3.) Contract Law Flashcards

1
Q

What is a contract?

A

An agreement, made between two or more persons, giving rise to obligations on the part of both parties, which are usually enforceable or recognised by law

It’s not merely an exchange of promises, both having given something, and having promised to give something in the future

The persons referred to in the above definition are usually called parties to the contract and are identified by the terms offeror and offeree. The offeror (the person wanting the goods) makes an offer to the offeree (the person who owns the goods)

The important thing to remember is that the basis of contract law is what the parties have themselves agreed. To a degree, the parties make the rules of the contract themselves, and providing they don’t infringe the law itself, they can make any terms or conditions they wish

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2
Q

A contract is an agreement, made between two or more persons, giving rise to obligations on the part of both parties, which are usually enforceable or recognised by law - Define the persons referred to

A

The persons referred to in the above definition are usually called parties to the contract and are identified by the terms offeror and offeree. The offeror (the person wanting the goods) makes an offer to the offeree (the person who owns the goods)

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3
Q

Define the offeror in an agreement

A

The person who WANTS the goods

Regarding ACCEPTANCE of a contract, acceptance must be communicated back to the OFFEROR

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4
Q

Define the offeree in an agreement

A

The person who OWNS the goods

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5
Q

What are the essential elements to form a valid and enforceable contract?

A

REMEMBER - OFFER AND ACCEPTANCE, INTENTION TO CREATE RELATIONS, CONTRACTUAL, CONSIDERATION, CERTAINTY and NOT CONTRARY

There must be an offer and acceptance (which is an agreement)

There must be an intention to create legal relations (the contract will bind the parties, who will then be able to sue and be sued)

The parties must have contractual capacity (that is, legal capacity)

There must be consideration (unless under seal)

There must be certainty (the parties must know exactly what they have agreed)

The contract must not be contrary to public policy

In the absence of some or all of these requirements, the contract may be void, voidable or unenforceable

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6
Q

What if a contract lacks some or all of the essential elements to make it valid and enforceable?

A

In the absence of some or all of the requirements, the contract may be void, voidable or unenforceable (depending on the materiality of the missing requirements):

X A void contract has no binding effect

X A voidable contract is binding, but one party, usually the innocent one, has the right to set it aside

X An unenforceable contract is valid, but cannot be enforced by one party against the other

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7
Q

What are the two types of terms (either express or implied) that make up a contract?

A

Conditions

Warranties

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8
Q

Describe conditions, one of the two types of terms (either express or implied) that make up a contract

A

Important terms that form the basis of the whole contract

Upon a breach of CONDITIONS, the innocent party can either:

repudiate the whole contract

Affirm the contract

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9
Q

Describe warranties, one of the two types of terms (either express or implied) that make up a contract, and the options available to an innocent party in a contract upon a breach of warranty

A

Less important terms that are incidental to the main purpose of the contract

Upon a breach of WARRANTY, an innocent party must treat the contract as continuing, but can claim damages

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10
Q

What are the two clauses that make up a contract?

A

Express terms, aka express conditions and warranties

Implied terms, aka implied conditions and warranties

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11
Q

Describe an offer, in relation to offer and acceptance

A

An offer is a proposition put by one person(s) to another with an intention that if accepted, it will be legally binding.

An offer must be sufficiently definite in order for it to be capable of being accepted by the offeree

An offer must be carefully distinguished from an invitation to treat (or invitations to other persons to make an offer)

An offer can be made to an individual (a bilateral contract) or the world at large (a unilateral contract)

Regarding a famous example of the law’s ruling in relation to rules relating to an offer, note the case Carlill vs carbolic smoke ball company (1892)

Note that rewards are often offers, e.g. a poster for a lost cat

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12
Q

Describe the case Carlill vs carbolic smoke ball company (1892)

A

This case provides an example of rules relating to an offer, specifically newspaper adverts

In the case Carlill vs carbolic smoke ball company (1892), it was argued that an effective offer could not be made to the public at large

The company were the proprietors of a medical preparation called the carbolic smoke ball, and they issued an advert in which they offered to pay £100 to anyone that caught flu after using the product correctly

The plaintiff, Mrs Carlill bought the smoke ball and used it as prescribed, but still caught the flu.

She successfully sued for the £100, after the judge ruled that such a contract was valid

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13
Q

Describe an invitation to treat, in relation to offer and acceptance

A

A statement inviting offers/an invitation to enter negotiations (an offer to make an offer) - its objective is if the party accepts a proposition, there will be no contract at this stage. As such, the acceptance of an invitation to treat doesn’t create an agreement

Regarding a famous case relating to an invitation to treat, note the case of the pharmaceutical society of Great Britain vs Boots cash chemists (southern) limited 1953

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14
Q

Describe the case pharmaceutical society of Great Britain vs Boots cash chemists (southern) limited 1953

A

An example of a case relating to an invitation to treat

Boots adapted on of its shops into a self service system

The case came to court to determine at which point a sale is made (offer and acceptance), as in this case the sale of the poison strychnine was only permitted under the safe supervision of a qualified pharmacist

The plaintiffs submitted that as soon as the item was in the basket, then the offer had been accepted, and this was therefore done before the pharmacist could intervene

The court held that by merely picking up the item didn’t make the sale, the contract was made at the till when the buyer offers to buy, and the acceptance to sell is the process of taking the money. The pharmacist had undertaken the transaction at this stage

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15
Q

Describe advertisements, in relation to offer and acceptance

A

Adverts are usually construed as an invite to treat, as no obligations are agreed at that time. This allows the seller advertising his goods the ability to withdraw them or to change them without giving notice to potential buyers

The only contradiction to this ruling was in the case of Carlill vs carbolic smoke ball (1892), in which the defendants had deposited £1,000 to deal with responses to their advert, which evidenced their intention to be legally bound

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16
Q

Describe goods in shop windows, in relation to offer and acceptance

A

These goods are on display to invite offers to buy, but the shopkeeper has no obligation to accept the offer, and to sell the goods at the price stipulated

Most adverts are designed to encourage people to buy particular products, and/or services. However, bear in mind that any claims made may create legally binding promises, as in the case of Carlill vs carbolic smoke ball case (1892)

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17
Q

Describe auctions, in relation to offer and acceptance

A

In Payne vs cave (1789), the bids are merely offers made by the bidders, and it’s only when the hammer comes down that the winning offer will be deemed to have been accepted by the auctioneer

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18
Q

Describe acceptance, in relation to offers and acceptance, and the rules that apply to it

A

REMEMBER THE DREDD STORY

Acceptance is the unconditional consent to the terms of an offer

Various rules are applied:

X Acceptance must be clear and unqualified

X Acceptance must be communicated directly back to the offerer

X Silence cannot amount to acceptance

X Acceptance must come from the proper authority

X Substantial performance (completion) of the contract almost amounts to acceptance

X Acceptance must be by the mode or method laid down by the offeror

X Acceptance must be when the offer is still open

X Acceptance can be subject to contract

X Acceptance can be by operation of law

The general rule, as shown above, is that an acceptance has no legal effect until it’s been communicated to the offeror

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19
Q

What’s the general rule that applies to acceptance, in relation to offers and acceptance

A

Acceptance has no legal effect until it’s been communicated to the offeror

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20
Q

When can silence amount to acceptance?

