Contract law Flashcards

Question

What is the exception to the general rule regarding invitations to tender?

Answer 1

The exception to the general rule is when the invitation to tender expressly contains an undertaking to accept the highest or lowest bid. In such cases, the party requesting tenders has made an offer to enter into a contract with the party submitting the highest/lowest bid.

Answer 2

The four rules for a valid acceptance are: only the person to whom the offer is made can accept it, the acceptance must be unqualified and correspond exactly with the terms of the offer, the acceptance must be communicated to the offeror using a valid mode of communication, and the offer must still be open at the time of acceptance.

Answer 3

The four aspects to identifying an unequivocal acceptance needed to form a contract are: 1) Acceptance must be communicated to the offeror, 2) Acceptance applies from the moment it is communicated, 3) Silence does not constitute acceptance, and 4) A third party with authority can effectively communicate acceptance on behalf of the offeree.

Answer 4

In the case of Gibson v Manchester City Council, the House of Lords held that there was no binding contract because there was never an offer made by the Council. The Council’s letter stating that it ‘may be prepared to sell’ lacked the requisite clarity and certainty to be considered an offer. It was deemed to be the first step in negotiations, lacking the intention to be legally bound.

Answer 5

In relation to the death of the offeror, if the offeree knows about the offeror’s death, the offer will lapse. However, if the offeree is unaware of the offeror’s death, the offer may not lapse. In the case of the death of the offeree, the offer will lapse and cannot be accepted by the offeree’s representatives.

Answer 6

The general rule is that the auctioneer’s request for bids is an invitation to treat. The bidder makes an offer, and the auctioneer is free to accept or reject it. Acceptance is indicated by the fall of the auctioneer’s hammer.

Answer 7

In an auction without reserve, the seller promises to sell to the highest bidder, regardless of the bid amount. If an auction without reserve is expressed, the auctioneer may be sued for breach of contract if they refuse to sell to the highest bona fide bidder.

Answer 8

An offeror must show an intention to be legally bound for a contract to be formed. The case of Gibson v Manchester City Council demonstrates the significance of an intention to be legally bound. The wording ‘may be prepared to sell’ used by the City Treasurer in Gibson lacked the requisite intention to be legally bound, while the similar case of Storer v Manchester City Council demonstrated an intention to be bound

Answer 9

Revocation refers to the act of the offeror withdrawing or revoking their offer at any time before acceptance. Once a valid acceptance has been made, the offeror is bound by the terms of their offer and cannot revoke it.

Answer 10

If the offeree posts their acceptance, it is unlikely to be deemed an equally advantageous mode of acceptance to the offeror, as post is slower than email. However, a response by an alternative instantaneous communication would likely suffice.

Answer 11

If the offeror prescribes a mode of acceptance and the offeree communicates acceptance in a different mode, the question arises whether the communication of acceptance in the other manner will suffice. If the offeror makes it clear that only acceptance by the prescribed mode will suffice, then acceptance by that mode is required. However, if the prescribed mode is not made mandatory and the alternative mode does not disadvantage the offeror, the acceptance using the alternative mode will bind the offeror.

Answer 12

Yes, a third party with authority can effectively communicate acceptance on behalf of the offeree.

Answer 13

Revocation of an offer is effective only upon actual notice of it reaching the offeree. If revocation is communicated by post, it takes effect from the moment it is received by the offeree and not from the time of posting. Indirect communication of revocation is also effective if the offeror has shown a clear intention to revoke and notice has reached the offeree.

Answer 14

The twin requirements of a unilateral offer in the Carlill case were a prescribed act (using the smoke balls in a specified manner for a specified period but nevertheless contracting influenza) and a clear intention to be bound. The defendants’ deposit of £1,000 and the certainty of the language used in the advertisement demonstrated their intention to be bound.

Answer 15

An offer may come to an end through rejection, lapse, or revocation. Once terminated, the offer loses its legal effect and becomes incapable of acceptance. It is important to check whether the offer had been terminated before accepting it.

Answer 16

No, once a valid acceptance has been made, the offeror is bound by the terms of their offer and cannot revoke it. An offer cannot be revoked after acceptance.

Answer 17

The postal rule does not apply if it is not contemplated that the post would be used, to letters revoking offers, if the letter is incorrectly addressed, or if the offeror has disallowed the postal rule.

Answer 18

The objective approach to agreement focuses on determining the intention of the parties based on what a reasonable person would say was their intention, considering all the circumstances. It is not concerned with the inward mental intent of the parties but rather with the outward manifestations of their intent.

Answer 19

The court takes an objective approach in determining intention to be bound. It focuses on what a reasonable person would say the parties intended based on their letters or communications. The actual intent of the parties is not relevant; what matters is the objective interpretation of their words and actions.

Answer 20

In order for there to be a binding contract, three elements must be present: offer and acceptance, intention to create legal relations, and consideration. Offer and acceptance involve one party making a clear and certain offer displaying an intention to be bound, and the other party communicating an unequivocal acceptance.

Answer 21

If the acceptance is incorrectly addressed, the postal rule may be displaced. The offeree’s own carelessness in addressing the acceptance may result in the loss of the benefit of the postal rule.

Answer 22

Exceptions to the postal rule include situations where the letter of acceptance was not properly posted, where it is not contemplated that the post would be used, where the letter is incorrectly addressed, or where the offeror has specifically excluded the postal rule. Note that the postal rule does not apply to letters revoking offers.

Answer 23

No, the offeror cannot stipulate that they will take silence to be acceptance and thus bind the offeree. The rule that silence cannot amount to acceptance is a sensible one as it clarifies when the parties are bound.

Answer 24

The Court of Appeal concluded that a message sent during ordinary office hours but not seen by office staff until the following Monday was effective when received. The decision recognized the possible negligence of the office staff in failing to note the message, allowing the offeree to reasonably assume effective communication.

Answer 25

In relation to unilateral contracts, acceptance is perceived as the complete performance of the act(s) required by the terms of the unilateral offer. However, if the offeree has partly performed the obligation and is willing and able to complete it, the offeror may be under an implied obligation not to revoke the offer.

Answer 26

In a unilateral contract, the communication of acceptance is waived. This means that acceptance can be made through performance of the acts required in the offer. The case of Carlill v Carbolic Smoke Ball Co (1893) is authority for this principle.

Answer 27

The three aspects of acceptance needed to form a contract are: 1) acceptance must be in response to the offer, 2) acceptance must be unqualified and correspond exactly with the terms of the offer, and 3) if a mode of acceptance is prescribed, the offeree can use any alternative mode that is no less advantageous to the offeror.

Answer 28

The courts have shown a willingness to look at the context and the parties’ past dealings to determine the meaning of office hours. This was established in the case of Thomas v BPE Solicitors

Answer 29

The auctioneer’s hammer falling constitutes acceptance of the antique collector’s offer, resulting in the conclusion of a contract for sale. If the hammer does not fall, no contract is concluded.

Answer 30

An offer ceases to be open if it is rejected, if a counter-offer is made, or if it is not accepted within the prescribed period or within a reasonable time. It can also lapse on the death of a party if the offeror or offeree dies.

Answer 31

In a business context, ICLR is presumed. In a domestic or social agreement, it is assumed that the parties do not intend to enter into a legally binding contract. These presumptions are rarely rebutted.

Answer 32

A request for bids at an auction is usually no more than an invitation to treat, and does not constitute a unilateral offer

Answer 33

The courts will look to enforce an agreement, reflecting the intentions of the parties, where possible. However, if an agreement is too vague or ambiguous, the courts may not be able to enforce it. The case of Hillas v Arcos (1932) 147 LT 503 demonstrates the court’s willingness to enforce an agreement if the words can be given a reasonable meaning.

Answer 34

Minors lack capacity to contract, but there are limited instances when they can be bound by a contract. These include contracts for necessaries and contracts of employment, apprenticeship, or education.

Answer 35

Consideration is the act or forbearance of one party, or the promise thereof, which is the price for which the promise of the other party is bought. Each party must give consideration for a contract to be binding.

Answer 36

A unilateral offer is a statement that an item will be auctioned without reserve, which can be accepted by the act of a bona fide bidder making the highest bid. An invitation to treat, on the other hand, is a request for bids at an auction, which is usually not considered a unilateral offer.

Answer 37

The mutual exchange of something of value, known as consideration, is vital for a contract to be binding. Without this exchange, a contract becomes unenforceable and is considered a gratuitous promise.

Answer 38

First, consideration must not be past. Second, consideration must move from the promisee. Third, consideration need not be adequate but must be sufficient. If valid consideration, along with agreement, ICLR, and capacity, is present, a binding contract is formed.

Answer 39

Acceptance must be a mirror image of the offer, unqualified, and made in response to the offer. If acceptance asks for something different or is a counter-offer, it is not binding. Acceptance must also be communicated to the offeror.

Answer 40

In the context of a contract for sale at an auction, acceptance occurs when the auctioneer’s hammer falls, signifying the conclusion of the contract.

Answer 41

Acceptance by instantaneous means, such as fax or email, is binding upon receipt. It is the offeree’s responsibility to ensure that acceptance has been properly communicated. If there is an error at the offeree’s end, there will be no contract. However, if the fault lies with the offeror, they will be estopped from denying acceptance.

Answer 42

If the offeror specifies a particular method of acceptance, the mode becomes relevant. If the offeror uses mandatory language and explicitly excludes other modes, only acceptance in the prescribed mode will be binding. Failure to use mandatory language and exclude other modes will leave the offeror bound by any mode that is no less advantageous.

Answer 43

When an auction is stated to be without reserve, it means that there is no minimum price set for the item being auctioned. The highest bidder, even if it is the only bid, is entitled to purchase the item.

Answer 44

Offer, acceptance, consideration and intention to create legal relations

Answer 45

An objective approach, by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances

Answer 46

The person to whom an offer is made

Answer 47

The offer must be clear, certain and show an intention to be bound.

Answer 48

A request for further information

Answer 49

It amounts to a counter offer.

Answer 50

The acceptance must correspond with the offer.

Answer 51

No, there is no contract between the farmer and the brother because the farmer did not accept the brother’s offer.

Answer 52

Where acceptance is communicated by post, the contract is formed as soon as the letter of acceptance is properly posted.

