Contract Flashcards

1
Q

What 3 elements need to be present for a binding contract?

A

Offer and acceptance

Intention to create legal relations

Consideration

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2
Q

What 2 elements need to be satisfied to show offer and acceptance?

A

Clear and certain offer displaying intention to be bound

Unequivocal acceptance

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3
Q

What test is applied to determine if there is an agreement between an offeror and offeree?

A

Objectively, what would the reasonable person say was the intention of the parties having regard to all circumstances

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4
Q

When is a unilateral contract deemed to be accepted?

A

When the act is performed

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5
Q

If a shop advertises saying special offer will that be an offer or invitation to treat?

A

Invitation to treat

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6
Q

Are goods displayed on shelves of a self-service store offers or invitation to treat?

A

Invitations

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7
Q

Are website displays offers or invitations to treat?

A

Invitations to treat

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8
Q

Is the act of inviting to tender an offer or an invitation?

A

Invitation

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9
Q

Is an invitation to tender, promising to accept the highest/lowest bid an offer or invitation?

A

Offer – it is a unilateral contract

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10
Q

What 3 conditions can be satisfied to show that an invitation to tender is actually an offer?

A
  1. Tenders are solicited from specified parties known to the requesting party
  2. Absolute deadline for submission
  3. Party requesting tenders had laid down absolute and non-negotiable conditions for submission
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11
Q

In auctions, when is the bidders offer deemed accepted?

A

Fall of hammer

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12
Q

In auctions, when can an offer be revoked?

A

Before the fall of the hammer

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13
Q

How many contracts are there in an auction without reserve and what are they?

A
  1. Bidder makes offer, accepted by hammer
  2. Unilateral contract based on promise that auction is without reserve and goods go to highest bona fide bidder (no matter how low)
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14
Q

What is a bidder entitled to if it is an auction without reserve and the auctioneer does not give them the goods/say there is an offer?

A

Damages from auctioneer

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15
Q

How can offers come to an end?

A

Rejected

Lapses

Revoked

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16
Q

What happens if there is no counter offer but an acceptance of an offer on an offerees terms?

A

It will be deemed a counter-offer and will still negate the OG offer

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17
Q

When does revocation of an offer take effect?

A

When the offeree has actual notice

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17
Q

Is an offer revoked in communication by a third party valid?

A

Yes

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17
Q

When will death lapse an offer?

A

If the offeree knows the offeror has died

The death of the offeree – offer can’t be accepted by oferee’s representatives

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18
Q

When can a unilateral offer be revoked?

A

B4 act is complete

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19
Q

What happens if a unilateral offer has been part-performed?

A

It’ll probably be upheld and there is an implied obligation not to revoke the offer once performance has commenced

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20
Q

How can revocation be effected for a unilateral offer if its impossible to know who all the offerees are?

A

Must take reasonable steps to bring to the attention of all those who have read the offer

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21
Q

What are the 4 elements for defining whether there has been a valid acceptance?

A

Acceptance is in response to the offer

Acceptance is unqualified

Necessary prescribed mode of acceptance is followed

Acceptance must be communicated

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22
Q

Can you accept an offer that was not addressed to you?