A

Silence cannot amount to acceptance, except by express prior consent, e.g. If I haven’t heard back from you within seven days

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21
Q

Describe the case Adams vs Lindsell 1818

A

This case provides an example of the postal rule

The case involved two parties in the sale of wool

On 2 September, the defendants wrote to the plaintiffs offering to sell them certain fleeces of wool, and requiring an answer by post. The defendants misdirected the letter so that the plaintiffs didn’t receive it until 5 September

The plaintiffs posted their acceptance on the same day, but it wasn’t received until 9 September. Meanwhile, on 8 September, the defendants, not having received an answer by 7 September as expected, sold the wool to someone else

The defendants argued that there couldn’t be a binding contract until the answer was actually received, and until then they were free to sell the wool to other buyers

The judge said that if true, it would be impossible to complete any contract through the post: if the defendants weren’t bound by their offer until the answer was received, then the plaintiffs wouldn’t be bound until they’d received word that the defendants had received their acceptance, and this could go on forever.

Instead, it was considered that the offeree was making the offer to the plaintiffs during every moment that the letter was in the post

The postal rule won’t apply if the letter wasn’t properly delivered, or handed to a postman only authorised to deliver, and therefore not authorised to accept letters

Where the offer excluded the postal rule, I.e. notice in writing means that the acceptance must reach the offeror

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22
Q

Describe conditional assent and counter offer, an example of acceptance

A

Acceptance must be unconditional and absolute, excepting when the acceptance is subject to contract

A counter offer is a rejection of the original offer, and in some cases where the counter offer introduces a new term, the original offer is cancelled

An example of conditional assent and counter offer is the case Hyde vs wrench 1840

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23
Q

Describe the case Hyde vs wrench 1840

A

This case is an example of the law’s ruling in relation to conditional assent and counter offer, an example of acceptance

In Hyde vs wrench 1840, the defendant offered to sell an estate to the plaintiff for £1,000

The plaintiff made an offer of £950, but was rejected by the defendant. The plaintiff then wrote to say that he was prepared to pay the full £1,000

It was held that no such contract existed - the offer was no longer open because the counter offer had destroyed it

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24
Q

Describe request for information, an example of acceptance

A

This doesn’t destroy the offer, but attempts to clarify matters. It can be difficult to determine whether a statement from the offeree to the offeror regarding the offeree’s offer is simply a request for information, or whether the offeree’s statement is a counter offer

In the end, the test being applied will be the intention of the offeree

Request for evidence, in relation to acceptance, is evidenced in the case Harvey vs facey (1893)

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25
Q

Describe the case Harvey vs facey (1893)

A

This case provides an example of request for information, an example of acceptance

The plaintiff telegraphed the defendant asking what the lowest price would be for bumper hall pen, and the defendant telegraphed back the lowest price. The plaintiff telegraphed back that he would buy for that agreed price

It was held that the second telegraph was only information, not an offer to sell, only an indication of the price

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26
Q

Describe revocations of offer, an example of acceptance

A

The general rule is that an offer may be revoked at any time before it has been accepted, as per the case of Payne vs cave

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27
Q

Describe lapse of time, an example of acceptance

A

If a time has been stipulated, then the offer lapses when the time has expired. If no time has been stipulated, then acceptance must be within a reasonable time, which the court will determine the length of

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28
Q

Describe effect of death of a party, an example of acceptance

A

The effect of death would appear to vary, according to the type of contract in question, whether the death is that of the offeror or the offeree, and whether death takes place before or after acceptance:

Death of offeror before acceptance, if a man who makes an offer dies: the offer cannot be completed after he is dead

Death or the offeree before acceptance: once the offeree is dead, there’s no offer to be accepted. His executors cannot accept the offer in his stead

Death of parties after acceptance: death after acceptance usually has no effect, unless the contract was for personal services, when the liability under the contract ceases

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29
Q

Define consideration

A

Consideration is essential to the formation of any contract not made under seal, and was defined by Currie vs misa (1875) as:

Some right, interest, profit or benefit accruing to the party, or some forebearance, detriment, loss or responsibility give, suffered or undertaken by the other

Paying, or promising to pay, money in return for the supply of goods or services constitutes the most common form of consideration

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30
Q

Describe the rule that ‘consideration must move from the promise (privity of contract)’, one of the rules the courts have developed regarding consideration

A

Only a person who’s provided consideration in return for a promise may sue on that promise.

In tweddle vs Atkinson (1861), a man agreed with tweddle that each of them would pay tweddle’s son, who was the man’s prospective son in law. When the son in law sued for nonfulfillment of the promise, it failed because no consideration had moved from him, the contract being between the man and tweddle

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31
Q

Describe the case tweddle vs Atkinson (1861)

A

This case helps outline the rule ‘consideration must move from the promise (privity of contract)’, a rule the courts have developed regarding consideration

In tweddle vs Atkinson (1861), a man agreed with tweddle that each of them would pay tweddle’s son, who was the man’s prospective son in law.

When the son in law sued for nonfulfillment of the promise, it failed because no consideration had moved from him, the contract being between the man and tweddle

Therefore, only the people making the contract can enforce it - it was the son in law who brought to the case to court, and couldn’t enforce it, as only the original men had the power to do so (I.e. one of the original men would have been able to successfully take the other to court for non-payment)

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32
Q

Describe the rule that ‘consideration need not be adequate’, one of the rules the courts have developed regarding consideration

A

Consideration need not be adequate, but must have some value, however slight.

For example, a house could be transferred from me person to another for a peppercorn

There’s no requirement that the bargain must be balanced, if it’s freely entered into.

In Chappell vs nestle co ltd (1960), the House of Lords held that used chocolate wrappers were part of the consideration for the purchase of a gramophone record

Note that, in this context, ‘adequate’ means that the consideration is viable, but that ‘sufficient’ implies that the consideration is real, and not an illusion, e.g. a handful of air for a car

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33
Q

Describe the case Chappell vs nestle co ltd (1960)

A

This case helps outline the rule ‘consideration need not be adequate’, a rule the courts have developed regarding consideration

In Chappell vs nestle co ltd (1960), Nestle had an offer whereby if you sent in three chocolate wrappers, and some money, they’d send you a gramophone record.

