Contract Flashcards
Auctions
Offer accepted when auctioneer’s gave goes down - bilateral contract.
Without reserve - sue auctioneer for difference of bid and value. Unilateral contract.
Tenders
Unilateral contract.
Loss of opportunity.
Postal rule
Letter of acceptance effective when posted -
Reasonable in all circumstances to use post.
Letter properly addressed, stamped, posted.
Postal rule not excluded.
Termination
Rejection - expressly or impliedly - counter-offer.
Revocation - any time. Exception - offeree gave something in return to keep offer open.
Public - publish notice in same place, same prominence.
Certainty and completeness
Objective.
Same trade.
Trade usage.
Whether agreement has been acted for any length of time.
Whether objective mechanism for resolving uncertainty.
Intention to create legal relations
Commercial - strong presumption.
Domestic - no presumption.
Both rebuttable.
e.g. ‘binding in honour only’
Consideration
Must be sufficient.
Need not be adequate.
Past consideration not good, exceptions -
Past act done at promisor’s request.
Mutual understanding between parties that compensation.
Had promise made in advance it would have been legally enforceable - intention to create legal relations.
Contractual variation
Agreement, consideration, intention to create legal relations.
Rule in Pinnel’s case
Accepting part payment in full and final settlement not binding on creditor.
Foakes v Beer (1884) - no new consideration - can sue.
Exceptions -
Some consideration for concession.
Primary estoppel
Central London Property Trust v High Trees House [1947]
Defence.
Promise to waive strict legal rights.
Debtor must have acted on promise.
Ongoing payments e.g. rent - resume fill payment giving reasonable notice. Cannot claim back arrears.
Equitable doctrine - clean hands.
Contracts (Rights of Third Parties) Act 1999
Contract expressly provides they may acquire benefit.
Term purports to confer a benefit on them.
Expressly identified - name, member of class, particular description.
Agency
Actual -
Express or implied. Undisclosed principal.
Apparent -
Principal represented that agent had authority.
Third party must rely on representation, believing agent has authority.
Third party must alter their position.
Minors
Not bound. Exceptions - necessaries - goods and services, for benefit.
Proform Sports Management Ltd v Proactive Sports Management [2006] - Rooney - not necessaries.
Mental incapacity
Mental impairment, drunk when contract made.
Valid unless at time - person incapable of understanding nature of transaction and other party knew.
Voidable - binding unless person terminates it.
Incorporation of express terms
Signature.
Reasonable notice.
Previous consistent course of dealing.
Hong Kong Fir Shipping Co Ltd v Kawasaki kisen Kaisha Lts [1962]
Innominate term.
Breach deprived of it of sufficiently whole benefit.
SGA 1979
S.12(1) - right to sell.
S.13(1) - goods correspond with description.
14(2) - satisfactory quality.
S.14(2A) - reasonable person would regard satisfactory.
S.14(3) - reasonably fit for purpose.
Strict liability.
13 and 14 - if slight, unreasonable to reject.
SGSA 1989
S.2(1) - right.
S.3 - correspond with description.
S.4(2) - satisfactory quality.
S.4(5) - fit for purpose.
S.13 - reasonable care and skill.
S.14 - reasonable time.
S.15 - reasonable sum.
CRA 2015
S.9 - satisfactory quality.
S.10 - fit for purpose.
S.11 - correspond with description.
S.17 - right.
S.49 - reasonable care and skill.
S.51 - reasonable sum.
S.52 - reasonable time.
Consumer rights
Goods -
ss 9-11 -
Short term right to reject and full refund.
Right to repair or replacement.
Right to price reduction or final right to reject and get partial refund to reflect use of goods.
Pecking order.
Damages.
Service/work -
Reasonable skill and care - repeat performance where reasonable or price reduction.
Reasonable time - only price reduction.
Contra proferentem rule
Uncertainty - clause constructed against person seeking to rely on it.
Damages
Expectation loss/loss of bargain - claimant back in position.
Reliance loss - expenses incurred because of reliance on contract being performed.