A

No

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23
What will a qualified offer likely be?
A counter offer
24
What is needed to make a prescribed mode of acceptance hold?
It has to be very clearly mandatory or else any mode of acceptance that is no less advantageous to the offeror will bind them
25
Can silence indicate acceptance if the offer indicates that it will?
No
26
When does acceptance take place under the postal rule?
The moment the letter is properly posted
27
In what circumstances are there exceptions to the postal rule?
Is not contemplated that post would be used Letter is incorrectly addressed Offeror disapplied the postal rule To letters revoking offers
28
When is acceptance effective with instant communications?
When received by the offeror Offeror can be prevented from denying receipt of communication if they are at fault for the non-receipt
29
When can a third party accept an offer for the offeree?
With authority of the offeree
30
When is a letter properly posted?
When in the official letter box or the hands of the postal operative
31
Does the postal rule apply if the letter is lost in the post?
Yes
32
When will it not be contemplated that post would be used?
If using the post was not reasonable
33
When is an email deemed received?
When in the server of the other person during their ordinary office hours
34
What is the requirement of certainty?
Only contracts where the material terms are certain and complete can be binding
35
What is the test to establish certainty?
In all circumstances, have the parties agreed all the terms they considered to be a precondition to creating legal relations
36
What does it mean that consideration must not be past?
Cannot generally have taken place prior to the promise to pay
37
What does it mean that consideration must move from the promisee?
Party who has not provided consideration may not bring an action to enforce a contract
38
What does it mean that consideration need not be adequate?
Court will not assess adequacy of the consideration
39
What does it mean that consideration must be sufficient?
Must have some value in the eyes of the law
40
What is executory consideration?
Promise to perform something in future, after the contract has been made Deliver goods and pay on delivery (at time of agreement, neither party has done anything yet)
41
What is executed consideration?
Time of forming contract, consideration has already been performed
42
What 4 things should you examine when looking at whether there is adequate consideration?
Not be past Need not be adequate Must move from the promisee Must be sufficient
43
What are criteria for the exception to consideration must be past rule?
1. Act was done at promisors request 2. Parties understood the act was to be rewarded by payment or conferment of some other benefit (AGREED OR IMPLIED) 3. Payment/benefit would be legally enforceable had it been promised in advance
44
In what types of context is there an issue with consideration moving from the promisee?
When a contract is for the 3rd parties benefit, who then tries to enforce But they were not party to the original contract that was for their benefit (e.g., parent buying something for their adult child) A party who has not provided consideration may not bring an action to enforce the contract.
45
How is a variation of contract effected?
Must be the same elements as creating an original contract
46
Are existing obligations good consideration for a new contract?
No
47
When can existing obligations be good consideration for a new contract?
If it confers some practical benefit
48
Is carrying out a public duty enforced by law good consideration?
No
49
Is a promise to do something which a party is obliged to do pursuant to a contractual obligation to a third party good consideration?
Yes
50
Is agreement to part payment of a debt good consideration?
Usually not
51
What is factual consideration?
When nothing new is being promised, but the party is still getting something out of the reshaped deal
52
What are the 6 criteria for establishing factual consideration?
1. There is an existing contract for goods or services for payment 2. B has reason to believe A can't complete his side of the bargain 3. B promises additional payment to perform contractual obligation on time 4. B obtains a benefit or obviates a disbenefit 5. Promise isn't given under economic duress or fraud 6. Benefit is capable of being consideration and legally binding
53
How can you have good consideration for part-payment of a debt?
If other things are varied in the contract too to provide additional consideration e.g., Pay at different time Pay with smth different than money Pay at a different place
54
Is it enforceable if a creditor accepts a 3rd party payment of a lesser sum in satisfaction of a debtors obligation?
Yes, the debtor can then no longer be sued for the difference
55
What famous case illustrates a departure from Williams/Roffey in terms of a promise to accept less?
MWB Offering delayed rental payments for a tenant because the practical benefit is no vacant property
56
Is promissory estoppel a defence or cause of action?
Defence
57
What is required for promissory estoppel to operate?
Clear and unequivocal promise or representation that existing legal rights will not be fully enforced Promisee relied on that promise It would be inequitable for promisor to go back on their promise
58
Can you sue someone for not keeping their promise?
No
59
Can a promise in promissory estoppel be implied?
Yes
60
When is intention to create legal relations presumed?
Commercial contracts
61
When is there a presumption against intention to create legal relations?
Social/domestic agreements
62
What is the effect of the wording 'subject to contract' creating a strong interference for?
That parties do not intend to be bound until the formal execution of a contract
63
Is the presumption of intention to be bound only B2B contracts or also B2C?
Also B2C
64
When do people lack capacity to contract?
Drunkenness Under 18 (*there are exceptions) Mental capacity act
65
When are adults lacking capacity still bound by their contracts?