Chappel took Nestle to court, claiming that they should accept offers which were JUST money, as well

Nestle won the case, as the House of Lords held that used chocolate wrappers were part of the consideration for the purchase of a gramophone record

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34
Q

Describe the rule that ‘past consideration is no consideration in law’, one of the rules the courts have developed regarding consideration

A

The promises between parties must be promises to do something immediately or in the future. A promise regarding something done in the past is not good for consideration. In other words, you can’t make contracts relying on information that’s given AFTER the deal/work has been completed

In Re McArdle (1951), a woman carried out work on a house jointly owned by several family members. After the work had been completed, her relatives signed a document promising to pay her for the work. It was held that she couldn’t recover the money as her consideration was past, unless this was part of the terms set down in the contract, e.g. in consideration of you having…

Another aspect of this rule is that new terms can’t be added to a contract after it’s been concluded. In Roscorla vs Thomas (1842), P purchase a horse from D. After the sale was complete, D gave an understanding that the horse wasn’t vicious, which proved to be wrong. P sued on this undertaking. He failed since his consideration was in the past. The act put forward as consideration, I.e. the payment of the pricd, was complete before the undertaking was given. P therefore gave nothing new in return for the undertaking. It’s impossible to sue in a ‘something for nothing’ situation

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35
Q

Describe the case Re McArdle (1951)

A

This case outlines the rule ‘past consideration is no consideration in law’, a rule the courts have developed regarding consideration

In Re McArdle (1951), a woman carried out work on a house jointly owned by several family members. After the work had been completed, her relatives signed a document promising to pay her for the work. It was held that she couldn’t recover the money as her consideration was past, unless this was part of the terms set down in the contract, e.g.vin consideration of you having…

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36
Q

Describe the case Roscorla vs Thomas (1842) and its significance

A

This case relates to the rule ‘past consideration is no consideration in law’, one of the rules the courts have developed regarding consideration

New terms can’t be added to a contract after it’s been concluded

In Roscorla vs Thomas (1842), P purchase a horse from D. After the sale was complete, D gave an understanding that the horse wasn’t vicious, which proved to be wrong. P sued on this undertaking. He failed since his consideration was in the past. The act put forward as consideration, I.e. the payment of the pricd, was complete before the undertaking was given. P therefore gave nothing new in return for the undertaking. It’s impossible to sue in a ‘something for nothing’ situation

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37
Q

Describe the rule that ‘ consideration must be legal’, one of the rules the courts have developed regarding consideration

A

The agreement between parties must be within both civil and criminal law

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38
Q

Describe the rule that ‘ consideration must not be something which one party is already bound to do as a matter of duty or contract’, one of the rules the courts have developed regarding consideration

A

If an organisation such as a fiduciary (trustee) has a duty to do something, that duty can’t be raised as consideration.

Consideration will only arise if the organisation exceeds their duties

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39
Q

Describe the rule over ‘whether part payment of debts is an adequate consideration ‘, one of the rules the courts have developed regarding consideration

A

The general rule is that the creditor isn’t obliged to accept it

Poems else case explains this as:

“Payment of a lesser sum on the day it’s due in satisfaction of a greater sum cannot be any satisfaction for the whole”

The exception to this rule is promissory estoppel, which makes a promise binding in the absence of consideration. Where the promise is made to another that he will accept less than full performance of the contract, he will not be allowed to go back on this promise by suing later on, and that he will be estopped (prevented) from doing so

An example of this is the high trees case (1947) - the landlords of a block of flats in London agreed to pay half rent from the tenants due to wartime conditions. After the war, full rent was payable again but the landlords were estopped from demanding the balance of the reduced rent

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40
Q

Define and describe promissory estoppel

A

A creditor isn’t obliged to accept part payment payment of a debt, instead of the full amount

Pemsels case describes this as “payment of a lesser sum on the day it’s due in satisfaction of a greater sum cannot be any satisfaction for the whole

The exception to this rule is promissory estoppel, which makes a promise binding in the absence of consideration. Where the promise is made to another that he will accept less than full performance of the contract, he will not be allowed to go back on this promise by suing later on, and that he will be estopped (prevented) from doing so

An example of this is the high trees case (1947) - the landlords of a block of flats in London agreed to pay half rent from the tenants due to wartime conditions. After the war, full rent was payable again but the landlords were estopped from demanding the balance of the reduced rent

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41
Q

Describe the rule regarding ‘executed and executory consideration’, one of the rules the courts have developed regarding consideration

A

A contract is said to be executed when one or both parties have done all that the contract requires

For example:

If A and B agree to exchange A’s car for B’s motorbike, and it’s done straight away, this is executed

A contract is said to be executory when the obligations of one or both parties have yet to be completed

For example:

Alternatively, if A and B agree to do the exchange next week, then it is executory

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42
Q

Describe intention to create legal relations, including the two general rules

A

If the parties didn’t intend the agreement to be legally binding, then there will be no contract although there may be an offer, acceptance and consideration.

The law won’t recognise the existence of a contract simply because of the presence of mutual promises

Some agreements aren’t meant to be legally binding, such as:

To offer a friend a meal is not to invite litigation

There are two general rules:

X Social/domestic agreements AREN’T intended to be legally binding

X Commercial agreements ARE presumed to be

For example, where a husband arranges for his wife to have a monthly allowance for her personal enjoyment, this will not usually be taken to contemplate legal relations

Balfour vs Balfour (1919) is the authority for this. D was a civil servant stationed abroad. His wife said that while they were both on leave in England, and because she was ill and couldn’t accompany him, he had promised to pay her a monthly allowance as maintenance while they were apart, she sued for breach of this agreement, but her action failed. This relied on lack of intention

Mr B promised to pay his wife £30 per month.

Mr B had to return to Ceylon, but his wife remained in England for medical reasons

The couple later separated

Mrs B claimed £30 per month, pursuant to Mr B’s promise

Mrs B could have been successful in her claim, had the agreement been made outside marriage (because they were married when the agreement was made, it was seen as a domestic agreement)

Decision -

An agreement to pay £30 existed

The parties hadn’t intended it to be legally binding

There’s a presumption that domestic arrangements aren’t intended to finish up in court

Another example of a case where the parties expressly deny any intention to be legally bound was evidenced in Jones vs Vernon’s pools ltd (1938). The judges appear to recognise that pool companies are particularly susceptible to fraud by those who would conceal late entries

Vernon ran a football pools (like combination betting slips, pick the winners and post in the coupon) company in the UK

During a dispute, the court had to decide whether a contractual relationship existed between Vernon’s pools and each entrant

There was a clause on the back of the betting slip that said the contract wasn’t legally binding. As a result, the court ruled in favour of the company

Reasoning for the decision:

Because the relationship was clearly commercial, there was a presumption that the relationship was
binding

However, the court held that the clause in the coupon was sufficient to rebut the presumption, meaning that there was no contract between Vernon’s pools and the entrants

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43
Q

Describe the case of Balfour vs Balfour (1919)

