Paper three x Flashcards

Question

What are the case examples of lapse of time ?

Answer 1

Ramsgate Victoria Hotel v Montefiore (1866)

Answer 2

Where the offeror dies before the offer is accepted, the offeror’s personal representatives may still be bound by an acceptance provided that: Contract does not involve the personal services of the deceased; and Offeree is ignorant of the offeror’s death (Bradbury v Morgan (1862)).

Answer 3

Where the offeree dies before acceptance, then the offer lapses and the offeree’s personal representatives will be unable to accept on behalf of the deceased (Reynolds v Atherton (1921)).

Answer 4

A nephew discussed buying a horse from his uncle (C). He offered to purchase the horse and said “if I don't hear from you by the weekend I will consider him mine”. The horse was then sold by mistake at auction. The auctioneer (D) had been asked not to sell the horse but had forgotten. C sued D for conversion (civil equivalent of theft). The action depended upon whether a valid contract existed between the C and his nephew. HELD: There was no contract.

Answer 5

Acceptance is effective when communicated to the offeror.

Answer 6

Conduct may form the basis of acceptance. Shown by the famous case of Carlill v Carbolic Smokeball Co. (1893). C in that case accepted the offer when she purchased and used the smokeball.

Answer 7

Reveille © was a company which produced TV programs. This included the US version of Gordon Ramsey’s MasterChef. C began negotiating with Anotech (D), a cookware company, to feature D’s product on the show and allow D to use the MasterChef brand. An offer was made but D made alterations to the contract before signing it (counteroffer). Contract remained unsigned by the C however C began including D’s products in MasterChef. Contract terms were performed by both parties and therefore became binding - Acceptance through conduct.

Answer 8

C were the suppliers of coal to D railway company. Had been dealing for some years on an informal basis with no written contract. Parties agreed that it would be wise to have a formal contract written. D drew up a draft contract and sent it to C. C made some minor amendments and filled in some blanks and sent it back to D. D then simply filed the document and never communicated their acceptance to the contract. Throughout this period C continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid. The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection to the terms.

Answer 9

Fitch v Snedaker (1868) Facts: A unilateral offer (a reward) was made by D to anyone who could find their dog. C found and returned it to D without being aware of the offer made by the D. Legal point: C was not entitled to the reward because acceptance of an offer, in ignorance of that offer, is not acceptance

Answer 10

Fitch v Snedaker (1868) Facts: A unilateral offer (a reward) was made by D to anyone who could find their dog. C found and returned it to D without being aware of the offer made by the D. Legal point: C was not entitled to the reward because acceptance of an offer, in ignorance of that offer, is not acceptance

Answer 11

As the primary source of communication prior to electronic means, the law had to deal with certain issues posed by the postal service. Sometimes a letter would not arrive on time or at all. The most important question for the course was ‘when exactly does acceptance take place?’ The postal rules only apply to letters of acceptance, not to offers or counteroffers. Postal rules stated in Adams v Lindsell (1818). Applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. Acceptance then becomes effective when the letter is posted.

Answer 12

D wrote to C offering to sell them some wool and asking for a reply 'in the course of post'. Letter was delayed in the post. On receiving the letter C posted a letter of acceptance the same day. However, due to the delay D had assumed C was not interested in the wool and sold it on to a third party. C sued for breach of contract. Decision - There was a valid contract which came into existence the moment the letter of acceptance was placed in the post box. This case established the postal rule. The acceptance becomes effective when the letter is posted where: Post is the agreed form of communication between the parties The letter of acceptance is correctly addressed and carries the right postage stamp The Offeree can prove that the letter was posted.

Answer 13

Henthorn v Fraser (1892)

Answer 14

Re London & Northern Bank, ex parte Jones (1990).

Answer 15

Holwell Securities v Hughes (1974).

Answer 16

Household Fire Insurance Co. V Grant (1879).

Answer 17

The general rule of electronic communication is that acceptance takes place when the offeror is aware of it.

Answer 18

C sent a telex message from England offering to purchase 100 tons of Cathodes from the D in Holland. D sent back a telex from Holland to the London office accepting that offer. Instantaneous communication: Normal rules on acceptance applied. Acceptance occurs when the offeror becomes aware of it.

Answer 19

An acceptance was sent by telex but arrived out of office hours Acceptance took effect at the start of the next working day. BUT…no universal rule can cover every case and therefore each should be taken on its own facts and with reference to the intention of the parties.