Paying a reasonable price for necessaries
66
What is the sequence to consider when examining whether a minor is bound by a contract?
1. Does the contract concern necessaries? IF NO 2. Is it a contract of employment, apprenticeship or education? IF NO Child is not bound
67
How are necessaries defined?
Essentials: food, clothes, medicine, accommodation, clothing For the minors 'real use' as long as they are not produces and services for comfort or pleasure only
68
How does the definition for necessaries vary person to person?
Considering age Considering specific needs and actual requirements
69
What does it mean that a contract has to be for a minors benefit?
It can't be a disadvantageous contract e.g., Onerous No clear benefit Restriction of freedom Ambiguous terms for payment of wages
70
In what way are contracts with minors that aren't under an exception enforceable?
Minors can enforce against the adult Adult can't enforce against the minor
71
How can a contract with a minor become binding?
If they ratify it when 18
72
Can drunkeness mean lack of capacity?
Yes
73
What 2 criteria must be satisfied for a person claiming lack of capacity to succeed?
They did not understand what they were doing Other party knew that to be the case
74
What is the effect on the enforceability of a contract entered into under duress?
It is voidable
75
What are the 3 types of duress?
To person To property Economic duress
76
What constitutes duress to a person?
Actual or threatened violence
77
What constitutes threat to property?
Threat to seize or damage it
78
What criteria are there for establishing economic duress?
Lack of practical choice as to whether to enter/vary the contract Caused by illegitimate pressure
79
What is the proper remedy for duress?
Voided Rescission
80
Who has the burden of proof for duress to the person?
The person being accused of duress has to prove that their violence contributed nothing to the victims decision to contract
81
How much influence does the duress have to have on the influence to enter the contract?
It is at least 1 factor influencing the decision
82
What is the threshold to establish duress for duress to goods?
But for the duress, agreement would not have been entered into Lower than for duress to person
83
What are the 3 ingredients for actionable economic duress?
Illegitimate pressure Lack of practical choice Is a significant cause inducing the claimant to enter the contract
84
What is the remedy for voidable contracts in general?
Rescission
85
When will rescission no longer be available?
After duress has ceased, innocent party does not challenge in a timely way or acts in compliance with its terms Contract is affirmed
86
What 4 things will the court consider when examining whether there has been economic duress?
If there was actual or threatened breach of contract Where the party exerting the pressure did so in good or bad faith Whether the victim protested Whether the victim affirmed after the duress ceased
87
When does undue influence arise?
When there was a relationship of influence or ascendancy and an abuse of that decision
88
For which relationships is there an irrebuttable presumption of influence?
parent/minor child client/solicitor trustee/beneficiary guardian/ward dr/pt
89
What characteristic does a transaction have to have to establish undue influence?
A transaction that requires explanation
90
What is the difference between duress and undue influence?
Duress developed in common law Undue influence in equity Primary difference is relationship of trust
91
What is the test for undue influence?
Transaction was produced in such a way that the consent ought not fairly to be treated as the expression of their free will
92
What 2 types of pressure can amount to undue influence?
Overt acts of improper pressure or coercion Relationship of influence/ascendancy of which unfair advantage is taken
93
If there is an overt act of improper pressure that was deceitful/fraudulent, then what is the causation test?
Same as duress to person Only necessary to establish that undue influence was 1 factor
94
If there is an overt act of improper pressure that is not deceitful/fraudulent then what test applies?
But for the behaviour, would the innocent party have entered the contract
95
What is the most common relationship of ascendancy resulting in undue influence claims?
Husband/business owner wants wife to agree to use home as collateral
96
Who has the burden of proof for undue influence?
The party alleging it was a victim
97
What must the undue influence victim prove?
That there was a relationship of trust and confidence Transaction that requires explanation
98
When will a gift require explanation?
Very large and unreasonable on ground of friendship, relationship, charity or other ordinary motives
99
When undue influence is exerted by a third-party, when can undue influence render contract set aside?
When the contractor had notice of the undue influence
100
When is a bank deemed to have constructive notice of undue influence?
When relationship between the party giving the guarantee and the borrower is non-commercial
101
How can a bank protect itself when on notice of undue influence?
Take reasonable steps to warn the weaker party of the risks Ensure weak party gets independent advice
102
When a spouse is offering a guarantee for a matrimonial home, is that a transaction requiring explanation?
Not automatically They have to show how spouses influence was used unduly
103
When will a creditor be on notice of undue influence?
X offers to stand surety for her husbands debts: 1. transaction does not on the face benefit X 2. substantial risk that in procuring X to act as surety, husband commits a legal or equitable wrong
104
What 3 points dictate the banks obligations and rights when working with a solicitor advising the person offering surety in an undue influence case?
1. Can rely on solicitors confirmation that advice was given unless on notice that not true 2. Must give solicitor enough information that transaction can be fully explained 3. If creditor is aware of active misleading, must inform the solicitor
105
What advice does a solicitor have to give a wife in an undue influence scenario?
