CL Flashcards
IMPORTANT CONTRACTS THAT MUST BE IN WRITING
* Contracts of Guarantee
* Contracts to Sell Land
* Consumer Credit
Agreements
Which of the following contracts would have to be in writing?
(check all that apply)
(A) A contract to sell a cottage in the Cotswolds
(B) A contract to purchase a company that makes pizzas in London
(C) A parent’s agreement to pay their adult child’s car loan if they don’t pay
(D) An agreement by a homeowner with a trader to pay for a new fridge in ten instalments
(A), (C) and (D) are correct. English law requires contracts of guarantee (C), contracts to sell land (A), and consumer credit agreements (D) to be in writing. While it would be a very good idea to put a contract to purchase a business in writing (B), parties are not required to do so.
True or False: To be valid under the law of contract, an offer must be in writing.
False. This is a bit of a “Simon Says” question. I didn’t say that an offer has to be in writing - because it need not be. It need only be communicated, certain, and demonstrate a willingness to enter into a contract. It can be oral.
REQUIREMENTS FOR VALID
OFFER
* Party making it is prepared to enter into contract
* Terms of offer are sufficiently certain
* Offer is communicated to other party
UNILATERAL CONTRACT
Contract where offeror
promises to do something IF the offeree actually does something in return
A retailer of electronic goods advertises them on its website, where customers can order them. Is this an offer?
Yes
No
No, this is likely to be an invitation to treat. Customers placing orders will make offers to the retailer, which can then choose whether to accept them.
A woman goes into a chemist, selects an eyeliner, takes it to the till and hands it to the shop assistant in order to pay for it. Is this an offer?
Yes
No
Yes, this is the classic retail situation. The woman is making an offer to buy the eyeliner, which the shop assistant can choose to accept, on behalf of the shop.
A sports shoe manufacturer advertises a payment of £50,000 to the first person who can run from Land’s End to John O’Groats in a pair of the manufacturer’s shoes. Is this an offer?
Yes
No
Yes. Although it is an advertisement, this is a unilateral offer because the manufacturer should expect to be bound to pay £50,000 to someone who does what it is asking.
A - an enquiry
B - an invitation to treat
C - an offer for a bilateral contract
D - an offer for a unilateral contract
E - a counteroffer
F - a revocation
G - a rejection.
More than one term might be applicable to each scenario. In this case, you should write your answer letters alphabetically with no spaces, e.g. ACF.
- A woman walks into a BMW showroom and picks up a brochure and price list. The price list shows the price of a new BMW X1 as £30,000.
- The woman tells a salesman in the showroom that she would like to buy a new BMW X1 for the list price of £30,000.
- The salesman tells the woman that BMW are running a prize draw. The prize is a brand-new BMW X1. All that she needs to do is to take one out for a test drive and BMW will enter her name into the draw.
- She doesn’t win the prize draw, so she decides to buy an Audi A3 instead. She calculates that the list price for her chosen specification is £28,500. She goes into an Audi showroom, tells a salesman exactly what she wants, and says she is prepared to pay £26,000 for the car.
- The salesman reminds her that the list price is £28,500, but says that he is able to sell her the Audi for £28,000.
- The woman says she will pay £27,500 for the Audi. The salesman says that he can sell it for that price as long as they sign a full contract. The woman goes home to arrange finance for the car. Before the contract is signed, she loses her job and tells the salesman she can no longer buy the car.
- The price list looks like an invitation to treat (B). Just like goods displayed in shops and prices on websites, price lists are usually thought of as invitations to treat rather than offers. That’s because, if they were offers, and everyone in the world accepted them, the person making the offer would then be legally obliged to sell to them all.
- The woman’s statement to the BMW salesman is just an enquiry (A). It’s not precise enough to be an offer. Before the purchase can be agreed, she will need to choose a colour and many other aspects of the car’s specification.
- The prize draw promotion is an offer to enter into a unilateral contract (D). BMW are promising that anyone who does what they ask (taking a test drive) can have their name entered into the draw. The offer can be accepted by the act of taking the test drive.
- The woman is making an offer to the Audi salesman to enter a bilateral contract (C). This time, the offer is sufficiently precise and it can be accepted by the salesman’s promise.
- The Audi salesman’s response is a counteroffer (E), as the salesman did not agree to the woman’s terms and instead offered a different price term. This serves as an offer which the woman may accept or reject, and as a rejection of the woman’s original offer (G).
- The woman is making a new offer to buy the car (C), which might be seen as a counteroffer (E) and rejection (G). She then revokes her offer (F). She is able to do that because the salesman has not finally accepted it - he said acceptance was dependent on signing a full contract, and this hasn’t happened.
BILATERAL (MOST COMMON)
* Performance
or
* Promise to Perform
UNILATERAL
Performance
THE POSTAL RULE
Acceptance by post creates contract at moment of posting unless:
* Letter wasn’t properly addressed and stamped
* It wasn’t reasonable to accept by post
OR
* The rule has been excluded by the offeror
REBUTTABLE PRESUMPTION
PARTIES DID NOT INTEND A BINDING AGREEMENT
* Domestic Family Situations
* Social Situations
REBUTTABLE PRESUMPTION
THERE IS INTENT FOR AGREEMENT TO BE BINDING
* Commercial and Business
Agreements
LACKING CAPACITY TO BE
BOUND
* Minors
* Mental Incapacity
- Intoxication
Indicate whether you think there is
A - a binding contract
B - a voidable contract
C - no contract
- Sammy is 16. He books a holiday to Peru for £5,000.
- Jenny’s mother Tricia agrees to pay Jenny a monthly allowance of £175 whilst Jenny is studying at university.
- Samira tells Fran that she can live in a room in Samira’s flat as long as she pays £600 per month towards Samira’s mortgage repayments and half the council tax and utility bills. Fran persuades Samira to accept £500 per month towards the mortgage instead. Samira agrees, and Fran moves in.
- B
- C
- A
Consideration
- EXECUTORY
CONSIDERATION
A promise to do something - EXECUTED
CONSIDERATION
Actually doing it
What’s the difference between executed consideration and executory consideration?
Executory consideration has not been performed, whereas executed consideration has been performed. Both can be the basis of a binding contract.
Consideration must move from the promise
Consideration must be sufficient but need not be adequate
I promise to pay you £100 to walk across Tower Bridge in a swimming costume in December. Have you given consideration to make my promise enforceable?
No. You, the promisee, have not made a promise or performed the requested act, so you gave no consideration - you can’t force me to pay you £100. If you do walk across the bridge as requested on a brisk winter day, then you have given consideration in exchange for my promise, and now my promise becomes enforceable.
True or False: A contract based on illusory consideration is not enforceable because the consideration is not adequate.
Answer True was Incorrect. Feedback provided: False. Adequacy goes to economic value - that the consideration given by one party is roughly equivalent to the consideration given by the other. The law doesn’t care about adequacy. It does care about whether the consideration is sufficient - something of legal value - and illusory consideration has no legal value and is not sufficient.
False. Adequacy goes to economic value - that the consideration given by one party is roughly equivalent to the consideration given by the other. The law doesn’t care about adequacy. It does care about whether the consideration is sufficient - something of legal value - and illusory consideration has no legal value and is not sufficient.
In which one of the following scenarios is there sufficient consideration to bind the promisor?
O (A) Promisee rushes into a burning building and rescues Promisor. Promisor promises to pay Promisee $1,000 as a reward.
O (B) Promisee has agreed to paint Promisor’s house for £2,000. Promisee tells Promisor he accidentally underbid the job. Promisor
agrees to pay Promisee £2.500.
O (C) Promisor sees Promisee - a gardener - mowing his neighbour’s lawn and asks Promise to mow his lawn, too. After completing
the task, Promisee asks Promisor for £30. Promisor promises to send Promise a cheque for £30.
