Contract Flashcards
What is required for a valid offer?
(1) Clear and certain
(2) Offeror shows an intention to be legally bound
What 4 things are required for valid acceptance?
(1) Acceptance must be in response to the offer
(2) Mirror image rule
(3) Follow a prescribed mode of acceptance (maybe)
(4) Acceptance must be communicated
When must an offer be accepted by? What 3 possibilities need to be considered?
Before termination i.e.
-Rejected?
-Lapsed? (Passage of time or death of party)
-Revocation? For bilateral offer, effective upon actual notice reaching offeree (no postal rule); for unilateral, prior to completion of required act, where reasonable steps to communicate have been provided, except if partly performed and willing/able to complete; can be communicated by 3rd party
When does a prescribed mode of acceptance need to be used?
Contract prescribes mode of acceptance + stipulation as to mode is clearly mandatory and excludes all other options
What happens if contract prescribes mode of acceptance + stipulation as to mode is NOT clearly mandatory and excludes all other options?
Offeree can use any mode which is no less advantageous for offeror if reason is made clear, or ‘equally expeditious’ if reason is not made clear
How must acceptance be communicated?
-Silence is insufficient
-3rd party requires offeree’s authority
-Postal rule
-Instantaneous communication
-Waived for unilateral contracts
What is the test for certainty? Is it objective or subjective?
Objective: have the parties agreed all the terms they consider to be a precondition to creating legal relations?
ITCLR: when is ITCLR presumed, when is it not, and when is presumption rebutted?
-Objective test
-Commercial agreements: to rebut, need clear wording in agreements; e.g., ‘s.t. contract’
-Social, family and other domestic agreements: consider circumstances and language
What are the 4 requirements of consideration?
- Consideration must not be in the past
- Consideration must move from the promisee
- Consideration need not be adequate
- Consideration must be sufficient
What is the exception to the general rule that consideration must not be in the past?
(1) Act done at promisor’s request
(2) Parties understood that the act was to be rewarded either by payment or conferment of some other benefit because of express/implied agreement
(3) Payment/conferment of other benefits was legally enforceable if promised in advance
What are the 5 circumstances in which the postal rule does not apply?
- Not contemplated that post would be used
- Concerns email communications
- Concerns letter revoking offer
- Acceptance is incorrectly addressed
- Disapplied by offeror
What is the general rule surrounding communication by instantaneous means? What are 2 exceptions?
General rule: acceptance takes place at moment the acceptance is received by the offeror
Exceptions: does not apply if
-Offeror’s fault for not receiving the message + offeree has reasonable belief that message was received
-Offeror did not hear properly on phone + did not tell offeree to repeat
Consideration: if there is an existing contract between the same parties, what is the general rule and what are the 2 exceptions?
-General rule: agreeing with Party A again to do that thing is not generally good consideration for a new contract
-Exception 1: fresh legal consideration e.g., exceed existing contractual obligation
-Exception 2: factual consideration
What are the 5 requirements for factual consideration?
(i) A has entered into a contract with B to do work for, or to supply g/s to, B in return for payment by B
(ii) At some stage before A has completely performed his obligations under the contract, B has reason to doubt whether A will (be able to) complete his side of the bargain
(iii) B promises A an additional payment in return for A’s promise to perform his contractual obligations on time
(iv) As a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit
(v) B’s promise is not given as a result of economic duress or fraud on the part of A
Consideration: what is the general rule regarding public duties?
Merely carrying out a public duty imposed by the law will not amount to sufficient consideration
Consideration: is an existing contract with a 3rd party good consideration? What is the risk?
Yes
Double liability: action from 2 parties if fails to meet obligation
Consideration: what is the general rule regarding part payment of a debt? What are the exceptions to this rule?
General rule: a debtor promising to pay part of their debt in return for a release from the remainder of their liability is not good consideration - debtor remains liable even where creditor has agreed to release them from liability
Exceptions:
1) New element introduced into payment
2) Payment of a lesser sum by a 3rd party: creditor cannot sue debtor for the difference
What is promissory estoppel?
