The Law of Contract Flashcards
(98 cards)
1
Q
Give 5 examples of everyday contracts
A
- Parking ticket
- Buying something from the shop
- Bidding on ebay
- Downloading music from iTunes
- Buying something online
2
Q
What forms can contracts come in? (2)
A
- Oral
- Written
3
Q
Contracts must be voluntary. How are contracts through coercion treated?
A
- As null and void
4
Q
What are the typical remedies for breach of contract? (2)
A
- Damages
- Injunction, which can include specific performance (forcing someone to carry out their side of the contract)
5
Q
What is the recipe for a contract?
A
- Invitation to treat - Offer + Acceptance + Consideration = Contract
6
Q
Give four examples of an invitation to treat, with a case for each
A
- Goods on display in a shop - Pharmaceutical Society of GB v Boots Cash Chemists (1953)
- Goods on display in a window - Fisher v Bell (1961)
- Advertisements and price lists - Partridge v Crittenden (1968)
- Lots at an auction - British Car Auctions v Wright (1972)
7
Q
What is an invitation to treat? What is it not?
A
- An invitation for a party to make an offer
- It is not an offer in itself
8
Q
What is an offer?
A
- A statement containing the essential terms expressed in reasonably certain terms
9
Q
What was decided about offers in Taylor v Laird (1856)?
A
- The offer must be communicated to the offeree
10
Q
What was decided about offers in Carlill v Carbolic Smoke Ball Co (1893)?
A
- An offer can be made to the whole world
11
Q
What was decided about offers in Guthing v Lynn (1831)?
A
- The terms of the offer must be certain
12
Q
What happened in Carlill v Carbolic Smoke Ball Co (1893)? What did the defendant say? What was held?
A
- Newspaper advert said anyone who got influenza fter using their product would get £100
- Mrs Carlill got influenza
- Defendant said advert was simply an invitation to treat
- Held - Carlill entitled to reward as advert constituted a unilateral offer
13
Q
What was decided about offers Hyde v Wench (1840)?
A
- An offer can be terminated by a counter offer being made
14
Q
What was decided about offers in Carlill v Carbolic Smoke Ball Co (1893)?
A
- An offer can be made to the whole world
15
Q
What does the Consumer Protection (Distance Selling Regulations) 2000 Act allow the consumer? What is the condition of this?
A
- A 14 day cooling off period
- Allows a consumer to withdraw their acceptance within 14 days, so long as there has been no face to face contact between the buyer and the seller
16
Q
What was decided about offers in Carlill v Carbolic Smoke Ball Co (1893)?
A
- An offer can be made to the whole world
17
Q
What was decided about intention in Confetti Records v Warner Music UK Ltd (2003)?
A
- Intention can be negated by express wording, such as “subject to contract”
18
Q
What happened in Tweddle v Atkinson (1861)? What was decided?
A
- After a couple got married, their fathers said they’d give them money
- When they didn’t the couple tried to sue, but couldn’t as it was a gift, not a contract, as they weren’t to give anything in return
- Decided that the consideration must move from the promise
19
Q
What was decided about offers in Routledge v Grant (1828)?
A
- An offer can be withdrawn at any point before acceptance
20
Q
What was decided about offers in Byrne & Co v Leon Van Tienhoven (1880)?
A
- Any withdrawal of an offer must be communicated
21
Q
When can an offer no longer be withdrawn?
A
- Once there has been acceptance
22
Q
What can an offer be terminated by? (5)
A
- Being accepted, and a contract is formed
- Being withdrawn
- A specified time can lapse
- A reasonable time can lapse
- A counter offer being made
23
Q
What was decided about offers in Ramsgate Victoria Hotel Ltd v Montefione (1866)?
A
- An offer can be terminated by a reasonable amount of time lapsing
24
Q
When does acceptance take place?
A
- When there is unconditional assent to all terms of the offer
25
What was decided about acceptance in Felthouse v Bindley (1863)?
- Acceptance must be communicated to the offeror; silence can not amount to acceptance
26
What was decided about counter offers in Butler Machine Tool Ltd v Ex-Cell O Corp (1979)?
- Where there are ongoing negotiations of a contract, any new condition, alteration or qualification is regarded as a counter offer
27
What was decided about acceptance in Yates v Pulleyn (1975)
- Acceptance can be in any form , in writing, in words, implied by conduct
28
What are the disadvantages of the Contracts (Rights of Third Parties) Act 1999? (5)
- Extended litigation
- Does not reflect the intentions of the parties
- Does not protect those who incur losses because they rely on a contract
- Sheer number of exceptions makes it very legally complex
- Could allow some parties to escape their contractual obligations
29
What was decided in Household Fire Insurance v Grant (1879)?