(C) is correct. To be valid, consideration must be sufficient. A promise based on an act already done (A) or doing something one is already obligated to do (B) is not sufficient consideration. However, a promise made on an act already done is sufficient consideration if the act was done with an expectation of payment. In (C), the Promisor would have expected that the gardener expected payment.
Sandor agreed to paint Amy’s house for £2,000. When Sandor asks for payment, Amy says the price is too high and pays Sandor £1,800, which Sandor accepts. Can Sandor successfully make a claim against Amy for the other £200?
Yes,
No.
Yes. Amy has given no consideration to enforce any kind of implied promise by Sandor to reduce the cost of the work. The parties agreed to £2,000 and the agreed work was done.
My mechanic agrees to fix my car if I agree to pay his parts supplier £400. I agree. When the work is done, the mechanic calls his supplier, explains the deal, and hands me the phone. The supplier tells me where to send my cheque. I go home but never send the cheque. Can the supplier force me to pay him?
O (A) No, because we are not in privity of contract.
O (B) Yes, because the mechanic assigned his rights under the contract to the supplier.
O (C) Yes, under the Contract (Rights of Third Parties) Act 1999.
(C) is correct. Although usually one who is not in privity (that is, not a party to a contract) cannot enforce the contract, under the Contract (Rights of Third Parties) Act 1999, a person who is named or described in the contract can enforce the contract if the contract says so, or if it purports to confer a benefit on the person. Here, when I made my contract with my mechanic, he named a person (his supplier) who would have a benefit under the contract (payment of £400). Note that (B) is incorrect because in an assignment situation, the benefit is transferred sometime AFTER the contract is made. Here, my mechanic mentioned the supplier as we were forming the contract. It does not matter that the supplier was told of the deal after the work was done.
Indicate whether any privity problems in the following scenarios might be solved by
A - Agency
B - Assignment
C - A collateral contract
D - A trust
E - The Contracts (Rights of Third Parties) Act 1999
F - None of the solutions
- Easy Goods Limited sells fridges on credit. Lots of customers owe it money. It transfers the right to recover the money from its customers to Fast Factoring Limited. As consideration for the transfer, Fast Factoring pays Easy Goods 80% of the amount of the debts owed by its customers. Which privity solution gives Fast Factoring a contract right to collect from Easy Goods’ customers?
- Eureka Consultants Limited provide advice to XD Limited. The contract between the companies includes a clause in which XD agrees that Eureka’s employees will have no liability to XD for errors in the advice provided by Eureka. XD is now trying to sue Eureka’s employee Jeff, and Jeff wants to rely on the clause in the contract.
- Becky’s friend Tracey needs her computer upgraded. Becky tells Andy that she will pay Andy £50 if Andy performs the work. Andy upgrades the computer, but Becky tells Andy that she does not have an extra £50 right not. Andy would like to enforce the deal against Tracey.
- Steve asks his friend Emily to find him a second hand mobile phone to buy. Emily finds an iPhone being sold by Hamid and agrees to buy it on Steve’s behalf, for £200. Hamid wants to enforce payment against Steve.
- B
- E
- F
- A
CONTRACT TERMS
* Conditions or Warranties
* Expressly stated or Implied into the contract
Terms and representations
Do you think the statement that the dealer made indicating the lawnmower was sufficient to cut the grass in a big garden was a term of the contract or a representation?
O Term
O Representation
Term
Would the following be (A) conditions, (B) warranties,
(C) innominate terms, or (D) not terms at all?
1. I buy a bike from a specialist shop. I tell the salesperson that I want it for riding on rough paths, and they assure me that the bike is suitable for that. It turns out that it’s really only good for roads.
O (A) Condition
O (B) Warranty
O (C) Innominate term
O (D) Not a term
(A) Condition. The statement is likely to be a term of the contract because the salesperson should have known what the bike could do, and it’s clearly important to me. It’s a condition rather than a warranty because for me it goes to the root of the contract - it’s why I bought the bike.
Would the following be (A) conditions, (B) warranties,
(C) innominate terms, or (D) not terms at all?
2. A company orders heating oil for its factory. The supplier agrees to deliver on Tuesday.
O (A) Condition
O (B) Warranty
O (C) Innominate term
O (D) Not a term
(A) Condition. There is a presumption in a commercial contract that time is of the essence.
- Adrienne buys a second hand bike from Max, a private seller. Adrienne asks Max if the bike is comfortable when ridden off road. Max tells Adrienne that he thinks the bike ought to be OK to ride off road, although he has only ridden it on the road.
O (A) Condition
O (B) Warranty
O (C) Innominate term
O (D) Not a term
Max clearly doesn’t have the expertise to answer Adrienne’s question, so his statement is unlikely to be a term of the contract.
Would the following be (A) conditions, (B) warranties,
(C) innominate terms, or (D) not terms at all?
- A contract for the hire of a ship includes a clause saying that it is a condition of the contract that the ship’s captain follows orders given by the hirer.
O (A) Condition
O (B) Warranty
O (C) Innominate term
O (D) Not a term
(C) Innominate term. There is no way of knowing how serious the effect will be if the term is breached. Even though it’s called a condition, its significance is going to depend on the seriousness of the breach and its consequences.
PAROL EVIDENCE RULE
* Where there is a written contract, it is presumed to contain all the terms that have been agreed
*Can’t bring in external evidence to add to or vary the written terms
Although I don’t mean to beat a dead horse: Which of the following best reflects the parol evidence rule?
* (A) Contracts must be in writing.
* (B) A person cannot seek to vary the terms
of a contract with oral evidence.
* (C) If a contract is in writing, you can’t bring in external evidence to vary its terms.
(C) is correct. (A) is incorrect because while the parol evidence rule applies only to written contracts, it does not require contracts to be in writing. (B) is incorrect because it does not limit the rule to written contracts; additionally, the rule applies not only to oral evidence of other terms, but rather to any (oral or written) external evidence.
In the exam, you might be asked to identify the correct standard a court will use to determine whether to
imply a term. Which of the following is it?
(A) When the contract would otherwise be
unfair.
(B) When necessary to make the contract work and give it business efficacy.
(C) When an obviously important term is
missing.
B) is correct. Some exam questions merely want to ensure you know the magic words - the correct test. And these are the magic words for this test: when necessary to make the contract work and give it business efficacy.
So vou understand how this works: I go into a coffee shop and order a large latte. The shop is in the midst of remodelling and there are no signs on the wall indicating the price of my latte. The barista prepares the latte and then asks me for £3. Do we have a contract?
O Yes
O No
All our necessary contract elements are present. I made an offer to buy a latte by ordering it. The barista accepted my offer by making the latte. Each of us gave consideration: I promised to pay (implied), and the barista made a latte. Why is this not void for vagueness for lack of a price term? A reasonable price was implied.
Fill in the blanks using the letter choices below:
A - Representation
B - Reasonable notice
C - Terminate
D - Innominate terms
E - Satisfactory quality
F - Business efficacy
- One test for whether the courts will imply a term into a contract is whether the term is necessary in order to give the contract… .
- Terms of the contract may be express or implied. Whether they are express or implied, they can also be conditions, warranties, or… .
- When one party makes a statement to the other party before they enter into a contract, that statement may be a term or a … .
- If a party breaches a condition of a contract, the innocent party has the option to …. the contract and claim damages.
- A term will be expressly incorporated into a contract if the parties have…. of it.
- Under the Consumer Rights Act 2015, if a consumer buys goods from a business, a condition will be implied that the goods must be of….. .
F
D
A
C
B
E
The clause needs to be incorporated into the contract
The clause has to cover what has happened
Legislation prohibits some exclusion clauses
You take your suit to a dry cleaner. You ask how much it will cost to clean the suit. The dry cleaner tells you it will be £7. You pay and then are handed a claim check. On the back of the claim check, in small print, is an exclusion clause saying that the dry cleaner is not responsible for any damages to garments being cleaned.
When you pick up your suit, a button is missing. Your suit has unusual buttons, and a replacement cannot be found, so all of the buttons now have to be replaced. Do you think the exclusion clause will be binding?