A

Demonstrates one of the two rules of intention to create legal relations (that social/domestic agreements aren’t intended to be legally binding)

D was a civil servant stationed abroad. His wife said that while they were both on leave in England, and because she was ill and couldn’t accompany him, he had promised to pay her a monthly allowance as maintenance while they were apart, she sued for breach of this agreement, but her action failed. This relied on lack of intention

Mr B promised to pay his wife £30 per month

Mr B had to return to Ceylon, but his wife remained in England for medical reasons

The couple later separated

Mrs B claimed £30 per month, pursuant to Mr B’s promise

Mrs B could have been successful in her claim, had the agreement been made outside marriage (because they were married when the agreement was made, it was seen as a domestic agreement)

Decision -

An agreement to pay £30 existed

The parties hadn’t intended it to be legally binding

There’s a presumption that domestic arrangements aren’t intended to finish up in court

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44
Q

Describe the significance of the case Jones vs Vernon’s pools ltd (1938)

A

A case relating to intention to create legal relations, in this instance via commercial agreements

An example of a case where the parties expressly deny any intention to be legally bound was evidenced in Jones vs Vernon’s pools ltd (1938).

The judges appear to recognise that pool companies are particularly susceptible to fraud by those who would conceal late entries

Vernon ran a football pools (like combination betting slips, pick the winners and post in the coupon) company in the UK

During a dispute, the court had to decide whether a contractual relationship existed between Vernon’s pools and each entrant

There was a clause on the back of the betting slip that said the contract wasn’t legally binding. As a result, the court ruled in favour of the company

Reasoning for the decision:

Because the relationship was clearly commercial, there was a presumption that the relationship was
binding

However, the court held that the clause in the coupon was sufficient to rebut the presumption, meaning that there was no contract between Vernon’s pools and the entrants

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45
Q

Describe a minor’s capacity to enter into a contract

A

Persons under the age of majority (usually 18) have restricted capacity. They will be bound for purchases of goods, which are classed as necessities or for contract’s for the minor’s benefit, such as contracts of employment or apprenticeship

Food, clothes and lodging are regarded as necessities, but educational books, medical attention, burial of a minor’s wife, legal advice and even some luxury articles may be considered necessities

For example, Nash vs Inman (1908), or the waistcoats case. The plaintiff was a Savile row tailor and the defendant was an infant undergraduate at trinity college Cambridge. The plaintiff sent his agent to sell items of clothes including eleven waistcoats, hence its common name. Payment wasn’t forthcoming, so the tailor sued for repayment of the monies due. The court held that such waistcoats would indeed constitute necessities when considered in line with the defendant’s station in life. However, the claim failed, as the tailor hadn’t established that the defendant needed the waistcoats, as his father adequately maintained him.

Waistcoats WERE part of the uniform at Trinity College, Cambridge but the plaintiff hadn’t made sure that the defendant actually needed the items

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46
Q

Describe the case Nash vs Inman (1908), or the waistcoat case

A

An example of a case involving a minor’s capacity to enter into a contract

The plaintiff was a Savile row tailor and the defendant was an infant undergraduate at trinity college Cambridge.

The plaintiff sent his agent to sell items of clothes including eleven waistcoats, hence its common name. Payment wasn’t forthcoming, so the tailor sued for repayment of the monies due.

The court held that such waistcoats would indeed constitute necessities when considered in line with the defendant’s station in life. However, the claim failed, as the tailor hadn’t established that the defendant needed the waistcoats, as his father adequately maintained him.

Waistcoats WERE part of the uniform at Trinity College, Cambridge but the plaintiff hadn’t made sure that the defendant actually needed the items

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47
Q

Describe the capacity of corporate bodies to enter into a contract

A

In theory, a company can only make contracts, which are within their object clause, as stated within its memorandum of association

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48
Q

Describe an alien’s capacity to enter into a contract

A

Aliens usually have full capacity, but cannot acquire ownership of a British ship, unless as a member of a corporate body

However, contracts with enemy aliens during the period of hostilities are considered illegal and void. This would also encompass British citizens voluntarily resident or carrying on a business in the enemy country. The test isn’t nationality, but the place where the person resides and carries on business

Contracts which are agreed prior to war are cancelled, with some contracts being enforced after hostilities have ceased. Therefore, a debt due under a contract before the outbreak of war would survive the hostilities, and be enforceable on the return of peace

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49
Q

Describe the capacity of persons suffering from mental disorders to enter into a contract

A

Contracts made by a person of unsound mind are valid, but if the other party knew he was contracting with a person who, due to the unsoundness of his mind, couldn’t understand the nature of the contract, then the contract is voidable at the option of the insane party

The person of unsound mind must prove:

X The unsoundness of mind at the time of the contract, and

X The other party knew of it

Further, a contract made during a period of unsound mind can be ratified during a lucid interval

For example, if the person was drunk at the time the contract was made, it is voidable if it can prove that the two rules above apply, but the contract can also be ratified

Persons committed under the mental health act cannot personally make a valid contract, though the court can make a contract on their behalf

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50
Q

Describe utmost good faith (uberrimae fidei), in relation to making two parties making a contract

A

There’s no obligation on a contracting party to enlighten the other party, even when he knows or suspects there’s a misapprehension. For example, X offers to sell a watch to Y, and Y, thinking it is gold, offers £100. X, knowing the watch is only worth £10, accepts Y’s offer without enlightening him of the true value of the watch

The essential maxim (principle) in these cases is caveat emptor (let the buyer beware). This is a harsh rule that’s been modified in certain circumstances by the supply of goods (implied terms act) 1973 and other statutes such as the consumer credit act 1974

However, there are certain contracts in which disclosure of material facts is required by law. Contracts of insurance and/or assurance are examples where the details need to be disclosed in order to obtain appropriate cover and failure to disclose places the other party under a misrepresentation of the true risk and therefore the premium (or consideration) is inadequate and the contract is voidable at the option of the insurer

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51
Q

Define vitiating factors

A

Vitiating factors have an impact on the effect of the contract, and may render it void, voidable, or valid but unenforceable.