Answer 53

Existing obligations generally cannot be considered as good consideration for a new contract between parties. However, there are exceptions where an existing obligation can be good consideration, such as when the new contract provides a practical benefit and certain criteria are satisfied.

Answer 54

The three elements required for a binding contract are offer and acceptance, intention to create legal relations, and consideration.

Answer 55

For promissory estoppel to operate, there must be a clear and unequivocal promise or representation that is intended to affect legal relations. The promisee must have relied upon that promise or representation, and the reliance must put the promisee in a worse position than if the promise had never been made. Detrimental reliance is not always required for promissory estoppel to apply.

Answer 56

An existing obligation can be considered as good consideration for a new contract if it constitutes a practical benefit and certain criteria are satisfied. This was established in the case of Williams v Roffey, where the defendants promised additional payment to the plaintiff to ensure timely completion of the work, which provided a practical benefit to the defendants.

Answer 57

Executory consideration refers to promises made by contracting parties to perform something in the future after the contract has been formed. Executed consideration, on the other hand, is where the consideration has already been performed at the time of contract formation.

Answer 58

There are various exceptions to the rule that existing obligations cannot be good consideration. For example, a promise to do something that a party is already obliged to do pursuant to an obligation owed to a third party can be good consideration. Additionally, carrying out a public duty imposed by the law will generally not amount to sufficient consideration.

Answer 59

In general, consideration must not be past. It cannot have taken place prior to the promise to pay. However, there is an exception to this rule when some prior act or service was provided by the promisee at the promisor’s request and it was always understood that payment would be made for that act or service.

Answer 60

In exercising their discretion, the courts will look at the conduct of both parties to determine whether it would be just and equitable to grant the defense of promissory estoppel.

Answer 61

The rule in Foakes v Beer states that if a promise of the creditor to accept a lesser sum is unsupported by fresh consideration from the promisee, the agreement is unsupported by consideration. However, if a new element is introduced at the creditor’s request, such as payment at a different place or time, or by providing a different thing in place of money, it will amount to good consideration.

Answer 62

When a promisor resumes their full legal rights after giving reasonable notice, the right to full payment is brought back to life. Promissory estoppel suspends the right to full payment, but it can be revived by reasonable notice.

Answer 63

The three conditions for the exception to the rule of past consideration are: (a) the act must have been done at the promisor’s request, (b) the parties must have understood that the act was to be rewarded either by a payment or the conferment of some other benefit, and (c) the payment or conferment of other benefits must have been legally enforceable had it been promised in advance.

Answer 64

Promissory estoppel is commonly relied upon to create an exception to the rule that part payment of a debt without fresh consideration does not discharge the debt obligation. It allows for the enforcement of a promise made by one party to another, even if there is no consideration, if the promisee has relied on the promise to their detriment.

Answer 65

The practical benefit refers to the advantage or benefit that one party obtains from the performance of an existing obligation by the other party. In the case of Williams v Roffey, the defendants obtained a practical benefit by avoiding late completion penalties and maintaining an efficient working arrangement.

Answer 66

If the client requested the work to be carried out and both parties understood that the act was to be rewarded, the gardener is entitled to payment. The exception to the past consideration under Pao On v Lau Yiu Long [1979] UKPC 17 is particularly relevant in this scenario.

Answer 67

According to the doctrine of freedom of contract, the courts will not interfere with a bargain freely reached by the parties. It is not the court’s duty to assess the relative value of each party’s contribution to the bargain. Therefore, consideration does not need to be adequate as long as there is something of value exchanged.

Answer 68

Factual consideration refers to a consideration that acknowledges that nothing new is being promised, but the party in receipt of the promise is still getting something out of the reshaped deal. It is distinguished from legal consideration and recognizes that a party may receive a practical benefit from the agreement, even if there is no new promise or consideration.

Answer 69

The right to periodic payments may resume once the period over which promissory estoppel operates ceases. Alternatively, the promisor may resume their full legal rights after giving reasonable notice of their intention to do so.

Answer 70

Economic duress is a concept that can render a promise unenforceable if it is obtained by economic force or pressure. In cases where economic duress is present, the court may find that the promise lacks the necessary consent and therefore cannot be enforced.

Answer 71

Detrimental reliance is not always required for promissory estoppel to apply. It is sufficient if the promisee has made a change of position in reliance on the promise so that it would be inequitable to allow the promisor to go back on their promise.

Answer 72

The exception to the rule of past consideration exists when some prior act or service was provided by the promisee at the promisor’s request, and it was always understood that payment would be made for that act or service. This exception was established in the case of Pao On v Lau Yiu Long [1980] AC 614.

Answer 73

Consideration must move from the promisee, which means that a party who has not provided consideration may not bring an action to enforce a contract. This rule is related to, but distinct from, the doctrine of privity of contract.

Answer 74

If a landlord informs a struggling tenant that they are willing to accept reduced rent until the tenant finds a new job, the landlord can demand full rent after the expiry of reasonable notice. Promissory estoppel suspends the right to full payment, but it can be revived by reasonable notice.

Answer 75

The doctrine of economic duress provides that a promise to pay in certain circumstances might be unenforceable if the consent to the contract was effectively obtained by economic force. While economic duress was not directly addressed in the case of Stilk v Myrick, it is a concept that has developed in more recent times and may have influenced the court’s decision.

Answer 76

In the case of Williams v Roffey, the practical benefit obtained by Roffey Bros was the avoidance of late completion penalties in the main contract, a more efficient working arrangement, and the avoidance of the need to find an alternative contractor. This practical benefit was considered as part of the consideration for the promise of additional payment.

Answer 77

According to Williams v Roffey, the conditions necessary to establish factual consideration are: (i) the party has entered into a contract with another party to do work or supply goods/services in return for payment; (ii) before the party has completed their obligations under the contract, there is reason to doubt whether they will be able to complete their side of the bargain; (iii) the other party promises an additional payment in return for the party’s promise to perform their contractual obligations on time; (iv) as a result of giving the promise, the other party obtains a practical benefit or avoids a disbenefit; (v) the promise is not given as a result of economic duress or fraud; and (vi) the benefit to the other party is capable of being consideration for their promise, making the promise legally binding.

Answer 78

Executory consideration is consideration that has been promised but not yet provided. Executory consideration is where contracting parties make promises to each other to perform something in the future after the contract has been formed.

Answer 79

Consideration must move from the promisee.

Answer 80

A party who has not provided consideration may not bring an action to enforce the contract.

Answer 81

The cat sitter is not obliged to return the money to the woman as performance of an existing obligation owed to a third party is good consideration. Performance of the existing duty owed to Jack is good consideration for the promise by Polly.

Answer 82

Performance of an existing duty owed to a third party.

Answer 83

Part payment of a debt without fresh consideration does not discharge the debt obligation.

Answer 84

The landlord can demand full rent after the expiry of reasonable notice. A promisor may resume his full legal rights after giving reasonable notice - Tool Metal v Tungsten.

Answer 85

Where a debtor pays a lesser sum to his creditor than that which was due, the general rule is that the debtor is not discharged from his obligation to pay the balance. This can be discharged via promissory estoppel Rule in Pinnel’s Case - Provided a debtor gives the creditor something (other than just part payment) in return for the creditor’s promise to forgo the balance of the debt then that something different will be consideration.

Answer 86

(a) the past act/ promise was done at the promisor’s request; (b) there was a mutual understanding between the parties that the act/ promise would be compensated for in some way; and (c) had the promise been made in advance it would have been legally enforceable. This last condition often hinges on whether, or not, there would have been the necessary intention to create legal relations

Answer 87

The use of the expression ‘subject to contract’ during contract negotiations creates a strong inference that the parties do not intend to be bound until the formal execution of a contract.

Answer 88

The intention to create legal relations is an essential element in the formation of a contract. Without the intention to be bound, there is no contract. In commercial agreements, it is presumed that there is an intention to create legal relations, while in social/domestic agreements, it is presumed that there is not an intention to create legal relations. However, these presumptions can be rebutted

Answer 89

The test of intention in contract law is objective, meaning that the intention of the parties is determined by their actions and the particular circumstances rather than their subjective thoughts. The courts seek to give effect to the intentions of the parties, whether expressed or presumed.

Answer 90

As the friend accepted the man’s offer when they were friends, there is a presumption that the parties did not intend to create legal relations. However, this presumption can be rebutted by the parties’ conduct.

Answer 91

A contract with a minor is generally not enforceable unless it relates to ‘necessaries’ or to a contract of employment, apprenticeship, or education. In these specific cases, the contract can be binding on the minor.

Answer 92

‘Necessaries’ refer to goods or services that are suitable to a person’s condition of life and their actual requirements at the time of the sale and delivery. A minor must pay a reasonable price for necessaries rather than the actual cost.

Answer 93

A person lacking mental capacity is not bound by a contract unless they did not understand what they were doing, and the other party knew that to be the case. However, a person without capacity remains liable to pay a reasonable price for ‘necessaries’.

Answer 94

If a person lacks capacity, the contract cannot be enforced against them unless it relates to ‘necessaries’. In any other case, the contract is binding unless the person claiming incapacity can establish that they did not understand what they were doing and that the other party knew that to be the case.

Answer 95

If a minor ratifies a contract once they reach the age of 18, then the contract will be binding on them. However, there are exceptions to this general rule, and certain contracts of exceptional types may be enforceable against the minor unless the minor specifically repudiates them.

Answer 96

A person lacking mental capacity or who is intoxicated remains liable to pay a reasonable price for ‘necessaries’. In other cases, the contract is binding unless the person claiming incapacity can establish that they did not understand what they were doing, and the other party knew that to be the case. Similar rules apply to contracts entered into by drunken persons.

Answer 97

If an individual becomes so intoxicated that they do not understand what they are doing, they will have to pay a reasonable price for necessaries but will not be bound by any other contract they make. This position should logically extend to those incapacitated by other intoxicating substances.

Answer 98

The supplier of the equipment cannot enforce the contract against the girl as she is a minor, and none of the exceptions to the general rule apply.