Promise (to accept reduced payment) can be enforced in the absence of consideration, provided that the promisee had relied on the promise
What 4 elements are required for promissory estoppel?
(1) Acts as a shield, not a sword
(2) Clear and unequivocal promise that strict legal rights will not be fully enforced
(3) Promisee relied on the promise/ representation
(4) Inequitable to allow promisor to go back on their promise
PE: What is required to demonstrate that the promisee relied on the promise/representation? What is not required?
A change in position in reliance on the promise: some reliance + causal connection
-Part-payment of debt may be the act of reliance, as long as the promise influenced the part-payment
Detrimental reliance is not required (but a factor in favour of demonstrating that it is inequitable to allow promisor to go back on their promise)
PE: What is required for it to be inequitable to allow promisor to go back on their promise?
-Clean hands: courts consider both parties’ conduct (e.g., intimidation)
-Balancing exercise
PE: when may promisor’s right to resume their strict legal rights arise?
- Resumption of right to periodic payments once period over which PE operates ceases
- Resumption of promisor’s full legal rights after giving reasonable notice of their intention to do so (note: notice is not always necessary where it is clear when period of suspension terminates)
- (Potentially) it has become impossible for, or inequitable to require, the other party to meet the obligation
Capacity: what is the general rule regarding minors?
A person is not bound by a contract entered into <18 even if other party contracting does not know of this fact or minor has lied about their age
Capacity: when will a contract be binding on a minor?
Minor ratifies contract once 18
Capacity: what constitutes ‘necessaries’?
Goods suitable to the condition in life of the person/minor and to their actual requirement at the time of sale and delivery
When does a person lack capacity?
Unable to make a decision for himself in relation to the matter at the time the contract is made, whether impairment is permanent or temporary
Capacity: what are the 2 exceptions regarding minors not being bound by contracts?
-Contract of employment, apprenticeship or education + for their benefit (e.g., non-onerous terms)
-Contract is to supply necessaries for them + contract is for their benefit (minor pays ‘reasonable price’ not actual costs)
In cases other than ‘necessaries’, a contract will be binding unless the person claiming incapacity can establish what 2 things?
- They did not understand what they were doing; and
- The other party knew this to be the case
–> Contract is voidable
Capacity: what is the test re drunken persons?
Were they so intoxicated that they did not understand what they were doing?
What is the test for duress to the person? Who has BOP?
Duress need be only 1 factor influencing the wronged party’s behaviour
BOP: party who exerted pressure - show threats and unlawful pressure contributed nothing to V’s decision to contract
What is the test for duress to property?
But for the duress, agreement would not have been entered into (i.e., decisive factor)
What is the test for economic duress?
(a) Illegitimate pressure
(b) Which results in compulsion on, or a lack of practical choice for, V
(c) That is a significant cause inducing C to enter the contract
Economic duress: what are some examples of a lack of practical choice for V?
-Need to complete work on time to avoid heavy fines
-Cannot find alternative supplier
-Small firm heavily reliant on contract
-Serious economic damage if contract were cancelled
-For important client with urgent requirements
Economic duress: what are some factors the court should consider to determine whether the pressure is illegitimate?
-Actual/threatened breach of contract
-Pressure applied in good/bad faith
-V protested at time alleged duress was exerted (e.g., letter)
-V affirmed and sought to rely on contract
Economic duress: what test is used to determine whether the pressure is a significant cause inducing C to enter the contract?
But for the duress, the agreement would not have been entered into (e.g., new agreement is on far worse terms)
What are the 2 types of undue influence?
- Overt acts of improper pressure/coercion
- One party has influence/ ascendancy over the other, and the 1st party takes advantage of that influence/ascendancy
UI: what are the 2 stages to prove taking advantage of influence/ascendancy in a relationship? (i.e., to prove UI)
Stage 1: innocent party can show that there is
(i) A relationship of trust and confidence (or a category of irrebuttable presumption; and
(ii) A transaction which requires explanation: transaction does not fit with what would be expected in the relationship concerned
Stage 2: D cannot produce evidence to show that there was no UI
What type of relief does UI provide?
