Contract

Question 1

Example where temporal market may exist, which would need to be taken into account

Answer 1

Commission Decision 77/327, Re ABG Oil Oil during oil shortage of 1970s

Question 2

What are VITIATING FACTORS?

Answer 2

impair the quality of something legally defective ex duress, (most common) induced by misrepresentation also mistake Offer, acceptance, I2CLR may exist BUT

Question 3

what is an actionable misrepresentation?

Answer 3

false statement = representation of past or existing fact made by other party

Question 4

Void v voidable contracts

Answer 4

If void as if it never existed vs voidable can be set aside

Question 5

to set a contract aside is also known as

Answer 5

rescinding the C, rescission (remedy, prev. only one available to misrep)

Question 6

Exam Approach to Misrep 5 Steps

Answer 6

0 Identify statements 1. Is the statement a term or representation (terms are more important) 2. Is the misrep actionable? 3 What type of misrep is it? Lots of types….. 4 (from type) what remedies are available? 5 Any attempt at exclusion of liability for misrep?

Question 7

Term of Reprensetation?

Answer 7

(LGS8) Test is one of intention of parties Heilbut, Symons & Co. v Buckleton, [1913] AC 30 Also * Timing of statement * Opportunity to verify given to person receiving rep * Importance of statement made clear to make of it * Specialist knowledge and skill of one party * Was statement put in writing

Question 8

Timing of statement

Answer 8

Timing of statement If longer ==> not that important => more likely term Routledge v McKay [1954] Motorbike sale, ‘model’ 1 wk later C concluded => rep =

Question 9

Opportunity to verify given to person receiving rep

Question 10

Importance of statement made clear to make of it

Question 11

Specialist knowledge and skill of one party

Answer 11

Depends on who makes the statement and has the specialised knowledge ##Dick Bentley v Harold Smith and Motors## Car dealer made statement on mileage. Since had specialist knowledge => stmt rep- term + ##Oscar Chess ltd## Seller private indiv, buyer car dealer==> rep+

Question 12

Was statement put in writing

Answer 12

Routledge v McKay# IF statement not in writing => not as important => rep+

Question 13

Owner of farm | never been used as a sheep farm | said would support 2000 sheep in NZ. Case and misrep?

Answer 13

Start here…..unfounded opinion ##Bissett v Wilkinson 1927 AC## Statement of pure opinion (no past practice). Since opinion => not fact

Question 14

Cases where implied rep of fact

Answer 14

If maker has specialist knowledge or skill ##Esso v Mardon 1976## Esso experienced rep estimated that petrol sales would reach 200,000 Gals per year based on which Mardon entered agreement, but never go past 70,000 gals. Denning: implied representation of fact+ (> opinion) If maker is in better position to know the truth ##Smith v Land and House 1884## Fleck sold hotel statement “let to most desirable tenant” Tenant was in arrears => not desirable. Held since in position to know truth => statement of fact+ (not opinion)

Question 15

When a statement of intention as to future conduct can be interpreted as a statement of fact?

Answer 15

If maker had, at the time, had NOT intention of acting=> statement of fact+ ##Edginton v Fitzmaurice 1885## @we will use the money to improve the buildings and to acquire a fleet of vans@ The fact was in the “our intention is to”=> false.

Question 16

Bowen LJs quote in Edgington v Fitzmaurice

Answer 16

A state of a man’s mind is as much a fact as the state of a man’s digestion

Question 17

Caveat emptor and Misrep

Answer 17

No general duty of seller to provide certain information as principle in English Law no duty to disclose information not asked about Starting Point

Question 18

Salesmen failed to reveal at job interview that had serious motor convictions…Misrep?

Answer 18

No. since under no duty to disclose information not asked about

Question 19

Purchaser of land asked solicitor if land subject to restrictive covenants. S replied not aware of any (becauise had not read documents). Misrep+

Answer 19

Half/truths are misleading #Notts Patent Brick v Butler 1886# misrep+ actionable+

Question 20

Circumstances have changed. Do you have a duty to disclose this if statement was true when made but is now false?