O Yes
O No
No. The exclusion was added after you made your contract (after you paid), it’s onerous as it excludes all liability, and the merchant did nothing to bring it to your attention.
3 WAYS A TERM CAN BE
INCORPORATED
* By signature
* By notice
* By custom or course of dealing
UNFAIR CONTRACT TERMS
ACT 1977 (UCTA)
Between businesses
UCTA
* Some exclusions are void
* Others are valid only if reasonable
CONSUMER RIGHTS ACT
2015 (CRA)
Between businesses and consumers
Under the Unfair Contract Terms Act 1977, which of the following exclusions of liability are valid if reasonable in a contract between businesses?
(check all that apply)
* (A) Exclusion of the implied condition of quality.
* (B) Exclusion of liability for personal injury
arising from negligence.
* (C) Exclusion of liability for late performance of a contractual duty in a party’s standard terms contract beyond £500.
* (D) Exclusion of the implied condition that seller has title.
(A) and (C) are correct. The exclusions in (B) and (D) are void.
Under the Consumer Rights Act 2015, a term in a contract between a trader and a consumer limiting the implied condition of quality is:
O (A) Always prohibited.
O (B) Permitted if reasonable.
O (C) Permitted if fair.
O (D) Prohibited unless brought to the
consumer’s attention.
(A) is correct. This is a stricter standard than in a contract between businesses under the Unfair Contract Terms Act 1977, in which such a term will be upheld if reasonable. Remember too that reasonableness is the standard used to determine whether an exclusion is enforceable under UCTA if the exclusion is not void, but under the CRA, if an exclusion is not prohibited, we look to whether it is unreasonable. There is a chance an exam question could key in on this difference in terminology: UCTA = void/reasonable; CRA = prohibited/unfair.
Indicate how the following exclusions will be treated under UCTA and the CRA (some choices may be used more than once or not at all):
A - Void
B - Subject to the reasonableness test
C - Potentially unfair
D - None of the above
E - Prohibited
- Jamilla engages a builder to build an extension to her home. The contract with the builder excludes liability for death or personal injury in cases where the builder is not negligent.
- An accountancy firm orders a new photocopier. The supplier’s standard conditions of sale exclude liability for late delivery.
- An accountancy firm orders a new photocopier. The supplier’s standard conditions of sale exclude liability for defects in the photocopier.
- Jamilla engages a builder to build an extension to her home. The contract with the builder defines the details of what the builder is and is not going to do.
- Jamilla orders new furniture for her new extension. The contract with the supplier excludes liability for defects in the furniture.
1.C
2. B
3. B
4. D
5. E
During a debate in the House of Commons on crime, an MP referred to a high-profile murder case currently before the criminal courts and said that the case against the defendant is overwhelming.
Has the MP done anything wrong?
A
No, because MPs have freedom of speech in Parliament under the royal prerogative.
B
No, because as a citizen, an MP is entitled to express views on whatever matter they wish.
C
Yes, because the MP has breached collective responsibility.
D
No, because MPs have freedom of speech in Parliament under parliamentary privilege.
E
Yes, because the MP has breached the sub judicie rule.
(E) The MP has breached the sub judicie rule. Generally, MPs (and members of the House of Lords) have freedom of speech within Parliament under parliamentary privilege.
However, out of respect to the separation of powers, the freedom of speech is limited by the sub judicie rule, which provides that, during debates, MPs (and members of the House of Lords) should not refer to cases currently ongoing before the courts. Here, the MP breached the sub judicie rule by referring to an ongoing case during the debate.
(A) is incorrect because the royal prerogative belongs to the Crown and, in any event, an MP’s freedom of speech in Parliament is limited by the sub judicie rule. (B) and (D) are incorrect because, again, an MP’s freedom of speech in Parliament is subject to the sub judicie rule. (C) is incorrect because the doctrine of collective responsibility applies to government ministers, not Parliament. It requires ministers to support government policies before Parliament, despite their own views, and requires that policy discussions should be kept confidential.
The House of Commons is about to debate a bill that would abolish the monarchy.
In which type of committee will the committee stage of the bill’s passage take place?
A
A Committee of the Whole House.
B
In a Public Bill Committee.
C
In a Select Committee.
D
In the Liaison Committee.
E
In a Committee of the Privy Council.
(A) At the committee stage, the bill will be considered in a Committee of the Whole House. The committee stage for the passage of bills in the House of Commons can take place in one of two committees: a Public Bill Committee or a Committee of the Whole House. Bills of ‘first-class constitutional importance’, a category to which a bill to abolish the monarchy would qualify, are debated in a Committee of the Whole House. (B) is incorrect because bills of ‘first-class constitutional importance’ cannot be considered in a Public Bill Committee. (C), (D), and (E) are incorrect because those committees are not involved in the committee stage for bills.
The Prime Minister has decided to hold a referendum on whether the North of England should get its own
Parliament, similar to the Scottish Parliament. Some ministers are in favour, whilst others, including the Chancellor and the Home Secretary, oppose the idea.
Which of the following is the best option available for the Prime Minister to address the disagreement among the ministers?
A
Maintain collective responsibility while allowing ministers to campaign on either side of the referendum.
B
Ask the King to suspend collective responsibility.
C
Ask Parliament to suspend collective responsibility.
D
Suspend collective responsibility and allow ministers to campaign on either side of the referendum.
E
Sack any MP who disagrees with the North of England Parliament.
(D) The Prime Minister’s best option is to suspend collective responsibility and allow ministers to campaign on either side of the referendum. Collective responsibility requires government ministers to support government polices in public and before Parliament. However, the Prime Minister is able to ‘set aside’ or suspend collective responsibility, and this has happened at previous referendums. When this is done, ministers are able to campaign on different sides, meaning that they are allowed, unusually, to disagree with each other in public. (A) is incorrect because it would not be possible to maintain collective responsibility while allowing ministers to campaign on either side of the referendum. Collective responsibility requires unanimous support of a policy by the ministers. (B) and (C) are incorrect because the Prime Minister, rather than Parliament or the King, has the authority to suspend collective responsibility. (E) is incorrect because the Prime Minister has no power to sack an MP.
The government has agreed a new international treaty with Singapore. The government has laid the treaty before both the House of Commons and the House of Lords. After 14 days, the House of Commons voted against ratifying the treaty.
Which of the following best explains the options available to the government?
A. The government can explain to Parliament why they still wish to ratify the treaty, and the House of Commons and House of Lords can hold a second vote.
B. The government can explain to Parliament why they still wish to ratify the treaty, and the House of Lords can hold a second vote.
C. The government can explain to Parliament why they still wish to ratify the treaty, and the House of Commons can hold a second vote.
D.The government can explain to Parliament why they still wish to ratify the treaty, and then ratify the treaty without a further vote.
E. The government can state that this is an ‘exceptional case’ and then ratify the treaty without a further vote.
(C) The government can explain to Parliament why they still wish to ratify the treaty, and the House of Commons can hold a second vote. The power to ratify treaties is a royal prerogative power, but is regulated by a procedure laid down in statute. Ordinarily, the treaty is laid, with either House of Parliament having 21 days to vote against the treaty. If a House votes against ratifying and the government still wants the treaty ratified, it can explain to Parliament why, and then the House of Commons has a further 21 days to vote against ratifying the treaty. (A) and (B) are incorrect because the House of Lords does not get to vote the second time. (D) is incorrect because the House of Commons must be given an opportunity for a second vote. (E) is incorrect. Although there is an ‘exceptional case’ exception that allows for a treaty to be ratified without being laid before Parliament, the exception cannot be invoked to override the vote of either House of Parliament.
A Conservative government was elected at the last election. In their manifesto, the Conservatives promised that they would pass legislation to allow autonomous cars to be on the roads. Pursuant to that commitment, the House of Commons passed the Autonomous Cars Bill. Many members of the House of Lords are concerned about the safety of autonomous cars and are inclined to vote against the Bill.
