contract law

Question 1

what is an offer and who defined it?

Answer 1

Clark defines an offer as: “a clear and unambiguous statement of the terms upon which the offeror is willing to contract should the person(s) to whom the offer is addressed decide to accept.”

Question 2

Bilateral Offer

Answer 2

A Bilateral offer is accepted by a promise to do something. Once accepted, both parties have assumed the obligations arising under the resulting contract.

Question 3

Unilateral Offer

Answer 3

A unilateral offer is accepted by performance of an act/ forbearance from acting.

Question 4

Four elements of a valid offer

Answer 4

(1) that the terms of the offer must be clear, certain and complete
(2) that the offer must be communicated to the other party;
(3) the offer must be made by written or spoken words, or be inferred from the conduct of the parties; and,
(4) the offer must be intended as such before a contract can arise.

Question 5

Invitation to treat

Answer 5

An invitation to treat is a statement made without intending a contract to result, it does not amount to an offer of itself. An invitation to treat essentially invites offers to be made

Question 6

There are four ways in which an offer can be terminated

Answer 6

(1) Rejection - Once the Offeree rejects the offer, the offer is then terminated.
(2) Revocation - Arises where the Offeror wishes to withdraw the offer. The general rule is that an offer can be withdrawn any time prior to acceptance. An offeror can terminate an offer at any time, but must make the revocation known to the Offeree.
(3) Lapse of time - An offer will generally terminate upon the lapse of a reasonable period of time.
(4) Death - Depends on whether the contract can be completed.

Question 7

Carhill v Carbolic Smoke Ball Co

Answer 7

The Court acknowledges that in the case of vague advertisements, language regarding payment of a reward is generally a puff, which carries no enforceability. In this case, however, Defendant noted the deposit of £1000 in their advertisement, as a show of their sincerity. Because Defendant did this, the Court found their offer to reward to be a promise, backed by their own sincerity

Question 8

Pharmaceutical Society of Great Britain v Boots cash chemist

Answer 8

Goods on a display are invitation not an offer; the customer makes an offer when they take the goods to the register, hence a contract has not been made until the cashier accepts the purchase.

Question 9

Dickinson v Dodds

Answer 9

Revocation of offer. For a revocation to be valid it does not have to be communicated by the offeror. It is valid if the offeree has heard about the revocation from a trustworthy third party whom the offeree believed.

Question 10

Errington v Errington

Answer 10

Paying the mortgage was an ongoing act of acceptance. Once the couple had begun paying the offer could not be withdrawn.

Question 11

What is acceptance?

Answer 11

Clark defines acceptance as “a final and unequivocal expression of agreement to the terms of an offer.”

Question 12

counter offer

Answer 12

A counter offer is an offer made after the original offer which changes the terms and/ or conditions of that original offer.

Question 13

Mirror image rule

Answer 13

A common law rule that requires that the terms of the offeree’s acceptance adhere exactly to the terms of the offeror’s offer for a valid contract to be formed.

Question 14

Postal Rule

Answer 14

The postal rule dictates that if an acceptance is sent by post, then acceptance is complete as soon as the acceptance is posted. The postal rule only applies to letters of acceptance sent by post and telegrams.

Question 15

Billings v Arnotts

Answer 15

The Court held that “[t]here was an inducement to the employees to join the Defence Forces and Acceptance was then completed when the plaintiff joined the Defence Forces

Question 16

Hyde v Wrench

Answer 16

A counter offer terminates the original offer

Question 17

Swan v. Miller

Answer 17

P offered to buy a property for 4750. He was unaware that there was a ground rent of 50 a year. Sellers thought he knew of the ground rent. They wrote back saying ‘accepted at price of 4750 and ground rent of 50’. This was seen as a counter offer i.e. not acceptance of the original offer.

Question 18

Consideration

Answer 18

Sir Frederick Pollock as: “[a]n act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.”

Question 19

Hamer v Sidway

Answer 19

Consideration may be a forbearance from doing something

Question 20

Brett v JS

Answer 20

In general, natural love and affection is not good consideration

Question 21

O’Neill v Murphy

Answer 21

Prayers are not good consideration

Question 22

Rule in Pinnel’s case

Answer 22

the payment of a lesser amount than is owed cannot discharge the obligation to pay the full amount, even if the creditor has agreed to accept the lesser amount, unless there is fresh consideration

Question 23

Chappell v Nestle

Answer 23

Consideration must be sufficient but need not be adequate. chocolate wrappers returned as a part of the promotion were deemed to be part of the consideration

Question 24

Roscorla v Thomas

Answer 24

Past consideration is not good consideration

Question 25

D&C Builders v Rees

Answer 25

Accept 300 or not get nothing

Question 26

Intention to create legal relations

Answer 26

A principle of contract law requiring the parties to intend to create obligations that are legally binding and enforceable.