Vitiating factors are:

Mistake

Misrepresentation

Duress and undue influence

Illegality and contrary to public policy

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52
Q

Describe mistake, a vitiating factor

A

People frequently make mistakes when purchasing goods and the general rule about the quality or the characteristics of the goods don’t invalidate the contract or give any remedy to the person who made the mistake

However, there are some misconceptions, which will render the contract void:

X Mistakes as to the existence of the subject matter which unknown to both parties doesn’t exist, known as a common mistake or identical mistake

X Mistakes as to the possibility of performing the contract which Unknown to both parties can’t be performed

X Mistake as to the identity of the subject matter. E.g. X was selling item B, but Y was intending to buy item A, known as mutual or non-identical mistake

X Mistake as to the document that’s being signed, known as non est factum (not my deed). However, the person signing cannot claim ignorance of the contents of the document

X Mistake as to the identity of the other party. Mr crook represents himself as someone else who actually exists, and this is an important factor in securing the deal

X Mistake can be by one party (unilateral) or both parties (bilateral)

53
Q

Describe misrepresentation, a vitiating factor

A

A misrepresentation is an untrue statement of fact, which is one of the causes which induces a contract. This has the effect of making the contract voidable. This means the contract is valid until the victim of misrepresentation exercises their option to avoid the contract

For example, if a lender quoted an interest rate of 3%, but the rate was really 7.9% APR, the borrower could avoid the contract as he or she may have been misled into entering into the contract by the perceived low interest rate

There’s three types of misrepresentation:

Fraudulent

Innocent

Negligent

54
Q

Define and describe the three types of misrepresentation

A

Fraudulent misrepresentation - involves one party knowingly making a statement that false or made recklessly, not caring whether it’s false or not. The innocent party may ignore the misrepresentation, or rescind the the contract and claim damages

Innocent misrepresentation - a statement, which the maker honestly and reasonably believes to be true. The innocent party may ignore the misrepresentation, or rescind the contract,Mobutu there’s no right to damages

Negligent misrepresentation - when a party makes a statement without any reasonable grounds for believing it to be true. The innocent party has a right to damages and to rescind the contract

55
Q

Describe duress and undue influence, a vitiating factor

A

Duress is a comm law concept that occurs when physical violence or the threat of violence causes someone to make a contract. The effect is that the contract is voidable

Undue influence was developed by equity, where one party brings pressure on another in order for them to complete a contract. It’s likely that the relationship will be based on trust, e.g. a solicitor, client, parent or child

Lloyds vs Bundy (1975) is an example of a case in which a bank has been shown to exert pressure on a customer to sign documents, which would place them in a financially worse situation:

The plaintiff was an elderly farmer who’d guaranteed his son’s account and supported this guarantee with the deeds of his farm. It was held that the bank had failed in its fiduciary duty by not allowing the farmer the opportunity to obtain independent legal advice. The bank manager by visiting the farm had used undue pressure to obtain the deeds and the signature. An additional problem in this particular case was the conflict of interest, as the bank knowingly induced the signature when they had little prospect of being repaid. Both the father and the son banked with Lloyds, and the bank owed a duty of care to each of them separately

Barclays vs o’brien updated the Bundy case and procedures so that all financial service providers are now obliged to ensure that clients seek independent advice prior to entering into any contract, and provide proof that they’ve done so

56
Q

List some vitiating factors

A

Mistake

Misrepresentation

Duress and undue influence

Illegality and contrary to public policy

57
Q

Describe the case Lloyds vs Bundy (1975)

A

An example of a party using duress and undue influence, a vitiating factor, to pressure another party to complete a contract

Lloyds vs Bundy (1975) is an example of a case in which a bank has been shown to exert pressure on a customer to sign documents, which would place them in a financially worse situation:

The plaintiff was an elderly farmer who’d guaranteed his son’s account and supported this guarantee with the deeds of his farm. It was held that the bank had failed in its fiduciary duty by not allowing the farmer the opportunity to obtain independent legal advice. The bank manager by visiting the farm had used undue pressure to obtain the deeds and the signature. An additional problem in this particular case was the conflict of interest, as the bank knowingly induced the signature when they had little prospect of being repaid. Both the father and the son banked with Lloyds, and the bank owed a duty of care to each of them separately

Barclays vs o’brien updated the Bundy case and procedures so that all financial service providers are now obliged to ensure that clients seek independent advice prior to entering into any contract, and provide proof that they’ve done so

58
Q

Describe a contract being illegal and contrary to public policy, a vitiating factor, I.e. factors that have an impact on the effect of the contract, and may render it void, voidable, or valid but unenforceable

A

Illegality - The courts won’t enforce contacts which are prohibited by statute, or contracts to commit crimes or civil wrongs

Contracts contrary to public policy - these contracts aren’t prohibited by statute nor are they illegal, but they cannot be enforced because they’re contrary to public policy

The most important of these are contracts in restraint of trade, which is a contract, which restricts anyone freely exercising their trade or profession. These contracts are prima facie void and will only be binding if reasonable

When examining such contracts, the court attempts to balance two conflicting interests:

The interest of the parties to be able to make such a contract

Any restraint of trade is likely to be against the public interest, since it will give them less choice or bargaining power

59
Q

What are the four methods for discharging a contract, I.e. Ways by which rights and obligations existing under a contract may come to an end

A

Performance

Agreement

Frustration

Breach

60
Q

Describe performance, one of the four methods for discharging a contract

A

A party who performs a contract in accordance with its terms and conditions is discharged from any further obligations

For example, if X writes a cheque in payment of goods and services, which are suitable for the purpose anticipated, then X will be discharged from his liability when the cheque is debited to his bank account

If a person’s obligation is to deliver goods, then these must be delivered at a reasonable hour, usually considered to be during working hours but in some cases can be 9am to 9pm

The problem with performance is its exactness as to form and obligation. If the seller tenders too few or too many goods, all the goods can be rejected by the buyer

In a similar way, if the goods don’t match exactly the description provided, they can be rejected, unless as is commonplace, a disclaimer that the goods may vary from that indicated as included in the original agreement

Finally, the contract may state in which order the parties must perform their obligations. For example, you may take fees in arrears, or that you may specify that these should be paid in advance

61
Q

Describe agreement, one of the four methods for discharging a contract

A

The parties to a contract may agree to end a contract before it’s been performed. This may occur when both parties have obligations outstanding

For example, Fred and Jane have agreed a car sale, Fred having paid a £100 deposit. Fred stated that he’d bring the cash balance on Friday of this week when he’d pick up the car, and Jane agreed to do this. Earlier in the week, Fred learns that he’s to be made redundant, and so can’t afford to buy the car. On contacting Jane, she agrees towns the contract, although technically she could have insisted that Fred complete the contract

62
Q

Describe frustration, one of the four methods for discharging a contract

A

A contract may be discharged by frustration if, after its formation, events occur making performance (completion) impossible or illegal

Generally, such a situation will only discharge a contract if:

X It wasn’t thought of by both parties when the contract was made

X It completely changes the nature of the contract

X Neither party was responsible for it

The result of the event creates a situation where the parties didn’t intend to be legally bound

For example, the case of Taylor vs Caldwell (1863): Caldwell agreed to let out a music hall to Taylor for four days. However, the music hall accidentally burnt down before the first date. Taylor claimed damages, alleging that Caldwell had broken the contract. However, it was held that Caldwell was discharged from his obligation when the hall burnt down, the contract being discharged by frustration.