Answer 20

Deals with online purchases where buyers give consent to buy Contract is formed when buyer receives notification that the order is acknowledged In reality then, online goods are seen as an invitation to treat The seller will accept the offer to buy when they notify the order is complete/dispatched.

Answer 21

1.Contractual formalities too narrow for the reality of commerce? 2.Distinction between offer and invitation to treat & the issue of displaying goods 3.Duration of offer 4.Advertisements and unilateral contracts 5. Communicating acceptance.

Answer 22

Business Agreement Social/Domestic Agreement

Answer 23

Presumption is that parties DO intend to be legally bound.

Answer 24

Presumption is that parties DO NOT intend to be legally bound.

Answer 25

Burden of proof falls on the party attempting to rebut the relevant presumption ie. if a case is presumed to be Business in nature, the party claiming otherwise must prove this. Could be either the claimant or defendant.

Answer 26

Alleged contract between a journalist and a businessman who were friends. Journalist wanted to ghost-write the autobiography of the businessman. Judge suggested that the agreement fell ‘somewhere between an obviously commercial transaction and a social exchange. Burden was on the journalist to prove that there was an ICLR.

Answer 27

Mr Jones claimed that he had a winning football pool coupon. The coupon, which he signed, stated that the transaction was ‘binding in honour only’. As the agreement was based on honour of the parties and not legally binding, there was no ICLR and no contract. Honour Clause Principle.

Answer 28

Esso ran a promotion whereby any person purchasing four gallons of petrol would get a free coin from their World Cup Coins Collection. The question for the court was whether these coins were 'produced in quantity for general resale' if so they would be subject to tax and Esso would be liable to pay £200,000. Esso argued that the coins were simply a free gift and the promotion was not intended to have legal effect and also that there was no resale. There was an ICLR. The coins were offered in a commercial context which raised a presumption that they did intend to be bound. However, the coins were not exchanged for a money consideration and therefore the coins were not for resale.

Answer 29

Ms. McGowan participated in a competition on a radio station for which the advertised prize was claimed to be a Renault Clio car. Ms. McGowan correctly identified the song on the radio and was informed that she won the competition. When she went to collect the car, the radio station gave her a plastic, toy model of the Clio car instead. Ms. McGowan sued. The radio station claimed the promotion was not a legally binding contract. The Court held that there was an ICLR and that, consequently, the competition and awarding of the prize was a legally binding agreement. The purpose of a promotion or competition is to promote the business which creates commercial advantages. Members of the public who enter into the competition ought to rely on this ICLR by the content of the agreement. Thus, Radio Buxton was legally bound to fulfil its promise and the Court awarded damages of the cost of a new Renault Clio to Ms. McGowan.

Answer 30

A husband worked overseas and agreed to send maintenance payments to his wife. At the time of the agreement the couple were happily married. The relationship later soured and the husband stopped making the payments. The wife sought to enforce the agreement. Held: The agreement was a purely social and domestic agreement and therefore it was presumed that the parties did not intend to be legally bound.

Answer 31

A husband left his wife and went to live with another woman. The husband signed an agreement whereby he would pay the wife £40 per month to enable her to meet the mortgage payments and if she paid all the charges in connection with the mortgage until it was paid off he would transfer his share of the house to her. Held: The agreement was binding. The Court of Appeal distinguished the case of Balfour v Balfour on the grounds that the parties were separated. Where spouses have separated it is generally considered that they do intend to be bound by their agreements. The written agreement signed was further evidence of an intention to be bound.

Answer 32

Daughter agreed to give up her well paid job in New York to study law in England Mother promised her an allowance and bought a house for her to live in whilst she studied Presumption stands No evidence the agreement was intended to be legally binding.

Answer 33

D had entered into a competition jointly with her granddaughter and the claimant (her lodger) They won £750 but D refused to share the money. There was a binding contract despite the family connection as the lodger was also party to the contract. This rebutted the presumption of no ICLR.

Answer 34

Elderly couple suggested niece and her partner move in with them Niece & partner sold their home and moved in Elderly couple changed their minds and asked them to leave Wording suggested legal intent The sacrifice of the house elevated this agreement beyond merely social.

Answer 35

Currie v Misa [1975]

Answer 36

“some right, interest, profit or benefit accruing to the one party, or some detriment, loss or responsibility given by the other”.

