Contract law

Question 1

What is a contract?

Answer 1

A legally binding agreement between 2 or more parties, verbal or written. An agreement is not legally binding unless it has intention.

Question 2

What are the essential features of a contract?

Answer 2

Requires offer and acceptance and consideration

Question 3

Whats a bilateral contract?

Answer 3

One party offers to do something in return for an action of the other party. (both parties have an obligation to perform an action)

Question 4

What is a unilateral contract?

Answer 4

1st party promises to perform an action in return for a specific act whilst the 2nd party doesnt promise to take any action for sure.

Question 5

What is the difference between an offer and invitation to treat?

Answer 5

Offeror proposes a set of terms to the oferee, with a promise to be bound by the terms if the oferee accepts.
Invitation to treat is merely an invitation to negotiate (stage before the offer).

Question 6

What is the authority for Partridge v Crittendens invitation to treat?

Answer 6

defendant placed advert for sale of birds in newspaper. Held that under the literal rule it was an invitation not an offer as not everyone that read the advert would be able to purchase a bird.

Question 7

What is the authority for goods displayed in a shop in Fischer v Bell?

Answer 7

goods on display in a shop are not offers they are an invitation to treat.

Question 8

What is the authority for goods displayed on the shelf in Pharmaceutical Society v Boots?

Answer 8

Goods on the shelf are an invitation to treat, customer takes goods to the shop assistant where they make the offer and they must accept so the contract is concluded at the till.

Question 9

What is the authority for bids in an auction in Payne v Cave?

Answer 9

Held the requested bids were invitation to treat so when withdrew bid before hammer banged then no contract was made

Question 10

What is the authoirty for statement of price in Harvey v Facey?

Answer 10

Mere statement of price that they are willing to accept is not enough to form a contract.

Question 11

Explain how Carbill v Carbollic Smoke ball set precedent that not all advertisements are invitations to treat?

Answer 11

You can make a contractual offer to the entire world by making it a unilateral offer and it doesnt require acceptance (anyone that satisifes the terms has accepted).

Question 12

What ways can an offer be terminated?

Answer 12

By acceptance
By rejection (rejects or counters)
By lapse of time (wont be accepted if accept offer after particular time - where no specific lapse of time then it is terminated when deemed reasonabale).
Revocation (offer can be withdrawn at any time before acceptance)

Question 13

What is the authority for rejection or counter offer in the case of Hyde v Wrench?

Answer 13

Wrench offers to sell farm, Hyde counters offer at lower price and Wrench rejects. Offer is terminated and a new contract is made if Hyde agrees to original contract.

Question 14

What is the authority for revocation in Routledge v Grant?

Answer 14

R wanted to buy G house, G said he would keep offer open for 6 weeks but G revoked his offer ( must be communicated in which case its fine).

Question 15

Can unilateral offers be revoked?

Answer 15

Not if the offeree is still performing it e.g Errington v Errington - father brought house and told daughter if she paid mortgage she could have the house. When he died he left house to the widow but couldnt revoke unilateral offer as daughter had already started to pay mortgagw.

Question 16

With evidence to Stevenson v Mclead - can offer be terminated when asked for more info?

Answer 16

Contract not destroyed by asking for more info )e.g if defendant could pay in installments).

Question 17

Use Entores v Miles Far East corp case to determine whether acceptance is valid where sent or received?

Answer 17

Valid where received e.g telegram sent in holland and received in England - contract was made in England

Question 18

Is silence accpetance? Felthouse v Bindley

Answer 18

silence isnt acceptance e.g contract not valid as Bindley never replied to Felthouse whether he wanted to buy the house.

Question 19

When is acceptance of offer valid when posted? Adams v Linsdell

Answer 19

When acceptance of offer is posted - so offeror was obliged to sell the wool to the oferee despite them selling the wool to someone else before they received the offer.

Question 20

When is acceptance effective when sent by fax or email? Entores v Miles Far East?

Answer 20

Beccomes effective when received not read during business hours.

Question 21

When there is battle of the forms (both parties want their standard terms and conditions ) what is the general rule? Butler MAchine COmpany v Ex Cello Corp

Answer 21

Take last counter offer and give effect to terms in contract. e.g butler made offer on standard t&c’s , defendants accepted on their own t&c’s (counter offer which claimants accepted by signing and returning tear off slip) which confirms the last approach (battle normal;y won by last party to counteroffer)

Question 22

Use Ramsgate Victoria Hotel v Montefiore to explain reasonable time frame?