Answer 20

With v O’Flanagan 1936# Doctor stated in Jan that medical practice income was £2K p.a. 4 m later when contract was signed it had declined and was £260 p.a. HELD duty to tell of change of statement of circumsatnces which caused the statement to become inaccurate Lord Wright ##It is a continuing representation which becomes a misrepresentation

Question 21

What is uberrimae fidei

Answer 21

of most abundant faith * legal doctrine (insurance contracts) * means that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal. –Abgrenzung/ContrastWith– caveat emptor

Question 22

Misrepresentation by Conduct. Case?

Answer 22

Spice Girls v Aprilia 2002 All members took place Though one had left did. HELD Groups conduct in participating in filming amounted to a representation that SGL did not know that any of the existing members had decided to leave.

Question 23

Inducement and misrepresentation

Answer 23

We need a false statement of fact It needs to be a material cause in decision to enter the C It needs to have induced the other party to have entered the C Smith v Chadwick 1884 misrep- False statement that a certain person was a director. That person wasnt a director. Smith bought shares in company. But admitted had never heard of director => no inducement => misrep- see also if go on to rely on own information

Question 24

Seller of mine exaggerated statements about earnings. Purchaser instructed expert surveyors to check truthj who reported statements correct. Inducement ==> Misrep?

Answer 24

Atwood v Small 1838# Relied on experts => no inducement

Question 25

Given an opportunity to find out truth but spurn it, Can later claim inducement?

Answer 25

Redgrave v Hurd 1881# H given opportunity to inspect accounts but didnt take it up. Would have found practice worthless Surprise! Misrep actionable! Mere opportunity not enough if false statement had been relied upon.

Question 26

Does the misrep have to be the sole reason why Contract entered into?

Question 27

Inducement Reqs

Answer 27

* Not necessarily sole reason * Actively present in mind when handing over money * (debated) reasonable man test

Question 28

Basics of False Statement of Fact

Answer 28

1 False Statement of Fact? * not opinion unless special knowledge/not genuinely held => implied fact (Esso,Smith v Land and House most desirable tenant) * not future intention unless untrue at time () * not silence BUT watch for partial failure to disclose and change of circumstances 2. Induced into entering into C? actively present in mind Edgington v FItzmaurice when contracting 3 MISREP=

Question 29

Types of Misrep

Answer 29

Order of seriousness? 1 Fraudulent 2 innocent (Limited remedies)

Question 30

What is fraudulent misrepresentation?

Answer 30

fraud# essentially absence of honest belief. Fraudulent MisRep is made 1. knowingly 2 without belief in its truth OR 3 recklessly, careless (not giving a care) as to whether it is true or false #Lord Herschell in Derry v Peak 1889# Heavy Burden on Claimant.

Question 31

Statutory basis of Negligent Misrepresentation

Answer 31

Misrepresentation Act MA67 s.2(1) MA67 reverses burden of proof by requiring representor to disprove Negligence

Question 32

Negligent Misstatement at Common Law

Question 33

Special relationship in Hedley Byrne

Answer 33

only arises if maker of statement possesses knowledge or skill relevant to subject matter about which statement is made and likely other party will rely on statement.

Question 34

Negligent Misstatement Act and section?

Answer 34

s.2(1) Misrepresentation Act 1967

Question 35

Howard Marine 1978

Answer 35

Misstatement was #The carrying capacity of each barge is 1600 tonnes# Since there was a written C and not in it => rep+ False statement did induce + ==> actionable misrep+ Type? did not lie about capacity => fraudulent - Applied under 67 Act && Hedley Byrne HELD NO special relationship => no duty of care => negligent misstatement - BUT Marine had failed to satisfy burden of disproving Negligence under s.2(1) MA67 => O won

Question 36

Bridge on s.2(1) MA67

Answer 36

s.2(1) is an absolute obligation NOT to state facts which the representOR cannot prove had reasonable grounds to believe.

Question 37

Wholly Innocent misrepresentations

Answer 37

made without fault. In other words the phrase refers to a statement made by a person who has reasonable grounds for believing in its truth * still untrue know type then determines remedy

Question 38

rescission

Answer 38

=> putting parties back into previous position [Anfechtung voidable…] VOID (here)= ?

Question 39

Bars to Recission?