- The postal rule applies even if the letter is never received
30
What was decided in Entores v Miles for East Corporation (1955)?
- Telex takes effect wherever received, and as soon as received, deemed instantaneous
31
What was decided in Thomas v BPE Solicitors (2010)
- Email deemed instantaneous, and if it is the case that it was sent in office hours, it is deemed to have been read - BUT - this depends on the parties' intentions, context and previous course of dealing
32
Although it is the law that once an offer has been accepted, it cannot be withdrawn, an exception has been created under what?
- The Consumer Protection (Distance Selling Regulations) 2000
33
What are the four exceptions to the 14 day cooling off period?
- Contracts for the sale of land
- Purchase of something from a vending machine
- Contracts for transport and leisure
- Contracts to supply food for every day consumption
34
Courts will only enforce a contract where there is an intention to what?
- An intention to be legally bound
35
In what way is the intention to be legally bound assessed?
- Objectively
36
There is a distinction between social and domestic agreements and commercial agreements. What is this? (the intention of each). Example cases?
- Social and domestic agreements
- No intention to be legally bound - Balfour v Balfour (1919)
- Commercial agreements
- Intention to be legally bound - Esso Petroleum Co v Commissioners of Customs and Excise (1976)
37
What was decided about intention in Confetti Records v Warner Music UK Ltd (2003)?
- Intention can be negated by express wording, such as "subject to contract"
38
What does consideration mean?
- Each party must give something in return for what is gained by the other party
39
What was decided about consideration in Chappell v Nestle (1960)?
- Consideration need not be adequate (it doesn't have to accurately reflect the value of the thing contracted for) but must be sufficient
40
What was decided in Re McArdle (1951)?
- Past consideration is no consideration. The consideration must be given in return for the promise
41
What is the exception to the decision in Re McArdle (1951)? What case decided this?
- Where it is at the promisor's request that payment will be made later
- Lampleigh v Braithwaite (1615)
42
What happened in Tweddle v Atkinson (1861)? What was decided?
- After a couple got married, their fathers said they'd give them money
- When they didn't the couple tried to sue, but couldn't as it was a gift, not a contract, as they weren't to give anything in return
- Decided that the consideration must move from the promise
43
What was decided in Collins v Godefroy (1831)?
- Performing an existing duty cannot be consideration for a new promise
44
What was decided in Williams v Roffey (1991)? Explain what happened
- If the performance of the existing duty confers an additional benefit, then it will be sufficient consideration
- Building contract - extra payment for getting the work done on time - counts as consideration because a condition of the contract was that it was due to be finished by a certain date, and the builders were paid extra as an incentive
45
What was decided about consideration in Pinnel's Case (1602)?
- Part payment of a debt does not in itself constitute consideration, but it will be binding if there is some additional element that can be treated as consideration
46
What can happen under the doctrine of promissory estoppel?
- A contract can be formed even where there is no consideration
47
What was decided in Central London Property Trust v High Trees House (1947)?
- A contracting party who promises not to enforce a contractual right will not be able to enforce that right if it is inequitable to do so
48
What is privity of contract?
- Common law principle which provides that third parties cannot sue or be sued under a contract, even if they have an interest in its performance
49
What happened in Tweddle v Atkinson (1861)?
- Even though a person was named in a contract, he was unable to claim a third party right
50
What is the issue with privity of contract? What has been done to remedy this?
- Parties can be left without justice
| - Some exceptions have developed over the years
51
What are the three exceptions to privity of contract?
- Married Women's Property Act 1882 allows the beneficiary to life insurance to enforce the terms even though they are not parties to the contract
- Road Traffic Act 1988 requires all drivers to take out third party liability insurance
- Restrictive Covenants
52
What does the Contracts (Rights of Third Parties) Act 1999 do? Provided what? (2)
- Enables parties to enforce contractual terms even where they are not a party, provided that;
- The contract expressly provides that they may do so, or;
- The contract purports to confer a benefit upon them, unless the parties did not intend it to be enforceable
53
What are the advantages of the Contracts (Rights of Third Parties) Act 1999? (5)
- Unjust to allow a party to sue if they themselves cannot be sued
- Restricts the rights of the parties to modify or terminate the contract
- It makes gratuitous promises enforceable
- Could expose parties to indefinite liability
- The holiday cases
54
Explain "the holiday cases" (hint - third parties)
- In Jackson v Horizon Holidays (1975) it was decided that one CAN sue losses for third parties when booking a holiday, even though the third party members are not actually a part of the contract
55
What are the disadvantages of the Contracts (Rights of Third Parties) Act 1999? (5)
- Extended litigation
- Does not reflect the intentions of the parties
- Does not protect those who incur losses because they rely on a contract
- Sheer number of exceptions makes it very legally complex
- Could allow some parties to escape their contractual obligations
56
What does an offer contain?
