Contract Flashcards
ramsgate hotel v Montefiore
offer cannot be accepted after the fixed period of the offer expires
carlill v carbolic smoke ball
advertised £100 to anyone who used a smoke ball and got the flu, and they said £1000 had been deposited with a bank to indicate their seriousness. mrs carlill bought one and got the flu and sued for her money, they were made to pay- clearly i2clr
Barry v Davies
an auction with no reserve is offer and acceptance
fisher v bell
displayed a flick knife in the shop window- it was an invitation to treat, an offer comes later when someone enters the shop
partridge v Crittenden
advert for birds in a magazine- invitation to treat not offer
dickinson v dodds
communication of revocation doesnt have to be by the offeror as long as the offeree ought to believe the source that informed him- offer can be revoked any time before acceptance as long as there is no consideration
stevenson v Mclean
a request for info won’t destroy the original offer
entores v miles
contract is made when and where the acceptance is recieved- it is as if they were in each others presence
byrne v van tienhoven
revocation needs to be communicated to the offeree before acceptance
Thomas v Thomas
something of value must be given for a promise in order to make it enforceable- even £1 a year as rent
Tweddle v Atkinson
tweddles son couldn’t enforce the promise of William guy as he had given no consideration
re mcardle
past consideration isn’t valid consideration
williams v roffey bros
already in a contract, D promised to pay C a bonus to complete on time, C failed to complete on time but D was still found to be liable for the money because they would have secured a practical benefit and there was no duress on them
high trees
paid a reduced rent during the war years but had to go back to full rent after- obiter- promissory estoppel stops claimant being able to get the full rent for the war years
d and c builders v Rees
Rees trued to exploit the bad financial situation of d and c builders by offering less money but promissory estopped that
pinnels case
payment of a lesser sum on the day its due cant be satisfaction for the whole
foakes v beer
beer sued foakes for the interest on the debt- foakes hadn’t offered any consideration for her promise to forgo the debt
Jackson v horizon holidays
could recover damages for his distress at the bad holiday but also his additional distress caused by his wife and kids distress- a way to get around privity of contract- connect also to damages for loss caused by 3rd parties
shanklin pier v detel
painting pier- paint manufacturer promised it would last 7 years but only lasted 3 months- main contract was between D and contractors but there was a collateral contract of D and paint manufacturers so could sue
s2(1)- contracts (rights of 3rd parties) act
circumstances where parties to a contract cant rescind the third party’s rights without their consent
contracts (rights of 3rd parties) act 1999
sets out when a third party has the right to enforce a term of the contract
Hong Kong Fir Shipping
innominate term- couldn’t be classified in advance as either a condition (serious term) or a warranty (not as serious) so whether they could terminate or not relied on the seriousness of the breach- this one couldn’t be terminated because they hadn’t been deprived of substantially the whole benefit
Bettini v Gye
not going to 3/6 of the rehearsals which his contract stipulated was held to be a breach of warranty
poussard v spiers
missed the first 4 performances- breach of condition
the moorcock
term implied by courts to give the agreement business efficacy - defendants were liable for the damage done to the steamship when it was moored at their jetty
offer cannot be accepted after the fixed period of the offer expires
ramsgate hotel v Montefiore
advertised £100 to anyone who used a smoke ball and got the flu, and they said £1000 had been deposited with a bank to indicate their seriousness. mrs carlill bought one and got the flu and sued for her money, they were made to pay- clearly i2clr
carlill v carbolic smoke ball
an auction with no reserve is offer and acceptance
Barry v Davies
displayed a flick knife in the shop window- it was an invitation to treat, an offer comes later when someone enters the shop
fisher v bell
advert for birds in a magazine- invitation to treat not offer
partridge v Crittenden
communication of revocation doesnt have to be by the offeror as long as the offeree ought to believe the source that informed him- offer can be revoked any time before acceptance as long as there is no consideration
dickinson v dodds
communication of revocation doesnt have to be by the offeror as long as the offeree ought to believe the source that informed him- offer can be revoked any time before acceptance as long as there is no consideration
dickinson v dodds
a request for info won’t destroy the original offer
stevenson v Mclean
contract is made when and where the acceptance is recieved- it is as if they were in each others presence
entores v miles
revocation needs to be communicated to the offeree before acceptance
byrne v van tienhoven
something of value must be given for a promise in order to make it enforceable- even £1 a year as rent
Thomas v Thomas
tweddles son couldn’t enforce the promise of William guy as he had given no consideration
Tweddle v Atkinson
past consideration isn’t valid consideration
re mcardle
already in a contract, D promised to pay C a bonus to complete on time, C failed to complete on time but D was still found to be liable for the money because they would have secured a practical benefit and there was no duress on them
williams v roffey bros
paid a reduced rent during the war years but had to go back to full rent after- obiter- promissory estoppel stops claimant being able to get the full rent for the war years
high trees
Rees trued to exploit the bad financial situation of d and c builders by offering less money but promissory estopped that
d and c builders v Rees
payment of a lesser sum on the day its due cant be satisfaction for the whole
pinnels case
could recover damages for his distress at the bad holiday but also his additional distress caused by his wife and kids distress- a way to get around privity of contract- connect also to damages for loss caused by 3rd parties
Jackson v horizon holidays
painting pier- paint manufacturer promised it would last 7 years but only lasted 3 months- main contract was between D and contractors but there was a collateral contract of D and paint manufacturers so could sue
shanklin pier v detel
circumstances where parties to a contract cant rescind the third party’s rights without their consent
s2(1)- contracts (rights of 3rd parties) act
sets out when a third party has the right to enforce a term of the contract
contracts (rights of 3rd parties) act 1999
exclusions and limitation clauses- 2 questions at common law
- is the clause part of the contract?