-Contract may be set aside
-Equitable –> discretionary
What are the 2 requirements for a bank to commit a wrong re UI?
(1) UI
(2) Notice
UI: what is required for constructive notice?
Treated as having notice of something that bank is not actually aware of: relationship between party giving guarantee and borrower is non-commercial, unless the bank takes reasonable steps to warn weaker party of risks of transaction or ensure it gets independent advice
UI: what 3 ‘reasonable steps’ must a bank take to avoid being held to have constructive notice?
a. No obligation to have seen wife itself: generally reasonable to rely on confirmation from solicitor that they have advised wife appropriately, unless creditor is aware that this has not been done
b. Provide solicitor with sufficient info
c. If actually/constructively aware that the wife has been misled, tell solicitor
UI: what must a solicitor due to uphold his duty to wife? (3 elements)
-Warn wife that bank may rely upon his involvement
-Wife consents to advice
-Explains docs, seriousness of risk, and fact wife has a doc
-Obtain any necessary info from lender/creditor
UI: what are the consequences to the solicitor if he fails in his duty to wife?
-Wife has action in negligence
-Wife has no recourse to creditor
Term vs representation: what 6 factors should be weighed up?
a. Importance of statement (‘but for’)
b. Timing of statement
c. Reduction of contract into writing
d. Special knowledge/skill of statement-maker
e. Assumption of responsibility
f. Further checks
FARKIT
Can a misrepresentation give rise to a breach of contract claim?
No: only a term can. If a representation is false, a claim for misrepresentation might be possible
What are the 3 main ways of agreeing to an express contract?
- Signed written contract
- Incorporation by notice
- Incorporation by a course of dealing
Are parties bound by onerous clauses/terms?
-Signed written contract: yes (even if party has not read/understood it)
-Incorporation by notice: only if clearly brought to other party’s attention
When will terms of a signed written contract not binding? (2 instances)
- Doc signed was not intended to have contractual effect (objectively): consider timing
- Party orally misrepresented meaning of clause to other party
Incorporation by notice: when will terms form part of the contract?
Reasonable steps have been taken to bring them to C’s attention (incl. reasonable notice before/at time of contracting)
Incorporation by notice: does doc giving notice need to intend to have ‘contractual effect’?
Yes. e.g., ticket is not intended to have contractual effect –> T&Cs on back not binding
What are the 2 ways in which express terms can be agreed by incorporation by a course of dealing?
- Consistent course of dealings over a period of time
- Regular course of dealings (e.g., 3 or 4 transactions per month, or 5 transactions over 13 months - not 3 or 4 transactions over 5 years)
Outside of the normal 3 ways to agree express terms, what is required to agree express terms using alternative methods?
Parties adequately express an intention to be bound by terms of contract
How does statute affect classification of terms (as conditions vs warranties)
-SGA s12-15: conditions; however, for s13-15, treated as warranty if breach is so slight that it is unreasonable for buyer to repudiate and reject
-SGSA 13: innominate
-CRA s9-11: right to reject, but only in certain circumstances
How is a term classified as a condition at the outset?
Important term ‘going to the root of the contract’: did the parties intend, at the time of contracting, that any breach of the term could result in the innocent party terminating?
When is a term classed as an innominate term?
Condition vs warranty is unclear i.e., court cannot determine parties’ intention or determines intention was that not every breach would lead to right to terminate
How are innominate terms classified? What is the test?
Does the breach deprive the party not in default of substantially the whole benefit from the contract?
-Yes = condition
-No = warranty
What happens if a term is (treated as) a condition?
Repudiatory breach:
1. Right of election (treat as repudiated or affirm)
2. Sue for damages
What happens if a term is (treated as) a warranty?
Entitled to damages
What are the 3 elements to a successful exemption clause?
- Incorporation: is the exemption clause part of the contract?
- Construction: does the clause, as drafted, cover the alleged breach(es) and resulting loss
- Statutory controls (UCTA/CRA)
What does contra preferentum mean in the context of exemption clauses?