Explanation of documents and consequences - risks Seriousness of risk, duration and terms of agreement in relation to all assets and means Fact that the wife has a choice
106
What are express terms?
Statements made Intention to be bound
107
What are implied terms?
Law determines that these exist
108
What 3 types of statements can be made when negotiating a contract?
Puff Representations Terms
109
What does an untrue statement in a term of a contact amount to?
Breach of contract
110
When will a representation be a term?
If the parties consider it binding
111
What will the courts consider to decide whether a representation is a term?
Importance of statement Timing Reduction of contract into writing Special knowledge and skill of person making the statement Assumption of responsibility by person making the statement
112
What factor is important in deciding how important a statement was when distinguishing whether it was a representation or term?
Whether the contract would have been entered into or not
113
What factors are considered when examining time for the purposes of distinguishing a term from a representation?
Statements made at the time of contracting are more likely terms
114
How long between the statement and signing has been held to be a representation not a term?
A week
115
Why does reduction to writing make a statement more likely to be a term?
Cause if it is important you write it down
116
How can terms be incorporated into a contract?
Notice Course of dealing Conversations/emails
117
What is the main way contracts show intention to be bound?
Signing them
118
What is the effect of an entire agreement clause?
Means anything other than what is in the agreement is not in the contract
119
Does signing a document which wasn't intended to have contractual effect demonstrate an intention to be bound?
No
120
What must be fulfilled for incorporation by notice to be effective?
Reasonable steps have to have been taken to bring the notice to a claimants intention
121
What threshold of notice is required to incorporate terms which are particularly adverse to the other party?
'Printed in red ink with a red hand pointing to it'
122
Can a term be incorporated by notice after the contract is made?
No BEFORE OR AT THE TIME OF CONTRACTING
123
What is the exception to incorporation by notice after the time of contracting?
When there was a previous course of dealing if not specified in this particular transaction might be inferred from the past
124
What would violate the incorporation by dealing notice?
If dealings in the past were inconsistent
125
Would 3 or 4 transactions over 5 years be sufficiently consistent course of dealing?
No
126
On what 2 bases can terms be implied?
Fact and law
127
When can terms be implied in fact?
Basis of custom or course of dealing To give business efficacy to contract
128
When can terms be implied by law?
Common law Policy Some relationships Statutes
129
Will courts imply a term contrary to an express term in the contract?
No
130
What is the test for implying a term for business efficacy?
Without implying the term, the arrangement would be so unworkable that sensible people could not be supposed to have entered into it
131
What terms does the Sale of Goods Act 1979 imply?
Seller has the right to sell the goods Goods comply with description Goods are of satisfactory quality Goods are suitable for any purpose made known to the seller Goods comply with any sample
132
To whom does the Sale of Goods Act 1979 apply?
Businesses only
133
What type of term is it in SGA 1979 that the seller has title to sell?
A condition
134
What rights are given for breach of condition?
Terminate Affirm and claim damages
135
What type of term is it that goods must comply with their description?
A condition
136
What is the test for satisfactory quality?
A reasonable person would regard them as satisfactory taking account of any description of the goods, price and other circumstances
137
What factors are considered when examining whether goods are of satisfactory quality?
Fitness for purposes which commonly supplied Appearance and finish Freedom from minor defects Safety Durability
138
What are the exceptions to the implied term of satisfactory quality?
Defects drawn to buyers attention before contracting Buyer examined the goods prior to purchase and the defect ought to have been revealed
139
When is fitness for a particular purpose engaged?
When a buyer expressly or impliedly makes their intention with the goods known
140
What are the exceptions to fitness for particular purpose?
Circumstances show buyer does not rely, or it is unreasonable for him to rely on the sellers skill or judgement
141
What type of term is it if goods don't correspond with sample?
Condition
142
When will a breach of sample correspondence, match condition and title to sell not bring rights to remedies?
If the breach is so slight it would be unreasonable to repudiate the contract
143
Can implied terms in SGA 1979 be excluded?
Yes, to the extent not limited But UCTA significantly limits them
144
How does UCTA limit exclusion of SGA 1979?
Title to sell cannot be excluded or restricted Others can be subject to reasonableness
145
What does s12 say in SGA 1979?
Title to sell
146
What does 13(1) say in SGA 1979?
Correspond to description
147
What does s14(2) say in SGA 1979?
Satisfactory quality
148
What does s14(3) say in SGA 1979?
Fit for implied or express purpose
149
What does s 15 SGA 1979 say?
Bulk of goods must correspond with sample
150
What terms does the Supply of Goods and Services Act 1982 imply?
Services will be carried out with reasonable care and skill
151
What types of transactions does the Supply of Goods and Services 1982 imply terms into?
Some contracts for transfer of property in goods Contract for hire of goods Contracts for supply of services
152
Does SGSA 1982 apply to consumer contracts?
No
153
What terms does the SGSA 82 imply into contracts for transfer of property in goods and contracts for hire of goods?
Effectively the same as in SGA 79
154
Define contract for transfer of goods under SGSA