- is the clause appropriately worded to cover what has occurred?
- if yes to both then turn to legislation
UCTA 1977 what does it apply to?
- business to business transaction
- terms which exclude or restrict liability
s13 UCTA
extends the acts to terms that may not appear at first sight to be limitation clauses such as a term
- which make the LIABILITY OR ITS ENFORCEMENT subject to RESTRICTIVE CONDITIONS
- which EXCLUDES ANY RIGHT OR REMEDY in respect of the liability
- excludes or restricts RULES OF EVIDENCE OR PROCEDURE
reasonableness test
s11(1)- unfair contract terms act
- burden of proof lies on the party seeking to rely on the clause
- watford electronics- terms are unlikely to be found unreasonable where the contract is between two commercial companies of equal bargaining power
consumer rights act 2015 important sections
-s64- where core terms can or cant be assessed for fairness
- s62- unfair terms
unenforceable terms CRA
- excluding or limiting liability for PI OR DEATH resulting from negligence
- excluding or limiting liability for BREACH OF THE IMPLIED TERMS about QUALITY, FITNESS FOR PURPOSE AND MATCHING DESCRIPTION
- excluding liability for the breach of the implied term to take REASONABLE CARE IN A CONTRACT FOR SERVICES
effect of finding a term to be unfair
- not binding on the customer
- it is the individual term that isn’t valid, not the whole contract
- contract continues to bind the parties as long as it is capable of continuing in existence without the unfair term
what does mistake make a contract? and what are the 3 types?
VOID
- common
- mutual
- unilateral
common mistake
both parties have made a contract on the basis of the same false and fundamental assumption
3 possibilities to consider before mistake
- term/warranty- one party may have expressly/impliedly promised the subject matter existed
- assumption of risk- if one party assumed the risk of the non-existence of the subject matter, they are liable
- misrepresentation- the false statement wasn’t a term but induced the party to enter the contract
leaf v international galleries
C bought a painting both parties thought was painted by Constable but 5 years later found it wasn’t- claim failed cuz it was about the quality of the painting not the subject matter
raffles v wichelhaus
2 ships called peerless, one party thought it was the one sailing in Oct, the other thought it was the one sailing in Dec- contract failed for mutual mistake
mutual mistake
2 parties misunderstand each others intentions and are at cross-purposes- they dont make the same mistake
unilateral mistake
- one party must make a mistake as to a fundamental aspect of the contract
- and the other party must be aware of the mistake
cundy v Lindsay
a rogue induced Lindsay to sell goods on credit to him by using the name of a company they were aware of. the rogue then sold the goods on to cundy, who Lindsay then successfully sued for the goods because the contract between the rogue and Lindsay was void for mistake
documentary mistake
- a person is induced by the false statement of another to sign a contract that is fundamentally different from that contemplated-
- lloyds bank v Waterhouse- C was illiterate so this was successful - parties agree on the terms of the contract but record them incorrectly by mistake and one party seeks rectification–
- Craddock v hunt, contract was for an extra piece of land than originally agreed on so court rectified it to not have the extra land
lloyds bank v waterhouse
c was illiterate so contract being fundamentally different from that contemplated succeeded
Craddock v hunt
contract was for an extra piece of land than originally agreed on so court rectified it to not have the extra land
misrep problem question
- is the statement a term or representation?
- is the misrep operative?
- what type of misrep is it?
- has any attempt been made to exclude liability for misrep?
- what remedies are available?
term or representation?
primarily a question of intention
guidelines for if intention is unclear
- timing of the statement- routledge v McKay
- whether an opp to verify was given- ecay v Godfrey
- importance of the statement is made clear to the maker- Bannerman v white
- specialist knowledge and skill of one part- dick Bentley v Harold smith
- whether the statement was put in writing- Routledge v McKay
routledge v McKay
- timing of the statement
- whether it is put in writing
ecay v Godfrey
whether an opp to verify was given
dick Bentley v harold smith
specialist knowledge and skill of one party
Bannerman v white
importance of statement was made clear to seller
what makes a misrep actionable?