Which of the following best explains the constitutional considerations that regulate how the House of Lords can respond to the Bill?
A. By statute, the House of Lords is required to grant a Second Reading to any bill.
B. By constitutional convention, the House of Lords is required to grant a Second Reading to a bill which implements a manifesto commitment of the government.
C. By constitutional convention, the House of Lords is free to reject any bills passed by the House of Commons.
D. By statute, if the House of Lords vote against the Bill, the House of Commons cannot reintroduce the Bill again.
E. By statute, the House of Lords is required to grant a Second Reading to a bill which implements a manifesto commitment of the government.
(B) Because the Bill is implementing a manifesto commitment of the government, the House of Lords is required by constitutional convention to grant a Second Reading to the Bill. Under the Salisbury Convention, the House of Lords will grant a Second Reading to a bill as a matter of course if the bill is implementing a commitment made by the party elected into government (here, the Conservative Party) in their manifesto. (A), (D), and (E) are incorrect because there are no such statutes. (C) is incorrect because of the requirements placed on the House of Lords by the Salisbury Convention.
After a major political scandal involving the leadership of the party who were in government, a general election was held. The party who were in opposition won 450 seats in the House of Commons, and the party who were in government won 200 seats.
Which of the following best explains who will become Prime Minister?
A
The previous Prime Minister will appoint the person who can command the confidence of Parliament to the office.
B
The Speaker of the House of Commons will appoint the person who can command the confidence of
Parliament to the office.
C
The Monarch will appoint the person who can command the confidence of the House of Commons to the office.
D
The Speaker of the House of Commons will appoint the person who can command the confidence of the House of Commons to the office.
E
The previous Prime Minister will stay in office unless voted out by both Houses of Parliament.
(C) The Monarch will appoint the person who can command the confidence of the House of Commons as the next Prime Minister. By constitutional convention, the Prime Minister must be an MP who is able to command the confidence of the House of Commons. This is usually the leader of the political party with a majority of the seats in the House of Commons. As there are 650 seats in the House of Commons, a political party needs 326 seats to have a majority. Here, the party that were in opposition has won 450 seats and are now in the majority. The previous Prime Minister would therefore resign, and the Monarch would appoint the person who can command the confidence of the House of Commons (likely the Leader of the party that are now in the majority) as the next Prime Minister. (A) and (B) are incorrect because it is the person who commands the confidence of the House of Commons, not Parliament as a whole, who becomes Prime Minister. (B) and (D) are incorrect because it is the Monarch who formally appoints the Prime Minister. (E) is incorrect because the previous Prime Minister will need to resign under these circumstances.
A woman is explaining to a man the concept of constitutional conventions.
Which of the following best describes constitutional conventions?
A
A constitutional convention is a legal rule which usually applies to the Monarch, government ministers, or MPs.
B. A constitutional convention is a non-legal rule which usually applies to the Monarch, government ministers, or MPs.
C. A constitutional convention is a legal rule which can apply to the Monarch or government ministers, but not MPs.
D. A constitutional convention is a non-legal rule which can apply to MPs, but not the Monarch or government ministers.
E. Constitutional conventions are legal rules which are enforced by the courts.
(B) Constitutional conventions are rules which are not matters of law, but rather are derived from practice and can apply to the Monarch, government ministers, or MPs (among others). (A), (C), and (E) are incorrect because constitutional conventions are not “legal” rules but are merely conventions that are followed. (C) is also incorrect because some constitutional conventions do apply to MPs, while (E) is also incorrect because the courts cannot directly enforce constitutional conventions. (D) is incorrect because some constitutional conventions apply to the Monarch and government ministers.
A constitutional convention is considering the powers of government ministers, and, in particular, the relationship between ministers and the royal prerogative. The participants of the convention seek to define how government ministers exercise the royal prerogative powers.
Which of the following best describes how government ministers exercise the royal prerogative powers?
A
Ministers require the approval of the Monarch in order to exercise the royal prerogative powers.
B
Ministers make decisions which may need to be formally approved by the Monarch before taking legal effect.
C
Ministers are required to seek the consent of the House of Commons before making a decision under the royal prerogative.
D
Ministers are required to seek the consent of the House of Lords before making a decision under the royal prerogative.
F
Ministers may make a decision under the royal prerogative, but the Monarch may override the decision.
(B) Under the royal prerogative, ministers may make decisions which may need to be formally approved by the Monarch. These powers are known as the ministerial prerogatives and are described as such because they are in substance exercised by ministers on behalf of the Crown. For some ministerial prerogative powers, the final approval of the decision still rests with the Monarch, but this is a formality. (A) is incorrect because it is too broad. Ministers need the formal approval of the Monarch for some decisions made under the royal prerogative, but not for all decisions. (C) and (D) are incorrect because ministers do not need the consent of the House of Commons or House of Lords to made a decision under the royal prerogative. (E) is incorrect because the Monarch has no power to override a minister’s decision. Under the cardinal convention, the Monarch must ultimately act on ministerial advice, and this is shown by the fact that the Monarch’s approval of some government decisions is a mere formality.
In the previous session of Parliament, the House of Commons passed the Trade Union Restriction Bill. However, the House of Lords voted against the Bill. One year later, in the current session of Parliament, the House of Commons approved the Bill, but the House of Lords rejected it again.
Which of the following best explains the constitutional position?
A, The House of Commons can immediately send the Bill for the Royal Assent.
B. The House of Commons must reintroduce the Bill in the next session of Parliament, and if the House of Lords rejects the Bill again, the Bill can be sent for Royal Assent.
C. The House of Commons must accept the view of the House of Lords and not pursue the Bill any further.
D. The House of Commons must insist that, by convention, the House of Lords are required to agree to the Bill.
F
The House of Commons must ask the Monarch to instruct the House of Lords to agree to the Bill.
(A) The House of Commons may immediately send the Bill for the Royal Assent. Generally, when it comes to legislation, the House of Lords has the same powers as the House of Commons. However, under the Parliament Acts 1911-1949, if the House of Lords rejects a bill that has been approved by the House of Commons and the House of Commons passes the bill in the following session, only for it to be rejected again by the House of Lords, the Bill can nevertheless be sent for the Royal Assent. A year needs to have elapsed between the Bill being granted a Second Reading in the first session and being granted a Third Reading in the second session. Here, this condition
grefore the Bill can he cent for Roval Accent (Blic incorrect
has been met; at least a year passed between the Bill being passed in successive sessions of Parliament. Therefore, the Bill can be sent for Royal Assent. (B) is incorrect because under the facts, the House of Commons has already passed the Bill twice; it need not pass it a third time. (C) is incorrect because, as discussed, under the Parliament Acts 1911-1949, the Bill can be sent for the Royal Assent. (D) is incorrect because the House of Lords is entitled to disagree with the Bill; there is no convention requiring them to agree. (E) is incorrect because, as in (D), the House of Lords is not required to agree to the Bill. QUESTION
In a debate in the House of Commons on the number of social security claimants, the Secretary of State claimed that the number of claimants has been reduced under the government. The Secretary of State relied on statistics that had been prepared by her civil servants. Later, the Secretary of State learned that the statistics were incorrect and that the number of claimants had not been reduced, but at the time of the debate, she was not aware of the error.
Which of the following best explains what the Secretary of State would be expected to do?
A
She would be expected to resign immediately.
B
She would be expected to correct the error as soon as possible.
C
She would not be expected to take further action.
D
She would be expected to hold a Select Committee inquiry to discover why the statistics were incorrect.
E
She would be expected to release the correct statistics to the public.
