Contract GAPS

Question 1

Formation

Answer 1

Agreement (Offer and Acceptance)

Consideration

Intention

Question 2

Past Consideration

Answer 2

Not usually sufficient - Exception:

1. Act must have been done at promisor’s request
2. Parties must have understood that the act was to be remunerated either by payment or some other benefit

3- Payment or other benefit must have been legally enforceable had the promise been made in advance

Question 3

Performance of existing contractual duty?

Answer 3

Only if there is practical benefit

Question 4

Part-payment of debt

Answer 4

1. Where debt is disputed in good faith
2. Unliquidated claims - where amount owed is uncertain
3. Payment at different place or earlier payment
4. TP makes payment
5. Payment is by different means at the request of the party accepting the lesser amount
6. Composition with creditors

Question 5

When can a third party enforce rights?

Answer 5

Contract expressly provides that they can

Contract purports to confer benefit on third party and it appears from the terms of the contract the parties intended for the term to be enforceable by a third party - expressly named in contract or member of benefitting class

Question 6

Exclusions from C(RTP) 1999

Answer 6

Employment contracts

Articles of association

If the contract excludes the Act

Question 7

Term or representation?

Answer 7

Viewed objectively from the perspective of a reasonable person having regard to the conduct of the parties

Take account of:
- Importance of the statement
- Stage in negotiations it was made
- Whether statement maker had any specialist knowledge or information

Question 8

Terms Implied by Statute - SOGA 1979

Answer 8

Goods will made description

Good will be of satisfactory quality (fit for purpose good are generally used)

Fit for purpose known to seller

(Treated as conditions)

Question 9

Terms Implied by Statute - SGSA 1982

Answer 9

B2B - Services

Carry out services within reasonable time and with reasonable care and skill

(Treated as innominate term)

Question 10

Terms Implied by Statute - CRA 2015

Answer 10

Consumer - Supply of goods:

Should match description be of satisfactory quality and be fir for purpose

Supply of services:

Carried out with reasonable care and skill

Completed in accordance within information consumer relies on

Completed for reasonable price (if not agreed)

Completed in reasonable time (if not agreed)

Question 11

Terms implied by courts

Answer 11

Only prepared to imply terms to give the agreement ‘business efficacy’

officious bystander test

Question 12

Servering terms

Answer 12

Courts will only do this if it does not harm the substance of the agreement

Question 13

Exclusion clause requirements

Answer 13

Must be incorporated into contract

Properly drafted to exclude the liability

Not be prohibited by statute

(Remember contra proferentum)

Question 14

Incorporation of exclusion clauses

Answer 14

Signature

Notice

(Must be brought to the attention of the other party at or before contract signing)

Question 15

Unfair terms - UCTA 1977

Answer 15

Regulates B2B

Excluding death or personal injury by negligence are void

Other loss by negligence are void unless reasonable

Implied condition as to title under SGA 1979 void unless reasonable

Cannot restrict performance of contract at all unless reasonable

Question 16

UCTA 1977 - What does reasonable mean?

Answer 16

Looks at:

• Strength of bargaining positions
• Whether there was opportunity to enter a similar contract without term
• Whether customer knew or ought to have known
• Whether compliance was practicable
• Any special order of the customer

Question 17

Unfair terms - CRA 2015

Answer 17

Regulates Consumer contracts

• Cannot limit or exclude statutory implied terms as to title, compliance with description, quality or fitness for purpose
• Cannot limit implied term that service must be provided with reasonable care and skill, within a reasonable time or for reasonable price
• Cannot exclude PI or death through negligence

Question 18

Unfair terms - CRA 2015

Answer 18

Contract remains valid bar the offending term

Question 19

Variation

Answer 19

Same as for discharge, all the parties must agree and the agreement must be supported by consideration

Question 20

Vitiating Factors

Answer 20

Void = contract without legal effect

Voidable= Valid unless innocent party elects to rescind it

Question 21

VF - Mistake

Answer 21

Must be so fundamental that it prevents formation or creates an agreement fundamentally different from what was intended

Question 22

VF- Misrepresentation

Answer 22

Voidable

• Silence will not amount to a misrepresentation (unless they do not correct a statement that was true but is now false)

Can be fraudulent, innocent, or negligent

Burden is on party to prove that statement was true or they believed it was true

Question 23

Termination

Answer 23

Goods delivered - Must return and claim damages

Rescission of voidable contract - treated as though it was never effective (entitled to be put in position they would have been in had the contract never been entered into)

Affirmation - once affirmed the right to terminate is lost

Question 24

Frustration

Answer 24

• If frustrated the contract is automatically discharged (no further liability and no damages)
• Events must be outside of the parties
• Impossibility of performance
• Continued performance is illegal

Question 25

Things that do not constitute frustration

Answer 25

• More difficult or expensive to perform
• Self-induced frustration (nothing more than breach of contract)
• Events that could be foreseen

Question 26

Restitutionary Damages

Answer 26

• Designed to prevent unjust enrichment

Requirements:

• Innocent part must show a legitimate interest in preventing the party in breach from keeping any profit

Question 27

Remedies

Answer 27

Damages - compensate for losses:

• Expectation interest = put innocent party in position they would have been in had contract been performed
• Reliance interest = Compensation for losses incurred in relying on the contract up to the date of breach

Question 28

When are damages assessed?

Answer 28

At the date of breach

Question 29

Specific performance

Answer 29

Cannot be used for employment or where it would cause undue hardship

Question 30

Guarantees

Answer 30

Promise by A (guarantor) to ensure that B, who is party to the contract, will perform their obligations

Must be in writing