Answer 99

There are rules on capacity to contract for individuals who are weak or less capable of looking after themselves, such as children, those who are mentally ill, and others temporarily lacking mental capacity. Persons over the age of 18 have full contractual capacity if they are of sound mind and not suffering from a factor ruling out capacity, such as drunkenness.

Answer 100

ICLR is presumed to exist in commercial situations but presumed not to exist in domestic or social situations.

Answer 101

The companies do not intend to be bound until they sign a formal contract. The phrase creates a strong inference that the companies do not intend to be bound until the execution of a formal contract.

Answer 102

The Sale of Goods Act 1979. The definition is found in section 3(3) of that Act

Answer 103

The ability of a person to enter a binding contract. Adults of sound mind have full contractual capacity. However, minors, the mentally incapacitated and those intoxicated have limited contractual capacity.

Answer 104

A minor is bound by a contract of employment but only if it is for their benefit.

Answer 105

The neighbour cannot enforce the contract against the boy as he is a minor. Correct. The neighbour cannot enforce the contract against the boy as he is a minor and the motorbike is unlikely to fall under the exception of necessaries.

Answer 106

Corporations have different levels of contracting ability, eg a statutory corporation will not be bound by contracts that are outside its statutory powers whilst limited liability partnerships have unlimited capacity. With registered companies check whether the company has capacity - but most of the time director’s powers should make capacity free of any limitation under the company’s constitution

Answer 107

Following the decision in Patel v Mirza, a court now adopts a discretionary approach, applying principles of public policy and proportionality.

Answer 108

The general rule in English law prior to the decision in Patel v Mirza was that a contract to perform an illegal act or a contract contrary to public policy would be declared void and unenforceable.

Answer 109

In the case of Patel v Mirza, Mr. Patel paid a large sum of money to Mr. Mirza for betting on changes in share prices. Mr. Mirza expected to receive ‘inside information’ about the shares, making the agreement between them illegal as they were pursuing ‘insider dealing’.

Answer 110

All nine Supreme Court judges agreed that the defense of illegality should not apply to defeat Mr. Patel’s claim for the return of his money.

Answer 111

A The Supreme Court identified the following trio of necessary conditions: a) considering the underlying purpose of the prohibition and whether denying the claim would enhance that purpose, b) considering any other relevant public policy impacted by the denial of the claim, and c) considering whether denial of the claim would be a proportionate response to the illegality, with punishment being a matter for the criminal courts.

Answer 112

An ‘operative mistake’ in contract law refers to a mistake that affects a contract and renders it void, meaning it has no legal effect from its outset.

Answer 113

The three categories of mistakes that can amount to operative mistakes in contract law are common mistake, mutual mistake, and unilateral mistake. Common mistake This is sometimes known as ‘identical mistake’ or ‘shared mistake’ because both parties have made the same fundamental mistake. As with frustration (which is a supervening rather than a preceding impossibility there are strict limitations on the operation of common mistake: *It will not operate if one party is at fault. *The contract must not make express provision on the matter. *The mistake must be fundamental, ie it must render performance of the contract impossible or radically different from what the parties anticipated. One instance where the courts will find a fundamental mistake is where both parties are mistaken as to the very existence of the subject matter of the contract. Cross- purpose mistake In the case of cross- purpose mistakes, the problem is that although one or other party may assert that a contract exists, each on terms favourable to that party, objectively it is impossible to resolve the ambiguity over what was agreed. That being the case, the only possible conclusion is that there was no contract. Unilateral mistake Unilateral mistake (ie where only one party is mistaken) is often relied on where there has been a mistake as to the identity of the other contracting party. However, only a genuine mistake of this nature where the identity of the other party is of vital importance will render the contract void. If the mistake is as to anything less (eg a mistake simply as to the other party’s attributes such as creditworthiness) then it will not generally affect the validity of the contract.

Answer 114

Common mistake refers to a mistake as to the existence of the subject matter or a fact/quality fundamental to the agreement. Mutual mistake refers to a mistake as to the identity of the subject matter. Unilateral mistake refers to a mistake as to the identity of the person contracted with.

Answer 115

Unilateral mistake of identity occurs when one party mistakenly believes they are contracting with a person that the other party is pretending to be. Whether or not such a contract is void depends on the precise circumstances.

Answer 116

A mutual mistake occurs when both parties are mistaken, but they are mistaken about different things. In other words, they have negotiated at cross-purposes, resulting in a lack of genuine mutual consent and rendering the contract void.

Answer 117

A contract tainted by mistake is void from the outset and has no legal effect. In contrast, a contract affected by misrepresentation is voidable, meaning it may be set aside. This distinction is important when considering the remedies available.

Answer 118

If the offeror makes a material mistake in expressing their intention, and the other party knows or is deemed to know about the error, the contract is likely to be void.

Answer 119

The exception arises when a person signs or seals a document under a mistaken belief as to its nature. In such cases, the person may raise the defense of non est factum (‘it is not my deed’).

Answer 120

The objective test is used to determine whether a reasonable third party would infer the existence of a contract in a given sense, based on the words and conduct of the parties themselves. If a reasonable person would infer such an agreement, the court will hold that a contract in that sense is binding, even if there was a material mistake.

Answer 121

In face-to-face dealings, where one party makes a false statement about their attributes, the contract may not be void if the other party intended to contract with the person in front of them. However, in distance dealings, it is easier to establish that the confusion is about identity rather than attributes, resulting in the contract being void.

Answer 122

In a face-to-face transaction, the court will presume that the seller intended to deal with the person in front of them. This presumption can be difficult to rebut and requires the seller to show that identity, not attributes, was of vital importance.

Answer 123

In practical terms, if a contract is void for mistake or voidable for misrepresentation, the seller may be left without a remedy. They may not be able to recover the goods or the agreed-upon payment if the fraudulent buyer has sold the goods to a third party in good faith.

Answer 124

If the original owner sells goods to a fraudster, and the fraudster sells them to an ultimate purchaser, title will have passed to the ultimate purchaser.

Answer 125

…of no legal effect from the outset.

Answer 126

The contract will be void if the seller can persuade the court that the identity of the buyer and not their attributes was of vital importance to the contract.

Answer 127

In a face-to-face transaction where there is a fraudulent misrepresentation as to the attributes of the buyer. Correct, the contract between the fraudster and the seller is voidable. Title will pass to the innocent third party.

Answer 128

A person who is not a party to a contract cannot acquire any rights under that contract or be subject to any of its obligations.

Answer 129

Contract (Rights of Third Parties) Act 1999. This allows a third party, who is neither a party to the contract, nor has provided consideration, to enforce a term of the contract in certain circumstances (see s 1). Common law methods of circumventing the doctrine.

Answer 130

Agency * Assignment * Collateral contract * Actions in tort * Other judicial attempts to avoid the doctrine

Answer 131

The basic requirements necessary to establish an agency relationship are as follows: (a) The principal should be named (usually by the agent) and it should be clear that the agent is contracting on the principal’s behalf; (b) The agent should be authorised to act as agent. In the vast majority of cases, the agent’s authority will be limited by the principal - eg the agent may be authorised to sell certain of the principal’s goods within a certain range of prices. The agent does not have freedom to enter into any contract it wishes to on behalf of the principal. The principal is only bound by acts of the agent which are within the agent’s authority (or, in certain circumstances, by acts which appear to be in the agent’s authority); and (c) Consideration has moved from the principal

Answer 132

Where A is under a contractual obligation to B and B assigns their contractual rights to C, it may be possible for C to sue A on their promise to B. Crucially, because B is simply passing their rights to C, the extent of C’s rights can never exceed the rights of B.

Answer 133

If there is a prohibition against the assignment in the main contract, then any attempted assignment is likely to be unsuccessful This would be a ‘non- assignment’ clause,

Answer 134

As an alternative to a total prohibition on assignment or sub-contracting (as set out above), the parties may agree to allow limited assignment of the benefit of the contract or sub-contracting of the work, for example, within a group of companies or to a named person or persons.

Answer 135

The court may find a collateral contract between the promisor and the third party to provide an exception to the doctrine of privity. e.g. Shanklin Pier employed contractors to paint the pier. It was a term of the contract that Shanklin Pier was to specify the paint to be used. Detel informed Shanklin Pier that their paint would last for at least seven years. Shanklin Pier instructed the contractors to buy and use Detel’s paint. The paint lasted three months. Shanklin Pier sued for breach of contract. However, the contract was between Shanklin Pier and the contractors. Mr Justice McNair held that there was a collateral contract between Shanklin Pier and Detel, the consideration for which was, on the one hand, the warranty by Detel that the paint would last for seven years and on the other, the instruction by Shanklin Pier to the contractors to buy the paint.

Answer 136

Where a ‘third party’ is prevented by the privity rule from bringing a claim under the contract, you should consider whether a claim can be brought in tort instead.

Answer 137

In certain circumstances, the courts have taken a flexible approach to the doctrine of privity, allowing a contracting party to recover in relation to losses suffered by a third party.

Answer 138

Under this Act, a third party can acquire rights if: * the contract expressly provides that they may acquire a benefit (s 1(1)(a)); or * the term purports to confer a benefit on them (s 1(1)(b)). Subsection (1)(b) does not apply, however, if on a true construction of the contract it was not intended that the term be enforceable by a third party (s 1(2)). For a third party to enforce a term of the contract in their own right, they must be expressly identified in the contract by name or as a member of a class (eg ‘employees’) or answering a particular description

Answer 139

ss 1(1)(a) and s 1(1)(b) create alternative circumstances in which a third party can enforce a term. Under s 1(1)(a), the contract must specifically provide that the third party can enforce a term of the contract. For example, s 1(1)(a) would apply if the contract specifically stated: ‘X has the right to enforce this contract’ or ‘X has a right to sue on this contract’. Under s 1(1)(b) in conjunction with s 1(2), it need not be stated specifically that the third party has the right to enforce a term. However, it must be established that: (a) The agreement purported to confer a benefit on the third party; and (b)It was not the case that the contracting parties ‘did not intend the term to be enforceable by the third party’.

Answer 140

The fact that there is no requirement that the third party be in existence at the date of the contract means that a right can be conferred on, for example, an unborn child, being expressly identified as a member of an identified class or answering a particular description.