General rule: clear words must be used if they are to excuse a party from its liability
Applied less rigorously when clause limits liability and/or dealing with commercial parties of equal bargaining power
Construction of exemption clauses: what is required for negligence?
-Clear words
Distinguish between:
1. Negligence is only basis for liability –> effective
2. Party is liable irrespective of negligence –> not effective
How does UCTA (B2B) affect exemption clauses?
-Death/PI: void
-Other loss: valid if reasonable
-Statutory implied term (s13-15): valid if reasonable
-Express term: if dealing on other’s written standard terms, valid if reasonable
What is considered for the reasonableness test in UCTA?
a. Bargaining positions
b. Inducement / alternatives with other providers
c. Knew or ought reasonably have known about existence and extent of term
d. Special order
How does CRA (B2C) affect exemption clauses?
-Death/PI: not binding
-s9-11 (goods): not binding
-s34-36 (digital content): not binding
-s49 (services): exclusions are not binding; restrictions/limitations are not binding if prevent recovery of price paid
Actionable misrep: conditions (X5)
- Unambiguous
- False
- Statement of fact (s.t. exceptions)
- Addressed to C
- Induces (i.e., causes) C to enter into the contract with statement maker
Misrep: what is the test for whether a statement causes C to enter into the contract?
- Objective route: representee shows statement relates to an issue that would have influenced a reasonable person + representator cannot show that the statement did not influence particular representee
- Subjective route: C can prove that they were subjectively induced
Misrep: what is the impact of a party makes its own investigations?
-Party cannot bring misrep claim if it has relied on its own investigations, not on the misrep
-No general duty to check misrepresentator’s statement
Misrep: what happens if representee fails to check a representation, where the court considers it reasonable for them to have done so, or carries out a negligent investigation?
Potential CN, except for fraudulent misrep
More likely reasonable where representee is commercial
Misrep: when can a statement of opinion be used as a basis for a claim?
Representator has greater knowledge/experience than representee + no reasonable grounds for opinion (i.e., not actually held)
Misrep: when can a statement of future intention be used as a basis for a claim?
Statement of intention by people with no such intention: at that point in time, representator knew that they cannot do what they state or they do not intend to do it
Does silence give rise to an action for misrep?
General rule: no
Exception 1: half-truths
Exception 2: continuing representation
Exception 3: utmost good faith - duty to disclose material facts where 1 party is in an esp. strong position to know the material facts which form the basis of the contract
What is the test for fraudulent misrep? Who has the burden?
Representee (i.e., C) must prove that representator made statement knowing untrue / without belief in truth / reckless as to (i.e., flagrant disregard for) truthW
What is the test for fraudulent misrep for change of circumstance?
Failure to disclose was deliberate/dishonest, and not just due to inadvertence/failure to realise requirement of disclosure
What is the test for negligent misrep? Who has the burden?
Representor (i.e., D) fails to show reasonable grounds to believe true and/or not believing true up until the contract was made
What is the test for innocent misrep?
Representator has shown reasonable grounds to believe and actual belief up until contract was made
Which misrep(s) is rescission potentially available for?
All (s.t. bars to rescission)
Misrep: what is the effect of rescission?
Contract is voidable
Misrep: what are the bars to rescission?
-Affirmation
-Lapse of time
-Restitution is impossible
-3rd party rights accrue
Which misrep(s) is an indemnity potentially available for?
All, but unlikely to be needed for fraudulent and negligent (as these will give right to damages). As part of rescission for innocent
Which misrep(s) are damages potentially available for?
Fraudulent and negligent
Misrep: can damages be reduced by CN?
Fraudulent: no
Negligent: yes
Which misrep(s) are damages in lieu of rescission potentially available for?
Negligent and innocent, at court’s discretion
Can exemption clauses be used in claims for misrep?
Yes, if reasonable
What is the effect on the contract of a common mistake? (x2)
- As to existence of subject matter: void, unless contract expressly/impliedly allocates this risk
- As to a fact/quality fundamental to the agreement: void only in most severe instances of mistake
When will common mistake not operate?
