Contract Flashcards
Describe the presumption of ICLR between husband and wife (2 pts)
- Rebuttable presumption that agreements are unenforceable
- Does not apply if couple is estranged or separated
Describe the presumption of ICLR between parents and children (2 pts)
- Rebuttable presumption that agreements are unenforceable
- Does not apply if relationship was ruined by discord at the time
Does presumption against ICLR apply outside the domestic context?
Yes, presumption against ICLR applies in social situations - rebuttable if context implies an ICLR
3 documents that may rebut a presumption of ICLR in a commercial context?
- Letters of comfort
- Letters of intent
- Honour clauses
What is an “if contract”?
A requests B to carry out a certain performance, promising that if they do so, they will receive a certain performance i return
What is the legal status of a promotional offer?
Gifts free with a purchase are deemed part of an offer and therefore usually treated as subject to an ICLR
What is the fact pattern of a collateral contract?
Where C contracts with Z in order that Z will contract with D, C may be able to sue D
2 alternative requirements for third party to enforce contract under CRTPA?
- Contract expressly entitles them to enforce contract
- Term purports to confer benefit on an expressly identified class to which C belongs
When will a contract be voidable for lack of mental capacity (2 pts)?
- Individual was incapable of understanding the nature of the transaction when it was made
- The other party knew of the above
4 consequences of statutory frustration?
- Money still owed no longer owed
- Money paid previously is recoverable
- Where one party obtained valuable benefit, the court can order other party to pay a just sum in return
- Expenses incurredin relation to performance before frustration may be recoverable, at the court’s discretion as to what is “fair” in the circumstances
What is the primary distinction between an indemnity and a guarantee?
Indemnity is a freestanding obligation
A guarantee is parasitic on a primary obligation
Important formality for guarantees?
Not enforceable unless evidenced in writing
2 important limitations on the scope of an indemnity?
- Subject to reasonableness test under UCTA
- Do not usually cover losses caused by negligence
When does time bar start to run for an indemnity
Once the liability indemnified against is actually incurred
What are two important limitations on a guarantor’s liability?
- Limited to the amount specified in the original contract
- If original contract is unenforceable, guarantor’s liability may cease
What are the two main kinds of guarantee?
- All moneys - G guarantees all EXISTING and FUTURE payment obligations owed by P to B
- Specific amount - G guarantees all PAYMENT obligations arising out of a SPECIFIC TRANSACTION
Important precaution when preparing a deed of release for a guarantor?
Should ensure that the release of one guarantor does not release any others, using a “waiver of defence clause”
What kinds of exclusion clauses are void under UCTA?
Any exclusion of liability (whether contractual or tortious) for negligence causing death or personal injury
2 elements of the reasonableness test under UCTA?
- Must be FAIR and REASONABLE in the circumstances KNOWN TO THE PARTIES
- Financial limitation clause - RESOURCES and AVAILABILITY of INSURANCE
What kinds of contracts are caught by the Consumer Rights Act 2015?
All contracts between traders ad consumers
Definition of “consumer” under CRA 2015?
Natural person acting for purposes wholly or mainly outside of their trade, business, craft or profession
Definition of “trader” under CRA 2015?
Someone acting for the purposes of their trade (whether personally or through an agent)
What is the test of unfairness under the CRA 2015?
If (1) contrary to the requirement of GOOD FAITH, (2) it causes a SIGNIFICANT IMBALANCE in the parties’ RIGHTS AND OBLIGATIONS, to the CONSUMER’S DETRIMENT
3 relevant circumstances when assessing unfairness ynder CRA 2015?
- Nature of goods and services
- Context surrounding conclusion of the contract
- All other terms of the contract or any other dependent contract
2 types of clauses not covered by the CRA 2015?
- Terms defining the SUBJECT MATTER of the contract
- Terms concerning the ADEQUACY OF REMUNERATION
Consequence if an unfair term is included in a consumer contract?
- The term will be VOIDABLE and not binding
- The rest of the contract will be ENFORCEABLE IF the unfair term can be SEVERED
What is the main advantage of suing for misrepresentation under the statutory route?
The maker of the statement bears the burden of proving that he reasonably believed his statement to be true
What is the “third party exception” to the right of rescission for misrep?
If a person relies on the misrepresentation when purchasing goods and subsequently sells them to a BFP, he loses the right to rescind, because BFP is considered to have purchased goods without notice of the representation
3 requirements for court to award damages in lieu of rescission under the Misrep Act?
- C would have a right to rescind otherwise
- Misrep was not fraudulent
- It would be equitable to award such damages (taking into account both the representation and the loss C would suffer if contract maintained)
Main remedial difference between innocent and negligent misrepresentation?
Innocent misrepresentation gives no automatic right to damages.
Main remedial difference between fraudulent and negligent misrepresentation?
C may recover for ALL DIRECT LOSS incurred as a result of fraudulent misrep, REGARDLESS OF FORESEEABILITY
For negligent misrep, the remoteness test is the usual test of REASONABLY FORESEEABLE LOSS
3 requirements to rescind a contract based on LAWFUL ACT economic duress?
- D exerted ILLEGITIMATE PRESSURE
- The illegitimate pressure CAUSED C to enter into the contract
- C had NO REASONABLE ALTERNATIVE but to give into the pressure
What is the definition of undue influence?
Where one party exerts influence over another to the extent of PREVENTING THEM FROM EXERCISING INDEPENDENT JUDGMENT
Two different classes of presumed UI?
- Where there is a PROTECTED or FIDUCIARY relationship
- Where there is a relationship of ACTUAL TRUST AND CONFIDENCE
Two requirements to place BoP on D in a presumed UI case?
- Relationship of trust and confidence
- Transaction was manifestly disadvantageous
What are the usual four bars to rescission?
- Affirmation of contract
- Laches
- BFP acquires RFrights
- Parties cannot be substantially restored to their original positions