Answer 141

In essence, where a term ‘purports to confer a benefit’ on a third party, s 1(1)(b) creates a rebuttable presumption that the third party will be able to enforce the term. Section 1(2) provides that this presumption will be rebutted if ‘on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party. The indications are that the courts will be slow to hold that, where the contract does purport to confer a benefit on a third party, there is no intention that the third party should have a right to enforce the term. In other words, once it is held that the contract purports to confer a benefit on a third party, there will be a rebuttable presumption in favour of the third party having a right to enforce the term and it will be difficult to rebut that presumption.

Answer 142

For the purpose of the Contracts (Rights of Third Parties) Act 1999, this Agreement does not and is not intended to give any rights, or any right to enforce any of its provisions, to any person who is not a party to it.

Answer 143

Importantly, it should be noted that the Act also allows third parties to rely on exemption or limitation clauses in contracts to which they are not a party in the same way in which it allows third parties to enforce contractual terms (s1(6)).

Answer 144

. Consequently, s 2(1) states: “Subject to the provisions of this section, where a third party has a right under section 1 to enforce a term of the contract, the parties to the contract may not, by agreement, rescind the contract, or vary it in such a way as to extinguish or alter his entitlement under that right, without his consent if: a) the third party has communicated his assent to the term to the promisor, b) the promisor is aware that the third party has relied on the term, or c) the promisor can reasonably be expected to have foreseen that the third party would rely on the term and the third party has in fact relied on it.” For the purposes of s 2(1)(a) the third party may communicate assent by ‘words or conduct’ (s 2(2)(a)) but, if the assent is sent by post, s 2(2)(b) stipulates that such communication will not be effective until received by the promisor. If the contracting parties wish to allow variation or rescission without the consent of the third party or in circumstances not provided for in s 2(1), they can do so by including an express term in the contract (s 2(3)). Section 2 also provides that the court can dispense with the third party’s consent where their whereabouts cannot reasonably be ascertained (s 2(4)(a)), where they are mentally incapable of giving their consent (s 2(4)(b)) or where their reliance on the term cannot be reasonably ascertained (s 2(5)). In such circumstances, where the court or arbitral tribunal sees fit to dispense with such consent, it may impose such conditions, for example a requirement to pay compensation, as may be thought fit (s 2(6)).

Answer 145

By virtue of s 3, the promisor’s defences against the third party are both the same as they would be against the promisee and anything specific that they may be able to claim against the third party.

Answer 146

As a breach of a relevant term could expose the promisor to actions by both the promisee and the third party, s 5 sets out to protect the promisor from double liability. It provides that any award to a third party may be reduced by the court or arbitral tribunal to such extent as is thought appropriate if the promisee has already recovered a sum in respect of the third party’s loss or the expense incurred by the promisee in making good to the third party the default of the promisor.

Answer 147

The Act allows a third party, in limited circumstances, to enforce a term of a contract to which it is not a party. * Broadly, a third party will have such a right: a. Where the contract states it should; or b. Where the contract purports to confer a benefit on it, unless it appears the parties did not intend the term to be enforceable by the third party. * The third party must be expressly identified in the contract, but this can be by describing a class of people, and the third party does not need to exist at the time of the contract. * Once a third party has a right under the Act, that right sometimes cannot be reduced / extinguished by the parties without the third party’s consent. * The third party’s rights will never be greater than they would have been had the third party been a party to the contract.

Answer 148

Where the contract expressly provides that they may

Answer 149

S1(5) of the 1999 Act makes available to a third party the same remedies for breach of contract which are available to a party to the contract

Answer 150

The Act allows a third party, in limited circumstances, to enforce a term of a contract to which they are not a party. To be effective: - the contract must specifically provide that the third party can enforce a term of the contract; or - the agreement purports to confer a benefit on the third party, and it is not the case that the contracting parties ‘did not intend the term to be enforceable by the third party’. The Act does not allow a contract to be enforced against a third party. The third party’s claim will be subject to limitation clauses /exclusions clauses in the contract

Answer 151

The three types of duress are duress to the person, duress to property, and economic duress.

Answer 152

The minimum basic test of subjective causation in economic duress is the ‘but for’ test. It must be shown that the agreement would not have been entered into if there had not been the duress.

Answer 153

Economic duress occurs when a party has no alternative but to accept revised terms that are detrimental to its interest. It involves exerting pressure on another party to enter into a contract or modify existing terms under circumstances that leave the victim with no practical choice.

Answer 154

Consideration is crucial in making a variation binding. If a party does no more than it was already bound to do, there is no consideration to make the variation binding. However, if a party goes above and beyond its original contractual obligations, it may amount to good consideration and make the variation enforceable

Answer 155

Yes, economic duress can invalidate a contract if it can be proven that one party exerted illegitimate pressure on the other party, leaving them with no practical choice but to accept the revised terms. The victim must demonstrate evidence of protest at the time the alleged duress was exerted.

Answer 156

In economic duress, the pressure must have actually caused the making of the agreement, in the sense that it would not otherwise have been made either at all or, at least, in the terms in which it was made. On the other hand, duress to the person can be established if the duress is one factor influencing the wronged party’s behavior, even if it is not a decisive factor.

Answer 157

Factors that might prevent a contract from being formed include duress and undue influence.

Answer 158

The causation test for duress to the person is that once it is established that physical threats contributed to the decision to enter into the contract, duress will be found as long as the threats were one of the reasons for contracting. The burden of proof is on the party who exerted the pressure to show that the threats and unlawful pressure contributed nothing to the victim’s decision to contract.

Answer 159

In Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, the Court of Appeal recognized practical benefit as good consideration to make a promise to pay more binding. However, if duress has been exercised to extract the promise to pay more, the promise will not be enforceable.

Answer 160

When assessing the legitimacy of pressure in economic duress, factors such as an actual or threatened breach of contract, good or bad faith of the party exerting the pressure, whether the victim protested at the time, and whether the victim affirmed and sought to rely on the contract are taken into account.

Answer 161

Duress involves one party coercing another party into a contract, where consent is not present or not given freely. Undue influence, on the other hand, is less about an act that amounts to improper pressure and more about a relationship where one party has influence over the other, which could be taken advantage of.

Answer 162

When considering whether there has been illegitimate pressure in economic duress, the court will consider: whether there has been an actual or threatened breach of contract, whether the party exerting pressure has done so in good or bad faith, whether the victim protested at the time of the duress, and whether the victim affirmed the contract after the duress ceased.

Answer 163

Duress to goods refers to a threat to seize or damage the owner’s property. To establish duress to goods, it must be shown that the agreement would not have been entered into if there had not been the duress.

Answer 164

To succeed in establishing economic duress, it must be shown that the agreement would not have been entered into but for the duress. This test demonstrates the causal link between the duress and the agreement.

Answer 165

Undue influence exists when a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will. The court keeps its options open to find undue influence in any situation that falls within this test.

Answer 166

In order to establish economic duress, the three elements that must be present are compulsion/lack of practical choice for the victim, which is illegitimate, and which is a significant cause inducing the claimant to enter into a contract.

Answer 167

Protest at the time of alleged duress and timely action to set aside the contract are important factors in cases of economic duress. Failure to protest or delayed action may be taken as acquiescence or affirmation of the revised terms, which can weaken the claim of economic duress.

Answer 168

The two types of undue influence are overt acts of improper pressure or coercion, which overlap with the idea of duress, and situations where one party has influence or ascendancy over the other and takes advantage of that influence. In the latter case, there may be no specific act of pressure or coercion, but the underlying relationship is sufficient for undue influence to be exercised.

Answer 169

A person who has entered into a contract under duress has not done so under their own free will. The contract is considered ‘voidable’, meaning that it remains in force unless some action is taken. The party subject to duress may choose to avoid the contract after the duress has ceased. The proper remedy for duress is rescission, which involves attempting to return the parties to the situation they were in prior to the contract being entered into.

Answer 170

Parties can vary a contract, effectively agreeing to replace the old set of terms with a new set. However, if the variation is the result of improper pressure, such as economic duress, it may not be binding. The material provided on economic duress will help you understand this concept.

Answer 171

A threat to breach a contract is an unlawful threat and usually amounts to illegitimate pressure in cases of economic duress. Breaching a contract by failing to comply with its terms is considered a breach and can give rise to a right of the innocent party to claim damages.

Answer 172

The court determines if undue influence exists by considering whether a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will. The court wants to keep its options open to find undue influence in any situation that falls within this test.

Answer 173

If a contract is affirmed after duress has ceased, the remedy of rescission may be lost. Affirmation occurs when the innocent party fails to challenge the contract in a timely manner or acts in compliance with its terms. The court may conclude that the contract is affirmed, which operates as a bar to rescission.

Answer 174

If an unlawful threat to breach a contract is made for illegitimate ends, it is considered bad faith and will almost inevitably lead to a finding of economic duress. However, if the pressure is exerted in good faith, it may be considered legitimate commercial pressure.

Answer 175

The three types of duress are duress to the person, duress to property, and economic duress. Duress to the person refers to actual or threatened violence that influences the decision to enter into a contract. Duress to property involves a threat to seize or damage the owner’s property. Economic duress occurs when one party lacks practical choice due to illegitimate pressure, and the agreement would not have been entered into without the duress.

Answer 176

If a person’s consent to a transaction was produced in a way that it ought not fairly be treated as the expression of their free will, the transaction will not be allowed to stand. Undue influence can invalidate a transaction if it is proven to have been exerted.

Answer 177

Relevant factors to consider when assessing the legitimacy of pressure in economic duress include an actual or threatened breach of contract, good or bad faith of the party exerting the pressure, whether the victim protested at the time, and whether the victim affirmed and sought to rely on the contract.

Answer 178

The key elements of undue influence are a relationship of influence/ascendancy and taking unfair advantage.

Answer 179

The proper remedy for duress in a contract is rescission. Rescission involves attempting to return the parties to the situation they were in prior to the contract being entered into. It is a remedy that voids the contract and allows the party subject to duress to avoid it.

Answer 180

Relationships where one party has significant influence over the other, such as parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and doctor and patient, may give rise to a presumption of undue influence. However, there is no definitive list of relationships, and influence can also arise from trust and confidence placed in the other party.

