9. Pre-contractual Remedies I

Question 1

Common law starting point

Answer 1

If a party does work pre contractually “he undertakes work as a gamble” (Barry J, William Lacey v Davis)

BUT possible depending on facts - as in William Lacey

Question 2

crossco v Jolan

Answer 2

arden LJ fears imposing PCL because it would inhibit parties entering into negotiations

Question 3

Walford v Miles (general)

Answer 3

no duty to negotiate in good faith

Question 4

Countrywide Communications v Pathways

Answer 4

Straus QC - not possible to formulate a clear principle for PCL (v problematic)

Question 5

contractual claims requires:

Answer 5

(1) intention to make immediatly binding agreements
(2) certainty of terms
(3) consideration
(4) formalities (in some contexts)

Question 6

Walford v Miles

Answer 6

must be CERTAINTY to be contract

because contractual obligations impose an immediately binding duty so there must be certainty as to what parties must do to discharge their duties

Question 7

May v Butcher

Answer 7

an agreement to agree is. “no contract at all” (not certain enough to be contractually enforceable)

IF UNDECIDED TERMS = FUNDAMENTAL = NO CONTRACT (courts can’t fill in the gaps)

Question 8

SOGA S.8

Answer 8

CAN find a principal contract even if price not determined

B must pay reasonable price (s.8 SOGA)

does not work if contract has a mechanism for the price (e.g. May v Butcher - agreement to agree)

CONTRACT MUST BE SILENT AS TO PRICE FOR S.8 TO APPLY

Question 9

Way v Latilla

Answer 9

shared understanding that C’s services were to be paid for

= given effect with contractual term for reasonable remuneration

if C engaged in COE, clearly indicates work is not gratuitous

Question 10

RTS Flexible Services

Answer 10

subject to contract clauses can be overriden/waived by parties’ action (even commercial parties) if:

ONE - all significant terms agreed to
TWO - C started to do what C is meant to do under the contract

main contract concluded in absence of signature

Question 11

Brewer Street v Barclay’s (SOMERVEIL)

Answer 11

COLLATAROL CONTRACT

• promise to pay for renovations
• no implied condition that D must get the lease

Question 12

Brewer Street v Barclay’s (DENNING)

Answer 12

NO CONTRACT because

• ONE: work not paid (D only agreed to pay if finished)
• TWO: promise to pay was condition on lease being granted (parties did not contemplate no grant of lease, so agreement to pay does not cover that eventuality)

RESTITUTIONARY ANALYSIS
- done for D, no benefit to C, D should pay

Question 13

unjust enrichment

Answer 13

1) enrichment of D)
2) coming from claimant at C’s expense
3) unjust
4) defences

Question 14

ENRICHEMNT (UE)

Answer 14

1) D requested it (British Steel)
2) Incontrovertible benefit (no reasonable person could deny its a benefit)
3) Free acceptance

Question 15

UNJUST (UE)

Answer 15

1) mistake about present state of affairs (mistake about a fact of law, NOT mistake that other party will enter into contract)
2) duress
3) failure of shared basis (basis of being paid)

Question 16

Cobbe v Yeoman’s Row

Answer 16

UE

• enriched (D got free work)
• obtained at C’s expense (C did the work)
• unjust (failure of basis - didn’t get land)
• no defences

PROBLEM: enrichment was found to be the free work rather than increase in value of land (much larger)

Question 17

Benourad v Compass Group (leading towards recovery)

Answer 17

Beatson J: no clear principles but certain factors lead towards recovery in UE

leading towards recovery:
ONE - D received immediate financial gain/saving of expense/requested services/D accepted knowing C didn’t intend it to be free

TWO - D behaved unconscionably in declining to pay

Question 18

Benourad v Compass Group (leading against recovery)

Answer 18

ONE - C took risk that she would only be reimbursed if contract concluded (or risk should fall on C)

TWO - C’s cost incurred for the purpose of putting C in a position to obtain and then perform contract (just investing in chance of contract - MSM v Tanzania)

Question 19

Countrywide Com v ICL (enrichment)

Answer 19

sometimes things are classed as enrichment when it’s really about loss to plaintiff

PROBLEM: courts say a request is a benefit (CPS)

Question 20

CPS v Eastenders

Answer 20

UE:

• enrichment: YES (benefit was request)
• at C’s expense: yes
• unjust (failure of basis that company asset will pay for it)
• no defences

Question 21

Benedetti v Sawairis

Answer 21

Calculating benefit for UE claims

general rule: MV of goods/services (objective value)

exception: if D can show D valued g/s less than MV, that can be considered

ONLY subjective DEVALUTATION (no subjective over-valuation)