Answer 37

1. Consideration need not be adequate but must be sufficient 2. Past consideration is not good consideration 3. Consideration must move from the promisee 4. Performing an existing duty cannot be the consideration for a new contract a. Public duty b. A duty imposed under an existing contract c. A promise to make payment on an existing debt

Answer 38

Consideration need not be adequate but must be sufficient: - Courts do not concern themselves with the quality of consideration passing between parties as it is for the parties to agree upon this. - However, the courts do require an enforceable contract to include something real and of value (inherent or otherwise) being transferred between the parties.

Answer 39

A husband expressed a wish that after his death his wife should remain in the marital home. He did not put this into his will however the executors carried out the wish and charged the wife £1 a year in rent. Some time later the executors sought to remove the wife claiming there was no contract. The £1 a year ground rent was held to be valid consideration meaning a contract existed between the executors and the widow.

Answer 40

Nestle ran a sales promotion whereby if persons sent in 3 chocolate bar wrappers and a postal order for 1 shilling 6d they would be sent a record. The question for the court was whether the chocolate bar wrappers formed part of the consideration. The wrappers did form part of the consideration as the object was to increase sales and therefore provided value. The fact that the wrappers were simply to be thrown away did not detract from this.

Answer 41

Courts have not been consistent in deciding what is sufficient White v Bluett (1853) Ward v Bytham (1956).

Answer 42

The father of the claimants child had promised the claimant (the mother) money towards the upkeep of the child if she would keep the child ‘well looked after and happy’. When the father stopped the money the mother sued him for the money. The father contended that the mother was doing no more than what she was already obligated to do. The court enforced the agreement holding that due to lack in law of a duty to keep a child happy, the promise to do so was good consideration.

Answer 43

A father lent money to his son and promised to write off the debt if the son stopped complaining about the way the father distributed property in his will. The father died and the estate executors sought to recover the debt from the son. Could ‘not complaining’ constitute good consideration for the promise of not needing to repay the debt Such consideration cannot be of value in the eyes of the law; there is no right to complain.

Answer 44

2. Past Consideration Is not good consideration: Courts do not recognise a deed already done or a good provided at the time the agreement is made as consideration. Something that has already passed cannot form part of a new agreement. Re McArdle (1951)

Answer 45

Exception to the rule: Implied Consideration: One exception to the rule occurs where there is a common understanding that goods or services will be paid for A typical example of this would be an emergency plumber who attends a household and fixes an issue.

Answer 46

D had killed a man and was due to be hung for murder. He asked C to do everything in his power to obtain a pardon from the King. C went to great efforts and managed to get the pardon requested. D then promised to pay him £100 for his efforts but never paid up. The promise to make payment came after the performance and was therefore past consideration… However… The court held that C should receive the money because the performance was proceeded with a request.

Answer 47

C worked on patents for a company. The company later promised hima ⅓ share in the patents. The company refused to had over the share of the patents on the basis that there was no contract as the consideration was past consideration. The court decided that C was entitled to the share. It was implied that when he worked on the patents he would receive some payment.

Answer 48

3) Consideration Must Move from the Promisee: This rule underpins the notion that a person cannot sue or be sued under a contract unless they have provided consideration for it. Tweddle v Atkinson [1861]

Answer 49

A couple were getting married. The father of the bride entered an agreement with the father of the groom that they would each pay the couple a sum of money. The father of the bride died without having paid. The father of the son also died so was unable to sue on the agreement. The groom made a claim against the executor of the will. Held: The claim failed. The groom was not a party (privy) to the agreement and the consideration did not move from him. Therefore he was not entitled to enforce the contract.

Answer 50

4) Performing an existing duty cannot be the consideration for a new contract: This rule recognises that consideration cannot take the form of something a person is already obligated to do. However, where an extra element such as an additional benefit is required for the new payment, there is consideration. This can occur in three ways where additional benefit is required: Public Duty - A duty imposed under a public duty to act, such as the police doing what they are required to do under their public duty. A duty imposed under an existing contract - A duty imposed under an existing contract with the promisor such as, in a contract of employment, merely doing one’s job. A promise to make part payment on an existing debt - A promise to make payment of an already existing debt, such as repaying a loan.

Answer 51

A policeman was under a court order to attend and give evidence at a trial. It was important to D that the policemen attended, so he promised to pay him some money. There was no consideration as the policeman was already under a duty to attend.

Answer 52

During a strike a pit-owner asked for extra protection from the police. He wanted them to live on site. For this there would be payment. When the strike was over the pit owner refused to pay. As the police had provided more men and in a different way than they would normally have done, there was consideration. Payment owed.

