Ch2+3+4 - Law Of Contract and Employment Law Flashcards
Bilateral and Unilateral contracts must have?
There must be agreement (offer and acceptance) between the parties to contract.
•The terms of the contract must be expressed with a degree of certainty.
• The parties must possess the intention to create legal relations.
• The parties must have exchanged consideration.
• The parties must have capacity.
Discuss the distinction between an offer and an invitation to treat
an offer is “a clear and unambiguous statement of the terms and conditions
under which the parties are willing to contract” whereas an invitation to treat is merely an invitation
(inducement) to make an offer.
The distinction between an offer and invitation to treat is often made with reference to displays, quotations,
brochures and catalogues etc… - which are generally deemed invitations to treat and not offers – in terms of
advertisements most are classified as invitations to treat and not offers.
However, in certain situations where a reasonable person would assume that the advertisement intended to make an order – the Court may classify the advertisement as an offer.
List the methods by which an offer can be terminated
(i) by rejection;
(ii) by revocation/withdrawal (at any time before it is accepted) (Dickson v Dodds (1876));
(iii) by lapse of time;
(iv) by counter-offer (Hyde v Wrench (1840));
(v) by legal factors (such as death, bankruptcy, insanity/ lunacy, incapacity and frustration).
Explain the concept of ‘consideration’
Consideration is based on the notion of quid pro quo (a favour for a favour) and on mutuality of obligation
(you do something for me and I’ll do something for you) - in most contracts, it is the price you pay for a
promise and is based on the element of exchange.
To be valid the consideration must be real and genuine, it cannot be vague (idea of prayers), uncertain or
illegal. Usually, consideration will be money or money’s worth.
Note that the courts are not interested whether market value was given, only whether a consideration was
given (for example exchange of a Rolls Royce for £1).
Explain the difference between express contractual terms and
implied contractual terms.
A contract consists of express terms agreed between the parties and also implied terms – the express terms
are the terms that the parties specifically agree to – they may be written or oral and if they are oral, the courts
will have to determine what the parties may have said.
Implied terms are terms that are not agreed between the parties but are terms that are part of the contract.
Because they are implied from a number of sources, namely, local custom, the courts, legislation or from the
previous behaviour of the parties towards each other in related contracts.
Implied terms are as important as express terms. If there is an implied term that conflicts with an express
term, the express term will normally override the implied term.
Define an exemption clause
An exemption clause is a clause used by a party in a contract that attempts to exempt (exclusion clause) or
restrict (limitation clause) their liability for breach of contract.
The doctrine of freedom of contract allows parties to include exemption clauses in a contract even though the
clauses will prevent the injured party from seeking a remedy for the breach caused by the other party.
Exemption clauses are usually inserted into contracts by the more powerful party to take advantage of the
smaller (or weaker) party to the contract.
Explain the methods by which an exemption clause can be incorporated into a contract.
(i) It may arise by signature: where the injured party has signed the contract containing an exemption clause - if
the injured party signs without reading the contract, the clause will still be considered validly incorporated into
the contract (L’Estrange v Graucob (1934).
(ii) By reasonable notice: a party to a contract that contains an exemption clause must be given reasonable
notice of the clause either before or at the time of entering the contract, not after.
When determining whether reasonable notice was given the courts will have regard to all the circumstances
and take into account factors, such as when the notice was given, what form the notice was given in and how
serious the effect of the limitation or exemption has on the injured party Chapelton v Barry Urban District
Council (1940), Thornton v Shoe Lane Parking Ltd (1971).
(iii) By a course of dealing: even if insufficient notice of the exemption clause has been given, the courts may still
determine that the clause is validly incorporated if the parties have had previous dealings on a
regular/consistent basis with each other.
Spurling Ltd v Bradshaw (1956)
List and explain the circumstances under which a contract may be discharged by frustration.
Frustration is where a contract cannot be completed as agreed due to some unforeseeable factor outside the
control of the contracting parties.