Ownership of goods is changing hands other than: Contract for sale of goods Hire/purchase agreement Trading goods in exchange for trading stamps Transfer by deed when there is no consideration other than presumed consideration Contract intended to operate by way of security
155
What terms are implied into contracts for the hire of goods under SGSA 82?
Rights against hirer selling Hired goods match description Quality/fitness for purpose Matching sample
156
What terms are implied for supply of services under SGSA 82?
Care and skill Time of performance (if not fixed in the contract) Consideration for a reasonable charge (if price left to be determined after performance)
157
What is the difference between sale of goods and contracts for transfer of property in goods?
?
158
What contracts does CRA 2015 apply to?
Consumer: contracts for goods contracts for digital content contracts for services
159
What terms does CRA 2015 imply into goods?
quality fit for known purpose comply with description
160
What terms does CRA 2015 imply into digital content?
quality purpose description
161
What term does CRA 2015 imply into contracts for services?
care and skill reasonable time (where hasn't been fixed) reasonable price (when one wasn't agreed)
162
What are the remedies for contracts for goods under CRA 2015?
Short term right to reject Right to repair or replacement Right to price reduction OR final right to reject
163
How long is the short-term right to reject goods under CRA?
30 days from Ownership passing Goods being delivered Goods have been installed and consumer notified
164
When is right to price reduction or final rejection exercisable?
After repair/replacement goods still don't conform Repair/replacement is not possible/is disproportionate Consumer required repair/replacement, but trader didn't do so within significant time or without significant inconvenience to the consumer
165
Under CRA for breach of quality, fitness, description can contract be treated as at an end?
No, only to the extent set out in the act (e.g., failed replacement or repair)
166
What remedies are available in CRA for digital content?
Repair/replacement Price reduction
167
When is a price reduction available for digital content under CRA?
Consumer cannot require repair or replacement Trader fails to replace/repair without significant inconvenience to the consumer
168
What is the deadline for a trader to provide a refund under CRA for digital services?
14 days
169
Can traders impose a fee for a refund under CRA for digital services?
No
170
What 4 criteria must be fulfilled to be entitled to repair/compensation for damage caused to device by digital content?
Trader supplies content to consumer under contract Digital content damages the device or other digital content Device/content damaged belonged to the consumer Damage would not have occurred if the trader had exercised reasonable care and skill
171
What are the remedial options allowed under CRA for services?
Require repeat performance Price reduction
172
When can a consumer not require repeat performance?
If completion in conformity with the contract is impossible
173
What 3 classifications of term is there?
Conditions Warranties Innominate terms
174
What remedy is available for breach of condition?
Terminate contract
175
If the party breaches a warranty, what remedy is available?
Sue for damages
176
What is an innominate term?
Neither a condition or warranty, is in the middle
177
What remedies are available for innominate term breaches?
Minor effect -- damages Serious consequences -- repudiate and claim damages
178
Can the innocent party still get damages if they affirm the contract after a breach of condition?
Yes
179
What is a condition?
Goes to the root of the contract
180
What is the test for deciding if something is a condition?
Whether the parties intended, at the time of contracting, that a breach of the relevant term could result in the innocent party terminating
181
What is the test from Hong Kong Fir, to determine whether an innominate term should be treated as a condition or a warranty?
Does the breach deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract?
182
What are the steps to the procedure or approach that should be followed when trying to classify terms?
1. Does statute classify it? 2. Did the parties classify it? 3. Previous judicial decisions 4. Apply other tests - root of contract - hong kong fir
183
What is a repudiatory breach?
A breach that is of a condition
184
What 3 points need to be considered when examining whether a party can rely on an exemption clause?
Is it properly incorporated? Construction Statutory controls
185
What happens if there is ambiguity in the exemption clause?
Resolved against the party seeking reliance
186
When is a court less likely to read a clause contra-proferentum?
Equal bargaining power
187
What is the most important point of construction when seeking to exclude reliability resulting from own negligence?
Clear words, negligence itself is used or a close synonym
188
What must the wording of the exemption clause contain to be valid?
Exempt from the BREACH and LOSS
189
What process should be followed to apply UCTA 77?
Identify the breach Identify the relevant section of UCTA Identify effect on the exemption clause
190
Does UCTA apply to consumers?
No
191
Does UCTA allow exclusion for death or PI?
No
192
To what extent does UCTA allow restriction of liability for negligence?
Reasonableness
193
To what extent does UCTA allow exclusion/limitation of breaches of S13-15 SGA 79?
Reasonableness
194
To what extent does UCTA allow limitations of liability for breach of contract?
Negotiated contract: UCTA does not apply Reference to standard terms: valid if reasonable
195
Where general/standard terms have been negotiated, will the courts treat them as standard or negotiated terms?
Standard Implication is that the exemption clause it self would have to be negotiated
196
What is UCTAs reasonableness test?
Fair and reasonable to include having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made
197
What 5 guidelines to reasonableness does UCTA provide?