Answer 22

M refused to pay for shares that were applied for in June and werent issued until Nov - court considered this wasnt a reasonable time

Question 23

What is a voidable contract?

Answer 23

Injured party in breach has option whether to affirm the contract (continue with contract and bring about an enforeceable one e.g company still requires delivery) or they can avoid the contract and it is terminated.

Question 24

What is a void contract?

Answer 24

If contract is destroyed due to not having a legal element e.g offer, acceptance, consideration and intent to create legal creations then contract never existed.

Question 25

What is consideration?

Answer 25

Each party must prove they are contributing something to the contract in return for the promise of the other party. ‘Some detriment to the plaintif and benefit to the defendant’ : Thomas v Thomas

Question 26

Give examples of forms that consideration may take?

Answer 26

Money, provision of serivce, future promise

Question 27

Whats the difference between executed consideration and executory consideration?

Answer 27

EXECUTED - one party promises to do something in return for the act of another (e.g acceptance in Carlil case)
EXECUTORY - a promise followed by an agreement to do something in the future (e.g paying for goods or services at a later date)

Question 28

What does Currie v Misa describe consideration as?

Answer 28

Some right, interest, profit or beneift accruing to one party or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other.

Question 29

What are the rules governing consideration?

Answer 29

• It must not be past, it must proceed rather than follow agreements
• Must be sufficient but not adequate (e.g must be of some value but no the same value as the other party)
• Performing an existing duty or something they are legally obliged to do is not consideration.
  -Defendant must receive some extra benefit for consideration to be deemed adequate.
• Accepting lower debt is not binding unless supported by fresh consideration.

Question 30

What is the authority for Re Mcardle in past consideration?
What is the exception to this rule?

Answer 30

Defendant promised to reimburse son for substantial improvements to house after it had been done - then revoked offer. Held the consideration was past so no contract.
If the act is done in response to a request - Lampleigh v Brathwaite; B asked L to secure him a pardon for murder. b was so grateful he offered L £100, then refused to pay. Not past as done in response to a request.

Question 31

Define sufficient and adequate?

Answer 31

Sufficient = real, tangible and have some value
Adequate = roughly equal value to other parties

Question 32

Is Chappel &Co ltd v Nestle a sufficient and adequate contract? Is Thomas v Thomas?

Answer 32

record sold in return for chocolate wrappers, held it was valid as doesnt require something of equal value to be exchanged.
Thomas v Thomas was valid as paid £1 in rent a year so it couldnt be deemed as a voluntary gift.

Question 33

Compare Stilk v Myrick and Harley v Ponsby for determining whether consideration is good in the case of performing an existing duty?

Answer 33

S v M - 2 crewmates desserted ship and a promise was made to increase wages, later refused. Not good consideration as doing what they were cobtractually obliged.
H v P - half crew desserted, remaining had to work twice as hard so were doing more than contractually obliged (consideration good)

Question 34

Compare Harris v Sheffield United and Leeds united case for determining whether they exceeded their contractual duty?

Answer 34

in the case of SU it was held that policing of football match in the grounds of the stadium was beyond protecting the public and amounted to special police service.
Leeds united case didnt amount to consideration as police were policing the riots in streets from football match as this is what they were expected to do.

Question 35

Explain how Williams v Roffey Bros shows that performance of an existing duty can be good consideration if the defendant gains an extra benefit from this?

Answer 35

R was contracted to refurb flats and subcontracted work to W. Promised to pay W £575 more per flat to finish on time to avoid penalty clause in place with flat owners - W was owed the money despite only carrying out his contractual obligations.

Question 36

What does Foakes v Beer case tell us about accepting lower debt in return for consideration?

Answer 36

Held that if payment not made in full can sue later for interest.

Question 37

What is promissory estoppel?

Answer 37

A defence for preventing a party who promised to vary the contract for the others partys benefit from attempting to enforce the original contract.

Question 38

How did D&C BUilders v Rees use promissory estoppel as a defence?

Answer 38

R owed £482 to builders for months, she offered them £300 or nothing when became aware of financial situation. They agreed then later sued for full amount which they were entitled to as R exploited their situation.

Question 39

What does Privity of contract mean and explain this through the use of the case Dunlop v Selfridges?

Answer 39

Means only parties involved in the contract can sue.
D v S - D contracted a distribution co, S then sold tyres below contracted price. D couldnt get damages from breach of contract as no contract existed between them (contract was with S and distributer and D and distributer).

