Contract

Question 1

Remedies the highest bidder buyer is entitled to when there has been an auction without reserve but the seller pulls out

Answer 1

Damages - not entitled to the goods themselves as these are dictated by a bilateral contract for sale.

Question 2

When does a rejection take place?

Answer 2

When it is communicated to the offeror.

Question 3

Rules for revocation

Answer 3

Can’t be after acceptance; communication is essential; means of communication do not matter; can revoke unilateral offer ant time before acceptance except maybe where offeree has partly performed the obligation and is willing to complete.

Question 4

When does acceptance take place with instantaneous means of communication?

Answer 4

When the acceptance is received by the offeror. But e.g. a message was sent during ordinary office hours on Friday and only seen on Monday.- but it was held to have been accepted when received.

Question 5

Rules for consideration as an existing contractural obligation between the same parties.

Answer 5

• Agreement to vary the contract so that the other party pays them more to do the same thing is not binding (stilk).
• If they exceed their existing obligations, there is consideration.
  -Practical benefit (factual consideration) e.g. avoidance of late completion payment in contract, avoiding need to find an alternative contractor. e.g. obviate a dis benefit.

Question 6

Rules for consideration as an existing obligation to a third party.

Answer 6

Can be good consideration - promisee will obtain the benefit of a direct obligation which he can enforce.

Question 7

Agreements to accept a lesser sum as consideration

Answer 7

Debtor remains liable even where creditor has agreed to release them from further liability. But if you introduce a new element - e.g. payment at a different place or time or payment by something other than money, or a third party provides the consideration, the creditor cannot sue the debtor for the difference.

Question 8

Rules regarding promissory estoppel

Answer 8

It acts as a shield and not a sword.

There must be a clear and unequivocal promise that strict legal rights will not be fully enforced.

There must be a change of position in reliance on the promise. Detrimental reliance is not necessary.

It must be inequitable to allow the promisor to go back on their promise.

Question 9

What does an incapacitated person need to establish to make a contract not binding.

Answer 9

IT was not for necessaries, they did not understand what they were doing and the other party knew this to be the case.

Question 10

Duress to the person v to goods

Answer 10

TO the person needs to be just one factor influencing the decision, for goods it needs to be shown that the agreement would not have been entered into if there had not been the duress.

Question 11

What is the legal effect of duress

Answer 11

Contract is voidable, can lead to recession.

Question 12

What elements are needed for economic duress.

Answer 12

Illegitimate pressure (e.g. threatened breach of contract, good faith/bad faith, DID VICTIM PROTEST/ AFFIRM - ? take immediate action or you’ll be deemed to affirm.)

A lack of practical choice

Significant cause in making the person enter the contract

Question 13

Term v representation?

Answer 13

Timing, importance, reduction of contract into writing, special knowledge or skill, assumption of responsibility

Question 13

Terms implied in fact include …

Answer 13

Trade or professional customs, course of dealing between parties, business efficacy.

Question 14

SGA 1979 application and terms, breach

Answer 14

For business contracts
Implied terms as to title - s12
Correspondence with description s13
Satisfactory quality and fitness for particular purpose s 14
sale by sample s 15

Breaches of these are breaches of conditions. for 13-15, 15A provides that if the breach is so slight it would be unreasonable to reject to goods and repudiate the contract, it will be a breach of warranty and the buyer will only be able to claim damages. Burden of proving this falls on the seller.

Question 14

SGSA 1982 application, terms.

Answer 14

Business contracts, for supply of services, hire of goods, transfer of property in goods.

terms: Care and skill (this is an innominate term), time of performance, consideration for reasonable charge.

Question 15

CRA 2015 application, terms

Answer 15

Consumer contracts - goods, digital content and services.

Goods and digital content - satisfactory quality (reasonable person), fit for purpose, match description.

Services - reasonable care and skill, reasonable price paid, service provided in a reasonable time.

Question 16

CRA remedies: Contracts for goods

Answer 16

Short term right to reject (30 days from when ownership has passed/goods have been delivered)

Short term right to repair or replacement - unless disproportionate or impossible.

Final right to price reduction OR final right to reject. This can only be used if after one repair or replacement, goods to not confirm, or consumer can require neither repair or replacement, or trader hasn’t repaired/replaced in a reasonable time.
- if final right to reject is exercised within 6 months there should be full refund with no deduction for use except for with motor vehicles and certain other goods.

Question 17

CRA remedies: Contracts for digital content

Answer 17

Right to repair or replacement

Right to price reduction (only where can’t be repaired or replaced, or this hasn’t happened in a reasonable time)

Refund must be given within 14 days.

Question 18

CRA remedies: Contracts for services

Answer 18

Right to require repeat performance

Right to price reduction.

Question 19

Condition v warranty

Answer 19

Condition goes to the root of the contract .

Warranty = damages only
Condition breach = right or election - affirm and damages or terminate and damages.

Question 20

Innominate term

Answer 20

neither conditions or warranties. Ask does the breach deprive the party not in default of substantially the whole benefit which it was intended he should obtain from the contract?

Question 21

Controls on exemption clauses

Answer 21

1. Incorporation - has the clause been validly incorporated?
2. Construction - does the clause cover the alleged breach and resulting loss?
3. Statutory controls - what is the effect of CRA and UCTA?

Question 22

UCTA impact on excluding liability for loss from negligence

Answer 22

Excluding death or personal injury - void

Any other loss from negligence (ALSO BREACH OF STATUTORY IMPLIED TERMS AND BREACH OF CONTRACT) - valid if reasonable.

Reasonableness test = look at strength or bargaining positions, inducement, did they know about the term, Is it based on a condition to be complied with, were the goods manufactured to the special order of the customer.

Question 23

CRA 2015 and exemption clauses

Answer 23

Exempting liability for death/PI from negligence - not binding on consumer

Breach of CRA implied terms digital and goods not binding

Breach of CRA implied terms s49 about reasonable care and skill for services - exclusions are not binging and restrictions/limitations are not binging if preventing recovery of price paid.

Question 24

Illegality trio of necessary conditions?

Answer 24

Consider underlying purpose of prohibition that has transgressed and whether that purpose will be enhanced by denial of the claim.

Consider any other relevant public policy on which denial of the claim may have had an impact

Consider whether denial of the claim would be a proportionate response to illegality, bearing in mind punishment is a matter for criminal courts.

Question 25

Contracts (ROTP) Act - in which circumstances can a third party enforce a term?

Answer 25

a. contract specifically provides for this.

b. agreement purported to confer a benefit on third party and it was not the case that the contracting parties did not intend the term to be enforceable by the third party. third party could be an unborn child.

Can put an exclusion of third party rights clause to avoid this.

Question 26

Contracts (ROTP) remedies for third parties?

Answer 26

vary/rescind contract if third party has communicated his assent to the term to the promisor, promisor is aware that third party relied on the term, promisor can reasonably be expected to have foreseen that third party would rely and third party has in fact relief on it.

Question 27

Affirming a contract after a breach limitations

Answer 27

Cooperation of breaching party is required.

Can’t affirm if innocent party has no legitimate interest, financial or otherwise in affirming the contract and continuing with performance.

There must be an unequivocal commitment to continue, and must mitigate loss. Contractural obligations remain and entitled to damages.

Question 28

Frustration of purpose

Answer 28

principal motivation v common foundation of contract. Common foundation fail can lead to frustration

Question 29

Consequences of frustration

Answer 29

money paid before frustrating act can be recovered. Money that should have been paid before no longer needs to be paid. Expenses incurred by payee can be recovered out of total sum paid or payable before the event.