week 5 - contract law

Question 1

what does it mean by the terms of a contract?

Answer 1

the contents of a contract, stating the parties legal duties + obligations to each other.
they can be oral, a written review or implied.

Question 2

what happens when there is a failure to comply to the terms of a contract?

Answer 2

the wronged party can claim damages + treat the contract as ended.

Question 3

what does it mean by certainty of terms?

Answer 3

• they must not be too vague or incomplete.
• courts will have regard to what a reasonable person would think is a certain term.

Question 4

what is an express term?

Answer 4

those actually stated (orally or in writing).

Question 5

what is an implied term?

Answer 5

terms may be implied by statute, trade customs or the courts.

Question 6

what is a condition in a contract?

Answer 6

the fundamental term of a contract.

Question 7

what is a warranty of a contract?

Answer 7

the minor term of a contract.

Question 8

what is an innominate term of a contract?

Answer 8

terms that can’t be assigned into either category
depends on the seriousness of the breach + how much benefit has been lost as to whether the contract can end.

Question 9

what will happen if a warranty is broken by a party?

Answer 9

damages can be claimed by a party not in breach but the contract continues.

Question 10

what is an example of case where the condition in a case was broken?

Answer 10

Poussard v spiers (1876)
An opera singer (poussard) fell ill for the first week of performances, producer hired a substitute + refused the services of poussard for the remaining performances.
Verdict: performing on the opening night was a condition of the contract, therefore failure to do so can be regarded as a breach of contract.

Question 11

can you give an example of a case where the warranty of a contract was broken?

Answer 11

Bettini v gye (1876)
An opera singer (bettini) was contracted to perform for 3 months and attend rehearsals for 6 days beforehand, he arrived 3 days late so the producer refused to accept services.
Verdict: the non attendance was a breach of warranty. The producer can sue for damages for breaching warranty but can’t terminate the contract as this would be he breached the contract himself.

Question 12

what are pre-contractual statements?

Answer 12

when the parties are in the process of negotiating a contract, statements can be made.

Question 13

what are the 3 types of pre-contractual statements?

Answer 13

• trader’s hype or puff
• representation
• term

Question 14

what does it mean by a traders hype or puff?

Answer 14

a statement that cannot give rise to legal consequences as they aren’t meant to be taken literally and there is no intention to be legally bound.
they are exaggerated subjective claims.

Question 15

what happens if a party claims against a trader’s hype or puff?

Answer 15

there is no legal remedy (they can not sue) as the claims are considered opinion rather than fact. they are not legally actionable, even if the statement is false.

Question 16

what happens if a party claims against misrepresentation?

Answer 16

they can seek legal remedies such as compensation or contract cancellation.

Question 17

what does it mean by “having a remedy if the case is false”?

Answer 17

if someone makes a false statement of fact that leads to another party to act on it, the affected party can seek compensation or contract cancellation.

Question 18

what happens if a party claims against the terms of a contract?

Answer 18

if one party ails to fulfill their contractual obligations, the other party has legal options to enforce the contract or seek compensation for their loss.

Question 19

what are the factors of an objective test?

Answer 19

1. the importance of the statement to both parties.
2. the interval of time between the statement and the contract.
3. whether the statement is oral or written.
4. knowledge and still of the party making the statement.

Question 20

a contract may contain stated clauses that attempt to do what?

Answer 20

exclude or limit liabilities to the other party.

Question 21

what is an exemption clause?

Answer 21

attempt to exclude all legal liability eg a car park contract excluding legal liability for theft or damage while parked in the car park.

Question 22

what is a limitation clause?

Answer 22

attempt to limit legal liability eg airline’s contract may limit a claim for lost or damaged baggage to £100.

Question 23

what must happen for an exemption clause to be valid?

Answer 23

• be incorporated into the contract instead of being added after.
• be clear and non-ambiguous.
• comply with relevant statutes including the unfair contract terms act 1977 (if b2b) and consumer rights act 2015 (if b2c).

Question 24

how can exemption clauses be incorporated into a contract?

Answer 24

• Can be included in a document that is signed by the other party. If it is signed the clause will usually be valid, even if the party did not read the clause before signing.
• Can be included in unsigned documents and notices, but reasonable steps have to be made to bring the clause to the attention of the other party.
• if written on a document, it has to be something that reasonably resembles a contractual document.

Question 25

what is an example of a case where the claimant was bound by the exemption clause?

Answer 25

L’estrange v graucob (1934) Claimant purchased a cigarette vending machine for her cafe and signed a contract without reading it. Verdict: claimant was bound by the exemption clause regardless of the fact she hadn’t read the clause because she signed it.

Question 26

what is an example of a case where someone could not rely on the exemption clause?

Answer 26

Olley v marlborough court ltd (1949) Claimant stayed at a hotel, paid at reception and went to his room to find a notice on the door excluding the hotel from any liability for lost or stolen items, they then had their coat stolen when they went out for the evening. Verdict: because the contract was made at reception before the claimant had notice of the clause, the hotel could not rely on the exemption clause and were liable for the loss

Question 27

what are some terms that may be regarded as unfair (and therefore invalid)?