Jarvis v Swans Tours [1973] - loss of enjoyment if main purpose is pleasure.
Remoteness - reasonable contemplation at time.
Mitigation of loss.
Cost of cure - reinstatement.
Ruxley Electronics v Forsyth [1996] - personal preference - loss of amenity and consumer surplus.
Specified - binding.
Penalty - pressure, extravagant or disproportionately high sum unenforceable.
Cavendish Square Holding BV v Makdessi [2015] - detriment on contract-breaker out of proportionate to legitimate interest of innocent party.
Equitable and other remedies
Action for an agreed sum.
Specific performance.
Injunction.
Restitution - total failure of consideration or compensated for work/goods done.
Restitutionary damages - gains by defendant.
Opportunity to negotiate release fee.
Guarantees - secondary obligated, signed writing.
Indemnity - primary obligation.
Frustration
Make performance impossible or radically different.
Something beyond ordinary risks parties could have expected when entering contract (force majeure, express provision).
Beyond the control of either party.
The Super Servant Two [1990] - self-induced.
Law Reform (Frustrated Contracts) Act 1943
Money paid before event can be recovered.
Money that should have been paid before event need not be paid.
Court’s discretion - expenses incurred by payee can be recovered out out total sums paid/payable before event.
S.1(3) - valuable benefit before event - just sum
Doctrine of of complete perfomance
Performance of contractual obligations must be precise and exact.
Exceptions
Divisible obligations.
Substantial performance - slightly defective - 1/14 to rectify.
Wrongful prevention - damages or reasonable sum for restitution.
Voluntary acceptance of part performance - reasonable sum.
Misrepresentation
An untrue statement of face made by one party to a contract, by words or contract, to the other contracting party, which induced the other to enter into the contract.
Silence - fiduciary relationship, utmost good faith, half-truth, change of circumstances - not disclosed.
Fraudulent misrepresentation
With knowledge that it is false.
Without belief in its truth.
Recklessly - not caring true or false.
Damages - all consequential loss.
East v Maurer [1991] - innocent party in position be in had misrepresentation not been made. Tortious basis.
Negligent misrepresentation
S.2(1) Misrepresentation Act 1967
Belief in truth of statement honestly held, not in reasonable grounds.
Misrepresentor prove reasonable grounds.
Damages same as fraudulent.
Innocent misrepresentation
Reasonable grounds to believe statement true.
No recession.
Damages.
Economic duress
Burden of proving on party alleging.
Pressure -
Practical affect - compulsion or lack of practical choice for victim.
Which is illegitimate.
Significant cause inducing claimant to enter into contract.
Factors -
Actual or threatened breach of contract.
Threat made in good or bad faith.
Victim protested at the time.
Voidable.
Remedy - recession - bars.
Undue influence
Voidable. Recession. Damages.
Actual undue influence - proved on facts.
Presumed undue influence -
Relationship of trust and confidence.
Transaction must call for an explanation.
Royal Bank of Scotland v Etridge (No 2) - constructive notice -
Inquiry - non-commercial, not for joint benefit.
Reasonable steps to ensure surety aware - private meeting, advise independent advice from solicitor.
Common mistake
Both parties.
Fundamental - render performance impossible or radically different from what anticipated.
Before
Cross-purpose mistake
Crucial aspect.
Objectively impossible to resolve ambiguity.
Unilateral mistake
Identity - genuine mistake where identity is vital to contract - void.
Cundy v Lindsay (1878) - rogue company - reputable company.
Bona fide purchaser already acquired goods - recession barred unless initial contract with rogue for mistake.
Lewis v Averay [1972] - mistake to attribute - creditworthiness does not invalidate - famous person.
Illegal contracts
At time of formation - commission of legal wrong.
If incidental to performance - unlikely to affect validity.
Both aware - neither enforce.
If one unaware - innocent party can enforce.
Covenants in restraint of trade -
Legitimate business interest to protect. Restraint is reasonable - geographical area, duration, scope of prohibited activities.
Injunctive relief, damages.