- false statement of existing or past fact
- inducement
smith v Chadwick
the fact must have induced the person to enter into the contract- in this case it didnt so wasn’t actionable
type of misrepresentation
- fraudulent- one made knowing its a lie or being reckless- burden is on the claimant to prove this- hard to do
- negligent- requires the representor to disprove negligence
- negligent misstatement- careless- breach of DoC- Hedley byrne special relationship test
- wholly innocent- not at fault, genuinely believed it
bars to recission (setting aside the contract and restoring parties to their original position)
- rights of 3rd parties
- impossibility of restoring
- affirmation (injured party wants to continue)
- lapse of time
- s2(2) MA
3 types of duress- VOIDABLE
Economic
duress to the person
duress of goods
pao on v lau yiu long- 4 factors to see if economic duress is present
- did the person claiming to be coerced PROTEST?
- did that person have any OTHER AVAILABLE COURSE OF ACTION?
- were they INDEPENDENTLY ADVISED?
- after entering into the contract did they TAKE STEPS TO AVOID IT?
dont all have to be present, just guidelines
barton v armstrong
duress to the person
- managing director was threatened with death if he didnt buy shares from D
test for duress- Olib case
- duress must be OPERATIVE (must be a reason for entering into the contract)
- barton v Armstrong
- LACK OF A REASONABLE ALTERNATIVE
- Atlas v Kafco-kafco made to pay more for baskets so not to lose their contract with someone else
- ILLEGITIMACY OF THE THREAT- threat of an illegal act
- barton v Armstrong
remedies for duress
- damages
- rescind the contract- can only do if there aren’t any bars to recision
undue influence- voidable-when does it apply
applies when IMPROPER PRESSURE has been used on a party to the contract
- usually arises in THIRD PARTY SITUATIONS
- influencer (husband) will persuade complainant (wife) by undue influence to guarantee a loan given to the influencer by a creditor (bank) using the matrimonial home as security
- needs to be a RELATIONSHIP
two types of undue influence
actual
- dominating influence
- no need to show a transaction that requires explanation
presumed
2 types
- special type of relationship existed
(parent and child, dr and patient)
claimant shows existence of relationship, law then presumes influence
- specific relationship was such that the presumption of influence arose
(husband and wife, banker and customer)
bank of credit and commerce v Aboody
- younger and traditionally educated wife was asked by husband to take out a loan
- tried to seek independent advice but he stopped her
- actual undue influence
lloyds bank v bundy
- farmer relied wholly on advice from banker- set aside because of the undue influence
2 ways in which a third party could be affected by undue influence
agency- debtor seen to be the agent of the creditor- any undue influence exerted upon the victim was deemed to be used on behalf of the creditor- even if they were unaware
notice- whether the creditor has been tainted by notice of the undue influence of one of the parties- eg if a bank is put on enquiry when a wife offers to be surety for her husbands loan- creditor needs to insist the wife gets independent advice
things that stop remedies for undue influence
- affirmation/lapse of time- right to rescind is lost if the influenced party affirms the transaction
- impossibility of restitution- same as for misrep- if the value of property has changed there can be problems
- third party rights- if a third party has acquired rights eg bought the property then recision is not available unless the third party was aware of the influence then it is voidable
when does frustration occur?
- whenever a contract, after its formation, becomes impossible to perform without default of either party
- frustrating event must not be the fault of either person or foreseeable
Taylor v Caldwell
- fire burned down a music hall- wasnt the fault of either party and there wasnt a provision in the contract so it was frustrated
frustrating events
- supervening illegality (performance would be contrary to a law passed)
- further performance rendered impossible by either - destruction of the subject matter of the contract or - non-availability of one of the parties due to death/illness/other circs
- nature of obligations becoming sig different from what was agreed, by - the non-occurrence of a particular event which forms the basis of the contract or - gov intervention
Avery v Bowden
crimean war made it illegal to load cargo at an enemy port
contract was frustrated
frustration doesnt occur where
- the events are foreseeable
- one of the parties is at fault
- the contract becomes more onerous or expensive to perform
davis v Fareham
- contracted to build houses for a specific price
- turned out to cost more than expected
- wanted it to be frustrated- but wasnt because they could have foreseen the higher cost
davis v Fareham
- contracted to build houses for a specific price
- turned out to cost more than expected
- wanted it to be frustrated- but wasnt because they could have foreseen the higher cost
the law reform (frustrated contracts) act 1943- why was it enacted?
