Contract Flashcards
A solicitor is trying to recall a definition of consideration so that they can advise a client accordingly.
Consideration may be a benefit to one party to the contract or a detriment to the other.
A client, the owner of a small off-licence business, recently sold two bottles of whisky to an elderly customer (the Customer) for a total price of £60. Yesterday the Customer’s daughter went to the client’s off-licence and demanded the client take back the whisky and refund the price. Unbeknown to the client the Customer has dementia and apparently does not remember buying the whisky. The daughter says she only realised when and where the client had bought it when she saw the receipt.
The contract would be binding as the client was unaware the Customer has dementia.
Last week a client bought a car from a neighbour for £15,000. The client had test driven the car but otherwise the car had been sold as seen. When the client went to collect the car, the neighbour assured them ‘‘It’s a good little car. I’d stake my life on it.’’ Yesterday the car broke down and the client has been reliably informed that there is a major mechanical problem which will cost £2,000 to repair. The client wants to reject the car and get a full refund.
No, because buying the car was not consideration for the neighbour’s assurance about it.
A client went into a furniture shop and agreed to buy a new sofa for £1,000. The client intended it to be a house-warming for their daughter but did not mention this to the shop assistant. The shop delivered the sofa to the daughter but, after three months, the springs have broken in it meaning that the sofa is now very uncomfortable. The sofa cannot be repaired and, given this, the daughter wishes to return the sofa to the shop and claim a refund of the price.
No, because the contract for the sale of the sofa was made between the parent and the shop and the daughter cannot rely on it.
In November a boy aged 17 years, who looks at least 20 years old, bought a warm padded winter jacket from a local retail shop. The boy already owned two lightweight jackets which he had worn in the spring and summer.
Yes, because the boy needed the jacket for the cold weather
A client wanted a new kitchen for their home. The client went to a kitchen supplier (the Supplier) to discuss their requirements. The Supplier emailed the client a quotation and said that it would stay open for a month. A week before the deadline the client posted a letter to the Supplier accepting the quotation and asking when it would be able to start work. Ten days after posting the letter, the client phoned the Supplier. The Supplier said it had not received the client’s letter and that it was now too late to accept the quotation. The client had obtained proof of posting the letter.
The client had accepted the Supplier’s offer when the client posted the letter.
As the letter was properly stamped, addressed and posted the postal rule would apply and the letter would be effective acceptance on posting. It was reasonable to accept by post as there was still a week before the deadline and the postal rule had not been expressly or impliedly excluded by the Supplier.
An electrical High Street retailer (the Retailer), advertised for sale in the local newspaper a Sony XR-55A95K OLED TV 55-inch screen at the knock-down price of £1,200 on a “first come, first served” basis in its post-Christmas sale starting on 27 December. A client, desperate to buy the TV, began queuing outside the Retailer’s shop on 26 December and was the first customer inside the next day asking to buy the TV. The Retailer refused to sell the client the TV for £1,200. The Retailer said the advertisement had been a ‘gimmick’ and said it would have to charge £2,000 by way of price match with online retailers.
The claim would succeed and the client would be awarded £800 by way of damages.
A client attended an auction. When it came to the lot comprising a Persian carpet, the auctioneer said it had been valued at £300 and would be sold that day whatever price it fetched. He invited bids of £100, then £80. When nobody responded, the auctioneer asked how much anyone would be prepared to pay for the carpet and the client bid £20. No further bids were made but the auctioneer withdrew the carpet from the sale. He later sold it privately for £150.
The client could sue the auctioneer for breach of a unilateral contract.
A client decided to sell their car and placed an advert on their village’s Facebook page. The advertised sale price was £6,000 and underneath photographs of the car it said ‘Need to know if you’re interested within the next 7 days; otherwise it’s off to an auction’. Three days later someone responded to the client’s post ‘I’ll buy it for £6,000. Tell me where you live and I’ll come and collect it. How do you want to be paid? ’In the meantime, the client had sold the car to a neighbour for £6,500 and posted this on the village’s Facebook page.
The client will not be in breach of contract as they had not accepted the other person’s offer to buy the car for £6,000.
The advert would simply be an invitation to treat. The person offered to buy the car for £6,000 and the client did not accept that offer.
A woman has booked a cruise for herself, her son and his partner. She has booked with a company on their five-star rated ship which promises luxurious accommodation, fine dining and bespoke tours of famous cities for individual guests which have to be booked and paid for in addition to the cost of the cruise. The holiday was a disaster; the cabins were cramped, the son got food poisoning and the tours the partner went on were for large groups of up to 30 people which was very disappointing.
She can claim damages for the full cost of the holiday for all three of them including the cost of the tours.
A building company enters into a contract with the owner of a hotel to convert a stable on the hotel grounds into a squash court. The contract contains the following term:
“Neither the building company nor any of its employees will be liable to the hotel for any losses arising out of any faulty or negligent workmanship”
The building company employs an electrician. The electrician failed to install the lighting in the squash court with reasonable care and skill resulting in delays to the completion of the building work. This has caused the hotel to incur loss of profit. The hotel owner brings a claim directly against the electrician.
The electrician can rely on the term because he falls within the class of people upon whom the term confers a benefit.
At a meeting of the board of directors of a limited company that is engaged in trading activities (“the Company”), the board decided that the Company would purchase items of machinery from a seller for £25,000. This decision was made following negotiations conducted by the Company’s Productions Director (with the board’s consent) with the seller. Part of the purchase price was payable by two instalments, each payable on delivery of specified items, and any default in payment of either instalment would constitute a breach under the terms of the contract. The Company’s Productions Director was authorised to sign the purchase contract on the Company’s behalf. After the contract was signed, the Company failed to pay the second instalment, and the seller brought a claim against the Productions Director and the Company for breach of contract. The majority shareholders of the Company have sought to argue that the board of directors had no authority to enter into the contract at the price agreed. The seller had checked that the board was acting within its powers and in accordance with the Company’s constitution.
The seller has a claim for breach of contract, but only against the Company itself.
The Company itself, not the board of directors nor the Productions Director, is therefore the party to the contract made with the seller. The board and the Productions Director are merely agents acting on the Company’s behalf.
A company decided to contract out the cleaning work of its premises. Three parties, including a client, were invited to submit tenders by post using a prescribed form. The invitation stipulated tenders had to be submitted to the Facilities Director of the company by 10.00am on Friday 26 May and that conforming tenders would be considered at the directors’ meeting on 29 May. The client submitted a conforming tender, but it was not considered and the cleaning work was awarded to one of the other two parties.
The client will be awarded damages for breach of a unilateral contract.
A client bought a house and promised his son and daughter-in-law that if they occupied the house and made all the mortgage repayments on the house he would transfer the house to them. The couple duly started to make the mortgage repayments but then there was a dispute. The client told the couple he had changed his mind and sought to repossess the house.
The client would be in breach of an implied promise not to revoke his offer once the act of repaying the mortgage had started.
A commercial client makes bespoke wooden sculptures for outdoor spaces. The client’s business is expanding. The client is considering appointing a sales agent so that the client can focus on creating the sculptures rather than have to be concerned with marketing and negotiating deals as well. The client appreciates there are some risks in appointing an agent and wants advice on the circumstances in which the client might become bound to a deal made by an agent on its behalf.
If an agent has authority to enter a contract the agent will have no rights and liabilities under it: the contract will be between the client and the buyer.