Question 27

Presumption in intention to create legal relations

Answer 27

There is a presumption that domestic family transactions are not intended to be legally binding. This presumption may be rebutted. It is a presumption of fact. The onus in rebutting the presumptions rests on the party seeking to claim that the agreement has contractual effect.

Question 28

Jones v Padavatton

Answer 28

Intention to create legal relations. Parent and Child. Mother said if daughter came back from USA and trained to be a lawyer she would buy the daughter a new house. Mother didn’t give daughter the house. No ICLR as this was a social/domestic agreement.

Question 29

grounds for rebuttal of presumption that domestic family relations are not intended to be legally binding

Answer 29

• The parties are not on good terms
• the relationship is not close
• The agreement has a commercial element
• The agreement is reduced to writing
• Lawyers are involved in the drafting of the agreement
• One of the parties relies to their detriment on the agreement

Question 30

pieces of legislation require certain contracts to be evidenced in writing

Answer 30

(i) The Statute of Frauds Act, 1965;
(ii) The Statute of Frauds Amendment Act, 1828;
(iii) The Land and Conveyancing Reform Act, 2009;
(iv) The Arbitration Act, 2010;
(v) The Copyright and Related Rights Act, 2000;
(vi) Consumer Legislation;
(vii) Mediation Act, 2017.

Question 31

Boyers v duke

Answer 31

quotation was not meant to be an offer but an invitation to

treat

Question 32

S.4 Sale of Goods Act, 1893

Answer 32

This section requires that contracts for the sale of goods in excess of ten pounds should be in writing. This provision was repealed in the UK and in the United States

Question 33

Contracts for “necessaries”

Answer 33

are essentially contracts which are generally beneficial for the minor. Section 2 Sale of Goods Act 1893 defines necessary goods as “goods suitable to the condition in life of such infant or minor … and to his actual requirements at the time of sale and delivery.” The onus of establishing that a contract is “necessary” rests on the party asserting to have made a contract with a minor.

Question 34

implied terms

Answer 34

An implied term is something implicitly agreed to by the parties or which the policy of the law implies into a contract regardless of the intention of the parties.

Question 35

Representations and Warranties

Answer 35

are statements of fact made in the contract by one party to the other party as of a particular point in time. Their purpose is to create a “snapshot” of facts that are important to the recipient’s business decision to enter the transaction. An innominate term are terms which are neither categories as neither a condition or warranty.

Question 36

There are three ways to distinguish between a condition and a warranty:

Answer 36

(1) Categorisation by statute or precedent;
(2) Express designation in the contract;
(3) Implied designation in the contract.

Question 37

breach of condition

Answer 37

failure to perform a major or very important part of a contract, entitling the injured party to treat the contract as ended or entitled to damages

Question 38

Breach of Warranty

Answer 38

The failure to meet the terms of a promise or an agreement associated with a product. Entitled to damages

Question 39

The Parol Evidence rule

Answer 39

It is a negative rule; whereby, the rule essentially means oral evidence cannot be introduced.

Question 40

Hong Kong Fir v Kawasaki

Answer 40

In deciding whether an innominate term should be treated as a condition or warranty, the court will ask “does the breach deprive the innocent party of substantially the whole benefit of the contract”

Question 41

exemption clause

Answer 41

An exemption clause is an express clause which seeks to exempt (or remove) a party to a contract for liability of an event.

Question 42

McDermott identifies three questions which should be asked when faced with a question as to the applicability of an exemption clause:

Answer 42

(1) Has the clause been validly incorporated into the contract?
(2) Has it been worded so as to cover the breach which has occurred?
(3) Is it affected by any legislation (e.g. Unfair terms in Consumer Contracts)?

Question 43

Three primary methods upon which a party may incorporate an exclusion clause into a contract:

Answer 43

(1) incorporation by signature;
(b) , by notice; and
(c) incorporation through previous course of dealings

Question 44

the lefkowitz v great minneapolis supply store

Answer 44

The case held that a clear, definite, explicit and non-negotiable advertisement constitutes an offer, acceptance of which creates a binding contract.