came into effect because frustration automatically brings the contract to an end at the time of the frustrating event and that led to some unfortunate consequences
appleby v myers
- c undertook to erect machinery on ds premises
- work was to be paid for on completion
- the premises and machinery burned down so the contract was frustrated
- didnt get any money for the work they’d done cuz that was to happen after the frustrating event
discharge by performance
- both parties have fulfilled their duties under the contract
- they no longer have any obligations under the contract
discharge by breach
- one of the parties breaches one or more of their obligations
- needs to happen without lawful excuse (eg frustration is lawful)
- burden of proof is on the party alleging it has been breached
remedies for the innocent party in a breach of contract
- termination
- sue in equity for specific performance
- sue for contract price
- claim damages
- combination
repudiatory breach
- occurs where the defaulting party intimates an intention not to comply with their obligations under the contract
- may be express or implied
- types- actual breach and anticipatory breach
can either accept the breach and terminate and sue
or
affirm the contract and hope the party in breach will ultimately fully perform the contract- doesn’t stop them being able to sue
discharge by agreement
2 types
- bilateral discharge of obligations (neither party performs their obligations
- unilateral discharge (one party hasn’t performed but both parties agree to discharge and fresh consideration is given by party in breach)
Victoria laundry v newman industries
- claimants wanted to claim for profits lost from their ordinary business by late delivery of boiler (normal loss)
- and also the profits lost from their lucrative contracts (abnormal loss)
- but because the defendants didnt know about the lucrative contracts they weren’t liable for that
- had to be reasonably foreseeable
parsons v uttley Ingham
- d contracted to supply c with a hopper for storing pignuts
- d installed one faultily and the nuts went mouldy
- c fed them to some pigs and 254 got an infection and died
- c was successful in their claim because although the infection couldn’t be foreseen, it was reasonably foreseeable that pigs would be ill if their food was badly stored
- where type of damage is reasonably foreseeable at the time of contract formation you can claim
- degree doesnt have to be foreseen but type does
3 types of pecuniary losses
- expectation measure (loss of bargain)
- reliance measure
- restitution measure
can only claim once for the same loss but can combine claims
expectation measure
- giving damages for what the claimant expected to gain by entering into the bargain
can use
- DIFFERENCE IN VALUE (diff between performance provided and performance that should have been provided)
- COST OF CURE (cost of repair)
- LOSS OF OPPORTUNITY (partial recovery on the basis the claimant lost the chance to make the profit)
reliance measure (and case)
- puts claimant in position they were in before they relied on the contract
CCC films v Impact Films
- D granted C a licence for £12,000 to exploit and distribute films, the rights to which were owned by D
- D breached contract by sending uninsured copies to third parties
- held D had to prove C wouldn’t have recouped the £12,000 expenditure and couldn’t so C succeeded
restitution measure
- return of money where there has been a failure of consideration
- eg where a seller has paid for goods in advance and they dont recieve them they have to pay the money back
addis v gramophone
- non pecuniary losses
- cant get damages for injured feelings
2 exceptions to not getting damages for non-pecuniary losses
- direct result exception- mental distress is a direct result of the physical inconvenience and discomfort caused by breach
- object of the contract exception- if the object of the contract was to provide a pleasurable experience then you might be able to get losses
time for assessment of the loss
- general rule- damages are assessed at the time of the breach
- if they didnt know and couldn’t discover the breach, damages are assessed at the earliest time they could have discovered it
- if the party in default performs late and the other party suffers loss because of this, the damages are assessed by reference to when performance was actually rendered, not when it should have been
brace v calder
- claimant has an obligation to take reasonable steps to mitigate his loss
- only entitled to nominal damages if you dont
(not this case) - only needs to be reasonable, not expected to embark on hazardous litigation
liquidated damages clause and what are unliquidated damages
- contract provides for a particular sum to be payable upon the occurrence of one or more specified breaches of contract
- even if the actual loss is greater/smaller than the fixed sum, that is the amount that will be paid
- unliquidated damages- the amount is fixed or assessed by the court
dunlop v new garage and motor co
- d bought tyres from c and agreed they wouldn’t sell below listed price
- liquidated damages clause provided that £5 was to be paid for every tyre sold in breach
- this was held to be a liquidated damages clause because it was a reasonable amount and not excessive
- it would be a penalty if it was excessive
linked to dunlop v Selfridge- privity of contract
equitable remedies for breach of contract
- specific performance (not available as of right but decided by the court)
- injunctions
- (mandatory)- orders D to take positive steps to put right what they’ve done wrong
- (prohibitory)- enforce a negative stipulation in the contract- the D will be ordered not to break the stipulation
Warner bros v nelson
- bette davis agreed to work exclusively for Warner bros for a period of time
- she broke this
- court ordered injunction to stop her appearing in any production for anyone else
- but no specific performance saying she had to work for them
