- section 52

Answer 40

- Section 52 rules that the service must be done within a reasonable time. Where the contract does not specify a time. What is a reasonable time is a question of fact which will depend on the circumstances.

Question 41

CRA 2015- section 57

Answer 41

Section 57 rules that a trader cannot exclude or limit liability with regards to section 49 or section 52.

Question 42

CRA 2015- Remedies for services

Answer 42

- Section 55- the right to require repeat performance- in accordance with the contract. within a reasonable time and without significant inconvenience to the consumer. The trader must also bear any necessary costs. - Section 56- The right to a price reduction- by an appropriate amount for the trader's failure to perform. This could be giving a refund, up to the full contract price. This must be given within 14 days.

Question 43

Explain How contract can be discharged under CRA 2015

Answer 43

- The remedies for services do not include discharge of contract - If a claimant wishes to do this, they must prove that a condition has been breached - if this is the case, fully explain and apply breach - Exam tip- always briefly explain this in every services question, regardless if it applies.