-The mistake is not sufficiently fundamental
-1 party is at fault
-The contract makes provision for the issue
What is the test for mutual mistake?
Objective test: what a reasonable 3rd party would believe the agreement to be, based on words and conduct of parties themselves. If no meaning can be attributed to agreement, genuinely at cross-purposes, cannot point to 1 interpretation as more probable, and no contract exists
What is a unilateral mistake? What are 3 examples of unilateral mistakes?
Only 1 party is mistaken; other party knows, or is deemed to know, of mistake
1. Unilateral mistake as to expression of intention
2. Unilateral mistake as to nature of doc signed
3. Unilateral mistake as to identity of person contracted with
Will contract be void for unilateral mistake as to expression of intention?
Yes, if:
(1) offeror makes a material mistake in expressing their intention; and
(2) other party (is deemed to) know(s) of the error
Will contract be void for unilateral mistake as to nature of doc signed?
General rule: no - bound if signed/sealed, even if did not understand content
Exception: mistake due to
a. Blindness, illiteracy or senility
b. Trick or fraudulent misrep, if person took all reasonable precautions pre-signing
Unilateral mistake as to the identity of the person contracted with: what is the general rule / starting presumption for face-to-face and distance selling
Face-to-face: attributes (e.g., creditworthiness), not identity, vital to seller
Distance: identity, not attributes, vital to seller (as seller intends to deal with person named in correspondence)
Unilateral mistake as to the identity of the person contracted with: effect on contract with fraudster if general rule is followed + which party gets title
Face-to-face: voidable if fraudulent misrep is proven; ultimate purchaser gets title
Distance: void for mistake; 3rd party must return goods
Unilateral mistake as to the identity of the person contracted with: when is the general rule re face-to-face selling rebutted?
Only intended to deal with a specific person e.g., not willing to offer a sale for payment by cheque from anyone else
What are the 5 common law and judicial methods of circumventing the doctrine of privity?
- Agency
- Collateral contract
- Assignment
- Actions in tort
- Judicial attempts to avoid the doctrine
What is required for an agency relationship?
a. P is named + clear that A is contracting on P’s behalf
b. A is authorised to act as agent
c. Consideration has moved from P
What are 2 examples of collateral contracts?
- Person buys a good from a dealer and is given a ‘guarantee’ in name of manufacturer
- Contract for execution of building work, performed through sub-contractor
What is assignment?
Where A is under a contractual obligation to B and B assigns their contractual rights to C, C may be able to sue A on their promise to B (extent of C’s rights can never exceed B’s)
Under C(RTP)A, when can a 3rd party enforce a term of a contract to which they are not a party?
a. Contract specifically provides that the 3rd party can enforce a term o the contract
b. Contract purports to confer a benefit on 3rd party + not the case that the contracting parties ‘did not intend the term to be enforceable by the 3rd party’ (rebuttably presumed)
When can parties to a contract NOT by agreement rescind/vary the contract to remove/alter 3rd party’s entitlement?
a. 3rd party has communicated his assent to the term to promisor
b. Promisor is aware that the 3rd party has relied on the term
c. Promisor can reasonably be expected to have foreseen that the 3rd party would rely on the term + the 3rd party has in fact relied on it
When can a court dispense with 3rd party’s consent?
a. Their whereabouts cannot be reasonably ascertained
b. They are mentally incapable of giving their consent
c. Their reliance on the term cannot be reasonably ascertained
When can a contract be discharged by performance? What is the general rule and what are the exceptions?
General rule: complete performance
Exceptions:
1. Acceptance of partial performance
2. Substantial performance
3. Divisible obligations
4. Wrongful prevention of performance
Acceptance of partial performance: what is party in default entitled to?
Payment on quantum meruit basis (objective); C may be able to claim a reasonable sum so that D is not unjustly enriched
What does ‘substantial’ performance mean?
Defect goes to the root of the contract (should consider purpose of contract and circumstances as a whole)
Substantial performance: what is party who rendered substantial performance entitled to?