(B) The Secretary of State would be expected to correct the error as soon as possible. All government ministers owe a fundamental duty not to mislead Parliament. Should they do so inadvertently, they are expected to correct the error with Parliament as soon as possible. If a minister knowingly misleads Parliament, they would be expected to resign. Here, the Secretary of State inadvertently misled Parliament, since at the time of the debate, she did not know that the statistics were incorrect. Therefore, she would need to correct the error as soon as possible. (A) is incorrect because a minister would be expected to resign if it is discovered that they knowingly misled Parliament, which is not the case here. (C) is incorrect because the Secretary of State would be required to take further action. That is, she would be expected to correct the error as soon as possible. (D) is incorrect because the Secretary of State does not have the power to require Parliament to hold a Select Committee inquiry. (E) is incorrect because releasing the correct statistics to the public would be insufficient; the minister must go back to Parliament to correct the error.
The Secretary of State for Work and Pensions has come under scrutiny because his department is taking too long to decide applications for welfare payments, which was deemed to be an operational failure. Some MPs have said that the Secretary of State should resign.
Which of the following best explains how the Secretary of State should respond to the calls for his resignation?
A
The Secretary of State should resign, because ministers must resign in the case of operational failures.
B
The Secretary of State should explain which civil servants are responsible for the delays.
C
The Secretary of State should refuse to appear before Parliament to explain what is happening within his department.
D
The Secretary of State should explain to Parliament what is happening within his department.
F
The Secretary of State should resign, because ministers must resign whenever an MP calls for their resignation.
(D) The Secretary of State should explain to Parliament what is happening within his department. Ministers are accountable and responsible for the actions of their department. This means that ministers have a duty to give an account to Parliament for operational failures, and to take responsibility for policy failures. ‘Giving an account’ means responding to criticisms and concerns raised by Parliament in a way which ensures that Parliament will continue to have confidence in the minister and the government. ‘Taking responsibility’ means that the minister must personally take the blame for the failure, which can ultimately include resignation. Because, here, the Secretary of State’s department committed an operational failure, the Secretary of State would be expected to give an account; that is, explain to Parliament what is happening in his department. (A) is incorrect because ministers do not need to resign for all operational failures within their department, although they may need to resign for decisions that are considered to be policy failures. (B) is incorrect because blaming the civil servants is not an appropriate response to an operational failure (or a policy failure). (C) is incorrect because in the case of an operational failure, the minister cannot ignore Parliament, but instead must respond to its criticisms. (E) is incorrect because it is too broad. Ministers do not necessarily need to resign just because an MP has called for their resignation. Rather, as discussed, a minister may need to resign for a policy failure.
An environmental charity has secured a court order requiring the Secretary of State for Transport to stop all preparations for the construction of a new railway line until an environmental assessment has been completed.
Despite this, the Secretary of State has ordered his officials to continue to make preparations for the new railway line.
Which of the following best explains the legal situation?
A
The Secretary of State is free to act however he wishes because he is a government minister.
B
The Secretary of State could be sacked by the Monarch for breaching a court order.
C
The Secretary of State could be found in contempt of court.
D
The Secretary of State would be required to explain his actions to the House of Commons.
F
The Prime Minister could arrange for the court order against the Secretary of State to be lifted.
(C) The Secretary of State could be found in contempt of court. This is an example of one of the elements of the rule of law, in that, generally, no person is above the law.
Here, the Secretary of State is bound by the law just like any other person. This means that he must comply with the terms of the court order against him, not continue with the preparations for the new railway line. As the Secretary of State has not complied with the order, he could be found in contempt of court. (A) is incorrect because, as discussed, government ministers are not above the law. (B) is incorrect because the Prime Minister, not the Monarch, can decide whether a minister should remain in their position. (D) is incorrect because it is not the best answer. Although it is likely that the Secretary of State could be required to answer questions in Parliament, that is a matter of politics, not law. (E) is incorrect because the Prime Minister cannot get involved with the judicial process in this way.
During a debate in the House of Commons, an MP argues for a set of constitutional changes so that the UK constitution “better reflects the separation of powers”. As part of the discussion, the MP summarises how the UK constitution currently reflects the separation of powers.
Which one of the following would best describe the MP’s summary?
A
There is a partial separation of powers, in that there is some overlap in the functions and personnel of the branches of government.
B
There is no separation of powers in the UK due to the position of the Monarch having a role in the branches of government.
C
There is a complete separation of powers between the branches of government.
D
There is no separation of powers in the UK because all power rests with Parliament.
E
There is no separation between the executive and judiciary because of the role of the Privy Council.
(A) The UK has a partial separation of powers in light of the overlap between the functioning and personnel of the three branches. The principle of the separation of powers provides that the executive, legislature, and judiciary are separate in terms of their function and their personnel and that, to some extent, the different branches serve as a check and a balance against each other. However, there is a substantial overlap between the executive and legislature. In terms of personnel, all government ministers must be members of the legislature and in function, the executive branch may pass secondary legislation under powers granted to it by the legislature. (B) is incorrect. It cannot be said that there is no separation of powers in the UK. Although the Monarch has a role in the executive, legislature, and judiciary, his role is almost exclusively formal. (C) is incorrect because, given the overlap between the branches, it cannot be said that there is a complete separation of powers. (D) is incorrect because not all power (for example, judicial and executive power) is vested in Parliament. Even some legislative powers are granted to the executive, as discussed above. (E) is incorrect because there is some separation of powers between the executive and judiciary. Although the Privy Council does exercise some executive and judicial functions, these are minimal.
The owner of a bicycle wrote a letter to her friend offering to sell her bicycle to him for £150. The friend received the letter on 18 January. On 19 January, he mailed a letter back saying that he was not interested in purchasing the bicycle because he had just bought a gym membership. However, the friend changed his mind on 20 January and posted a letter to the owner accepting her offer to sell the bicycle and enclosing a cheque for £150. The owner received the friend’s rejection letter on 21 January but put it aside without reading it. The next day, she received the friend’s acceptance letter, which she opened and read immediately.
Do the parties have a contract?
A
Yes, because an acceptance is effective when it is posted, whilst a rejection is effective when received.
B
Yes, because the friend paid for the bicycle when he accepted the offer to buy it.
C
No, because the acceptance was dispatched after the rejection.
D
No, because the postal rule does not apply.
E
No, because the owner did not read the rejection letter.
(A) Under the postal rule, acceptance by mail creates a contract at the moment of posting, with a couple of exceptions not relevant here. Rejection, on the other hand, is effective when received. So, as the postal rule applies, there is a contract, because the friend’s acceptance was posted before his rejection letter was received. (B) is incorrect because whether the friend paid for the bicycle is irrelevant. (C) is incorrect because when a rejection by post is followed by an acceptance by post, the postal rule will apply and there will be a contract if the acceptance is posted before the rejection is received. (D) is incorrect as the postal rule does apply to this scenario. (E) is incorrect because the fact that the bicycle owner did not read the rejection does not matter; the time of receipt is the relevant factor.
A man wanted to buy a car from his nephew, who worked at a car dealership. The two spoke on the phone to discuss a possible sale, and after offering to buy the car the man concluded the phone call by saying, ‘If I hear no more about the car, I consider it mine for £500’ The nephew said nothing, but moved the car from the forecourt before leaving for his lunch break. In his absence, another member of the dealership’s staff sold the car to a third party.
Was there a valid contract between the man and his nephew?
A
Yes, the nephew’s silence was an acceptance of the man’s offer.
B
Yes. By removing the car from the forecourt the nephew had accepted the man’s offer by his conduct.
C
No. The nephew did not communicate his acceptance of the offer.
D
No. The offer was not certain and definite enough to be valid.
E
No. There was no intention by the nephew to be legally bound.