Note that, should one party have already paid monies to the other party, then the court may order those monies to be repaid

63
Q

Describe the case of Taylor vs Caldwell (1863)

A

An example of frustration, one of the four methods for discharging a contract

Caldwell agreed to let out a music hall to Taylor for four days. However, the music hall accidentally burnt down before the first date.

Taylor claimed damages, alleging that Caldwell had broken the contract. However, it was held that Caldwell was discharged from his obligation when the hall burnt down, the contract being discharged by frustration.

64
Q

Describe breach, one of the four methods for discharging a contract

A

If a person fails to perform one of their contractual obligations, for example they don’t perform on the agreed date, or deliver goods of inferior quality, or they refuse to pay the agreed price

If a person, before the date fixed, indicates that they won’t complete the contract, then this is known as anticipatory breach

Note that breach WON’T automatically end the contract

65
Q

Define a breach

A

A civil wrong that will entitle the innocent party to refuse further performance of the contract and seek a remedy (compensation)

The possible remedies are:

1) Common law remedies - that the innocent party can enforce against the whole world. In such cases, the judge has no discretion and must award the remedy:

X Damages and monetary compensation, and…

X Repudiation

2) Equitable remedies - personal rights that the judge can exercise discretion, guided by the rules and circumstances of each case:

X To make a quantum meriut or claim for work done

X Specific performance, that is a claim for the actual performance of the other person’s promise

X Injunction that is an order from the court preventing a person from doing something

X Rescission for misrepresentation

66
Q

Describe the possible remedies for a breach

A

The possible remedies are:

1) Common law remedies - that the innocent party can enforce against the whole world. In such cases, the judge has no discretion and must award the remedy:

X Damages and monetary compensation, and…

X Repudiation

2) Equitable remedies - personal rights that the judge can exercise discretion, guided by the rules and circumstances of each case:

X To make a quantum meriut or claim for work done

X Specific performance, that is a claim for the actual performance of the other person’s promise

X Injunction that is an order from the court preventing a person from doing something

X Rescission for misrepresentation

67
Q

Describe damages, a common law remedy for breach of contract

A

The usual remedy for breach of contract is damages (compensation). This is payment of money by the party in breach, to the innocent party. The objective of this payment is to place the innocent party back into the same financial position as he was before the breach took place. It isn’t intended to be used to punish the other party, as this would be the role of a criminal case

There are two main types of damages:

Liquidated damages - the potential financial loss HAVE been agreed and set out in the contract by the parties themselves

Unliquidated damages - in which the damages HAVEN’T been agreed in the contract

The court will apply common law rules of assessment

When the damages to be paid are assessed by the courts, for example where the innocent party’s reputation or financial standing has been proved to be damaged by the breach

The court will decide whether or not the damages should be:

Ordinary

Special

Exemplary

Nominal

Contemptuous

68
Q

Define and describe the different types of damages a court can decide to hand down (or not)

A

REMEMBER AS SENCO

Special damages - the parties to the contract knew the particular loss was likely to occur following the breach

Exemplary damages - designed to punish the defendant. Unlikely to be awarded today

Nominal damages - where a breach has occurred, but the financial loss is inconsequential

Contemptuous damages - where the court feels that a plaintiff has brought a frivolous action, they will award damages of halfpenny to show their contempt for the plaintiff, in that the case should never have been brought before them

Ordinary damages - where ordinary persons would expect such a loss to occur following a breach

Another aspect the court will ensure is that the damages aren’t too remote

69
Q

Describe repudiation and affirmation, a common law remedy for breach of contract

A

Repudiation is simply when the parties revoke or end the contract, so that neither is bound and claiming damages. This remedy should go through the court, as wrongful repudiation can result in action against that party.

Affirmation means choosing to let the contract stand despite the breach, damages may be payable in some circumstances, but the right to repudiate the contract is lost after a party has affirmed it

70
Q

Describe common law remedies, one of the two types of remedy for a breach of contract

A

Common law remedies - that the innocent party can enforce against the whole world. In such cases, the judge has no discretion and must award the remedy:

X Damages and monetary compensation, and…

X Repudiation

71
Q

Describe equitable remedies, one of the two types of remedy for a breach of contract

A

Equitable remedies - personal rights that the judge can exercise discretion, guided by the rules and circumstances of each case:

X To make a quantum meriut or claim for work done

X Specific performance, that is a claim for the actual performance of the other person’s promise

X Injunction that is an order from the court preventing a person from doing something

X Rescission for misrepresentation

72
Q

Describe quantum meruit, an equitable remedy for breach of contract

A

Where there is a breach of contract, the innocent party may claim payment for what’s been done, rather than sue for damages

For example, if a director employed a legal advisor, when not authorised to do so, the legal advisor may claim payment for services rendered and loss of remuneration under the contract, rather than sue for damages

73
Q

Describe specific performance, an equitable remedy for breach of contract

A

This is a court order which orders the party in breach to complete the contract under the terms and conditions set down in the original agreement

This equitable remedy will only be granted if certain conditions apply:

Consideration must exist

The court must be able to supervise the performance

It must be just and equitable that the remedy be granted

Both parties must be able to obtain the remedy equally

The plaintiff must show that he was in a position to complete his part of the bargain at the time, fixed for performance

The plaintiff must come with clean hands, and therefore be beyond reproach

74
Q

Describe the circumstances in which specific performance, an equitable remedy for breach of contract, will be granted by the court (ordering the party in breach to complete the contract under the terms and conditions set down in the original agreement)

A

This equitable remedy will only be granted if certain conditions apply:

Consideration must exist

The court must be able to supervise the performance

It must be just and equitable that the remedy be granted

Both parties must be able to obtain the remedy equally

The plaintiff must show that he was in a position to complete his part of the bargain at the time, fixed for performance

The plaintiff must come with clean hands, and therefore be beyond reproach

75
Q

Describe injunction, an equitable remedy for breach of contract

A

This is a court order whereby an individual must refrain from continuing with the performance of the contract, and is usually used to prevent torts (wrongful acts) being committed by one person against another

The two main types of injunction are:

Mandatory injunction - orders a person to take action to undo a breach of contract. For example, to take down his fence, which was erected without planning permission

Prohibitory injunction - a court order, prohibiting a person from doing something

76
Q

What are the two main types of injunction, an equitable remedy for breach of contract

A

The two main types of injunction are:

Mandatory injunction - orders a person to take action to undo a breach of contract. For example, to take down his fence, which was erected without planning permission

Prohibitory injunction - a court order, prohibiting a person from doing something

77
Q

Describe rescission, an equitable remedy for breach of contract

A

This is an equitable remedy for breach of contract.

The innocent party must rescind (revoke) the whole of the contract, or not at all. It must be possible to restore the status quo.