Answer 53

C was a seaman on a voyage from London to the Baltic and back. He was to be paid £5 per month. During the voyage two of the 12 crew deserted. The captain promised the remaining crew members that if they worked the ship undermanned as it was back to London he would divide the wages due to the deserters between them. C agreed. The captain never made the extra payment promised C was under an existing duty to work the ship back to London and undertook to submit to all the emergencies that entailed. Therefore he had not provided any consideration for the promise for extra money. Consequently he was entitled to nothing.

Answer 54

Williams, a subcontractor, was contracted to do carpentry work for Roffey Bros, the main contractor responsible for building a block of flats Williams ran into financial difficulty, and Roffey Bros promised more money for the work as this would allow them to avoid late penalties HELD If there is no economic duress or fraud involved, consideration can be provided for the promise to pay more for an existing duty if the promisor obtains a practical benefit for paying more.

Answer 55

A purchaser of coal paid D to carry and unload it C was the supplier of coal and also paid D to carry the coal C argued the D was already under a contractual duty to carry the coal and therefore no consideration was given HELD: Consideration may take the form of third party obligations.

Answer 56

A creditor may claim the full amount of a debt even if they previously agreed that part payment will suffice. Unless at the promisor's request for part payment is made either: Payment is made early (so the promisor received a benefit) or Something additional is given (so the promisor received a benefit).

Answer 57

Dr Foaks (C) owed Mrs Beer (D) £2090 The two reached an agreement that C could pay in instalments by an agreed date and D would then take no further action. Later D demanded the interest which hadn’t been paid by that date. D was able to change her mind as part payment is generally not held to be consideration for a full debt.

Answer 58

The owner of a block of flats in London struggled to find tenants during WW2. He agreed to lower rent to induce them to stay. After the War the landlord demanded the full amount owed. The landlord could not go back on his word. Both parties acted voluntarily and the tenant had relied upon the promise.

Answer 59

If you are not a party to the contract, you can neither sue nor be sued under it’s terms.

Answer 60

Dew & Co had acquired tyres from the Dunlop at a discount, but subject to not reselling below a certain minimum price. Dew sold them to Selfridges who also agreed to uphold the Dunlop restriction on price. Selfridge did however sell the tyres at a reduced price and Dunlop brought an action in breach of contract. Held: Dunlop were a stranger to the contract between Dew & Selfridge and thus could not rely on it.

Answer 61

Mr Beswick made a contract with his nephew to sell his coal merchant’s business in exchange for weekly payments due to the uncle for life and, after his death, to his wife, the nephew’s aunt. After the uncle’s death the nephew refused to pay the aunt. HELD: No privity of contract. No breach.

Answer 62

Mr Jackson booked a holiday for himself and his family. The holiday was very disappointing. He sued for damages for himself and his family. HELD: Damages were awarded to both Mr Jackson and his family despite the family not having privity. Judges ratio cited the fact the holiday impacted all of the family.

Answer 63

The Contracts (Rights of Third Parties) Act 1999 This Statute allows a 3rd Party to enforce contractual rights if: A 3rd is named as part of the contract and.. The contract has express terms allowing 3rd parties to enforce the contract or.. The contract intends to confer a benefit on a 3rd party.

Answer 64

An ‘agent’ is someone who is authorised to contract on behalf of a party. This means that the person granting agency is bound by contracts made by the agent despite not being directly involved. Employees do this often on behalf of employers.

Answer 65

A collateral contract is a second contract May induce a person to enter into a main contract Depends upon the main contract for its existence Courts can avoid the rules of privity in these circumstances.

Answer 66

The Pier company employed painters to paint a pier. Painters bought paint from Detel who informed the pier company the paint would last for 7 years. It only lasted 3 months Detel had a ‘collateral’ contract with the pier company despite the painters buying the paint as the purchase relied upon the promise of 7 years.

Answer 67

Prevent landowners from doing something on the land. For example: Not using the premises as a site for business operations. All present and future purchasers of property bound by the covenant.

Answer 68

Tulk sold the garden in Leicester Square, London to Elms. Elms sold the land to Moxhay who intended to build on it. Tulk was able to sue Moxhay despite having no privity. Covenants run with the land.

Answer 69

Terms of a contract are its content and represent the agreement between parties Terms that are agreed on represent a: ‘Meeting of the minds’.