Question 40

What is the contracts act 1999?

Answer 40

Privity rule seen as unfair to prevent those with an interest in the contract from being able to sue. The act gives rights to the third party to enforce terms of contract if it expressly provides for it. (third oarty need to be named or have a relationship).

Question 41

Explain Themis v Colwill and Martin?

Answer 41

T entered into a contract with a company that was then sold to C&M. When T was unsatisfied with the work he wasnt able to sue C&M as didnt have a contract with them and they hadnt named him as a third party.

Question 42

Why does a contract require intent to create legal intentions?

Answer 42

So that parties view the agreement as a lawfully enforceable contract and a breach could result in a remedy being sought.

Question 43

What happened in Simpkins v Pays?

Answer 43

3 relatives entered into weekly lottery. When money won P refused to share prize money as described it as a social arrangement. Held that sharing cost of entry elevated it to a non social arrangement.

Question 44

Explain how Merrif v Merrif isnt a social arrangement?

Answer 44

Husband and Wife divorced, husband gave wife £40 to meet repayments if she contributed to mortgage payments, When payed mortgage she brought a dec that the house belonged to her. Held that it didas were seperated at time of agreement so more likely to have intended it be legally enforceable.

Question 45

Are minors able to enter a contract?

Answer 45

Yes with protection, often can make con tracts voidable so if benefits minor then can affirm it to become valid.

Question 46

Is a contract for necessaries (food, water, shelter, clothing etc) deemed valid, void or voidable? Back up with a case.

Answer 46

Valid - Nash v Inman; tailor sold waistckat to student - goods werent deemed as necessaries as student had enough clothes already.

Question 47

Give evidence to how necessaries are determined?

Answer 47

Based on someones status - Peters v Flemming held that ornate jewelerry was a necessarie for a young rich man.

Question 48

Explain how Clements v Northwestern railway proves that contract will be held binding if benefits the minor?

Answer 48

Minor was a porter and joined an insurance society to provide him with more protection, beneifical but claims paid out were lower than under act. When injured due to negligence of employer he wasnt able to void his membership for greater payment as the package was of benefit to the minor.

Question 49

What is the Minors CONTRACT act 1987?

Answer 49

at 18, debts from when a minor will be binding on them. Where third party acted as guarantor for minor, the contract may be enforceable on them.

Question 50

What is the mental incapacity act 2005?

Answer 50

patient under mental health act portected from entering contract - any contract made will be void. To avoid the contract the patient must prove at the time of concluding they didnt know the nature of the agreement and the other party must have been aware of the incapacity. But will be valid if for necessities and other party doesnt know about incapacity.

Question 51

Will a contract be valid, void or voidable if one party was intoxicated at the time?

Answer 51

Valid if other party is unaware as assumed they are fully aware of actions.
Voidable if so intoxicated they dont know the consequences and other party knows.

Question 52

Will mistakes make a contract void, voidable or valid?

Answer 52

Void if they are fundamental to the contract as makes it not a true agreement.

Question 53

DEFINE;
common mistake
mutual mistake
unilateral mistake

Answer 53

• both parties make same mistake
• both parties at cross purposes for the nature of the contract.
• one party mistakes terms of contract or the others identity.

Question 54

How does Great peace shipping vs Tsavliris salvage international show common mistake?

Answer 54

Damage to ship, defendants requested nearest ship to rescue sinking crew, GP said was closer than they thought. When defends found out the cancelled contract with GP, GP claimed breach of contract. Court held common law mistake didnt render contract different to what it was.

Question 55

Explain case of Courtrier v Hastings over existence of goods?

Answer 55

Whilst negotiating sale of corn it was disposed of, held no contract as no goods but said that operative mistake is not the same as being careless so could have amounted to a breach.

Question 56

Explain Raffles v Wichelhaus for mutual mistake?

Answer 56

Cotton was being shipped, one party thought in Oct the other in Dec. Void as reasonable person wouldnt be able to determine which.

Question 57

What did the Phillips v Brooks case hold authority for in unilateral mistakes?

Answer 57

That when parties transact in person there is a presumption that they deal with the person they see in fornt of them not who they claim to be so contract wont be void.

Question 58

What does Shogun Finance v Hudson hold authority for in unilateral mistake?

Answer 58

contracts formed on mistakedn identity and where adequate checks done will make the contract void. e.g rogue was impersonating Mr Patel and produced docs to convince finance co of his identity.