Question 45

Offeree/Offeror

Answer 45

The person who makes the offer is known as the offeror; the person to whom the offer is made is known as the offeree.

Question 46

Storer v Manchester City Council

Answer 46

the Court held: ‘In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract.’

Question 47

Leonard v. Pepsico

Answer 47

The courts ruled that the advertisement did not lead the man to be able to believe Pepsi Co would convey a $23 million jet for $700,000 and that as the value of the contract fell underneath the “Statute of Frauds” it was required for both parties to form a written agreement. As this was not fulfilled there was no contract to be broken

Question 48

Stevenson, Jacques & Co v McLean

Answer 48

A request for further information is not a rejection of offer

Question 49

what does Friel say about discharge of contracts?

Answer 49

A contract is discharged when the subject matter of the contract has been completed: at that stage contractual liability between the contracting parties has come to an end

Question 50

what is the objective approach?

Answer 50

The objective approch is the approach the Courts use in determining whether or not a contract has been entered into between the parties. In the case of Smith v Hughes (1871) LR 6 QB 597, the Court held that the manner in which the parties conduct themselves can be used to determine whether the parties intended to enter into contractual relations.

Question 51

what are the exceptions to the pinnel case

Answer 51

There are three exceptions to the rule in Pinnel’s case:

(1) Introduction of a new element
(2) Composition with creditors
(3) Payment by a third party

Question 52

Section 3(2) of The Assisted Decision Making Act provides that a person lacks the capacity to make a decision if s/he is unable:

Answer 52

1. To understand the information relevant to the decision
2. To retain that information long enough to make a voluntary choice
3. To use or weigh that information as part of the process of making the decision
4. To communicate his or her decision (whether by talking, writing, using sign language, assistive technology or other means) or, if the decision requires the act of a third party, to communicate by any means with that third party.

Question 53

when may a contract be discharged

Answer 53

A contract may be discharged by performance whereby each party has performed their respective roles arising under the contract.

Question 54

where substantial performance has taken place

Answer 54

Where substantial performance of a contract has taken place, it is possible to seek payment of the contract price. In such cases, the contract price will be reduced by a cross- action for the defects in complete performance. The case law establishes that the two key factors are: (a) the nature of the defects; and, (b) the cost of remedying the defects compared to the contract price.

Question 55

The rule in Sumpter v Hedges

Answer 55

The rule in Sumpter v Hedges essentially dictates that where a party is willing to accept incomplete performance, he will generally be bound to pay for it on a quantum meruit (for work done) basis.

Question 56

doctrine of frustration

Answer 56

The doctrine of frustration operates in very limited and confined circumstances. After the parties to a contract have settled all the terms and conditions which are to operate, other factors may arise which render the performance of such contract IMPOSSIBLE. Such factors are outside the control of the parties.

Question 57

Ringsend Property Ltd v. Donatex Ltd

Answer 57

the doctrine of frustration is: “one of limited application and narrowness” and arises “in circumstances where performance of a contract in the manner envisaged by the parties is rendered impossible because of some supervening event not within the contemplation of the parties”.

Question 58

repudiation

Answer 58

In repudiation, the innocent party is given the right to terminate the contract, either before it has actually fallen due for performance or on the date for performance where it is made expressly or implicitly clear by the other party that s/he has no intention of performing the contract as agreed.

Question 59

What are the three types of mistake

Answer 59

(a) Common mistake – this is where the parties share the same mistaken perception as to an issue of fact
(b) Mutual mistake – this is where the parties are mistaken but not about the same thing. They are at cross purposes.
(c) Unilateral mistake – this is where only one of the parties are mistaken.

Question 60

A unilateral mistake as to identity

Answer 60

A unilateral mistake as to identity arises where a person sells goods to another person whom they believe to be someone else. This can occur when for example goods are being purchased on a stolen credit card and then sold to an innocent third party.

Question 61

a person seeking to raise the defence of non est factum (not my deed) must prove

Answer 61

(a) That there was a radical or fundamental difference between what he signed and what he thought he was signing.
(b) That the mistake was as to the general character of the document as opposed to the legal effect; and,
(c) That there was a lack of negligence - i.e. that he took all reasonable precautions in the circumstances to find out what the document was

Question 62

when does the doctrine of non est factum apply?

Answer 62

The doctrine of non est factum (“it is not my deed) applies where a person signs a document that turns out to be different documents than those which the person thought s/he was signing.