Answer 70

Conditions, Warranties, Innominate terms

Answer 71

These are terms which are central to the contract If these terms are breached then the innocent party has the right to bring the contact to an end.

Answer 72

These are minor terms of the contract. Breach of these terms gives a right to damages but does not bring the contract to an end.

Answer 73

These are terms that are not defined as conditions or warranties. If the effects of a breach are serious then they will be treated as conditions. If they are trivial then they will be treated as warranties.

Answer 74

An opera singer made a contract to sing in an opera. She failed to attend rehearsals and the opening night. The court held that the promoters of the concert were entitled to replace the singer because her role was central to the performance and her failure to attend amounted to a breach of condition.

Answer 75

An opera singer was required to attend for six rehearsal days before performances were due to start. The singer did not attend for the first two days of rehearsals Held to be a breach of warranty and not a breach of condition.

Answer 76

D chartered a ship from the claimant for two years. The ship was required to be seaworthy. The ship was not seaworthy and C lost 18 weeks of use. The Court considered whether this was a condition or a warranty. Classification of terms depends on the impact of the term on the contract. As the whole benefit of the contract was not lost, this was found to be a Warranty.

Answer 77

When parties negotiate the terms of a contract, lots of things may be discussed either verbally or in writing. Some of these may become terms of the contract, but others may be representations instead.

Answer 78

D leased a computer from C under an agreement requiring 20 instalments of £584 every three months. The contract stated that punctual payment was essential, and failure to comply would allow C to terminate the lease. D fell into arrears, prompting C to repossess and sell the computer for £175. C then sued D for outstanding arrears and future instalments totaling £6,869. Held: The term requiring prompt payment was a condition, as the parties had explicitly agreed that time was of the essence. C was entitled to terminate the lease due to D’s breach. The court upheld C’s right to claim the arrears and future payments.

Answer 79

However, sometimes the court will override what the parties have said in the agreement where it is so unreasonable that the parties could not have intended it. Schuler (C), a tool manufacturer, granted Wickman (D) exclusive rights to sell its tools. The contract required D to send a salesperson to specified companies weekly, totaling 1,400 visits. The term was expressly labeled a condition. D missed some visits, leading C to terminate the contract for breach. Held: Despite the term being called a condition, the House of Lords ruled it was only a warranty. The obligation to make 1,400 visits was deemed so unreasonable that the parties could not have truly intended strict compliance to justify termination. Outcome: C wrongfully terminated the contract. The missed visits did not amount to a fundamental breach.

Answer 80

The courts will look at the following factors: The importance of the statement Special knowledge or skill of the person making the statement Time between making the statement and formation Whether there is a written contract.

Answer 81

An auction catalogue stated that a heifer was unserved (not pregnant). The auctioneer and the farmer selling the animal confirmed this. In fact the heifer was pregnant and died while calving. HELD The statement was clearly important to the purchaser of the animal and so was taken as a contract term rather than a representation.

Answer 82

D sold a car to a dealer (C) describing it as a 1948 model as this was what was on the registration documents. The car was later found to be a 1939 model. C brought a claim in breach of contract but it failed as D had no expertise and was thus an honest misrepresentation.

Answer 83

The claimant (C) asked the Ds to find him a well vetted Bentley. D found a car and falsely stated its mileage as 20k when it was in fact 100k. The COA held that this was a term of the contract due to the Ds level of expertise and the reasonable reliance on this in the contract.

Answer 84

A motorcycle had first been registered in 1939 but in the registration book the date was wrongly stated as 1941 In 1949 the owner, who was unaware of this inaccuracy, was selling the bike and in response to an enquiry about the age stated it was a 1941 model The buyer did not respond for a week and the agreement sent did not mention the registration date The buyer later sued for breach but was unsuccessful as the time frame reduced the year of registration to a mere, honest misrepresentation.

Answer 85

Puffs are boasts or unsubstantiated claims Usually exaggerated and easily identifiable as mere advertising ploys Is Disneyland really the happiest place in the world? Not to be considered terms Exception seen in Carlill v Carbolic SB.

Answer 86

Business Efficacy Test Officious Bystander Test.

Answer 87

This test asks whether a term is needed to make the contract ‘effective’ Business Efficacy = ‘Does it work’ Leading case is The Moorcock (1889).

Answer 88

The court implied a term that a ship would be moored safely into a contract for docking and unloading it. Meant that the ship owners could claim damages for breach of contract when their ship was damaged when it grounded on rock at low tide. The court said that this term was necessary to give the contract business efficacy (‘make it work’).