Answer 39

A If 3rd parties have acquired rights,…(as => voidable) =>EG 2 innocent parties Seller and Bone Fide Buyer +> court must decide between two B Impossibility of restoring the parties to their original position

Question 40

Example of Impossibility of restoring the parties to their original position

Answer 40

GR Buyer of a business cannot claim rescission after it has disposed of key assets. Buyer cannot reclaim horse after slaughtered BUT substantial rescission is possible ##Erlanger v New Sombrero Phosphate Co., (1878)## Mine was mined during period of validity Company was allowed to rescind the contract by returning the mine to the sellers, and accounting for the profits it made in extracting the phosphate. This amounted to substantial restoration.

Question 41

Confirmation that substantial rather than complete restoration is sufficient for restoring parties to original position

Question 42

What is affirmation in terms of recsission of C

Answer 42

Affirmation occurs where the injured party, with full knowledge of the misrepresentation, indicates (expressly or impliedly) an intention to continue with the contract. If proceeded with C despite knowledge of misrep cannot then rescind contract: Long v Lloyd, [1958] 1 WLR 753 (damages then also possible) Lapse of time is a kind of affirmation == doing nothing. Constable picture case Leaf v International Galleries, [1950] HELD 5 years => lapsed+ rescisson right - BUT doubted in obiter Salt v Stratstone Specialist Ltd [2015] (supra) The CA took the view that lapse of time by itself should not be a bar to rescission. ==> affirmed Leaf v Int Galleries Constable

Question 43

What is statutory bar to recission and where does it apply?

Answer 43

s2(2) MA67 Used when misrepresentation is relatively unimportant => damages more appropriate. ==> Since fraudulent misrep more important => statutory bar not available here ==> Discretion to refuse to allow rescission and award damages in lieu.

Question 44

Is there a breach of contract if a misrepresentation later appears to be false?

Answer 44

If representation && factual && later untrue => NO breach of contract, although there may be a remedy for misrepresentation. Available remedies

Question 45

Whether a statement is a representation or a term is primarily a question of the intention of the parties – Case

Answer 45

Heilbut, Symons & Co. v Buckleton, [1913] AC as shown objectively

Question 46

Sale of a motorbike – the seller described the motorbike as being a particular model, but this statement was made a week prior to the conclusion of the contract.

Answer 46

Routledge v McKay [1954] 1 WLR 615. HELD rep(+) term (-) ALSO Oral statements that subsequently appear in the written contract will normally be terms. Statements excluded from the written contract are more likely to be representations

Question 47

What is the parol evidence rule?

Answer 47

extrinsic (outside) evidence cannot be introduced to add to or vary a written contract.

Question 48

make of break clause term or rep?

Answer 48

Bannerman v White, (1861) 10 CBNS 844 The statement that the hops had not been treated with sulphur was a term of the contract rather than a representation as the claimant had communicated the importance of the term and relied on the statement. His action for breach of contract was successful.

Question 49

2 dealeship cases for misrep

1. The defendant (a car dealer) sold a Bentley car to the claimant saying it had done only 20,000 miles since a replacement engine and gearbox had been fitted. The car in fact was in poor condition and the statement was untrue. The claimant sued for damages.
2. W was selling his Morris car to the claimant, a car dealer, in part exchange for a new car. The registration book said it was a 1948 model. W, in good faith, gave the claimant that date in order to value the car. The claimant allowed him £290 as the part exchange price for the new car. Later it was discovered that the car was a 1939 model and was worth only £175. The claimant sued for the balance of £115 claiming that the statement about the year was a term.

Answer 49

1.

Dick Bentley Productions Ltd. v Harold Smith Motors Ltd. [1965] 2 All ER 65

Statement made by Dealer

==> HELD to be a term since the dealer was in a better position to know the truth of the statement.

Oscar Chess Ltd. v Williams, [1957] 1 All ER 325

the seller did not possess superior knowledge and skill about the subject matter of the contract.

Question 50

The defendant sold a boat to the claimant. He stated that as far as he was aware the boat was sound and free from vice but advised the claimant to have it surveyed. The boat turned out to be defective. Rep/Term?

Answer 50

If Opportunity to verify => rep(+)

Ecay v Godfrey (1947) 80 Lloyd’s Rep 286.Held:

The statement that the boat was sound was merely a representation. The statement was not sufficiently emphatic to amount to a term and the advice to have the boat surveyed demonstrated the defendant did not wish the claimant to rely on the statement.

Others?

Question 51

Consumer Rights Act 2015 is a consolidation of what acts?