**Bargaining** power Whether customer received an **inducement** to agree to the term Customer **knew or ought to have known** about the existence and extent of the term If term excludes/restricts liability if the condition was not complied with, whether it was reasonable at the time of contract to** expect that compliance was practicabl**e Whether goods were manufactured, processed or **adapted to the special order** of the customer
198
How much precedential value to previous decisions about reasonableness in UCTA have?
little, because the tests/factors are so vague Reasonableness under UCTA is somewhat judicial discretion
199
What limitation of liability terms are not binding on the consumer under CRA?
Death/personal injury Stat implied terms under s9/10/11 (goods), s34,35,36 (digital content), s49 (services)
200
What limitation of liability is allowed about any term that isn't limitation of stat implied terms, death/PI and transparent terms about contract/price?
Not binding if contrary to good faith and causes imbalance in rights and obligations to the detriment of the consumer
201
Can transparent and prominent terms be assessed for fairness by the court?
No
202
What attempts to limit liability for a service is allowed in CRA?
Limitations will not be binding if they prevent the recovery of price paid (refund)
203
What is the effect of an operative mistake?
Is void Had no legal effect from the outset
204
What are the 3 categories of operative mistake?
common mutual unilateral
205
What are the 2 types of common mistake and their effect on the contract?
Both parties suffer from same misapprehension Existence of the subject matter: void unless contract impliedly/expressly allocates this risk Fact or quality fundamental to the agreement: void only in the most severe instances
206
What is a mutual mistake and its effect?
Both parties are mistaken, as to different things, negotiated at cross purposes Will be void
207
What is the effect and definition of a unilateral mistake?
There is a mistake and one party knows or is deemed to know Void, but hard to show in face2face transactions
208
Will a mistake as to the quality of goods be an operative mistake?
No, not even if utility is effected
209
In what 3 circumstances will mistake not operate?
Mistake is not sufficiently fundamental One party is at fault Contract makes provision for the issue
210
What is the test for mutual mistake?
What a reasonable 3rd party would believe the agreement to be based on the words and conduct of the parties If you can't find one, void for mistake
211
When is a unilateral mistake of non est factum arising?
Blind, illiterate, senile Trick, fraudulent misrep to sign, provided all reasonable precautions were taken b4 signing
212
What is the presumption in a face2face contract of unilateral mistake for identity?
That the person intended to deal with that person in front of them
213
How is the face2face assumption rebuttable?
Identity, not attributes was of vital importance
214
What about parties contracting through correspondence?
Mistaken identity likely to be void
215
What is the trio of conditions the court will consider when deciding whether to provide remedies for an illegal contracts?
Underlying purpose of the prohibition transgressed and whether purpose is enhanced by denial of claim Other relevant public policy that denial will have an impact on Whether denial would be proportionate to the illegality, bearing in mind that punishment is for the criminal courts
216
Can you assign rights, benefits or both under a contract?
Benefits, if the contract permits it
217
What should you do if a third-party can't bring a claim in contract?
Consider a claim in tort
218
What are the common law methods of circumventing the doctrine of privity of contract?
Agency Assignment Collateral contract Actions in Tort Other judicial attempts to avoid the doctrine
219
What are the 3 requirements to develop a relationship of agency in contract?
Principal named, is clear is acting on somebody else's behalf Agent should be authorised to act as agent (frequently scope will be limited) Consideration has moved from the principal
220
Can a contractual assignee sue the original party for breach?
Yes
221
What can an assignee acquire from the contract?
No more than the OG benefit Not the burden
222
What is the collateral contract exception to privity of contract?
Court implies a contract between x and a third-party when there are very close ties of benefit and burden
223
Why can a claim in tort instead of contract be a good option for some third parties?
DOC can be imposed
224
Under the Contracts (Rights of Third Parties) Act 1999, when will a third party have a right to enforce a term of a contract?
Where the contract states it should Where the contract purports to confer a benefit on it, unless it appears the parties didn't intend it to be enforceable
225
Does a third party have to exist on creation of the contract for there to be a benefit conferred under statute?
No, e.g., unborn child
226
What does the term 'purports to confer a benefit' give rise to under statute for third-party enforceability of contracts?
An assumption that the third-party can enforce unless this is rebutted by examining the contract
227
Can third parties deriving rights under statute rely on exemption and limitation clauses?
Yes
228
How do third-party rights alter the flexibility/variability of a contract?
The parties cannot alter the contract in a way that affects the third party without consent if: Third party has communicated his asset to the term to the promisor Promisor is aware that the third party has relied on the term Promisor can reasonably be expected to have foreseen that the third-party would rely on the term
229
Can the parties contract out the requirement for third party consent?
Yes
230
When can the courts dispense with third party consent?
Unknown whereabouts Mentally incapable of consent Reliance on term cannot be reasonably ascertained *CAN impose conditions, e.g., compensation
231
In what 5 ways can a contract be discharged?
Performance Expiry Agreement Breach Frustration
232
What are the 4 exceptions to a contract being discharged by performance?
