contract law Flashcards
promissory estoppel
principle that gives legal effect to an agreement unsupported by consideration.
1-there must be a clear and unequivocal promise by the promisor not rely on existing legal rights
2- promises must have altered their position in reliance on the promise
3- it must be inequitable tofor the promisor to go back on their promise
POSTAL RULE
Under the postal rule, acceptance by mail creates a contract at the moment of posting, with a couple of exceptions not relevant here. Rejection, on the other hand, is effective when received. So, as the postal rule applies, there is a contract, because the friend’s acceptance was posted before his rejection letter was received.
A woman loses her dog on a country walk. She places signs in local village shop windows stating, ‘reward offered for safe return’.
In which of the following situations could the reward not be claimed?
To accept an offer of a unilateral contract by performance, the offeree must be aware of its existence. Therefore if the man finds the dog and is unaware of the reward when he returns it to the woman, he cannot claim it. The reward can be claimed in (
What is an ‘invitation to treat’?
An expression of willingness to negotiate, which falls short of a valid offer that is capable of acceptance.
A concert venue is booked by a famous singer for several dates on the singer’s world tour. Prior to the first concert date, the venue is burned down as a result of an electrical fault.
Can the singer terminate the contract and sue for damages?
The contract has been frustrated as the fire has occurred without fault of either of the parties. For frustration to apply, the contract must be incapable of being performed, not just more difficult or expensive. Clearly in this scenario, as there is no venue, the concert cannot go ahead. The Law Reform (Frustrated Contracts) Act 1943 (‘LRFCA’) deals with the apportionment of loss between the parties in such situations. The LRFCA provides that where a contract has become frustrated, and the parties have been discharged from further performance: (1) all sums paid in respect of the contract before discharge are recoverable and all sums payable before discharge cease to be payable, (2) if any expenses have been incurred before discharge, the court may, if it considers it right to do so having regard to all the circumstances of the case, allow retention of sums paid to account for reasonable expenses incurred, and (3) where any party has obtained a valuable benefit before the time of discharge, such benefit may be recoverable and the party who benefited may have to pay for it.
A woman contracted with a dog breeder for the purchase of a show dog. At the time of the sale, the breeder falsified the dog’s pedigree records to indicate that there were several champions in the dog’s bloodline. After a few weeks of enjoying the dog’s companionship, the woman discovered what the breeder had done.
What is the status of the contract between the woman and the dog breeder at the time of the revelation?
he breeder has made a (fraudulent) misrepresentation, which has induced the woman to enter into the contract. A contract is voidable for misrepresentation at the election of the innocent party. Misrepresentation does not render a contract invalid
Voidable contracts are valid unless and until a party elects to avoid (rescind) the contract. Voidable contracts include:
h Acontractenteredintoinrelianceonamisrepresentation(discussedfurtherbelow) h Most contracts entered into by minors (other than for necessaries)
h A contract entered into under duress
A contract entered into as a result of undue influence. Cases where an outside party’s influence prevented a party from giving true consent.The distinction between void and voidable contracts is sometimes important to an exam question. The key thing to remember is that void contracts cannot be enforced, but an aggrieved party can elect to enforce a voidable contract. Also, in the sale of goods context, title to goods can never pass under a void contract, whereas a party who buys goods under a voidable contract may be able to pass good title to a third party who buys the goods from them in good faith and for value.
A man and a woman enter into a contract under which the man agrees to sell the woman his 19th century cottage in a village. The man later changes his mind and refuses to go through with the sale.
What remedy is most likely to be available to the woman?
As a piece of land, particularly a period cottage in a village, is likely to be unique, damages would not be an adequate remedy to compensate the woman for her loss as she would not be able to acquire another property which is exactly the same. It is therefore likely that the courts would be willing to grant the equitable remedy of specific performance to compel the man to sell her the cottage as per their contract. Therefore (
A ship owner hires their ship to a customer for two years. It is a term of the contract that the ship be seaworthy. It becomes clear that the crew are unable to sail the ship properly due to its antiquated machinery and because they are insufficient in number. During the voyage, the ship breaks down several times and is out of service undergoing repairs for many weeks to make it seaworthy. After it has been repaired, only 17 months remain of the two-year contract.
