Contract

Question 1

Describe the presumption of ICLR between husband and wife (2 pts)

Answer 1

1. Rebuttable presumption that agreements are unenforceable
2. Does not apply if couple is estranged or separated

Question 2

Describe the presumption of ICLR between parents and children (2 pts)

Answer 2

1. Rebuttable presumption that agreements are unenforceable
2. Does not apply if relationship was ruined by discord at the time

Question 3

Does presumption against ICLR apply outside the domestic context?

Answer 3

Yes, presumption against ICLR applies in social situations - rebuttable if context implies an ICLR

Question 4

3 documents that may rebut a presumption of ICLR in a commercial context?

Answer 4

1. Letters of comfort
2. Letters of intent
3. Honour clauses

Question 5

What is an “if contract”?

Answer 5

A requests B to carry out a certain performance, promising that if they do so, they will receive a certain performance i return

Question 6

What is the legal status of a promotional offer?

Answer 6

Gifts free with a purchase are deemed part of an offer and therefore usually treated as subject to an ICLR

Question 7

What is the fact pattern of a collateral contract?

Answer 7

Where C contracts with Z in order that Z will contract with D, C may be able to sue D

Question 8

2 alternative requirements for third party to enforce contract under CRTPA?

Answer 8

1. Contract expressly entitles them to enforce contract
2. Term purports to confer benefit on an expressly identified class to which C belongs

Question 9

When will a contract be voidable for lack of mental capacity (2 pts)?

Answer 9

1. Individual was incapable of understanding the nature of the transaction when it was made
2. The other party knew of the above

Question 10

4 consequences of statutory frustration?

Answer 10

1. Money still owed no longer owed
2. Money paid previously is recoverable
3. Where one party obtained valuable benefit, the court can order other party to pay a just sum in return
4. Expenses incurredin relation to performance before frustration may be recoverable, at the court’s discretion as to what is “fair” in the circumstances

Question 11

What is the primary distinction between an indemnity and a guarantee?

Answer 11

Indemnity is a freestanding obligation

A guarantee is parasitic on a primary obligation

Question 12

Important formality for guarantees?

Answer 12

Not enforceable unless evidenced in writing

Question 13

2 important limitations on the scope of an indemnity?

Answer 13

1. Subject to reasonableness test under UCTA
2. Do not usually cover losses caused by negligence

Question 14

When does time bar start to run for an indemnity

Answer 14

Once the liability indemnified against is actually incurred

Question 15

What are two important limitations on a guarantor’s liability?

Answer 15

1. Limited to the amount specified in the original contract
2. If original contract is unenforceable, guarantor’s liability may cease

Question 16

What are the two main kinds of guarantee?

Answer 16

1. All moneys - G guarantees all EXISTING and FUTURE payment obligations owed by P to B
2. Specific amount - G guarantees all PAYMENT obligations arising out of a SPECIFIC TRANSACTION

Question 17

Important precaution when preparing a deed of release for a guarantor?

Answer 17

Should ensure that the release of one guarantor does not release any others, using a “waiver of defence clause”

Question 18

What kinds of exclusion clauses are void under UCTA?

Answer 18

Any exclusion of liability (whether contractual or tortious) for negligence causing death or personal injury

Question 19

2 elements of the reasonableness test under UCTA?

Answer 19

1. Must be FAIR and REASONABLE in the circumstances KNOWN TO THE PARTIES
2. Financial limitation clause - RESOURCES and AVAILABILITY of INSURANCE

Question 20

What kinds of contracts are caught by the Consumer Rights Act 2015?

Answer 20

All contracts between traders ad consumers

Question 21

Definition of “consumer” under CRA 2015?

Answer 21

Natural person acting for purposes wholly or mainly outside of their trade, business, craft or profession

Question 22

Definition of “trader” under CRA 2015?

Answer 22

Someone acting for the purposes of their trade (whether personally or through an agent)

Question 23

What is the test of unfairness under the CRA 2015?

Answer 23

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

Question 24

3 relevant circumstances when assessing unfairness ynder CRA 2015?

Answer 24

1. Nature of goods and services
2. Context surrounding conclusion of the contract
3. All other terms of the contract or any other dependent contract

Question 25

2 types of clauses not covered by the CRA 2015?

Answer 25

1. Terms defining the SUBJECT MATTER of the contract
2. Terms concerning the ADEQUACY OF REMUNERATION

Question 26

Consequence if an unfair term is included in a consumer contract?

Answer 26

1. The term will be VOIDABLE and not binding
2. The rest of the contract will be ENFORCEABLE IF the unfair term can be SEVERED

Question 27

What is the main advantage of suing for misrepresentation under the statutory route?

Answer 27

The maker of the statement bears the burden of proving that he reasonably believed his statement to be true

Question 28

What is the “third party exception” to the right of rescission for misrep?

Answer 28

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

Question 29

3 requirements for court to award damages in lieu of rescission under the Misrep Act?

Answer 29

1. C would have a right to rescind otherwise
2. Misrep was not fraudulent
3. It would be equitable to award such damages (taking into account both the representation and the loss C would suffer if contract maintained)

Question 30

Main remedial difference between innocent and negligent misrepresentation?

Answer 30

Innocent misrepresentation gives no automatic right to damages.

Question 31

Main remedial difference between fraudulent and negligent misrepresentation?

Answer 31

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

Question 32

3 requirements to rescind a contract based on LAWFUL ACT economic duress?

Answer 32

1. D exerted ILLEGITIMATE PRESSURE
2. The illegitimate pressure CAUSED C to enter into the contract
3. C had NO REASONABLE ALTERNATIVE but to give into the pressure

Question 33

What is the definition of undue influence?

Answer 33

Where one party exerts influence over another to the extent of PREVENTING THEM FROM EXERCISING INDEPENDENT JUDGMENT

Question 34

Two different classes of presumed UI?

Answer 34

1. Where there is a PROTECTED or FIDUCIARY relationship
2. Where there is a relationship of ACTUAL TRUST AND CONFIDENCE

Question 35

Two requirements to place BoP on D in a presumed UI case?

Answer 35

1. Relationship of trust and confidence
2. Transaction was manifestly disadvantageous

Question 36

What are the usual four bars to rescission?

Answer 36

1. Affirmation of contract
2. Laches
3. BFP acquires RFrights
4. Parties cannot be substantially restored to their original positions