Answer 27

- terms that exclude liability for death or personal injury. - terms requiring consumers (who fail to fulfil their obligations), to pay a disproportionately high sum to the trader. - terms that makes the contract binding on a consumer but allows the seller to avoid performance.

Question 28

what are vitiating factors?

Answer 28

factors that undermine or invalidate a contract, making it void or voidable. it affects the genuineness of consent.

Question 29

what are the different types of vitiating factors that can invalidate contracts?

Answer 29

- misrepresentation - undue influence - illegality - mistake - duress

Question 30

what does misrepresentation mean?

Answer 30

an untrue statement made by one party to the other party during negotiations for a contract.

Question 31

what makes a statement "actionable misrepresentation"?

Answer 31

- statement is made: silence is not a false statement, up to the party to seek info they need. - statement must be false: they might not know its untrue. - statement must be presented as fact: cannot be an opinion. - statement must have induced the other party to enter into the contract: must show they relied on the statement + if there were reasons for entering.

Question 32

what does actionable misrepresentation mean?

Answer 32

a false statement of fact made during pre-contractual negotiations made by one party which induces the other party to enter into a contract.

Question 33

what is an example of a case that was judged as misrepresentation?

Answer 33

With v o’flanagan (1936) Doctor sold his medical practice, buyer requested info regarding annual revenue which the doctor provided. He fell ill before the sale, affecting revenue. Statement was false at the time of sale.

Question 34

what is an example of a case that is not actionable misrepresentation?

Answer 34

Attwood v small (1838) Seller of a mine made exaggerated claims about its potential revenue, the purchaser appointed an expert to check claims and the findings agreed with the made claims. Verdict: this was not actionable misrepresentation as the purchaser had relied on the expert’s statement, not the seller’s statement.

Question 35

what are the 3 types of misrepresentation?

Answer 35

- fraudulent - negligent - innocent

Question 36

what is fraudulent misrepresentation?

Answer 36

where the party makes a false statement they know is true.

Question 37

what is negligent misrepresentation?

Answer 37

a false statement made by a person who believes that its true but have no reasonable grounds for that belief.

Question 38

what is innocent misrepresentation?

Answer 38

a false statement made by a person who has an honest + reasonable belief in its truth. the belief must be present when the statement is made right up to the time of the contract.

Question 39

what is a mistake?

Answer 39

where 1 or more parties are mistaken about an aspect of a contract they have entered into. does not invalidate the contract, if fundamental to the contract it will be an operative mistake + contract will be voided.

Question 40

what are the 3 types of contract mistakes?

Answer 40

- common - mutual - unilateral

Question 41

what is a common mistake?

Answer 41

where both parties make the same mistake, will only be void if the mistake is fundamental to the contract itself.

Question 42

what is a mutual mistake?

Answer 42

where the 2 parties are at cross purposes, therefore have never reached an agreement. will be voided if not possible to reconcile the intention?

Question 43

what is a unilateral mistake?

Answer 43

where 1 party is mistaken but the other is aware of the mistake. to be operative it must be essential to the contract.

Question 44

what is an example of a case where a common mistake occurred?

Answer 44

Scott v coulson (1903) Two parties negotiated a contract for a life insurance policy on a person + both parties mistakenly believed this person was alive when the contract was made. Verdict: the contract was void as the common mistake was made.

Question 45

what is an example of a case where a mistake occurred?

Answer 45

Raffles v wichelhaus (1864) Two ships with the same name left bombay at the same time, the seller thought the cotton was on 1 ship whilst the buyer thought the cotton was on the other one. Verdict: no possibility of finding common ground so contract was void for a mistake.

Question 46

what is duress?

Answer 46

where a threat of unlawful violence or imprisonment is made in order to induce the other party into entering into the contract.

Question 47

what is economic duress?

Answer 47

where a contract has been agreed to after extortion from one of the parties.

Question 48

what must the innocent party show for it to be duress?

Answer 48

illegitimate threats or pressure was applied to the other party, pressure was significant in making them agree, there was no practical choice but to agree.

Question 49

what is an example of a case where economic duress was present?

Answer 49

Atlas express v kafco (1989) Defendant was a small company that imported + sold goods to retail stores, claimant was a delivery company. Claimant revised the price list and threatened to not carry any further loads unless new prices were agreed to. Defendant could not find another carrier in the run up to xmas so signed the new agreement but later refused to pay new prices. Verdict: defendants were forced into the new terms, contract was set aside for economic duress.

Question 50

what does it mean by undue influence?

Answer 50

this covers situation where some form of improper pressure has been put on a person to enter into a contract.

Question 51

how can people prove actual undue influence?

Answer 51

victims must prove they entered into a contract as a result of genuine intimidation, courts apply a subjective test based on what the victims believe.

Question 52

illegality - why may contracts be deemed illegal?

Answer 52

- its purpose is illegal: eg a contract to sell contraband medicine. - the manner in which the contract is to be performed is illegal: eg a contract to manufacture clothing using child labour.