(C) For an offer to be validly accepted, the offeree must have communicated their acceptance of the offer to the offeror. Therefore (C) is the correct answer. (A) is incorrect because silence cannot constitute acceptance: a positive act is required unless both parties have agreed to dispense with the need for communication. (B) is incorrect because the nephew’s actions were not enough to communicate his acceptance to the man. It is unclear why the nephew moved the car. (D) is incorrect as the terms of the offer seem to have been definite and certain: the subject matter and price to be paid are clear. (E) is incorrect because there is no suggestion that the parties did not intend to be legally bound. Even though the parties have a family relationship, it may not be close enough to constitute a domestic and social arrangement. Even if it was, the fact that they are acting in the course of business would be enough to rebut the presumption that they did not intend to be legally bound.QUESTION
On 1 July, a buyer orders goods from a seller by email. The seller replies by email on 2 July, agreeing to the order, stating that its standard conditions of sale apply and supplying a copy. The buyer replies on 3 July, stating that their standard conditions of purchase apply and also supplying a copy. On 4 July, the seller replies again that its standard conditions of sale apply. The seller then delivers the goods on 5 July. The buyer unloads the goods, places them in their warehouse, and uses them.
On what day was a contract formed and which party’s standard conditions apply?
A
1 July; the buyer’s under the first shot rule.
B
2 July; the seller’s under the first shot rule.
C
3 July, the buyer’s, under the last shot rule.
D
4 July, the seller’s, under the last shot rule.
F
5 July, the seller’s because the seller’s reply of 4 July was a counteroffer which the buyer accepted by unloading and using the goods.
(E) No contract was formed until 5 July. A response to an offer is not an acceptance if it seeks to change the terms of the offer. The buyer’s 1 July order may have been an offer, but the seller added a term in its 2 July response (that the seller’s standard terms had to be used), so that was a counteroffer and not an acceptance. The buyer’s 3 July response did the same, insisting on the buyer’s terms. Therefore, that response was a counteroffer as well. And the seller’s 4 July response insisting on their terms was also a counteroffer as it did not accept the buyer’s terms. However, the buyer will be held to have accepted these terms and a contract was formed when the buyer accepted the goods. Therefore, the seller’s standard conditions apply. This is an example of the battle of forms in which the battle usually is won by the person who fires the last shot (that is, sends the last form). The other choices are incorrect for the reasons stated above. QUESTION
Two friends enter an agreement in writing. The agreed terms are that for one friend will pay the other £50 if they stop complaining about the weather.
Would this be a valid contract?
A
No. The consideration in this case is not sufficient.
B
No. The parties are friends and did not intend to be legally bound.
C
No. This represents a bad bargain for the party paying the £50, so the courts would not enforce the contract.
D
Yes. All the elements for a valid enforceable contract are present.
F
Yes. The consideration in this case is adequate.
(A) Valid consideration must be sufficient, meaning that it must have some value even if very small. Wholly illusory consideration is not sufficient in the eyes of the law, and a promise to stop complaining would normally be considered to be illusory. (B) is incorrect. Since the parties are friends, there is a presumption that they did not intend to be legally bound as this is a social arrangement, but the fact that their contract is in writing is strong evidence that could rebut this presumption. (C) is incorrect because the law is not concerned with whether or not the parties have made a bad bargain, in other words, whether or not the consideration is adequate. (D) is incorrect because without sufficient consideration, all the elements for a valid contract are not present. (E) is incorrect because the courts are not interested in whether or not the consideration is adequate. However, the consideration must be sufficient, meaning that it must have some value, and here it does not.
A paper manufacturer offers to sell 100 reams of copier paper to a printing business at £10 per ream. The offer is on the paper manufacturer’s standard terms and conditions and states, ‘You are required to email acceptance of any offer to supply to your sales associate by 5pm on the day the offer is made’. The terms and conditions go on to state that delivery will be two weeks later and that payment is required on delivery. The purchasing manager of the printing business telephones the manufacturer’s main number and leaves a message on the answerphone before 5pm accepting the offer. In reliance on the contract that has been made with the manufacturer, the printing business enters into a contract to print 200 copies of a brochure for a local estate agent.
Is there a binding contract between the paper manufacturer and the printing business?
A. Yes, the offer was validly accepted within the requisite timescale; consideration to be performed in the future (executory consideration) is permissible so there is a valid contract.
B. Yes, as the printing business has relied on the terms of the contract to enter into a secondary contract with a third party, the contract is valid notwithstanding any defects in its formation.
C. Yes, acceptance must be communicated, and acceptance by telephone constitutes a reasonable method ot communication.
D. No, the offer was not validly accepted as the purchasing manager left an answerphone message that could have been heard by a third party rather than communicating personally with the manufacturer.
E
No, the method of acceptance prescribed was email, and the printing business accepted by telephone.
(E) If an offer prescribes a method of communication, that method should be used unless the alternative method is no less disadvantageous to the offeror. In this case, leaving an answerphone message, when there is no guarantee that the offeror will listen to it, is unlikely to be considered to be an adequate alternative to an email to the sales associate, which was the requested method. (A) is incorrect because the offer has not been validly accepted, for the reasons just stated. (B) is incorrect because reliance on the contract does not make it valid in the absence of all the requirements for valid formation. (C) is incorrect because, whilst acceptance by telephone is a valid method of communication, in this particular scenario the requirement was for an email acceptance to the sales associate. (D) is incorrect because the problem with the valid purported acceptance was not that the message could have been heard by a third party, it is that acceptance by email was prescribed, and therefore had to be used for a valid acceptance.QUESTION
A woman loses her dog on a country walk. She places signs in local village shop windows stating, ‘reward offered for safe return’
In which of the following situations could the reward not be claimed?
A
A man finds the dog and telephones the woman having looked at the number on the dog’s collar. He has not seen the posters in any of the shops.
B
A man finds the dog and telephones the woman having looked at the number on the dog’s collar. He has seen the posters in the shops.
C
A man finds the dog and takes it to one of the local shops where he sees the reward poster.
D
Having seen the posters, a man goes out and searches for the woman’s dog. He finds the dog, but is informed by the woman that the reward is no longer available.
E
A day after the sign has been displayed in his shop, a shopkeeper finds the dog and takes it to the local pound. The pound contact the woman, who collects the dog. A week later the notice is removed from the shop.
(A) To accept an offer of a unilateral contract by performance, the offeree must be aware of its existence. Therefore if the man finds the dog and is unaware of the reward when he returns it to the woman, he cannot claim it. The reward can be claimed in (B). The man is aware of the offer of the reward because he has seen the posters. The reward can be claimed in (C) because, even though the man found the dog before he saw the reward poster, the conduct required of him is the safe return which he does carry out. The reward can be claimed in (D because the man has accepted the offer by his conduct, in full awareness of it. A unilateral contract cannot be revoked or withdrawn once performance has begun. The woman may therefore not withdraw her offer, but will be obliged to pay the reward only when performance is complete. In this case, performance is complete because he returned the dog safely to her. The reward can be claimed in (E) because the dog has been safely returned to the woman as required by the reward notice. The shopkeeper was aware of the reward, and there can be no revocation of the offer by the removal of the notice as performance had been completed before the sign was taken down.
On 3 November, an investor sent an email to a dealer in precious metals: “Please quote your best price on 800 troy ounces platinum bars for immediate delivery at my bank”. At 10 a.m. the next morning (4 November) the dealer replied by email, “My best price is £475 per ounce”. The investor received the dealer’s message later on that same day.
what is the best characterisation of the communications between the investor and the dealer?
A
An offer and an acceptance.
B
A request for an offer and an offer.
C
An offer and a price quotation.
D
A request for an offer and a price quotation.
E
A request for an offer and an acceptance.
(B) The investor’s communication was a request for an offer and the dealer’s response was an offer. For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. The investor’s communication does not pass the test because it is clear on its face that he did not want to be bound by whatever price the dealer came up with, but rather wanted to find out what the dealer would offer. The dealer’s communication, on the other hand, passes the test. Whilst it said nothing more than the price, it was sent in response to a request containing specific delivery terms and a specific quantity. Under the circumstances, the dealer’s response would have created a reasonable expectation in the investor that the dealer was willing to enter into a contract under the terms of the two communications. (A) is wrong because, as indicated above, the investor’s communication was not an offer because it did not indicate the requisite intent to be bound. Thus, the dealer’s communication could not be an acceptance, because an acceptance must be in response to an offer. (C) and (D) are wrong because, as explained above, the dealer’s communication was not merely a price quotation; given that it was sent in response to a very specific inquiry, it was sufficient to be an offer. (E) is wrong as there was no offer made by the investor capable of acceptance, and even though there has been an offer by the dealer, there has been no acceptance by the investor of the dealer’s offer.