Answer 89

A term will be implied into the contract where it is ‘so obvious that it goes without saying’. If an ‘officious bystander’ were to suggest the term to the parties while they were making their contract would they say ‘oh yes of course’? Developed in: Shirlaw v Southern Foundries (1939) .

Answer 90

M&S rented a property from BNP Paribas (D) for £2 million per year, with rent payable quarterly. A clause allowed M&S to terminate the lease on 24th January, provided there were no arrears. M&S exercised this right but had already paid rent until 25th March. They sought a refund for the period after 24th January, arguing an implied term in the contract. Held: The Supreme Court rejected M&S’s claim, holding that a term can only be implied if, without it, the contract would lack commercial or practical coherence (Lord Sumption). There was no basis to imply a right to a rent refund. Outcome: M&S was not entitled to recover rent beyond 24th January. The lease’s terms stood as written.

Answer 91

Shell supplied petrol and oil to Lostock, who agreed to buy exclusively from Shell. However, Shell also sold oil to other companies at lower prices, forcing Lostock to sell at a loss. Lostock claimed there was an implied term that Shell would not discriminate against them. Held: The court rejected Lostock’s argument, ruling that Shell would never have agreed to such a restriction in a competitive market. A term cannot be implied if it is inconsistent with commercial reality. Outcome: Lostock’s claim failed—no implied term was found.

Answer 92

Sometimes terms are implied because of an established local custom or custom of the particular trade.

Answer 93

A court may imply a term that reflects the previous dealing between the parties.

Answer 94

There are some terms which the law implies into a contract whether the parties want them in the contract or not……. Liverpool City Council v Irwin (1976)

Answer 95

The law largely ignores the fact that the vast majority of contracts involved at least one party being significantly inferior .

Answer 96

A couple (Cs) bought a house without knowing it had been the scene of a grisly murder. They later discovered the truth and sought compensation from the sellers (Ds), arguing that this information should have been disclosed. Ds had answered "no" to a questionnaire asking if there was any relevant information the buyer had a right to know. Held: The court held that sellers have no legal duty to disclose a property’s history unless they are dishonest. The principle of caveat emptor ("let the buyer beware") applies, even if it works harshly on purchasers (Lord Justice Gibson). Outcome: The claim failed—Ds were not legally required to disclose the murder.

Answer 97

S2(3) defines a consumer as ‘ an individual acting for purposes that are wholly or mainly outside that individual’s trade business, craft or profession’.

Answer 98

S9 The right to satisfactory quality S10 The right to fitness for particular purpose S11 The right to goods matching description.

Answer 99

Does not apply where the consumer has not relied on the skill or judgment of the trader or where it is unreasonable for him to do so.

Answer 100

C asked Ds (motor dealers) to supply a car suitable for touring. Ds recommended a Bugatti, which C bought. The contract included a clause excluding liability for any “guarantee or warranty, statutory or otherwise”. However, the car was unsuitable for touring, so C rejected it and sued for a refund. Held: The requirement of suitability for touring was a condition, not merely a warranty. Since the exclusion clause only applied to warranties and guarantees—not conditions—Ds remained liable for the breach. Outcome: C won—he was not bound by the exclusion clause and was entitled to a refund.

Answer 101

C bought two pairs of long underwear made by D. The underwear contained excess sulphite, causing C to develop severe dermatitis and nearly die. C sued D for negligence. D argued that, unlike the sealed bottle in Donoghue v Stevenson, the underwear came in paper packets, meaning there was a chance of tampering before use. Held: The mere possibility of tampering was not enough to absolve D of liability. A manufacturer owes a duty of care to the end-user, even if the product is not in an airtight seal. Outcome: C won—D was liable for negligence, and C was entitled to compensation.

Answer 102

The right to goods matching description Where the trader described the goods before the contract is entered into (for example on a website or attached to a display) then the goods must be as described.

Answer 103

A contract for the sale of 3,100 tins of peaches described the tins as being packed in cases of 30. When they arrived the tins were packed in cases of 24 although the agreed overall number of tins was supplied. Held: The purchaser was entitled to reject the goods as they were not as described.