Circumstances where a claim of frustration will be upheld:
(i) when the subject-matter of the contract is destroyed – in Taylor v Caldwell (1863) the destruction of a music
hall by a fire four days before a performance was due to take place was held to amount to frustration. Also, in
contracts of personal service, the death or incapacity of one party will amount to frustration.
in Condor v Barron Knights (1966) the employment contract of a drummer in a pop group was deemed
frustrated when medical evidence proved that he would not be unable to perform more than a couple of the 7
nights a week he was required to perform;
(ii) where government interference prevents performance of the contract or where performance of the contract
becomes illegal –
In Avery v Bowden (1856) a contract to collect cargo from Odessa could not be lawfully performed based on
frustration once the Crimean War broke out and the government made loading at the enemy port illegal.
Also, in Fibrosa v Fairbairn (1943) the contract was frustrated by the outbreak of World War II and the
invasion of Poland.
(iii) non-occurrence of an event core to contractual performance – this arose in Krell v Henry (1903) when the
coronation procession of Edward VII had to be cancelled due to the illness of HRH.
Consequently, many arrangements made in which persons obtained the right to view the procession from
hotels and rooms overlooking the route came before the English Courts – the Courts ruled that the contracts
were frustrated.
In relation to breach of contract, explain the difference between a common law remedy and an equitable
remedy
Injured parties are entitled to be awarded a common remedy by the courts as a right, equitable remedies in
contrast are a discretionary remedy, which means that the courts have a choice whether to award an
equitable remedy or not.
They usually only do so when the award of damages is insufficient to compensate the injured party for the
loss suffered as a result of the breach.
Outline two remedies available to an injured party for a breach of contract.
The two main remedies available for a breach of contract are: (i) the common law remedy of damages, and
(ii) the equitable remedy of ‘specific performance’.
the legal definition of redundancy;
Section 174 of the Employment Rights (Northern Ireland) Order 1996 defines redundancy as being a
dismissal attributable wholly or mainly to:
(i) the fact that the employer has ceased, or intends to cease, to carry on the business for the purposes of which
the employee was employed by him or has ceased, or intends to cease, to carry on that business in the place
where the employee was so employed; or
(ii) the fact that the requirements of that business for employees to carry out work of a particular kind, or for
employees to carry out work of a particular kind in the place where they were so employed have ceased or
diminished or are expected to cease or diminish.
Explain the redundancy consultation process, the selection criteria of employees for redundancy, and the
criteria that would be deemed unfair;
Selection criteria
Where all employees are equal (such as where there are ten accountants and five need to be made
redundant), an employer must utilise an independent selection criteria, such as:
last in first out, skills required, productivity/performance, attendance/disciplinary records.
A selection would be deemed unfair if it was based on discriminatory factors such as:
gender, marital status, family status, religious belief, age, race, disability, sexual orientation, membership of
the travelling community, trade union membership, pregnancy or because an employee has exerted (or
attempted to exert) their rights under protective legislation.
Explain the rights of an employee who is made redundant.
Rights of an employee:
(1) right to statutory minimum notice;
(2) right to redundancy payment;
(3) right to time off during notice period;
(4) right to be individually informed.
Outline the consultation requirements imposed upon companies considering collective redundancies.
Comment on the penalties that can be imposed for non-compliance.
There is a statutory obligation upon an employer who plans to undertake collective redundancies (more than
20 less than 100 persons) to consult the trade union or if there is no trade union, the elected body of
employee representatives at least 30 days in advance of making the first redundancy.
If making more than 100 redundancies they must consult at least 90 days in advance. The purpose of the
consultation is to look at methods of reducing or avoiding the necessity for redundancies.
There is also a statutory obligation for the employer to give written notice to the Department of the Economy.
Failure to comply is treated as a criminal offence and the employer is liable on summary conviction to a fine
of up to £5,000.
The Court may also award a protective award (which can be up to a maximum of the wages they would have
earned had there been the required consultation period- i.e. 30 days or 90 days wages) against the
employer.
List the grounds that would amount to unfair selection on the grounds of redundancy and would facilitate a
claim for unfair dismissal.
Unfair grounds include selection based on:
(i) pregnancy, child birth or leave for family reasons;
(ii) spent criminal offence of employee;
(iii) membership/proposed membership of trade union;
(iv) because an employee has exerted (or attempted to exert) their rights under protective legislation (including
minimum pay/flexible working hours);
(v) employee’s whistle blowing;
(vi) absence due to jury service;
(vii) involvement in protected industrial action;
(viii) reasons connected with health and safety;
(ix) employer fails to follow disciplinary and dismissal statutory provisions.