A farmer enters into a contract with a dealer to buy pesticide. The farmer told the dealer the pesticide would be used on wheat. The dealer supplied pesticide that was suitable for use on fruit, assuming it would be suitable for wheat as well. However, the farmer soon discovers the pesticide is not suitable for use on wheat.
Which of the following statements correctly identifies the farmer’s rights?
A
The farmer can reject the pesticide and/or claim damages, because the pesticide is not of satisfactory quality.
B
The farmer can reject the pesticide as unfit for their purpose and/or claim damages.
C
The farmer may be able to claim damages for failure to comply with description but has no right to reject the pesticide.
D. The farmer can claim damages because the pesticide is not of satisfactory quality, but they cannot reject it.
E
The farmer can claim damages because the pesticide is unfit for their purpose, but they cannot reject it.
(B) The farmer can reject the pesticide as unfit for their purpose and/or claim damages. If a buyer makes known the purpose of goods and the seller provides goods not suitable for that purpose, the buyer may reject the goods and/or claim damages for breach of the term of fitness for purpose implied by the Sale of Goods Act 1979 (‘SGA’).
That is the case we have here. (A) is not correct. The SGA implies a term that goods shall be fit for the purpose for which the goods are generally used. From the facts, it appears the pesticide in question generally is used on fruit and that it is suitable for that use. Therefore, the implied term for quality is not breached here. (C) is not correct because we have no facts indicating that the dealer made any description. If they did, (C) would still be incorrect because breach of description is considered a breach of condition and so it entitles the innocent party to reject the goods. (D) is not correct both because the pesticide is of satisfactory quality for the purpose for which it is usually supplied (use on fruit) and because the GA implied term relating to satisfactory quality is a condition, breach of which entitles the innocent party to reject the goods. (E) is not correct because, whilst there may have been a breach of the SGA implied term relating to description if the seller described the pesticide as suitable for use on wheat, that term is a condition, breach of which entitles the innocent party to reject the goods.
Two businesses are negotiating a contract for a delivery of coal. The parties have finalised all the terms including payment and delivery, but as one of the directors of the coal supplier is going on holiday, signature of the written contract is delayed and it is marked ‘subject to contract’ pending her return.
Do the parties have a binding enforceable contract?
A
Yes. The parties are both businesses, and in commercial situations there is a presumption that the parties intend to be legally bound.
B
Yes. All the valid elements of contract are present.
C
Yes. There is no requirement for a contract to be in writing, so there is a binding contract because the terms have been finalised.
D
No. A contract marked ‘subject to contract’ needs to be executed by deed.
F
No. There is no intention to be legally bound.
(E) Marking a contract ‘subject to contract’ means that the parties do not yet intend to be legally bound. Negotiations have taken place, but the parties are in agreement that a legally binding agreement will follow, therefore (E) is the correct answer. (A) is incorrect because, whilst it is correct that in a commercial situation the parties are presumed to intend to be legally bound, this presumption is rebutted by the inclusion of the words ‘subject to contract’. (B) is incorrect because all the elements of a valid contract are not present, as the parties lack legal intent. (C) is incorrect because, whilst a contract does not have to be in writing, there is no intention to be bound by terms agreed orally if they are stated to be ‘subject to contract’. Also the draft contract is in writing, and even if there were verbal discussions as to the parties’ intent to be legally bound, the written terms are likely to be definitive under the parol evidence rule. (D) is incorrect because a contract marked ‘subject to contract’ does not require execution by deed.
Categories of contract that require execution as a deed include a conveyance by land or a contract that lacks consideration.
What is an ‘invitation to treat’?
A
A counteroffer which cancels the original offer and makes it incapable of acceptance.
B
An expression of a promise, undertaking, or commitment to enter into a contract.
C
A valid offer, acceptance of which would result in the parties being in agreement.
D
An expression of willingness to negotiate, which falls short of a valid offer that is capable of acceptance.
F
An agreement between two parties that remains ‘subject to contract’
(D) An invitation to treat is an expression of willingness to negotiate, which falls short of a valid offer. (A) is incorrect because a counteroffer is a response to a valid offer, which terminates the original offer and renders it incapable of acceptance. As there is no valid offer in the question, there can be no counteroffer. (B) is incorrect because it states the definition of an offer, not an invitation to treat. (C) is incorrect because an invitation to treat falls short of a valid offer, it merely invites offers to be made. (E) is incorrect because where an agreement between parties remains ‘subject to contract’, they are in agreement, but until a formal contract is entered into, they do not intend to be contractually bound.
A marketing company has its offices in an older building that is heated by a boiler. On a recent cold day, the managing director of the company noticed that the office was cooler than it should be. The managing director asked the company’s facilities manager to have a heating engineer come in to determine what can be done to make the offices warmer.
The facilities manager calls a heating engineer who inspects the existing system. The engineer determines that the old heating system should be replaced. After brief negotiations regarding the price, the heating engineer agrees to supply and install a new boiler in the company’s offices. The only terms agreed are the make and model of boiler and the price.
Which of the following will be implied by statute into the contract between the company and the heating engineer?
A
Under the Sale of Goods Act 1979, a condition that the new boiler will be of satisfactory quality and terms requiring that the installation will be carried out with reasonable care and skill and within a reasonable time.
B
C
D
Under the Sale of Goods Act 1979, a condition that the new boiler will be of satisfactory quality and a condition that the installation will be carried out with reasonable care and skill and within a reasonable time.
Under the Sale of Goods Act 1979, a condition that the new boiler will be of satisfactory quality and under the Supply of Goods and Services Act 1982, terms requiring that the installation will be carried out with reasonable care and skill and within a reasonable time.
Under the Supply of Goods and Services Act 1982, a condition that the new boiler will be of satisfactory quality and a condition that the installation will be carried out with reasonable care and skill and within a reasonable time.
F
Under the Supply of Goods and Services Act 1982, a condition that the new boiler will be of satisfactory quality and terms requiring that the installation will be carried out with reasonable care and skill and within a reasonable time.
(E) When goods are supplied under a contract for services, all the statutory implied terms are implied by the Supply of Goods and Services Act 1982 (‘SGSA’). These terms include conditions relating to the goods similar to those which would be implied by the Sale of Goods Act 1979 (‘SGA’) in the case of a sale of goods contract. They also include terms (which are ‘innominate’ terms) that the work will be carried out with reasonable care and skill, and that it will be carried out within a reasonable time if no time for performance has been agreed. (A), (B) and (C) are incorrect because the SGA has no relevance to this contract. (D) is incorrect because the SGSA implied terms relating to care and skill and time for performance are innominate terms, not conditions.
On 6 December, the owner of an electronics store sent a written request to a computer manufacturer asking for the price of a certain laptop computer. The manufacturer sent a written reply with a catalogue listing the prices and descriptions of its computers. The letter stated that the terms of sale were cash within 30 days of delivery.
On 14 December the store owner ordered the computer, enclosing a cheque for £4,000, the listed price.
Immediately on receipt of the order and cheque, the manufacturer informed the store owner that there had been a pricing mistake in the catalogue, which should have quoted the price for that computer as £4,300. The store owner refused to pay the additional £300, arguing that his order of 14 December in which the £4,000 cheque was enclosed was a proper acceptance of the manufacturer’s offer.
Will the manufacturer’s claim for the extra £300 succeed?
A
Yes, because its first communication stated terms requesting cash within 30 days of delivery.
B
Yes, because of the mistake as to price.
C
Yes, because its first communication did not constitute an offer.
D
No, because the store owner’s letter of 14 December was a proper acceptance of the manufacturer’s offer.