Answer 104

D advertised a car as a 1961 Triumph Herald 1200, genuinely believing this to be true. C inspected the car, noted a "1200" metal disc on the rear, and purchased it. Later, C discovered the car was actually a hybrid, with the rear of a 1961 Triumph Herald 1200 welded to the front of an older Triumph Herald 948. Held: This was a breach of s13 of the Sale of Goods Act, as the car did not match its description. Even though C had inspected the car, he still relied on the description in the advertisement and the misleading "1200" marking. Outcome: D was liable for breach of contract—C was entitled to a remedy.

Answer 105

sets an upper limit on liability (damages).

Answer 106

seeks to exclude all liability for certain breaches on contract.

Answer 107

- By signature - By Reasonable Notice - By course of dealing

Answer 108

When a party has signed a written agreement then they are bound by that agreement even if they have not read or understood its terms Exception where the person seeking to rely on the clause, misled the other party about the meaning of the clause.

Answer 109

C bought a cigarette vending machine for her café. She signed an order form containing a clause in small print excluding all express and implied warranties, including those under the Sale of Goods Act. When the machine did not work, C attempted to reject it for not being of merchantable quality. Held: By signing the order form, C was bound by its terms, regardless of whether she read them or not. The exclusion clause was valid, preventing C from relying on statutory protections.

Answer 110

C took her wedding dress to the cleaners. She was asked to sign a form. She asked the assistant what she was signing and the assistant told her that it excluded liability for any damage to the beads. The form in fact contained a clause excluding all liability for any damage howsoever caused. The dress was returned badly stained. Held: The assistant had misrepresented the effect of the clause and therefore could not rely on the clause in the form even though C had signed it.

Answer 111

If separate written terms are presented at the time a contract is made (for example on a ticket or sign) then those terms only become part of the contract if the person suffering the exemption clause had reasonable notice of them. The court will look at the following points Was the notice brought to the attention of the party or at the time the contract was made? Was the notice given in a document which a reasonable person would expect to contain contractual terms? Is the term one that is particularly unusual or onerous?

Answer 112

C booked into a hotel. The contract was made at the reception desk where there was no mention of an exclusion clause. In the hotel room on the back of the door a notice sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. C had her fur coat stolen. Held: The notice was ineffective. The contract had already been made by the time C had seen the notice. It did not therefore form part of the contract.

Answer 113

C hired a deck chair from D (the council) for use on the beach. A notice displayed the hire price and "respectfully requested" users to obtain a ticket from an attendant. C got a ticket but did not read it, unaware that it contained an exclusion clause for personal injury. When C sat down, the fabric tore, causing injury. D tried to rely on the exclusion clause to avoid liability. Held: The exclusion clause was not incorporated into the contract. A reasonable person would see the ticket as just a receipt, not a document containing contractual terms. Furthermore, the contract was formed when C took the chair, meaning the council could not introduce new terms afterward. The council was liable for the injury.

Answer 114

C was injured while stepping off a train. The railway company had prominent notices on the platform excluding liability for personal injury and property damage due to negligence. The tickets also referred to these terms. However, C was illiterate and argued that the exclusion clause was not incorporated because she had not been made aware of it at the time of contracting. Held: The railway company had taken reasonable steps to bring the clause to the attention of a reasonable person. There was no duty to ensure that every individual actually read or understood the terms. As long as the exclusion clause was sufficiently displayed, it was incorporated into the contract. The railway company was not liable for her injuries.

Answer 115

C was injured in a car park due in part to D’s negligence. On entering, C paid at a machine and received a ticket, which stated that parking was subject to terms and conditions displayed inside the car park. One term excluded liability for personal injury due to negligence. The key issue was whether the exclusion clause was incorporated into the contract. Held: The machine itself made the offer, and acceptance occurred when C inserted the money. Since the ticket was issued after acceptance, any new terms, including the exclusion clause, were not incorporated into the contract. Outcome: C won—the exclusion clause was not binding, and D was liable for negligence.

Answer 116

If the parties have previously made contracts between them and those contracts included an exemption clause, the clause may also apply to the subsequent agreement. However, there must be a consistent course of dealing and the courts are reluctant to find that there is.

Answer 117

C had used D’s garage for repairs 3–4 times over five years. Each time, C had signed a document excluding D’s liability for damage. On this occasion, the contract was made over the phone, and no mention of the exclusion clause was made. D later damaged the car and sought to rely on the exclusion clause from previous dealings. Held: The court held that 3–4 transactions over five years were not frequent or consistent enough to establish a course of dealings that would incorporate the exclusion clause. It was unreasonable to expect C to remember the clause from past transactions. Outcome: C won—the exclusion clause was not incorporated, and D was liable for the damage.