Answer 181

In situations where a third party is involved, such as a bank, and encourages one party to enter into a transaction with another party, further complexities arise. It raises questions about whether the contract between the bank and the party influenced by the business owner should be binding, even though the undue influence did not come from the bank.

Answer 182

In cases of duress to the person, the burden of proof is on the party who exerted the pressure to show that the threats and unlawful pressure contributed nothing to the victim’s decision to contract. This means that the party exerting the pressure must demonstrate that the threats did not influence the victim’s decision.

Answer 183

Economic duress and consideration are related in cases where an attempt has been made to vary a contract. If a party does no more than it was already bound to do, there is no consideration to make the variation binding. However, if a party does something above and beyond its original contractual obligations, it may amount to good consideration, making the variation enforceable.

Answer 184

The court determines if a transaction was produced under undue influence by considering whether the consent to the transaction ought not fairly be treated as the expression of a person’s free will. The court keeps its options open to find undue influence in any situation that falls within this test.

Answer 185

A contract or variation of a contract that has been entered into under duress is voidable. This means that the wronged party may be able to take action to have it set aside and to have the parties returned to the position they were in before the contract was entered into.

Answer 186

In cases of economic duress, the burden of proof is on the party claiming duress to show that there was illegitimate pressure or a threat that resulted in a lack of practical choice. The party claiming duress must demonstrate that the pressure was a significant cause inducing them to enter into the contract.

Answer 187

When considering whether there has been illegitimate pressure in economic duress, the court will consider: whether there has been an actual or threatened breach of contract, whether the party exerting pressure has done so in good or bad faith, whether the victim protested at the time of the duress, and whether the victim affirmed the contract after the duress ceased.

Answer 188

Affirmation refers to the victim’s action of relying on the contract and not taking timely action to set it aside. Delayed action to set aside the contract can weaken the claim of economic duress as it may be seen as an affirmation or acceptance of the revised terms.

Answer 189

The test for economic duress is that there must be pressure whose practical effect is that there is compulsion on, or a lack of practical choice for the victim. The pressure must be illegitimate and a significant cause inducing the claimant to enter into the contract. These are the ingredients of actionable economic duress.

Answer 190

Economic duress can impact the enforceability of a variation in a contract. If duress has been exercised to extract a promise to pay more, even if there is practical benefit supporting the variation, the promise will not be enforceable.

Answer 191

In cases of economic duress, contracting parties are expected to consider risks such as changes in the cost of materials or labor when entering into a contract. Parties may include clauses to address price escalation or negotiate shorter contracts to mitigate risks. Failure to consider and address these risks may impact the enforceability of the contract.

Answer 192

Undue influence can render a contract voidable, meaning the wronged party may be able to take action to have it set aside. Undue influence occurs when one party takes advantage of a relationship of influence or ascendancy over another party.

Answer 193

The remedy for duress in a contract is rescission. Rescission involves attempting to return the parties to the situation they were in prior to the contract being entered into. It is a remedy that voids the contract and aims to restore the parties to their pre-contractual positions.

Answer 194

In cases of economic duress, lack of practical choice is a key element. The pressure exerted on the victim must result in a lack of practical alternative or options. The victim must have no practical choice but to acquiesce to the demand.

Answer 195

If a contract is affirmed after duress has ceased, the remedy of rescission may be lost. Affirmation occurs when the innocent party fails to challenge the contract in a timely manner or acts in compliance with its terms. The court may conclude that the contract is affirmed, which operates as a bar to rescission.

Answer 196

To prove that they have been the victim of undue influence, a party must show a relationship of trust and confidence (or one of the categories of irrebuttable presumption) and a transaction that requires explanation. If these elements are present, the court will determine that the transaction is the product of undue influence unless the alleged wrongdoer can provide evidence to convince the court otherwise.

Answer 197

If a party alleges undue influence and shows a relationship of trust and confidence along with a transaction that requires explanation, the burden shifts to the defendant. The defendant must produce evidence to show that there was no undue influence. If they fail to do so, undue influence is established.

Answer 198

Equitable relief, such as setting aside a contract or gift by deed, may be granted in cases of undue influence. However, the court has discretion in granting this relief. It may be refused if the innocent party has delayed making their claim or if their conduct has been underhand.

Answer 199

According to Glidewell LJ, the criteria for factual consideration to apply are: (1) the parties must have an existing contract for goods or services, (2) the paying party must have reason to doubt the performing party’s willingness or capacity to complete their existing obligations, (3) an extra payment is promised to ensure the existing obligations are completed, (4) the paying party gains a practical benefit or avoids a disbenefit, and (5) the extra payment is made in the absence of duress.

Answer 200

Factual consideration does not apply to new contracts, but only to variations of existing contracts.

Answer 201

A contract can be affected by undue influence from a third party when the victim is persuaded to enter into a guarantee or surety contract with a bank or creditor based on undue influence, misrepresentation, or other legal wrong committed by the third party, not by the other party to the transaction.

Answer 202

If a contracting party has actual notice of undue influence, the contract will be affected. However, it is highly unlikely that the party will have actual notice of undue influence. More commonly, there are circumstances that might lead the party to realize that a transaction carries a risk of undue influence.

Answer 203

The first question to consider when determining if there was undue influence is whether there was a relationship of trust and confidence. The party alleging undue influence must prove such a relationship, typically by showing that they placed trust and confidence in the other party.

Answer 204

A creditor would be put on notice when the transaction is not financially advantageous to the wife and there is a substantial risk in transactions of that kind that the husband has committed a legal or equitable wrong. In such cases, the creditor needs to take reasonable steps to satisfy itself that the wife’s agreement to stand surety has been properly obtained.

Answer 205

An agreement to accept less can be enforceable if a relevant common law exception applies, such as payment of a different place, time, or thing. Additionally, the exceptions of payment by a third party and practical benefit should be considered. Promissory estoppel can also potentially allow a party to defend itself when the other party demands the original amount.

Answer 206

The current leading test for economic duress comes from DSND Subsea v Petroleum Geo Services. The test includes three elements: (1) lack of practical choice for the victim, (2) illegitimate pressure, and (3) causation, where the victim must show that but for the duress, they would not have entered into the agreement.

Answer 207

When considering if a spouse has exercised undue influence over the other spouse, it is important to note that a relationship between spouses does not have an irrebuttable presumption of a relationship of influence or ascendancy. The spouse alleging undue influence will need to prove such a relationship, most likely by showing that they placed trust and confidence in their spouse. Additionally, the court has indicated that a spouse offering their interest in the matrimonial home as security for a loan to their spouse’s business is not a transaction that requires explanation, so the spouse alleging undue influence would need to provide more explicit evidence of undue influence.

Answer 208

If undue influence is established in a contract affected by a third party, the contract may be set aside. However, this relief is discretionary and may be refused if the innocent party has delayed making their claim or if their conduct has been underhand.

Answer 209

The elements of undue influence include: (1) a relationship of influence or ascendancy, where one party trusts and has confidence in the other, (2) unfair advantage taken of that relationship, which can be shown if the transaction requires explanation or does not appear to be in the interests of the person entering into it.

Answer 210

To establish undue influence in a contract resulting from a relationship of trust and confidence, the party alleging undue influence must show that there was a transaction that calls for an explanation. If these elements are present, undue influence is inferred unless the other party can provide evidence to the contrary.

Answer 211

In cases where a ‘victim’ is persuaded to enter into a contract, such as giving security to a bank, based on undue influence by a third party, the contract with the bank can be set aside if the bank had notice of the undue influence. A bank will be held to have constructive notice in every case where the relationship between the party giving the guarantee and the borrower is non-commercial, unless the bank takes reasonable steps to warn the weaker party of the risks of the transaction or to ensure that they get independent advice.

Answer 212

In cases of undue influence, delay or a failure to come to court with ‘clean hands’ may lead to the refusal of a remedy. Equitable relief may be disallowed if the innocent party has delayed making their claim or if their conduct has been underhand.

Answer 213

In contracts affected by a third party, the principle is that if the contracting party has actual notice of undue influence, the contract will be affected. However, it is more likely that there are circumstances that might lead the party to realize that a transaction carries a risk of undue influence. The issue of notice is relevant when determining if the bank will be fixed with constructive notice of undue influence.

Answer 214

To prove undue influence in a contract involving a third party and a victim who is persuaded to enter into a guarantee or surety contract, the victim must show that the contracting party (e.g., the bank) had actual notice of the undue influence. However, it is highly unlikely that the bank will have actual notice. Instead, the victim must demonstrate circumstances that might lead the bank to realize that the transaction carries a risk of undue influence.

Answer 215

Overt acts of improper pressure and undue influence are two types of situations in contract law where one party takes advantage of the other. Overt acts of improper pressure involve unlawful threats or coercion, while undue influence is concerned with imbalanced relationships where one party has power and influence over the other.

Answer 216

The contract is voidable

Answer 217

The duress need be only one factor influencing the victim’s decision to enter the contract

Answer 218

The illegitimate pressure must have been decisive in the making of the agreement

Answer 219

B exceeds their contractual obligation to A.

Answer 220

Guardian and ward Correct. The law presumes irrebuttably that in a relationship between a guardian and his ward, one party had influence over the other. This is irrespective of the true facts. However, the presumption that the transaction was procured by that influence may be rebutted

Answer 221

Whenever one party in a non-commercial setting is standing as surety for the other party

Answer 222

The spouse can sue the solicitor in negligence

Answer 223

For undue influence to be presumed, there must be: *a relationship of trust and confidence; and *a transaction that calls for an explanation.

Answer 224

The effect of both duress and undue influence is to make contracts voidable. The only remedy is rescission.

Answer 225

The elements of an actionable misrepresentation include: unambiguous, false, statement of fact, addressed to the claimant, and induces the claimant to enter into the contract with the statement maker.

Answer 226

The general rule is that silence does not amount to a statement of fact, whether it is a statement of fact or otherwise.

Answer 227

Yes, there are special rules for statements of law, opinion, future intention, or silence.

Answer 228

A representation is a statement asserting the truth of a given state of facts. It can be made during negotiations leading to a contract and may qualify as a ‘representation’.

Answer 229

In most cases, mere silence will not give rise to an action for misrepresentation. However, there are exceptions to this general rule, such as half-truths, continuing representations, and contracts uberrimae fidei (contracts of utmost good faith).