Answer 51

=>The Consumer Rights Act 2015 (CRA) came into force on 15th October 2015.

==> It is a largely consolidating Act, bringing together the Sale of Goods Act 1979, UCTA and the Supply of Goods and Services Act 1982 amongst others.

==> B2C

==> Business = Trader and Consumer

Whats a Trader?

Trader is defined as a person acting for the purposes relating to that persons’ trade, business, craft or profession, whether acting personally or through an agent.

Consumer is defined as an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

Question 52

CRA 2015 Def Consumer?

Answer 52

Consumer is defined as an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

wholly or mainly

Question 53

Def Trader

Answer 53

Trader is defined as a person acting for the purposes relating to that persons’ trade, business, craft or profession, whether acting personally or through an agent.

Question 54

3 requirements for contract of sale under SOGA 1979

Answer 54

• A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.*
• goods, transfer ownership, money consideration*

Question 55

What does UCTA apply to B2B or B2C?

Answer 55

B2B only not consumer

=> consumer terms are covered in CRA 2015 itself

Question 56

Is s12(1) SOGA 1979 a term or a condition?

Answer 56

s.12(1):

Condition

12 Implied terms about title, etc
(1) In a contract of sale, other than one to which subsection (3) below applies, there is an implied [term] on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass.

s.12(5A):

[(5A) As regards England and Wales and Northern Ireland, the term implied by subsection (1) above is a condition and the terms implied by subsections (2), (4) and (5) above are warranties.]

Question 57

Implications of a contractual term being a condition

Answer 57

A condition is a major term of the contract which goes to the root of the contract.

=> If a condition is breached the innocent party is entitled to repudiate (end) the contract and claim damages:

=> What does repudiate a C mean?

=> Buyer can terminate the C (get a refund) and claim damages

=> can get money back even if has used the goods for a short time

=> even if goods cannot be returned to seller

Other Terms in SOGA which are identified by statute as Conditions?

• *13 Sale by description
  (1) Where there is a contract for the sale of goods by description, there is an implied [term] that the goods will correspond with the description.**

14 Implied terms about quality or fitness

[(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.

(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—
(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
Reproduced by permission of Reed Elsevier (UK) Limited trading as LexisNexis
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(e) durability.
(2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—
(a) which is specifically drawn to the buyer’s attention before the contract is made,
(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
(c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.]

&&

(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known—
(a) to the seller, or
(b) where the purchase price or part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker,
any particular purpose for which the goods are being bought, there is an implied [term] that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit-broker.

Also s.15(2) sale by sample

These are Conditions BUT EXCEPTION:

Inserted by the Sale and Supply of Goods Act 1994, s 4(1).
[15A Modification of remedies for breach of condition in non-consumer cases]
[(1) Where in the case of a contract of sale—
(a) the buyer would, apart from this subsection, have the right to reject goods by reason of a breach on the part of the seller of a term implied by section 13, 14 or 15 above, but
(b) the breach is so slight that it would be unreasonable for him to reject them,
. . . the breach is not to be treated as a breach of condition but may be treated as a breach of warranty.
(2) This section applies unless a contrary intention appears in, or is to be implied from, the contract.
(3) It is for the seller to show that a breach fell within subsection (1)(b) above.
(4) This section does not apply to Scotland.]

Question 58

A fisherman sold his boat. The Court of Appeal held that the sale was within the course of business. There was no requirement to prove any degree of regularity of such sales. Therefore, sporadic sales which are no more than incidental to the seller’s business are included.

Answer 58

Purpose is to distinguish between a sale made in the course of a seller’s business and a purely private sale of goods outside the confines of the business (if any) carried on by the seller

Stevenson v Rogers [1999] 1 All ER 613

F sells the goods in the course of a business => s.14(2) can apply.

Potter LJ

Question 59

Satisfactory Quality – SOGA 1979 as amended s 14(2)

Answer 59

Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

=> course of business ?

Potter in Stevenson v Rogers [1999]

‘distinguish between a sale made in the course of a seller’s business and a purely private sale of goods outside the confines of the business (if any) carried on by the seller

==> UNLESS defects specifically drawn to attention of buyer before Contract is made

==> REGARDLESS of how much it costs for buyer to rectify defects

Bartlett v Sidney Marcus Ltd [1965]

==> UNLESS buyer examines the goods before the contract is made and any defects arise which that examination ought to reveal.