Answer 118

Where the words in the clause are ambiguous they will be interpreted in the way less favourable to the party relying on them (contra proferentem).

Answer 119

Cs, a photo library, sent transparencies to D, an advertiser, for his review. The package included a document stating that a £5 + VAT daily holding fee per photo would apply if the transparencies were not returned within 14 days. D did not read the document and forgot to return the transparencies for 6 weeks. Cs sued for £23,783, based on the holding fee clause. Held: The holding fee term was not incorporated into the contract. D was unaware of the term, and the method of communication was insufficient to make it a binding contractual condition. Outcome: D was not liable for the claimed holding fee. The term was not enforceable. Where a term is particularly onerous/ harsh then the person who wants to rely on it must take greater steps to bring it to the attention of the other party.

Answer 120

Concerned loss of use of oil exploration rigs Court decided that Contra Proferentem was to be used where ambiguity and a lack of bargaining equality existed In this case both parties had the means to bargain well and deal with sophisticated agreement terms The rule was not used.

Answer 121

A clause saying that photographic company only had to give a replacement film if it failed to develop and print photos was unreasonable when it lost a couple’s wedding photographs.

Answer 122

A contract that is "void" cannot be enforced by either party. The law treats a void contract as if it had never been formed.

Answer 123

A contract that is valid but that can be declared invalid at the request of one of the parties.

Answer 124

Term - If not complied with then this can lead to an action for breach of contract Representation - If not complied with then this may lead to an action for misrepresentation.

Answer 125

A misrepresentation is an: False (untrue) statement Of material fact(s) Made by a party to the contract or an agent Which induces the other party to enter the contract

Answer 126

The statement must be one that is not true or accurate and may be in any form - written, spoken or by conduct Whether or not D knew that it was false decides what type of misrepresentation it might be. Silence cannot be misrepresentation.

Answer 127

The Spice Girls were held to have represented that none of them would leave the group when they took part filming in promotional material together. This was a misrepresentation because Gerri Halliwell had already given notice that she was leaving the band.

Answer 128

The court decided that a woman who applied for a job as a governess was under no obligation to state that she was divorced, although she would have been obliged to tell the truth had she been asked. In Victorian times, being divorced would mean that she would not be offered the job.

Answer 129

Even if a statement is true when it is made, it can become a misrepresentation if it becomes false before the contract is made. In that case, a person must correct the information made in the statement.

Answer 130

A doctor stated the profits of his medical practice to attach purchasers for the practice. However, between the statement and the contract being formed, the doctor fell ill and many of his patients left which made the statement inaccurate. The court decided that the doctor therefore had a duty to tell the purchaser of the changed circumstances.

Answer 131

Silence can be a misrepresentation where a statement is a half-truth. That is because what is unsaid is a form of non-disclosure and may be a misrepresentation as the maker of the statement has a duty to reveal the whole truth and not just part of it.

Answer 132

Seller of land said that there were tenants on the land, but not that they were all leaving. Part-truth was a misrepresentation.

Answer 133

Where the relationship between the parties is based on trust, silence may be a misrepresentation. For example, the relationship between a solicitor and their client. Sometime referred to as a fiduciary relationship.

Answer 134

D became the financial adviser to an Oxford University undergraduate who sold him his estate for half its value and then drank himself to death, aged 24. So the financial advisor had misrepresented the value of the property. The executors applied for the transaction to be set aside. Lord Chelmsford held that the executors would be successful in setting the contract aside. ‘The jurisdiction exercised by courts of equity over the dealings of persons standing in certain fiduciary relations has always been regarded as one of the most salutary description… The courts have always been careful not to fetter this jurisdiction by defining the exact limits of its exercise.’

Answer 135

Mrs Lambert signed a proposal form for ‘All Risks’ insurance over her husband’s jewelry, without mentioning her husband was convicted previously of receiving 1730 stolen cigarettes and was fined £25. The Co-op issued the policy. Mr Lambert was convicted of two more dishonesty offences in 1971 and sentenced to 15 months jail. Mrs Lambert did not reveal this either when the policy was renewed in 1972. In April 1972 some items worth £311 were lost or stolen and the Co-op refused on the basis of a failure to disclose. The court decided that the insurance company could refuse to pay a claim because Mrs Lambert had not told them about her husband’s conviction for conspiracy to steal when she took out the policy.

Answer 136

- Fraudulent - Negligent - Innocent

Paper three x Flashcards

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