Question 63

what does Friel defines a misrepresentation as?

Answer 63

“pre-contractual statements made by the parties which are subsequently discovered to be untrue for one reason or another.”9 Essentially a misrepresentation is an untrue statement of fact which does not form part of the contract; but, has induced the party to enter into it.

Question 64

what are the three elements to the claim of misrepresentation?

Answer 64

(1) The misrepresentation must be one of fact
(2) It must not form part of the contract (otherwise you would pursue an action for breach of contract)
(3) It must have induced the party into entering into the contract.

Question 65

what must be proven in order to advance an argument of fraudulent misrepresentation?

Answer 65

it is essential to prove that the party knowingly mislead the other party into entering the contract. The course consider a charge of fraud to be one that requires a heavy onus of proof and will not lightly come to a conclusion of fraud being present.

Question 66

Half truths

Answer 66

where a party to a contract makes a statement that is true; but, incomplete, an action for misrepresentation may exist if the party making the misrepresentation remains silent as to the full truth.

Question 67

what do the courts have regards to for duress?

Answer 67

1. The source of the pressure
2. The nature of the pressure
3. The existence of causation

Question 68

what is duress of goods

Answer 68

Duress of goods is where someone pays money to gain access to property that should have been available as of right, or on other terms

Question 69

Economic duress

Answer 69

The modern concept of economic duress occurs where one party obtains a benefit from another party by exerting economic or commercial pressure.

Question 70

Undue influence

Answer 70

Contracts which are entered into as a result of one party putting pressure on another are dealt with under the doctrine of undue influence- which is an equitable remedy.

Equity will set a transaction aside where the relationship between the parties was such as to give rise to a presumption of undue influence.

Question 71

Two catergories of undue influence

Answer 71

Class 1 – Actual undue influence where the claimant must show the undue influence as alleged.

Class 2A - Presumed undue influence where the relationship itself gives rise to the presumption.

Class 2B - Presumed undue influence when, the rapport between the parties has given rise to a trust and confidence being placed in the wrongdoer AND the transaction is manifestly disadvanteous to the complainant

Question 72

Unconscionability

Answer 72

The courts have jurisdiction in equity to set aside or amend harsh bargains in certain circumstances. Equity will grant relief where unfair advantage is taken of a person who is poor, ignorant or weak-minded and requires special attention.

Question 73

expectation Loss

Answer 73

Compensate for what he would have expected had the contract been carried out

Question 74

Reliance Loss

Answer 74

injured party altered his position in reliance on the contract.

Question 75

Restitution Loss

Answer 75

that which has been paid over on foot of contract.

Question 76

Damages for distress and inconvenience

Answer 76

Previously it was the case (as per Addis v
Gramophone) that damages were not recoverable for emotional distress/ harm to reputation.
This is no longer the case in virtue of the decision in Jarvis v Swan Tours where the UK court held that in an appropriate case, damages for mental distress can be
recovered in contract and an appropriate case.

Question 77

Punitive damages

Answer 77

these are damages where the court may feel that the action of the defendant is so far removed from the norms expected in the conduct of contractual dealings
that an award of money should be made. Such an award is not to compensate the plaintiff, but to punish the defendant and so send a strong signal as to how such a breach of contract
is viewed.

Question 78

Penalty clauses

Answer 78

these are clauses within the contract which seek to penalise a party. Such a clause cannot be used in terrorem (as a penalty).

Question 79

liquidated damages clause

Answer 79

is a provision which specifies the amount of money which a defaulting party under a contract is required to pay his counterparty in the event that he fails
to perform a particular obligation in accordance with the terms of the contract.

Question 80

what factors are relevant when determining whether a statement is a representation or a warranty?

Answer 80

1. At what stage was the statement made? The closer the statement is made to the actual completion of the contract, the more likely it will be deemed to be a term;
2. If contract later reduced to writing and statement was omitted, then it is more likely to be a representation.
3. If person making statement has some special skill, then it is more likely to be a warranty.
4. The more important the statement is to the completion of the contract. Then it is more likely it is a warranty.

Question 81

contractual interpretation

Answer 81

There are two approaches to contractual interpretation – the textualist approach and the
contextualist approach.
o Textualism is akin to literalism – approach focuses on the black letter of the language- a strict
literal approach.
o Contextualism – the words cannot be interpreted without taking into account the context or
background of the contract.