Party accepts partial performance, other party is entitled to payment for the partial performance (quantum meruit) One party substantially performed contract, may be entitled to contract price subject cost of remedying defect Party entitled to payment of a party of a divisible contract Party prevented from completing performance by other partys default, can sue for damages of breach and claim quantum meruit
233
What is the entire obligations rule?
A contract is only discharged if the entirety of the obligation is discharged This is interpreted very strictly - NO MONEY, if ALL the obligations aren't performed.
234
What are the exceptions to the entire obligations rule?
Acceptance of partial performance Substantial performance Divisible obligations Wrongful prevention of performance
235
When will the court consider when examining whether a contract has been substantially performed?
When the defects and omissions do not go to the root of the contract The cost of repair vs overall cost of the contract
236
What is the defence for failure to perform the contract?
Tender of performance The claimant refused performance of the terms of the contract and then tried to sue
237
How can parties discharge a contract by agreement?
Enter a new contract, supported by consideration or effected by deed
238
What is a condition precedent?
A condition of the contract stating that a condition must be satisfied before rights come into existence... prevents contract from being binding
239
What is a condition subsequent
Term provides for termination of the contract and discharge of obligations outstanding under the contract upon the happening of a specific event
240
Is the consideration of waiving rights under a previous contract good enough to discharge the OG contract?
Only if neither party has fully performed their obligations
241
What is accord for satisfaction?
Both contractual parties agree to release the other from obligations under a contract
242
How can you achieve accord for satisfaction when one party has completed its full obligation?
Deed
243
What rights does an innocent party have when there is an anticipatory breach?
Has the right to accept 'renunciation' and treat the contract as terminated
244
What can the innocent party claim for after a repudiatory breach?
The breach losses Loss of the contract as a whole
245
What are the 2 limitations on the ability to affirm?
Co-operation of breaching party is required Innocent party has no legit interest financial or otherwise in continuing
246
What is required to show affirmation?
Communicated clear and unequivocal commitment to continue the contract
247
What is discharge by frustration?
Without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it radically different
248
What are the 3 most common ways discharge by frustration occurs?
Performance is impossible Performance is illegal Parties common purpose is frustrated
249
What is a frustrating event not?
Caused by the default of a party Provided for in the contract Merely an increase in expense/onerousness Something the parties could reasonably have contemplated
250
What is the definition of frustration?
Without default of either party Contract has become incapable of being performed because circumstances in which performance is called for render it a thing radically different to that which was undertaken in the contract It was not something promised to do
251
What case law examples dictated events when frustration would be impossible/unavailable?
Hired venue is physically destroyed Machine repair contract frustrated by fire destruction of whole factory Musician is ill and can't perform Unavailable ship for charter party because was contracted elsewhere for 5/12mo of the contract
252
What was the example for frustration by illegality?
Delivering items to enemy occupied Poland in WW2
253
What criteria (1) must there be for frustration of purpose to apply?
It frustrated the JOINT purpose of both parties
254
What was the case law example of frustration of purpose THAT WAS upheld?
Hiring a room to view king procession which was then cancelled *very narrowly decided
255
What 2 examples of frustration of purpose were NOT upheld?
Booking a cruise for a cancelled naval show when the cruise could still go ahead Getting out of rent because of Brexit
256
What is a force majeure clause?
A clause that states what will happen to a contractual relationship if there are natural disasters etc
257
Does frustration happen automatically?
Yes
258
In frustration, can money paid before frustrating even be recovered?
Yes
259
What discretionary power does the court have regarding allowing a party to retain funds after frustration?
For expenses incurred in attempting to perform the contract
260
What must the court do if a party received a non-monetary benefit before frustration occurred?
Identify value of benefit Make an assessment of a just sum to be paid for that benefit
261
What is the cap that the court can award to keep if a contract was frustrated?
The cost in the contract itself
262
Who has the burden of proof when seeking to retain or recover expenses after frustration?
The person trying to get the money
263
How much discretion does the court have when deciding how to allocate money after frustration?
Very broad Case by case
264
What are the 2 main ways of calculating damages in contract?
Expectation interest Reliance interest
265
What is expectation interest?
Damages put the innocent party in the same position post-breach as they would have been had the contract been performed Cost of cure Difference in value between promised and received Loss in amenity
266
What is reliance interest?
Looking backwards at putting the claimant back in the position they would have been in had they never contracted
267
Is a claimant who has not suffered a loss entitled to a judgement?
Yes, just only nominal damages
268
Is loss of amenity likely to be available in commercial settings?
No
269
When will reliance be awarded instead of expectation?
When expectation is highly speculative
270
At what time to reliance losses occur?
Prior to the breach, sometimes prior to signing the contract
271