Potentially, contract price s.t. deduction to reflect cost of remedying ‘defect’
Wrongful prevention of performance: what options are available for innocent party?
- Sue for damages for breach of contract; or
- Claim a quantum meruit
What is the defence of ‘tendered performance’?
Promisor unconditionally offered to perform their obligations in accordance with terms of contract, but promisee refused to accept such performance
What is required for discharge by subsequent binding contract between the parties?
- Accord (agreement to release obligation)
- Satisfaction (consideration for the promisee to release a party from the obligation)
Discharge by subsequent binding contract between the parties: what solutions are available if satisfaction cannot occur?
- Party to whom obligation is owed releases other party by a subsequent agreement under deed
- Party to whom obligation is owed may provide consideration by agreeing with other party to accept something different in place of former obligation
What are 2 ways in which discharge by operation of a term in the contract may take palce?
CP: a condition which must be satisfied before any rights come into existence
CS: a term providing for the termination of the contract and the discharge of obligations outstanding under the contract, in the event of a specified occurrence
What is required to terminate a contract?
-Notification
-Mitigate loss
What happens if a contract is terminated?
-Ends all primary obligations of both parties remaining unperformed
-Can claim damages for loss of contract caused by termination of contract as a whole (not just breach)
How can performance be discharged by frustration (3 possibilities)?
- Performance is impossible
- Performance is illegal
- Common purpose of contract is frustrated
Discharge by frustration: when will performance be impossible (4 options)?
- Subject matter of contract destroyed
- Event destroys an asset which is essential for performance of contract
- Death/illness of a party in a personal contract
- Temporary unavailability, if interruption makes performance substantially different from what was originally undertaken
What are 5 limitations on the doctrine of frustration?
- Justification: doctrine must be applied within very narrow limits
- Contracts which become more difficult/ expensive to perform
- Self-induced frustration: event was a party’s fault/choice
- Foreseeable events
- Express contractual provision (e.g. force majeure clause)
Which costs/expenses are recoverable as a result of frustration?
-Money paid before frustrating event: can be recovered
-Money that should have been paid before frustrating event: no longer needs to be paid
-Expenses incurred by payee: can be recovered out of total sum paid/payable before event, at court’s discretion
-Obtained a non-monetary benefit pre-frustrating event: may be required to pay a just sum for it
Expenses incurred by payee pre-frustration: what is the max amount?
-Actual expenses incurred; and
-Amount paid/payable prior to frustrating event
What is expectation interest?
Put C into position it expected to have been in if contract had been performed (e.g. expected profit - actual profit)
What are 3 ways of calculating expectation interest?
- Cost of cure: cost of substitute/remedial work required to put C in position they would have been had the contract been properly performed (C must act reasonably). Usual for defective works
- DiV: difference in value between performance received and that promised in contract. Only different to CoC where there is dispute regarding specification
- Loss of amenity: value of non-economic loss
What is reliance interest?
Allows C to recover expenses which have been incurred in preparing for, or in part performance of, the contract which have been rendered pointless by breach: aims to put C in position they would have been in had they never contractedW
What can be recovered from reliance interest?
-Wasted expenditure
-Losses incurred prior to breach
When is reliance interest often used?
Expectation damages would be highly speculative
What is restitution interest?
Interest C has in the restoration to him of benefits which the defaulting party has acquired at his expense. Addresses unjust enrichment of D at expense of C
What is required for restitution interest?
- Inadequacy of other remedies
- C shows that he has a ‘legitimate interest’ in depriving D of his profit
When does restitution provide a remedy?
Total failure of consideration
When will damages be awarded for mental distress?
- Whole purpose of contract was to provide pleasure, relaxation and peace of mind
- Non-pecuniary losses (e.g., loss of amenity) where a major object of contract was to provide pleasure, relaxation and peace of mind
When will damages be awarded for loss of reputation?
Contracts of employment contain an implied term of trust and confidence –> employer is under an obligation to carry out its work in an honest way
When is loss of opportunity recoverable?
- Loss of chance is quantifiable in monetary terms; and
- There was a real and substantial chance that the opportunity might have come to fruition
What are the 2 limbs to the remoteness test?