Answer 230

If the statement is material, inducement will be inferred. If the statement is not material, then inducement must be proved.

Answer 231

Fraudulent misrepresentation is made knowingly, without belief in its truth, or recklessly. Negligent misrepresentation occurs when the representor fails to show reasonable grounds to believe the statement or does not believe it to be true. Innocent misrepresentation is made neither fraudulently nor negligently, where the representor had reasonable grounds for belief and believed the statement to be true. As such, no damages are available as of right for an innocent misrepresentation.

Answer 232

The principle of ‘continuing representations’ states that if, at the beginning of negotiations, a statement is made that is true but later becomes false before entering into the contract, the representor has an obligation to correct the representation. Failure to do so can lead to liability for misrepresentation.

Answer 233

The main remedies for misrepresentation are rescission and damages. Rescission involves putting the parties back in their pre-contractual positions, while damages refer to a payment of money.

Answer 234

An actionable representation is an unambiguous false statement of fact made to the claimant that induces them to enter into a contract. A non-actionable representation may include statements of opinion, intention, or silence.

Answer 235

Statements of opinion, statements of future intention, and silence do not normally amount to misrepresentation.

Answer 236

If a representor is in a position of superior knowledge or experience, a statement of opinion by them may be held to involve a statement of fact that there are reasonable grounds for their opinion. If there are no reasonable grounds for that opinion, a false statement has been made.

Answer 237

The classic definition of fraudulent misrepresentation was given in the case of Derry v Peek (1889) 14 App Cas 337 in the House of Lords. It requires proof of fraud, which can be shown when a false representation has been made knowingly, without belief in its truth, or recklessly.

Answer 238

An indemnity covers expenses or obligations arising from the contract, while damages compensate for losses suffered. The availability of damages depends on the type of misrepresentation, whereas an indemnity would be awarded for innocent misrepresentation.

Answer 239

The burden of proving that a misrepresentation was fraudulently made is on the claimant, and it is a heavy burden to discharge.

Answer 240

The statement must be false to qualify as a misrepresentation. However, if the statement is substantially correct and the difference between what is represented and what is actually correct would not have likely induced a reasonable person to enter into the contract, it may still be considered true.

Answer 241

The test for actionability in misrepresentation involves determining if the representation is unambiguous, false, a statement of fact, addressed to the claimant, and induces the claimant to enter into the contract.

Answer 242

To establish negligent misrepresentation under the Misrepresentation Act 1967, it must be shown that the person making the misrepresentation had reasonable grounds to believe and did believe, up to the time the contract was made, that the facts represented were true.

Answer 243

If a representor states that they intend to do something, but they know they cannot do it or they do not actually intend to do it, they misrepresent their existing intention.

Answer 244

If a representor is found liable for negligent misrepresentation under the Misrepresentation Act 1967, they will be treated as if they had made a fraudulent misrepresentation. This has important implications for damages.

Answer 245

In order to rescind, the representee must communicate the intention to do so to the representor. Alternatively, the representee may initiate proceedings for rescission of the contract.

Answer 246

Inducement is established if the representation would have influenced a reasonable person or if the representee personally was induced by the statement. The misrepresentation must have caused the representee to enter into the contract. However, inducement cannot be inferred if the statement was not communicated, did not affect the representee’s decision, or was known to be untrue by the representee.

Answer 247

Difficulties can arise in categorizing a misrepresentation based on a change of circumstances. Failure to disclose a change in circumstances may not automatically be considered fraudulent, as it could be due to inadvertence or a failure to realize the duty of disclosure. Proof of deliberate or dishonest failure to disclose is required for fraud.

Answer 248

Rescission may be barred if the contract has been affirmed, if there has been a lapse of time without attempting rescission, if restitution is impossible, or if third party rights have accrued.

Answer 249

Under the Misrepresentation Act 1967, where a representor is found liable for negligent misrepresentation, they will be treated as if they had made a fraudulent misrepresentation. This means that they can be held liable for damages as if the misrepresentation was fraudulent.

Answer 250

If a representee chooses to test the validity of a representation by making their own investigations, they may not be able to bring a claim for misrepresentation. The representee must have relied on the misrepresentation, not their own investigations, for the claim to be actionable.

Answer 251

Damages for fraudulent misrepresentation are potentially greater, but damages for negligent misrepresentation under s 2(1) MA 1967 can often match those for fraudulent misrepresentation. Damages in lieu of rescission may also be available under s 2(2) for an action brought under s 2(1).

Answer 252

The test for materiality is an objective one. It asks whether the statement relates to an issue that would have influenced a reasonable person. If the statement is found to be material, inducement will generally be inferred. If the statement is not found to be material, the claimant must prove that they were subjectively induced.

Answer 253

An innocent misrepresentation does not render the contract voidable. However, damages in lieu of rescission may be available under s 2(2) of the Misrepresentation Act 1967.

Answer 254

The potential remedies available when misrepresentation is established are rescission, damages, and indemnity. Rescission allows the contract to be set aside, damages compensate for losses suffered, and indemnity covers expenses or obligations assumed as a result of the contract.

Answer 255

If the statement is found to be material, the burden shifts to the defendant to rebut the inference of inducement. The defendant must prove that the claimant was not subjectively induced. If the statement is not found to be material, the claimant must prove that they were subjectively induced.

Answer 256

The principle of ‘continuing representations’ states that if a statement made at the beginning of negotiations is true but becomes false before entering into the contract, the representor has an obligation to correct the representation. In the case of With v O’Flanagan, the seller of a medical practice remained silent about a change in income, which was considered a continuing representation. The duty to disclose the change in circumstances and income was breached.

Answer 257

In contracts uberrimae fidei (contracts of utmost good faith), there is a duty to disclose material facts. An example of such a contract is an insurance contract, where disclosure of all material facts must be made to the insurer.

Answer 258

Separate enquiries may show that the purchaser did not rely on the misrepresentation but on their own investigations. In such cases, a claim for misrepresentation may not be successful. However, separate enquiries do not automatically prevent a claim for misrepresentation, and the circumstances of each case must be considered.

Answer 259

Damages in lieu of rescission can be awarded when a person has entered into a contract after a misrepresentation has been made otherwise than fraudulently, and the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission if it is equitable to do so. This remedy is available only at the discretion of the court and is only available for negligent and innocent misrepresentation.

Answer 260

Parties in a fiduciary relationship, characterized by trust and obligations of good faith, can have an obligation to disclose information. Examples of such relationships include that between a company and its directors, or between a trustee and beneficiaries of a trust.

Answer 261

There is no automatic right to damages for innocent misrepresentation. However, the court has the discretion under Section 2(2) of the Misrepresentation Act 1967 to award damages in lieu of rescission. The court must consider the nature and seriousness of the misrepresentation, the loss that would be caused if the contract were upheld, and the loss that rescission would cause to the other party.

Answer 262

Where there is a relationship of sufficient proximity between two parties, the court might find that one party owes a duty of care to the other to take reasonable care that statements made are accurate.

Answer 263

If a contract contains an exemption clause purporting to protect a party from liability for misrepresentation or to exclude or restrict any remedy available to the other party, the clause will be of no effect except insofar as it satisfies the requirement of reasonableness under Section 3 of the Misrepresentation Act 1967, as substituted by Section 8 of the Unfair Contract Terms Act 1977.

Answer 264

A non-reliance clause is a clause in a contract that states that neither party has made any representations to the other in relation to the contract or its subject matter, and that neither party has relied on any representation from the other in entering into the contract. However, it is doubtful whether an ‘entire agreement’ clause, which states that the agreement constitutes the entire agreement between the parties, would be sufficient to exclude liability for any misrepresentations. Any clause attempting to exclude or limit liability for misrepresentation is subject to the reasonableness test under the Unfair Contract Terms Act 1977.

Answer 265

A breach of the duty of care in terms of accuracy of statements made may result in a claim in negligent misstatement.

Answer 266

The law of negligent misstatement, which is part of the law of negligence, intervenes in relation to false statements that induce the representee to enter into a contract. It establishes a duty of care on the party making the statement to take reasonable care that the statements made are accurate. Negligent misstatement is not limited to statements made during contractual negotiations and can relate to any statements that cause the recipient of the statement loss.

Answer 267

It is rare for a party to pursue a claim in negligent misstatement instead of misrepresentation when a claim in misrepresentation is available. However, in cases where there is a relationship of sufficient proximity between two parties and one party owes a duty of care to the other, a claim in negligent misstatement might be pursued if the statement caused the recipient loss.

Answer 268

When exercising its discretion to award damages in lieu of rescission, the court must have regard to the nature and seriousness of the misrepresentation, the loss that would be caused if the contract were upheld, and the loss that rescission would cause to the other party. This discretion is evident in cases such as UCB Corporate Services v Thomason [2005] 1 All ER (Comm) 601.

Answer 269

In cases of innocent misrepresentation, the representee is entitled to the remedy of rescission and, if applicable, an indemnity to cover the cost of the legal obligations arising from the contract entered into. Damages for innocent misrepresentation are not an automatic right, but the court has the discretion under Section 2(2) of the Misrepresentation Act 1967 to award damages in lieu of rescission.

Answer 270

Conduct Correct. Statements can also be made by conduct. In the case of Gordon v Selico, the intentional concealment of dry rot was found to be a misrepresentation

Answer 271

A statement that relates to an issue that would have influenced a reasonable person

Answer 272

Where it is proved that the opinion expressed was not one which the representor believed This also applies if the opinion expressed is not one which a reasonable man with the knowledge of the representor could have reasonably held

Answer 273

At the time the representors made the statement of future intention, they knew that they did not intend to do what they said they would do

Answer 274

A statement that is technically true but misleading

Answer 275

The normal burden of proof is reversed and the defendant bears the burden of proving that they had reasonable grounds for believing their statement and that they did believe it Correct. The claimant bears the burden of proof in a claim for fraudulent misrepresentation and it is a difficult burden to discharge. However, the 1967 Act reverses the standard of proof for negligent misrepresentation and places the burden on the defendant to prove that he had reasonable grounds to believe his statement and that he did believe it

Answer 276

A false representation that was made knowingly or without belief in its truth or recklessly

Answer 277

Rescission, damages in lieu of rescission and indemnity

Answer 278

Negligent misrepresentation

Answer 279

Yes, as long as the clause satisfies the requirement of reasonableness as stated in s. 11(1) of the Unfair Contract Terms Act 1977

Answer 280

Misrepresentation and breach of contract

Answer 281

Negligent misstatement Correct. The correct claim is negligent misstatement. There is no claim in negligent misrepresentation as the accountancy firm’s negligent advice did not induce the client to enter a loss making contract with them but with a third party. See s 2(1) MA 1967.