If s.14(2)

THEN

strict liability => no fault on part of Seller required

is warranty adn not condition when breached if

the breach is so slight that it would be unreasonable for the buyer to reject the goods.(s.15A) => the buyer is entitled to damages but not to reject the goods.

Question 60

The sellers, who were motor dealers, sold a second-hand Jaguar. Their sales executive told the buyer that the clutch was defective and that he thought this would be a minor repair, costing £2-£3. The buyer agreed to pay a discounted price, rather than have the sellers repair the clutch. Two weeks later the buyer arranged for his own garage to repair the clutch. The total cost of this repair came to slightly over £84. The buyer claimed damages for breach of s14(2).

Answer 60

Bartlett v Sidney Marcus [1965] 1 WLR 1013

HELD: Defect drawn to his attention => s.14(2) could not apply

Question 61

Definition of Satisfactory Quality?

Answer 61

Section 14(2A) of the SGA 1979

• For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.*
• => reasonable person test => Objective*

=> Any description of the goods will be taken into account in deciding whether the goods are satisfactory

See s.14(2B) on quality of goods:

• For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods –*
• (a) fitness for all the purposes for which goods of the kind in question are commonly supplied;*
• (b) appearance and finish;*
• (c) freedom from minor defects;*
• (d) safety; and*
• (e) durability.*

Question 62

Section 14(2B) then amplifies the meaning of the quality of goods:

Answer 62

• For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods –*
• (a) fitness for all the purposes for which goods of the kind in question are commonly supplied (i.e. common purpose of goods)*
• (b) appearance and finish;*
• (c) freedom from minor defects;*
• (d) safety; and*
• (e) durability.*

These five matters listed are not hard and fast requirements; they are only aspects of the quality of goods in appropriate cases. In a consumer sale of a new product all of the aspects are likely to be appropriate.

Question 63

What section governsof SOGA 1979 Fitness for purpose?

Answer 63

Section 14(3) of SGA provides that:

• Where the seller sells goods in the course of a business && the buyer, expressly or by implication, makes known…to the seller…any particular purpose for which the goods are being bought, =>*
• implied [term] that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller.*

Question 64

3 circumstances for fitness for purpose term to be implied in s.14(3) SOGA:

Answer 64

The following circumstances are required for the term to be implied:

1. The goods must be sold in the course of the seller’s business;
2. The buyer must expressly or impliedly make known to the seller the particular purpose for which the goods are being bought; and
3. The buyer must (reasonably) rely on the skill and judgment of the seller.

Case

In Clegg v Andersson [2003] 1 All ER (Comm) 721 Lady Justice Hale stated that a customer buying a high priced quality product “may be entitled to expect that it is free from even minor defects, in other words perfect or nearly so”.

BUT

Griffiths v Peter Conway Ltd [1939] 1 All ER 685

The buyer bought a Harris tweed coat, which the seller made especially for her. Shortly after beginning to wear the coat, the buyer contracted dermatitis. The buyer had abnormally sensitive skin but had not made this fact known to the seller. The coat would not have caused anyone with normal skin to contract dermatitis. The Court of Appeal held that the sellers were not in breach of either s14(2) or s14(3).

==> specific characteristics of buyer not considered unless stated at contract time

Peter Griffiths Family Guy fit for no puirpose! SODA not soga

Question 65

GR The moer you pay…

Answer 65

the more you can expect in terms of quality.

ALSO

buy cheap, pay dear (buy twice)

Cf

Section 14(2A) of the SGA 1979 now defines satisfactory quality:

For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.

Question 66

relevant sections of CRA 2015, correspondence with SOGA 1979

Answer 66

s. 9,10,11, 19(14), 19(15), 20,21,22,23,24

Note CRA SOGA correspondence

9 = > 14(2) Satisfactory quality

10 => s14(3) Fitness for Purpose

11 => s.13 Goods as Described

s20-24

1. Short-term right to reject
2. The right to repair or replacement
3. The right to a price reduction or the final right to reject.

Later rejections=> ss19(14) and 19(15) may come into effect!!

Question 67

COndition technical definition of

Answer 67

type of term the slightest breach of which will in principle give rise in the injured party to a right to terminate the contract (“treat the contract as repudiated”)