- Conditions all parties intend to be bound by
57
What is consideration? What can it be?
- Can be an act, or acts, or money, or money's worth - a condition that must be fulfilled for the contract to be valid
58
What do terms do?
- Tend to set out how a condition is to be fulfilled (e.g time limit)
59
Give two cases that concern intention and grouping together money for competitions
- Patek v Lateu (1973)
| - Wilson v Burnett (2007)
60
What happened in Patek v Lateu (1973)? What was held?
- Peck and Lateu were friends who loved to play bingo. Hence, they agreed to share their winnings with each other. Both complied with the agreement until Lateu won and refused to share.
- HELD - The presumption that social agreements are not legally binding can be rebutted by evidence that the parties intended to be bound
61
What happened in Wilson v Burnett (2007)? What was held?
- Two women claimed they had reached an oral agreement with the defendant that if any of them won at bingo they would share the winnings equally between them.
- The defendant admitted she had discussed this idea with the other two, but argued that no agreement had been reached.
- HELD - Where an intention to be legally bound cannot be established the presumption in relation to social agreements will not be rebutted. A lack of certainty and clarity likely to indicate that there is no intention to be legally bound
62
What was held about consideration in Thomas v Thomas (1842)?
- It has to have some value but need not be equal on each side
63
What was held about consideration in White v Bluett?
- It must be something real and tangible
64
What happened in Thomas v Thomas (1842)? Held?
- Mr Thomas died and wanted his wife to live in his house but didn't put it in his will
- She paid a 'peppercorn or token' rent in order to live there
- HELD sufficient consideration so she could stay
65
What was held in White v Bluett?
- A promise to not complain about how the deceased distributed his estate upon his death was not consideration
- Intangible and could not be enforced
66
What happened in Simpkins v Pays (1955)? What was held?
- Grandma, granddaughter and lodger all chipped in to weekly competition
- Granny refused to share
- HELD there was a binding contract despite the family connection as the lodger was party to the contract. This rebutted the presumption of no intention to create legal relations
67
What happened in BBC v Harper Collins? Held?
- Defendants were publishers for the stig who wanted to publish a tell all book that would have revealed his identity and contravened a secrecy clause
- BBC sued publishers
- HELD since BBC and stig had signed their contracts with stig signing as director of his own firm, he was not party to the contract as a private individual and so the claim failed
68
Can terms of a contract be express or implied?
- Both
69
What are the three kinds of contract term?
- Condition
- Warranties
- Innominate terms
70
Why do the courts say that you should differentiate between a term and mere representation? (3)
- Representation not legally enforceable
- No liability attached to representation
- Inducements for people to enter contracts
71
What is a warranty?
- a term that basically sets out how a key condition is to be fulfilled
72
What are innominate terms?
- Usually opinions or representations that are not key performance points in a contract but are little more than sales inducements or opinions
73
How important are conditions?
- So important to a contract that not to perform it would justify the contract being repudiated since the effect of non-compliance renders the entire contract meaningless
74
Whether something is a condition depends on what? (3)
- Do the parties regard the term in question as a condition (indicative but not conclusive)
- Would there be unfair consequences if the court interpreted the relevant term as a condition?
- If there is a preliminary discussion about what a contract could be about then said discussions could form the basis of a condition because they could be inducements to enter the contract
75
What happened in Poussard v Spiers and Pond (1876)? What was held?
- Contract was for dates of a performance which the defendant could not honour as she was sick
- Damages payable as the performance was a contractual condition that was broken
76
What happened in The Mihalis Angelos (1970)? Held?
- Owners charted ship to defendant to use for cargo
- Ship wasn't ready so defendant cancelled contract
- Claimant tried to sue
- HELD - the expected ready to load clause was a condition despite the fact it had caused no loss to the defendant
77
What happened in Bunge Corporation v Tradax (1981)? What was held?
- Terms of contract were to hire a ship to carry 5000 tonnes of soya beans. The buyer had to give 15 days notice of readiness to load and didn't
- HELD - for the purpose of commercial certainty dates in commercial contracts are seen as conditions as failure to stick to dates could have a knock on negative effect
78
What was held about deciding whether or not something is a condition in Hong Kong Fir Shipping v Kawasaki (1962)?
- When you're deciding whether or not something is a condition the courts look at the consequence of the breach. If they are major then it will be a condition but if they are minor then it will be regarded as something less such as a warranty
79
Does a breach of warranty allow the innocent party to cancel the contract?