Answer 282

An exemption clause is a contractual term that purports to limit or exclude a liability that would otherwise attach to one of the contracting parties. It is used to limit or exclude liability in commercial contracts.

Answer 283

Exemption clauses can include statements about whether liability is entirely excluded or limited to a stated amount, which types of claims or duties the exemption relates to, and which types of loss the exemption relates to.

Answer 284

The purpose of the Unfair Contract Terms Act 1977 is to impose further limits on the extent to which liability for breach of contract, negligence, or other breach of duty can be avoided by means of contract terms and otherwise.

Answer 285

The two statutory controls that affect exemption clauses are the Unfair Contract Terms Act 1977 (UCTA) for contracts between businesses, and the Consumer Rights Act 2015 (CRA) for contracts between a business and a consumer.

Answer 286

The three points to consider are: incorporation (Is the exemption clause part of the contract?), construction (Does the clause, as drafted, cover the alleged breach(es) and resulting loss?), and statutory controls (What is the effect on the clause of the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015?).

Answer 287

The Consumer Rights Act 2015 regulates exemption clauses in consumer contracts. It ensures that attempts to exclude or limit liability for death or personal injury resulting from negligence, breach of statutory implied terms about quality of goods, digital content, or services are not binding on the consumer. The CRA also regulates unfair terms in consumer contracts.

Answer 288

The rule of contra proferentem means that if there is any doubt as to the meaning and scope of an exemption clause, the ambiguity will be resolved against the party seeking to rely upon it. This rule is applied when interpreting exemption clauses and can be used to construe ambiguous clauses against the party that drafted them.

Answer 289

Exemption clauses are often construed contra proferentem, meaning that any doubt as to their meaning and scope is resolved against the party seeking to rely on them. This is because courts and legislatures are concerned about limiting or excluding damages in a way that may be unfair to the innocent party.

Answer 290

Clear words must be used if a party is seeking to exclude liability resulting from its own negligence. The requirement is most obviously met when the word ‘negligence’ itself is used, but it can also be satisfied if the words used are wide enough to extend to negligence.

Answer 291

The reasonableness test in the Unfair Contract Terms Act 1977 requires that a term must have been fair and reasonable to be included in the contract, taking into account the circumstances known or reasonably contemplated by the parties at the time of making the contract. The test is judged at the time of the contract and considers factors specified in Schedule 2 of UCTA.

Answer 292

The doctrine of privity establishes that, at common law, a party outside the contract cannot benefit from its terms or have an obligation imposed upon them by the contract. This means that the doctrine applies to exemption clauses as well, limiting their effect on third parties.

Answer 293

Reasonable notice is important when incorporating an exemption clause, especially if the clause is onerous. Clear and emphatic notice may be required to ensure that the other party is aware of the clause and its implications.

Answer 294

The Contracts (Rights of Third Parties) Act 1999 reduces the effect of the doctrine of privity in certain circumstances. It allows third parties to benefit from the terms of a contract and have obligations imposed upon them, potentially affecting the operation of exemption clauses.

Answer 295

According to the Consumer Rights Act 2015, a term is considered unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer. However, terms specifying the main subject matter of the contract and the price cannot be assessed for fairness.

Answer 296

In contracts between commercial parties of equal bargaining power, the court is less likely to read a clause contra proferentem. Instead, the court favors a more commercial and less mechanistic approach to interpreting exemption clauses.

Answer 297

Under the Unfair Contract Terms Act 1977, liability for death or personal injury resulting from negligence cannot be excluded or restricted by an exemption clause. Similarly, liability for breach of statutory implied terms about the quality of goods, as specified in the Sale of Goods Act 1979, cannot be excluded or restricted unless the term satisfies the requirement of reasonableness.

Answer 298

The Canada Steamship test helps determine whether an exemption clause should be interpreted as excluding liability for negligence. It is used when the clause is ambiguous and may be less useful in some commercial cases. The test considers whether the clause falls into the category where liability is based solely on negligence or where the party would be liable irrespective of negligence.

Answer 299

Under the Unfair Contract Terms Act 1977, if a party deals on its own written standard terms of business, it cannot rely on a contract term to exclude or limit its liability for any breach of contract, unless the term passes the reasonableness test. This applies to rendering a contractual performance substantially different from what was reasonably expected and claiming entitlement to render no performance at all.

Answer 300

An exemption clause purports to limit or exclude a liability that would otherwise attach to one of the contracting parties, while a limitation of liability clause typically caps liability in relation to particular events at a particular sum.

Answer 301

Under the Consumer Rights Act 2015, liability for death or personal injury resulting from negligence and breach of statutory implied terms about goods, digital content, or services is not binding on the consumer. However, limitations on liability under section 49 cannot prevent the consumer from recovering the price paid.

Answer 302

When applying the reasonableness test in the Unfair Contract Terms Act 1977, factors such as the relative bargaining positions of the parties, inducements received by the customer, knowledge of the existence and extent of the term, practicability of compliance with conditions, and whether the goods were manufactured, processed, or adapted to the special order of the customer should be taken into account.

Answer 303

An exemption clause can be incorporated through signature, notice, or course of dealing. In almost all cases, the terms of a signed contract will be binding. Terms can also be incorporated by reasonable notice or by a course of dealing.

Answer 304

Construction means interpreting the exemption clause to determine whether the clause as drafted covers the breach and loss that has occurred

Answer 305

When an exemption clause occurs in a commercial contract between parties of equal bargaining power Following Persimmon Homes Ltd v Ove Arup & Partners Ltd [2017] when an exemption clause occurs in a commercial contract between parties of equal bargaining power, the contra proferentem rule and the Canada Steamship test might well be less useful than considering the normal meaning of the words construed in the light of the other provisions of the contract

Answer 306

The Act regulates exemption clauses that seek to exclude or restrict liability where both parties are acting in the course of a business

Answer 307

At the time the contract was made

Answer 308

A term is unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer

Answer 309

The Act makes unenforceable any term which restricts liability for breach of the requirement that services are performed with reasonable care and skil This is the correct answer because this proposition is not correct. S.57(1) provides that a customer is not bound by a term in a contract to supply services to the extent that it would totally exclude the trader’s liability to perform the service with reasonable care and skill, but a restriction of liability (to a specific sum) will not be binding to the extent that it would prevent the consumer from recovering the price paid, but otherwise could be binding. The other three answers are all correct interpretations of the 2015 Act and its effects

Answer 310

(a) it prevents the defendant from excluding or restricting their liability by reference to the term (eg in relation to death/ personal injury caused by negligence – UCTA 1977, s 2(1)) and the seller’s implied undertaking as to title (ownership) of goods sold or transferred (UCTA 1977, s 6(1)(a) and s 7(3A)); or (b) it has no effect on the term, and so the defendant can rely on the term (eg a clause in a freely negotiated contract that exempts liability for breach of an express term – UCTA 1977, s 3); or (c) it subjects the term to a ‘requirement of reasonableness’. This means that the defendant can rely on the term only if it satisfies this requirement. If it does not, UCTA 1977 will prevent the defendant from excluding or restricting their liability by reference to it. Indeed, if UCTA 1977 does apply, then, more often than not, it subjects the exemption clause to the requirement of reasonableness.

Answer 311

* loss or damage (other than death and personal injury) caused by negligence (including breach of the term implied by SGSA 1982, s 13) – UCTA 1977, s 2(2); * breach of the statutory implied terms relating to goods – description, quality and fitness for purpose – UCTA 1977, ss 6 and 7 (s 6 applies to sale of goods contracts and s 7 applies to goods supplied under a work and materials contract); and * breach of an express term contained in the standard written terms of the person seeking to exempt liability – UCTA 1977, s 3.

Answer 312

(a) exclude or restrict a right or remedy in respect of breach of ss 9– 11; (b) make such a right or remedy or its enforcement subject to a restrictive or onerous condition; (c) allow a trader to put a person at a disadvantage as a result of pursuing such a right or remedy; or (d) exclude or restrict rules of evidence or procedure.

Answer 313

(a) exclude or restrict a right or remedy in respect of liability for breaches of s 57 of the CRA 2015 effectively provides that a trader cannot exclude (compare restrict) liability for breach of s 49 (the implied term to perform a service with reasonable care and skill); (b) make such a right or remedy or its enforcement subject to a restrictive or onerous condition; or (c) put a person at a disadvantage as a result of pursuing such a right or remedy, or exclude or restrict rules of evidence or procedure.

Answer 314

The implied terms under the Supply of Goods and Services Act 1982 include the goods being of satisfactory quality, suitable for any purpose made known to the seller, and complying with any sample. These terms are explored in this Act.

Answer 315

The Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 impose important obligations on sellers in contracts for the sale of goods and suppliers in contracts for the supply of goods and services.

Answer 316

A Statements made during negotiations leading up to a contract can be divided into three groups: (a) Mere puffs or statements of no legal significance, (b) Statements of fact or law which the parties do not intend to be binding, and (c) Statements of fact which the parties intend to be binding.

Answer 317

Under a services contract, a consumer has the right that the service is performed with reasonable care and skill, the right to a reasonable price (where a price has not been agreed), and the right to receive the service in a reasonable time.

Answer 318

The Supply of Goods and Services Act 1982 applies to certain contracts for the transfer of property in goods, contracts for the hire of goods, and contracts for the supply of services.

Answer 319

The distinction between representations and terms becomes important when the statement turns out to be untrue or the promise is not fulfilled. The court then has to decide which statements are contractual terms and which are non-contractual representations, inducing the contract but forming no part of it.