Can the customer terminate the contract for breach?
Where it is not clear whether a term of a contract is a condition or a warranty, the court will class it as an innominate term and look at the effect of the breach when deciding what remedy should be available to the innocent party. The court will consider whether the occurrence of the breach deprived the innocent party of substantially the whole benefit of the contract. If it did, the court will treat the term as akin to a condition and the innocent party will be entitled to terminate the contract. If it does not, then the court will treat the term like a warranty and the innocent party will only be entitled to damages. In this scenario, the requirement that the ship is seaworthy is not classified by the contract as either a condition or warranty. Unseaworthiness could cover numerous different breaches, some fundamental but others trivial, so this term is an innominate term and the court will need to consider the nature of the event to which the breach gives rise. Here, the customer had received the benefit of the contract for 17 out of 24 months, so the court is likely to hold that the breach was adequately remedied by damages
consideration
he law requires both parties to a contract to provide consideration as ‘the price of their promise’. Consideration must have some value (it cannot be illusory), but that value is not required to be equal to the consideration provided by the other party nor is it required to be monetary.
minor
As a general rule, an individual under the age of 18 lacks capacity to enter into contracts. The exception to this is a contract for the sale to the minor of necessary goods, making (C) the correct answer. Necessary goods are defined by the Sale of Goods Act 1979 as goods suitable for the condition in life of the person concerned and to their actual requirements at the time of sale and delivery. What is deemed necessary will therefore differ from one individual to another.
Two businesses contract with each other for the sale and purchase of a piece of machinery. When corresponding about the contract, each business uses their own standard form contract, and both are clear that the contract is governed by their own standard terms and conditions.
How would the courts decide whether a contract exists and which terms govern it?
Responses
This is a so-called ‘battle of forms’ situation. Case law has shown that in circumstances such as these, the courts will find a valid contract between the parties based on the last set of terms and conditions sent before performance of the contract commenced, so (B) is the correct answer. The offer contained in the terms and conditions is accepted by the other party’s conduct in accepting performance of the contract
privity of contract ecveptions
he Contracts (Rights of Third Parties) Act 1999 is a statutory exception to the doctrine of privity.
a.Subrogation.Subrogation.
B Agency.Agency.
C Trusts.Trusts.
D Assignment
a to d common law exceptions
exclusion of liability
The term is automatically void under the Consumer Rights Act 2015 (‘CRA’). The heating engineer is a trader and the homeowner is a consumer. The term is seeking to exclude the implied statutory requirement that the boiler be fit for a purpose expressly or impliedly made known by the consumer (in this case, the engineer will have known by implication that the boiler had to be adequate to heat the house). Exclusions of the implied statutory terms are prohibited under the CRA and therefore void.
consideration
For consideration to be valid, it must be sufficient but need not be adequate. The law requires there to be some value to the consideration (that is, sufficiency) but the law will not interfere if you have made a contractually bad bargain, that is, if the value of the consideration flowing from one party to the other is unequal (that is, not adequate)
A car manufacturer contracted with a machinery supplier for the repair of a vital piece of machinery for its production line. The supplier was two months late in returning the mended piece of equipment. It was industry practice for manufacturers to keep a spare of this machinery in case of breakdowns, but the car manufacturer had not done so and sued the machinery supplier for its loss of profits for the period of time that the production line was not operational.
Will the car manufacturer be successful in its claim for loss of profit?
Responses
Damages for breach of contract can only be recovered for loss which arises naturally from the breach or was in the reasonable contemplation of both parties. As it was industry standard to keep a spare of the piece of machinery being repaired, it was reasonable for the machinery supplier to assume that the car manufacturer would be able to carry on with production, in the absence of any information to the contrary.