E
No, because the store owner did not intend to be legally bound.
(D) The store owner’s letter of 14 December was an acceptance. Whether the letter was an acceptance depends on whether the manufacturer’s letter was an offer, because an acceptance is a manifestation of assent to an offer. For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. There must be a promise, undertaking, or commitment to enter into a contract with certain and definite terms. Courts usually hold that if a statement is made broadly, such as in an advertisement or catalogue, it will not constitute an offer because it is not reasonable to expect that the sender intended to make offers to all who received the advertisement; rather, the courts usually find such advertisements to be invitations to treat seeking offers. However, price quotations (particularly from a manufacturer) may be considered as offers if given in response to a specific inquiry. The courts will look to the surrounding circumstances, and here a court would probably determine that the catalogue that the manufacturer sent was an offer because it was sent in response to the store owner’s specific enquiries about prices on a specific computer and it included delivery terms and conditions of sale. (A) is incorrect because, although the letter called for payment in cash, payment by cheque is sufficient. Moreover, because the contract called for payment within 30 days of delivery, even if the cheque was not sufficient, the store owner still had time under the contract to obtain cash. (B) is incorrect because the mistake was unilateral. Generally, a unilateral mistake will not be grounds to rescind a contract unless the non-mistaken party knew or should have known of the mistake. Here, nothing in the facts indicates that the store owner knew of the mistake, and the mistake was not so large that it could be said that he should have known of it. (C) is incorrect because, as explained above, the manufacturer’s catalogue was sent in response to the store owner’s request for information and its terms for sale constituted an offer. (E) is incorrect because there is a presumption of legal intent in commercial situations that can only be rebutted by strong evidence to the contrary, and there is no evidence here to suggest that the owner did not intend to be legally bound.
VOID CONTRACT
Has no effect
Mistake makes a contract void
- COMMON MISTAKE
Both parties made the same mistake - MUTUAL MISTAKE
Parties are mistaken about different things
They are at cross purposes - UNILATERAL MISTAKE
One party is mistaken
The other party is aware or should be aware
Illegal contracts are void
VOIDABLE CONTRACT
Remains in effect unless rescinded by a party
Duress and undue influence make a contract voidable
DURESS
One person applies illegitimate pressure to the other
Indicate whether each scenario involves:
A - Common mistake
B - Mutual mistake
C - Unilateral mistake
- A wholesaler agrees to sell a shipping ‘container’ of cotton to a manufacturer for £12,000. The wholesaler has in mind a 20-foot standard container and the manufacturer has in mind a 40-foot standard shipping container. The £12,000 would not be obviously unreasonable for either size, depending on market conditions.
- A homeowner asks three contractors to bid on the price of building an extension according to the same set of plans. Builder 1 submits a bid of £48,000, Builder 2 submits a bid of £27,000, and Builder 3 submits a bid of £51,000. The homeowner accepts Builder 2’s bid. Builder 2 says he made a mathematical error and the price should have been £47,000.
Correct answer 1 -
B
Mutual mistake
Correct
This is a mutual mistake, as the parties are at cross purposes. This is not a common mistake as they did not make an identical mistake (such as both thinking the container existed when it had actually fallen off the container ship it was on and was lost before the contract was made).
Correct answer 2 -
C
Unilateral mistake
Correct
Here, only Builder 2 was mistaken, because under the circumstances (same plans and one of three bids vastly different to the other two), the homeowner should have known of the mistake.
In March, a trader enters a lease of a shop in which she hopes to rent and sell bicycles. She hires a builder to remodel the shop for £30,000 and they agree the work is to be done by the 1st of May. Knowing that delay will cause the trader to miss the start of the traditional bicycle-selling season, and wanting to increase their own profit, after two weeks, the builder tells the trader he cannot complete the work until July unless the trader agrees to pay him £10,000 more so that he can hire additional employees. The trader agrees.
True or false: The contract to remodel the shop is void for economic duress.
O True
O False
False. Be careful not to get lost in fact (if you did). The clear bad faith here would make the modification (and not the whole contract) voidable for economic duress.
UNDUE INFLUENCE
One person abusing their influence over the other
Undue influence does not require bad faith
Undue influence is based on personal relationships between the parties
Third party undue influence
Indicate whether the following scenarios are:
A - Void for mistake
B - Void for duress
C - Voidable for duress
D - Voidable for undue influence
E - Valid contract
- Janice agrees to buy a classic car from Kevin. The car is stored in a specialist’s garage. Neither of them knew that the car had been destroyed in a fire.
- Sanjay works in a bank. He begins a relationship with Karen, his boss. The bank’s policies do not allow relationships between employees and their managers. Nigel finds out about the relationship and threatens to report Sanjay and Karen unless Sanjay sells Nigel his car for a knock-down price.
- Mike agrees to buy a vintage car from Noreen. Both Mike and Noreen think the car is a 1922 Bentley, but in fact it is a 1929 model.
- Sam and Greg are married. Sam has a good job as an accountant, keeps her savings in her own name, and makes her own investment decisions. Greg runs a small business. Greg is borrowing money for his business from MidWest Bank. He asks Sam to guarantee the loan to the bank. The bank sends Sam the guarantee, which she simply signs as a deed and returns to the bank.
- Void for mistake
- Voidable for undue influence
- Valid contract
- Valid contract
In which of the following situations IS
Becky most likely going to be able to enforce her contract?
O (A) Becky agrees with Jake to race their cars on the M1, with a £250 prize for the winner.
O (B) Becky books into a hotel with her boyfriend, Jeb.
O (C) Becky is employed by Julian to deliver packages.
Julian knows that it isn’t going to be possible for Becky to deliver all the packages during her working day without breaking the speed limit.
What is ‘Discharge of a Contract’?
Answer: It refers to the ending of a contract, typically when all obligations have been fulfilled.
Example: A contract concludes when its fixed term is completed.
What does ‘Variation of a Contract’ mean?
Answer: It involves changing a contract, often leading to a new contract in place of the old one.
Example: Modifying the terms of an employment contract before it ends naturally.
What is ‘Discharge by Agreement’ in contract law?
Answer: It’s when parties mutually agree to end a contract, forming a new agreement that requires standard elements like consideration.
Example: An employee and employer agreeing to terminate an employment contract early.
How is ‘Consideration in Contract Termination’ important?
Answer: For a valid contract termination, all parties must offer consideration, which often involves sacrificing a right or obligation.
Example: Both parties in an employment contract giving up rights (like work and payment) for early termination.
What are the ‘Challenges with Partial Performance’ in contracts?
Answer: Challenges arise when one party has fully performed, leaving them with no room to offer consideration for changing the contract.
Example: A buyer trying to avoid the final payment of a car after the seller has delivered it.
What role do ‘Contracts by Deed’ play in contract law?
Answer: These contracts can bypass the need for consideration, as deeds don’t require it.
Example: Modifying a contract’s terms or ending it without needing new consideration.
How does ‘Equity and Waiver’ work in contract law?
Answer: Equity uses waiver to address consideration issues, allowing one party to forego enforcement of a part of the contract.
Example: A builder being granted extra time beyond the original deadline.
What is ‘Discharge by Performance’?
Answer: This occurs when all parties fulfill their contractual obligations.
Example: A service provider completing their work and receiving the agreed payment.
What is the ‘Entire Obligation Rule’?
Answer: It requires the full performance of obligations for contract discharge.
Example: A sailor’s contract not being fulfilled due to their death, resulting in no payment.
What are ‘Substantial Performance and Divisible Contracts’?
Answer: These concepts allow for payment even if full performance hasn’t been achieved, under certain conditions.
Example: A builder claiming payment for a substantially completed conservatory.
What does ‘Quantum Meruit’ refer to in contract law?
Answer: It’s a principle allowing for reasonable payment for partial performance when there’s no contract variation.
Example: A cabinet-maker getting a reasonable amount for a half-finished table.