What defence does the defendant have to a reliance loss claim?
That the money would have been wasted regardless of their act
272
When are damages for mental distress, anguish or annoyance likely to be recoverable?
When the major purpose of the contract was to provide pleasure, relaxation and peace of mind
273
Are damages generally awarded for loss of reputation?
No
274
When are damages for loss of chance recoverable?
If the lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition
275
How will the courts calculate damages for loss of chance?
Proportion of the chance that is proved Unless chance of obtaining benefit was 50% or greater then expectation loss can be recovered in full, based on the balance of probabilities
276
What is the test in Hadley v Baxendale?
Must be a loss of a type ordinarily and naturally arising from the breach If the losses are too unusual for that then to recover You have to establish that the D had sufficient/actual knowledge of the particular special circumstances to be aware of the risk of those losses
277
When does it have to have been in contemplation and knowledge under Hadley?
At the time of contracting
278
To what extent is a party expected to mitigate?
Reasonable steps
279
Can reasonable steps include accepting a performance offered by D under a new contract even if it amounts to a breach under the initial contract?
Yes
280
What is the test for factual causation in contract?
The test is whether the defendant’s actions were a dominant or effective cause of the loss
281
What is restitution interest?
Damages on the basis of restoring to the claimant a benefit which the defaulter acquired at their expense *RARE
282
When can a restitution claim arise?
For a total failure of consideration
283
What is the second, less common way of considering remoteness other than Hadley?
Whether objectively, the D assumed responsibility for the loss in question
284
What needs to be proved to establish reliance interest?
That the contract would have enabled them to recoup expenses had it been properly performed
285
Who has the burden of proof for reliance interest?
The defendant has to prove the claimant would not have recouped had the contract gone ahead
286
What is the 'useful general guide' the courts use when deciding whether restitution interest is recoverable?
Whether the claimant has a legitimate interest in preventing the defendants profit-making activity and hence depriving him of his profit
287
What is an 'efficient breach'
In restitution claims, a type of breach that might make it more likely that restitution could be applied
288
What 3 criteria make up an efficient breach?
Breach was cynical and deliberate Breach enabled defendant to enter into a more profitable contract elsewhere By entering into a new, more profitable contract, the D put it out of his power to perform the contract with the claimant
289
What is a key consideration which is likely to dictate whether restitution interest can be considered?
Whether other remedies would be adequate
290
What 2 remedies are available for non-conforming goods?
Short term right to reject (30 days) Right to repair/replacement IF: IMPOSSIBLE/DISPROPORTIONATE FAILED ATTEMPT AND STILL BAD TRADER FAIL TO REPAIR/REPLACE Right to price reduction/final right to reject
291
What remedies are available for non-conforming digital content?
Repair/replace IF: IMPOSSIBLE/DISPORPORTIONATE TRADER FAILED TO REPAIR/REPLACE Right to a price reduction
292
What remedy is available if the trader had no right to supply the content?
Refund
293
What remedy is available if digital content damaged a device/other content?
Repair/compensation
294
What remedy is available for non-conforming services?
Repeat performance IF IMPOSSIBLE/TRAFER FAILED TO PROVIDE Right to a price reduction
295
What does a liquidated damages clause provide for?
A sum payable for a specific breach of contract
296
What is a penalty clause?
An excessive liquidated damages clause
297
What is the Makdessi approach for?
Determining whether something is a liquidated damages clause or a penalty clause
298
What are the steps in the Makdessi appraoch?
Is the clause a primary or secondary obligation? If primary, will not engage the penalty rule If secondary, the clause will be a penalty if it imposes a detriment out of all proportion to any legitimate interest of the innocent party in the performance of the primary obligation. Identify the legitimate business interest, then consider whether the detriment imposed is extravagant
299
Who has the burden of proof with penalty clauses?
The person alleging that the clause is a penalty
300
When will a clause be primary under Makdessi?
If part of the primary obligations in the commercial context Furthers the commercial objective
301
When will a clause be secondary under Makdessi?
If is an obligation triggered by breach of contract to compensate the innocent party
302
What 2 steps will the Supreme Court take when deciding whether a secondary clause imposes a detriment out of all proportion to legitimate interest?
What legitimate business interest is served and protected by this clause Is the detriment imposed to protect that interest extravagant, exorbitant or unconscionable?
303
What is the possible punishment for specific performance and prohibitory injunction breaches?
Contempt of court
304
When are specific performance and prohibitory injunctions available?
When damages are not appropriate
305
What 2 things mean equity won't be available to you?
Dirty hands Delay
306
When will specific performance not be awarded?
Cause undue hardship on defendant Promise given for no consideration, even if made by deed Breach of employment contract Services, where there is a breakdown of trust and confidence To perform a series of acts requiring constant supervision of the court Breach of contract not binding on both parties
307
If a contract is varied, would a guarantee or indemnity stay in force?
An indemnity does Guarantee doesn't
308
What are the formalities for a guarantee?
In writing Signed by guarantor
309
Can an indemnity be used between 2 parties to skirt traditional rules of contract?
Yes, e.g., to avoid remoteness rules