Limb 1: loss of type ordinarily and naturally arising from the breach
Limb 2 (if limb 1 is not satisfied): D had sufficient actual knowledge of the particular and special circumstances to be aware of the risk of those losses
What is required for injured party to mitigate?
Take reasonable steps to minimise effect of breach
Note: technically, no obligation to mitigate
What is the impact of a failure to mitigate?
Losses attributable to failure to mitigate are not legally recoverable –> innocent party cannot seek compensation by the party in default for loss which is really due not to the breach itself, but its own failure to behave reasonably after the breach
Under CRA, what remedies are available for breaches of s9-11
(1) Short-term right to reject within 30 days
(2) Right to repair replacement if (a) impossible/ disproportionate or (b) has been tried once and still doesn’t conform
What is s9 CRA?
Satisfactory quality
What is s10 CRA?
Reasonably fit for particular purpose
What is s11 CRA
Correspondence with description
CRA (contract for goods): within 30 days of what does the short-term right to reject arise?
i. Ownership has passed - possession has been transferred
ii. The goods have been delivered
3. Trader has notified consumer that required steps for instalment have been taken
CRA (contract for goods): When does the right to a price reduction / final right to reject (not both) arise for non-conforming goods?
a. Repair/ replacement is impossible/ disproportionate
b. Has been repaired/ replaced once and still doesn’t conform
CRA (contract for goods): what happens if final right to reject is exercised in 6 months?
Should be full refund with no deduction for use
What is non-conforming digital content?
Digital content which does not conform to the contract at any time within 6 months beginning on the day on which it was supplied
What is the remedy for non-conforming digital content?
Right to repair/ replacement within a reasonable time and without significant inconvenience to consumer
When is there a right to price reduction for contracts for non-conforming media and services?
(a) Impossible/ disproportionate to repair/ replace/ repeat; or
(b) Trader has failed to repair/ replace/ repeat within a reasonable time and without significant inconvenience
What remedy is available if trader has no right to supply the digital content it supplied?
Right to receive a full refund within 14 days, using same payment method
What remedy is available if there is damage to device by non-compliant digital content?
Repair or compensatory payment (where damage would not have occurred if trader had exercised reasonable care and skill)
What are the 2 stages for the Makdessi test for law on penalties?
Stage 1. Is the clause a primary or secondary obligation?
Stage 2. If secondary, does the clause impose a detriment out of all proportion to any LI of the innocent party in the performance of the primary obligation?
What are primary and secondary obligations?
Primary: part of primary obligations in the commercial context of the contract i.e., furthers the commercial objective of the contract
Secondary: an obligation triggered by breach of contract to compensate the innocent party
When considering stage 2 of the Makdessi penalties test, what 2 steps need to be considered?
(a) What (if any) legitimate business interest is served and protected by the clause?
(b) Is the detriment imposed to protect that interest extravagant, exorbitant or unconscionable (difficult to satisfy if parties have negotiated on a level playing field with professional advisers)
Makdessi test: who has BOP?
Person alleging that the clause is a penalty
What happens if there is a penalty clause?
Clause is struck out by court and C will only be entitled to ‘unliquidated’ damages (i.e., damages assessed in the normal way) as compensation for the breach
What are some circumstances under which specific performance will not be awarded?
-Would cause undue hardship to D
-Promise given for no consideration
-Breach of employment contract
-Other service contracts if (a) breakdown of trust and confidence between parties + (b) court would need to consider subjective opinions regarding performance
-Would require court’s constant supervision
-Contract is not binding on both parties
If A’s obligation ceases (e.g., main contract is set aside), what happens to guarantee and indemnity?
Guarantee: C’s obligation under guarantee will cease (as it depends on A’s obligation)
Indemnity: remains
If there is a change to the contract between A and B after a guarantee/ indemnity is given, what happens?
Guarantee: almost always discharged
Indemnity: remains in force
What formalities are required for guarantees and indemnities
Guarantee: in writing and signed by guarantor
Indemnity: n/a