- No, but they can pursue damages
80
What happened in Bettini v Gye (1876)? What was held?
- Contract for claimant to perform also said that they had to go to six rehearsals
- The claimant fell ill so missed some rehearsals
- Defendants cancelled the contract saying that it was a condition
- HELD - No. Rehearsals were incidental and did not go to the heart of the contract
81
What happened in Schuler v Wickman Machine Tool Sales (1973)? Held? Why is this case important?
- Contract in which a party agreed to visit manufacturers at least once a week. Term described as condition in contract
- Court says it depends on the seriousness of the breach
- On the facts not a serious breach
- Case important as it is a guide to when a term is a condition or something less
82
What did the courts say in Schuler v Wickman Machine Tool Sales (1979) would help to decide whether or not something is a condition? (4)
- The contract itself and the parties' intentions (indicative but not conclusive)
- Consequences and how serious they are
- Would it be fair in terms of the consequences if the court decided it wasn't a condition?
- The more unreasonable the consequence the less likely that parties intended this as an outcome, which points to it not being a condition but something else
83
What was held in Reardon Smith Line v Hansen Tangen (1976)?
- The fact that the ship was finished elsewhere was not a fundamental breach. The name of the ship was a minor term hence the hirers were not entitled to end the contract
84
What happened in Hong Kong Fir Shipping v Kawasaki (1962)? What did the courts say to ask? Held?
- Condition of contract was hiring vessel for 2 years. Other term said ship must be seaworthy - it wasn't
- Courts said ask - has what happened completely undermined the integrity of the contract?
- HELD - no. Period of hire was the main condition and seaworthiness = warranty
85
Give two cases that concern express terms of a contract
- Bannerman v White (1861)
| - Routledge v McKay (1954)
86
What happened in Bannerman v White (1861)? Held?
- Buyer said product should not be washed in sulphuric mixture. It was
- HELD - condition therefore breach of contract
87
What happened in Routledge v McKay (1954)? Held?
- Bike sold turned out to be an earlier model
- HELD - parties agreed to put terms of bike sale into a written agreement. The info about the age of the bike was taken from registration documents which proved that the reference to the age of the bike was a condition
88
What will undermine something being a condition in a contract? (3)
- A statement coming from someone with no expertise in the area
- Time lapse between representations being made and contractual signing - crucial period allowed for checking key details
- Was the representation included in the contract? Suggesting intention to be legally bound by it?
89
What 6 factors were set out in Oscar Chess v Williams (1957) that help decide if something's a warranty?
- Where an assumption is made that is fundamental to a contract containing key facts and statements does not mean that it will go to the heart of it
- Term 'warranty' means that something is binding but not as fundamental in importance as conditions
- Warranty is different to representation
- This difference depends on parties' words and behaviour
- Statement made from personal knowledge is more likely to be a warranty than some fact passed on from someone else
- Statement repeated in writing likely to be warranty but this alone is not conclusive
90
In what case did the court use some guidelines to help with assessing whether a term should be implied in a document?
- Equitable Life Assurance Society v Hyman (2000)
91
What five things did the court say that will mean a term will be construed as being implied into a contract? (Decided in BP Refinery and used in Equitable Life)
- If it is fair and just to do so
- If it is capable of clear expression
- It is compatible with express terms already in the contract
- If something is so obvious that it goes without saying
- It gives 'business efficacy' to the contract
92
What case established the five things used in Equitable Life Assurance Society v Hyman (2000) to assess whether a term should be implied in a document?
- BP Refinery (Western Port) Property Ltd v Shire of Hastings (1978)
93
In what case was the officious bystander test applied?
- Shirlaw v Southern Foundries (1939)
94
What is the officious bystander test?
- It must be obvious that both parties would have agreed to the term at the time the contract was made
95
In what case did the court introduce the business efficacy test?
- The Moorcock (1889)
96
What happened in The Moorcock (1889)? What was held? What test was introduced?
- Claimant moored his ship at the defendant's wharf on the Thames
- Thames is a tidal river so the ship became damaged due to uneven surfaces and rocks on the river bed
- HELD - the court implied a term in fact, that the river bed would be safe for mooring and introduced the business efficacy test
97
What is the business efficacy test?
- The term must be necessary to give the contract business effect. If the contract makes business sense without the term, the courts will not imply a term
98
What was held in BP Refinery (Western Port) Property Ltd v Shire of Hastings (1978)?
- Privy council held that it was an implied term in a contract for the sale of land to the oil company that the complex to be built would be taxed for rates at a certain level since the construction was going to be on industrial land