Many contracts will not be suitable for this remedy as the job may be part completed. All part payments must be returned on rescission, and the plaintiff cannot combine rescission with a claim for damages

78
Q

Describe the unfair contracts act 1977

A

This act seeks to control the inclusion of exemption clauses, which may be considered ineffective, or are subject to the test of reasonableness

Two examples of a case involving an unreasonable exemption clause are:

Smith vs Eric Bush (1989)

The commercial bank of Sydney vs RH brown (1972)

79
Q

Describe the main provisions of the unfair contracts act 1977

A

Exclusion of negligence liability

A person cannot, by reference to any contract term, restrict their liability for death or personal injury caused by their negligence

In other cases, a person cannot restrict liability unless the term is reasonable

The requirements of reasonableness

The test will be applied to individual situations and decisions made, but the following guidelines are also provided by the act:

X The strength of the bargaining positions relative to one another, for example, is one party more dominant or stronger than the other

X Whether the customer received a discounted price by agreeing to the term would indicate its reasonableness

X Whether the customer knew or ought to have known of the existence and extent of the clause, for example had made similar contracts, or the clauses was common practice

X Where the term excludes liability if a condition isn’t complied with, for example a life assurance contract

X If the goods had been made as a special order, then the terms would likely be considered reasonable

80
Q

Describe the case Smith vs Eric Bush (1989)

A

An example of a case involving an unreasonable exemption clause

Smith wished to buy a house, and used the building society’s surveyor,case required by the terms of the mortgage

The surveyor and the building society included a clause within the survey report, which disclaimed accuracy of the survey, or any liabilities for omissions.

A few months later, the chimney collapsed as the supporting wall had been removed, causing considerable damage.

The House of Lords held that the disclaimer of responsibility was unreasonable in circumstances as the borrower would have had sight of the report, and was relying on it

81
Q

Describe the case commercial bank of Sydney vs RH brown (1972)

A

An example of a case involving an unreasonable exemption clause

In the case of the commercial bank of Sydney vs RH brown (1972), it was held that a bank, which had provided an inaccurate reference for a customer, couldn’t rely on the disclaimer set down as part of its standard letter of response, unless it could prove that the answer was:

X Reasonable

X Current

X Honest

X On the facts available

X In general terms only

The standard disclaimer stated that the reference was given “without responsibility on behalf of the bank or its officers”

82
Q

What is the difference between executed and executory, in terms of consideration

A

Executed means that one or both parties have done all that the contract requires

Executory means that obligations of one or both parties in a contract have yet to be completed

83
Q

What are the three states a contract with a minor can take

A

Contracts with a minor can be:

Valid

Void

Voidable

84
Q

What kinds of contract can be enforced against a minor

A

The following kinds of contracts can be enforced against a minor as they’re valid contracts:

Contracts for necessities

Beneficial contracts of service

85
Q

Define necessaries, in relation to minors

A

Necessaries are things necessary to maintain a minor

The sale of goods act 1979 defines these as ‘goods suitable to the condition of life of the minor and their actual requirements at the time or sale and delivery’

Necessaries are things like food or clothes, not jewellery or DVD players

Minors are only required to pay reasonable prices for necessaries

86
Q

Describe void contracts, in relation to minors

A

Under the terms of the minors contract act 1987, certain contracts are void (I.e. Invalid) unless they’re ratified, in that the minor confirms they contract is valid when they reach 18

This applies to loans and contracts for non-necessary goods

87
Q

Define and describe common law

A

The system of dealing with cases based on precedent (legal principles developed in earlier case law), instead of statutory laws.

It’s the traditional law of an area or region, created by judges when individual disputes or cases

Note that common law changes over time

88
Q

Define and describe courts of equity

A

Courts of equity provide a remedy when common law courts decide a case constitutes an inequitable situation

The common law court determines things are legally unbalanced between two parties, and the court of equity provides equalising relief

89
Q

What case provides an example of:

Offers (and acceptance) via newspaper ads

A

Carlill vs carbolic smoke ball company (1892)

This case demonstrated that an effective offer cannot be made to the public at large

90
Q

What rules does the case Carlill vs carbolic smoke ball company (1892) provide examples of?

A

Offers (and acceptance) via newspaper adverts

AND

That an effective offer cannot be made to the public at large

91
Q

What case provides an example of an invitation to treat

A

The pharmaceutical society of Great Britain vs. Boots cash chemists (southern) limited (1953)

92
Q

What rules does the case The pharmaceutical society of Great Britain vs. Boots cash chemists (southern) limited (1953) provide examples of?

A

Invitation to treat

93
Q

What case provides an example of offers at auction

A

Payne vs cave (1789)

Auctions - The bids at auctions are merely offers. It’s only when the hammer comes down that it’s been accepted

Note that the above case also provides an example of revocation of offer - an offer may be revoked at any time before its been accepted

94
Q

What rules does the case Payne vs cave (1789) provide examples of?

A

Offers at auction - The bids at auctions are merely offers. It’s only when the hammer comes down that it’s been accepted

ALSO, is usable for conditional assent and counter offer, like Hyde vs wrench (1840)

95
Q

What case provides an example of postal rules

A

Adams vs lindsell (1818)

96
Q

What rule does the case Harvey vs facey (1893) provide an example of?

A

I.e. Lowest accepted pride for bumper hall pen

Request for information - this doesn’t destroy the offer, but is an attempt to clarify matters. It can be hard to determine whether such a statement from the offeree (the person wanting to buy the goods) is a request for info, or counter offer on the price of the purchase. In the end, the test being applied will be the intention of the offeree

97
Q

What case provides an example of conditional assent and counter offer

A

Hyde vs wrench (1840) - I.e. £1,000 estate with the offer of £950

ALSO USABLE - Payne vs cave (1789) - auctions

98
Q

What rules does the case Hyde vs wrench (1840) provide an example of?

A

Conditional assent and counter offer

99
Q

What case provides an example of:

Request for information - this doesn’t destroy the offer, but is an attempt to clarify matters. It can be hard to determine whether such a statement from the offeree (the person wanting to buy the goods) is a request for info, or counter offer on the price of the purchase. In the end, the test being applied will be the intention of the offeree

A

Harvey vs facey (1893) - I.e. Lowest price for bumper hall pen

100
Q

What case provides an example of consideration, as defined by the case in question as:

“Some right, interest, profit or benefit accruing to the party, or some forebearance, detriment, loss or responsibility give, suffered or undertaken by the other”

I.e. Paying, or promising to pay, money in return for the supply of goods or services constitutes the most common form of consideration

A

Currie vs Misa (1875)

101
Q

What rules does the case Currie vs Misa (1875) provide an example of?

A

Consideration, as defined by Currie vs Misa (1875) as:

“Some right, interest, profit or benefit accruing to the party, or some forebearance, detriment, loss or responsibility give, suffered or undertaken by the other”

I.e. Paying, or promising to pay, money in return for the supply of goods or services constitutes the most common form of consideration

102
Q

What case provides an example of the rule that:

Consideration must move from the promisee (privity of contract) - I.e. Only a person who’s provided consideration in return for a promise may sue on that promise

A

Tweddle vs Atkinson (1861) - man’s father in law and another man

103
Q

What rule does the case Tweddle vs Atkinson (1861) provide an example of?

A

Consideration must move from the promisee (privity of contract) - I.e. Only a person who’s provided consideration in return for a promise may sue on that promise

104
Q

What case provides an example of the rule that consideration need not be adequate

A

Chappell vs nestle (1960)

105
Q

What rule does the case Chappell vs nestle (1960) provide an example of?

A

Consideration need not be adequate

106
Q

What cases provide examples of the rule that past consideration is no consideration in law (I.e. The promises between parties must be promises to do something immediately or in the future. They can’t be in relation to something done in the past)

A

Re McArdle (1951) - Work on relative’s house

Roscorla vs Thomas (1842) - psychotic horse

107
Q

What rule do the two below cases provide an example of:

Re McArdle (1951)

Roscorla vs Thomas (1842)

A

Past consideration is no consideration in law (I.e. The promises between parties must be promises to do something immediately or in the future. They can’t be in relation to something done in the past)

108
Q

What case provides an example of the rule regarding promissory estoppel

A

The high trees case (1947)

109
Q

What rule do the two below cases provide an example of:

Balfour vs balfour (1919)

Jones vs Vernon’s pools ltd (1938)

A

Intention to create legal relations

110
Q

Which cases provide an example of the rule regarding intention to create legal relations

A

Balfour vs balfour (1919) - the husband having promised to pay his wife a monthly allowance

Jones vs Vernon’s pools ltd (1938)

111
Q

What rule does the case Nash vs Inman (1908), or the waistcoats case, provide an example of

A

The capacity of a minor to contract

112
Q

What case provides an example of the rule regarding a minor’s ability to contract

A

Nash vs Inman (1908), or the waistcoats case

113
Q

What rule does the case Lloyds vs Bundy (1975) provide an example of

A

Duress and undue influence

An example of a case in which banks have been shown to pressure their customers to sign documents which would place them in a financially worse situation

Barclays vs O’Brien updated the Bundy case and procedures, so that all financial services providers are now obliged to ensure that clients seek independent advice prior to entering into any contract, and provide proof that they’ve done so

114
Q

What case provides an example of the rule of duress and undue influence

A

Lloyds vs Bundy (1975) - elderly farmer who had guaranteed his son’s account with the deeds to his farm

Also Barclays vs O’Brien, which updated the Bundy case and procedures, so that all financial services providers are now obliged to ensure that clients seek independent advice prior to entering into any contract, and provide proof that they’ve done so

115
Q

What rule does the case Taylor vs Caldwell (1863) provide an example of

A

Methods of discharging a contract - via frustration

116
Q

What case provides an example of methods of discharging a contract by frustration

A

Taylor vs Caldwell (1863) - the rental of a music hall, which burned down before the first date it was booked for

117
Q

Define an acceptance

A

The second party in an offer’s unqualified willingness to go along with the first party’s proposal

118
Q

Define an agreement

A

If a valid offer is met by a valid acceptance, a valid agreement exists

Offer + acceptance = agreement

119
Q

What are the elements of a contract

A

Offer + acceptance = agreement

Intention to create legal relations

Consideration

Contractual capacity

Certainty

Legality

120
Q

Describe the difference between a bilateral and unilateral contracts

A

Bilateral contracts contain two promises

Unilateral contracts contain a promise by only one person to do something, if and when the other party performs a specific act

121
Q

Define an invitation to treat

A

An invitation to enter negotiations

The acceptance of an invitation to treat DOESN’T create an agreement

122
Q

What rule does the case Smith vs Eric bush (1989) provide an example of

A

Unreasonable exemption clause

123
Q

What cases provide an example of an unreasonable exemption clause

A

Smith vs Eric bush (1989) - there was a clause in the building society and surveyor’s survey report (on the house the client wanted to buy) which disclaimed accuracy of the survey, or liabilities for omissions

Commercial bank of Sydney vs R H Brown (1972) - a bank had provided an inaccurate reference to a customer, and couldn’t rely on the disclaimer set down in its standard response, unless it could prove the answer was reasonable/current/honest/on the facts available/in general terms only

124
Q

What rule does the case commercial bank of Sydney vs R H Brown (1972) provide an example of

A

Unreasonable exemption clause

125
Q

Describe the rule that a creditor isn’t obliged to accept part payment of debts

A

Pemsels case describes this as “payment of a lesser sum on the day it’s due in satisfaction of a greater sum cannot be any satisfaction for the whole

126
Q

What is the power of a void/voidable/unenforceable contract?

A

A void contract has no binding effect

A voidable contract is binding, but one party, usually the innocent one, has the right to set it aside

An unenforceable contract is valid, but cannot be enforced by one party against the other

127
Q

What are the rules of acceptance, in the context of contract law

A

REMEMBER THE DREDD STORY

X Acceptance must be clear and unqualified

X Acceptance must be communicated directly back to the offerer

X Silence cannot amount to acceptance

X Acceptance must come from the proper authority

X Substantial performance (completion) of the contract almost amounts to acceptance

X Acceptance must be by the mode or method laid down by the offeror

X Acceptance must be when the offer is still open

X Acceptance can be subject to contract

X Acceptance can be by operation of law

The general rule, as shown above, is that an acceptance has no legal effect until it’s been communicated to the offeror

128
Q

Describe “acceptance” in the context of contract law

A

Remember the DREDD ‘clear and unqualified’ story

Acceptance is the unconditional consent to the terms of an offer, and various rules are applied as follows:

Judge Dredd was cuffing a crook when he remembered “when I handcuff him, surrender must be CLEAR AND UNQUALIFIED”. The crook then COMMUNICATED DIRECTLY BACK TO THE OFFEROR “fuck you”. Dredd was relieved, as SILENCE CANNOT AMOUNT TO ACCEPTANCE. He’d head about this FROM THE PROPER AUTHORITY, the chief judge, who’d also told him “you can beat him up beforehand”, as SUBSTANTIAL PERFORMANCE (COMPLETION) ALMOST AMOUNTS TO ACCEPTANCE. The big book of law added that surrender MUST BE BY THE MODE OR METHOD LAID DOWN BY THE OFFEROR. The crook realised he’d best accept fast, WHEN THE OFFER IS STILL OPEN. Trying to be smart, he asked “SUBJECT TO CONTRACT?” Dredd gave him a whack and replied “BY OPERATION OF THE LAW”

Judge Anderson’s lesson of the day - “The general rule, as shown above, is that an acceptance has no legal effect until it’s been communicated to the offeror”

129
Q

Define acceptance

A

The unconditional consent to the terms of an offer