Answer 320

The Consumer Rights Act 2015 provides additional remedies for consumers when the implied terms are breached. These remedies sit alongside the remedies available under general law.

Answer 321

In the Schawel v Reade case, the court considered the importance of the statement, the timing of the statement, the reduction of the contract into writing, the special knowledge or skill of the person making the statement, and the assumption of responsibility by the person making the statement.

Answer 322

A ‘contract for the transfer of goods’ under the SGSA 1982 refers to a contract where one person transfers or agrees to transfer the property in goods to another. It excludes specific types of contracts such as a contract of sale of goods, a hire purchase agreement, and more.

Answer 323

When goods fail to meet the requirements under the Consumer Rights Act 2015, a consumer has three remedial options: the short-term right to reject, the right to repair or replacement, and the right to a price reduction or final right to reject.

Answer 324

*Terms implied by custom *Terms implied in fact *Terms implied in law *Terms implied by statute

Answer 325

If a statement is a term of the contract and this term is not fulfilled, it will amount to a breach of contract, for which the innocent party may claim damages among other remedies. However, if the untrue statement is not a term of the contract but a representation, this may amount to a misrepresentation, for which the innocent party may still be able to obtain a remedy in the law of misrepresentation.

Answer 326

Terms implied in fact are based on the presumed but unexpressed intentions of the parties, while terms implied in law are imposed by the courts or statute regardless of the intention of the parties. Terms implied in fact give effect to the unexpressed intention of the parties, while terms implied in law arise out of certain common types of contractual relationships.

Answer 327

In a contract for the hire of goods, implied terms include the right to transfer possession, terms where hire is by description, terms about quality or fitness, and terms where hire is by sample. These terms correspond to those implied in contracts for the sale of goods.

Answer 328

Common law and statute

Answer 329

The short-term right to reject for non-conforming goods is available to the consumer for 30 days from the time ownership has passed, the goods have been delivered, and the trader has notified the consumer that the required steps have been taken. This right is not available if repair or replacement is either impossible or disproportionate.

Answer 330

A statement can be both a term and a representation, giving rise to an action for both breach of contract and misrepresentation. This means that if the statement is considered a term of the contract and is not fulfilled, it will be a breach of contract. If the statement is also false and can be classified as a misrepresentation, the innocent party may have a claim under the law of misrepresentation as well.

Answer 331

The Sale of Goods Act 1979 implies important terms related to title, correspondence with description, satisfactory quality, fitness for a particular purpose, and sale by sample.

Answer 332

When digital content is non-conforming, a consumer has the right to repair or replacement and the right to a price reduction. The right to repair or replacement must be provided within a reasonable time and without significant inconvenience to the consumer.

Answer 333

Section 12 of the Sale of Goods Act 1979 implies that the seller has the right to sell the goods.

Answer 334

The Consumer Rights Act 2015 provides important implied terms and remedies in consumer contracts for goods, digital content, and services

Answer 335

If non-compliant digital content causes damage to a device or other content, the consumer is entitled to repair or a compensatory payment from the trader.

Answer 336

Section 13 of the Sale of Goods Act 1979 implies that 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.

Answer 337

In seeking to discover whether the parties intended to be bound by a statement made by one of them, the court will apply an objective test based on the question, ‘what would a reasonable person understand to be the intention of the parties, having regard to all the circumstances?’ If the statement was made during negotiations to induce the other party to enter into the contract, there is prima facie ground for inferring that the statement was intended to be a binding term of the contract. However, this inference can be rebutted if the party making the statement can show that it would not be reasonable to hold them bound by it. The court will take into account any factors that appear to be relevant.

Answer 338

When services are non-conforming, a consumer has the right to require repeat performance and the right to a price reduction. Repeat performance must be provided within a reasonable time and without significant inconvenience to the consumer.

Answer 339

The cornerstone rights implied in a consumer sale of goods under the Consumer Rights Act 2015 are that the goods should be of satisfactory quality, reasonably fit for any purpose made known to the trader, and should match the given description.

Answer 340

Section 14(2) of the Sale of Goods Act 1979 states that 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.

Answer 341

For contracts for digital content, the implied terms under the Consumer Rights Act 2015 include the digital content being of satisfactory quality, reasonably fit for purpose, and matching any description given by the trader to the consumer.

Answer 342

The reduction of a contract into writing is one of the factors considered by the court when determining if a term should be implied. While there is a general presumption that the parties have expressed every material term, terms may still be implied to give effect to the presumed intentions of the parties or fulfill legal duties.

Answer 343

The right to require repeat performance for non-conforming services is available unless completion in conformity with the contract is impossible. Repeat performance must be provided within a reasonable time and without significant inconvenience to the consumer.

Answer 344

Goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking into account any description of the goods, the price, and all other relevant circumstances. The checklist of factors includes fitness for all purposes, appearance and finish, freedom from minor defects, safety, and durability.

Answer 345

A ‘consumer’ under the Consumer Rights Act 2015 is defined as an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft, or profession.

Answer 346

The right to a price reduction for non-conforming services is available if repeat performance is impossible or if the trader has failed to provide repeat performance within a reasonable time and without significant inconvenience to the consumer.

Answer 347

Terms can be inferred by the courts when they are necessary to give effect to the presumed but unexpressed intentions of the parties or to fulfill legal duties that arise out of certain common types of contractual relationships. The courts may infer terms based on trade customs, a course of dealing between the parties, or to give business efficacy to a contract.

Answer 348

The consumer has the right to receive a refund of all money paid for digital content. The refund must be given within 14 days and using the same payment method used by the consumer, without imposing any fee

Answer 349

A ‘trader’ under the Consumer Rights Act 2015 is defined as a person acting for purposes relating to that person’s trade, business, craft, or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.

Answer 350

The exceptions to the implied term of satisfactory quality are when defects were specifically drawn to the buyer’s attention before the contract was made or if the buyer examined the goods before the contract was made and the defects should have been revealed. The term also does not apply if the seller is not selling in the course of a business.

Answer 351

Trade or professional customs can serve as a basis for implying terms into contracts. When a term is implied based on a custom, it is assumed that the parties intended to be bound by well-known customs of a particular trade. This can be seen in cases such as British Crane Hire v Ipswich Plant.

Answer 352

The Unfair Contract Terms Act 1977 limits the ability to negative or vary the implied terms set out in the Supply of Goods and Services Act 1982 and the Consumer Rights Act 2015. It provides provisions for contracting out of these terms

Answer 353

Section 14(3) of the Sale of Goods Act 1979 implies that where the seller sells goods in the course of a business and the buyer makes known a 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.

Answer 354

In general, a consumer cannot treat a contract as at an end as a result of a breach of implied terms under the Consumer Rights Act 2015, except to the extent set out in the Act.

Answer 355

In a contract for the transfer of goods, implied terms include terms regarding title, terms where transfer is by description, terms about quality or fitness, and terms where transfer is by sample. These terms correspond to those implied in contracts for the sale of goods.

Answer 356

Section 15 of the Sale of Goods Act 1979 states that where a sale is by sample, two conditions are implied into the contract: (a) that the bulk will correspond with the sample in quality, and (b) that the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample.

Answer 357

Under the Consumer Rights Act 2015, contracts for goods imply that the goods will be of satisfactory quality, fit for any particular purpose made known to the trader, and will comply with their description.

Answer 358

Section 15A of the Sale of Goods Act 1979 provides that if a breach of implied terms is so slight that it would be unreasonable for the buyer to reject the goods and repudiate the contract, the breach should be treated as a breach of warranty, entitling the buyer to claim damages.

Answer 359

A term may be implied to give business efficacy to a contract, meaning to make the contract produce its intended objective. However, a term will not be implied solely for the purpose of transforming the agreement into a business-like arrangement. The court will only imply a term if, without it, the arrangement would be unworkable.

Answer 360

Where the party making the statement had exclusive access to information or special knowledge compared to the other party, this is likely to be taken into account. The concept of skill and knowledge can be seen in contrasting cases such as Oscar Chess Ltd v Williams and Dick Bentley v Harold Smith.

Answer 361

Under Section 55 of the Sale of Goods Act 1979, a seller’s liability under the implied terms can be excluded or restricted by agreement of the parties, subject to the Unfair Contract Terms Act 1977. However, the implied undertaking as to title cannot be excluded or restricted.

Answer 362

The terms of a contract can be classified as conditions, warranties, or innominate terms.

Answer 363

The distinction between conditions and warranties becomes significant in the event of a breach of contract. If a party breaches a condition, the innocent party has the right to treat the contract as repudiated and can terminate the contract. If a party breaches a warranty, the only remedy available to the innocent party is to sue for damages.

Answer 364

When terms are implied by statute, the statute will normally specify whether they are conditions or warranties. In some cases, the statute will also state or modify the remedy available upon breach of such a term.

Answer 365

According to the traditional approach, a condition is an important term ‘going to the root of the contract,’ while a warranty is a less important term. The crucial question is whether the parties intended, at the time of contracting, that any breach of the relevant term could result in the innocent party terminating the contract.

Answer 366

Innominate terms are terms that are neither conditions nor warranties. They are of an intermediate nature. The consequences of breach determine whether the term will be treated as a condition or a warranty. If the breach deprives the innocent party of substantially the whole benefit intended from the contract, it will be treated as a condition and the innocent party can terminate the contract and claim damages. If not, the innocent party can claim damages only.

Answer 367

If the classification of a term as a condition or a warranty is not clear, the court will consider whether the parties intended for any breach of the term to entitle the innocent party to terminate the contract. If the parties’ intention cannot be determined, or if not every breach would lead to the right to terminate, the term will be considered innominate. The consequences of breach will then determine the available remedies.

Answer 368

Breach of statutory implied terms is not automatically treated as a breach of condition. The court has discretion to treat it as a breach of warranty if the breach is so slight that it is unreasonable for the innocent party to repudiate the contract. In such cases, the innocent party is entitled to claim damages only.

Answer 369

Time performance or completion is of greater or lesser importance depending on the nature and circumstances of the contract. If time is of the essence, lateness can amount to a repudiatory breach, entitling the innocent party to terminate the contract. The intention of the parties and the express terms of the contract determine whether time is of the essence.

Answer 370

A repudiatory breach refers to a breach of a condition, which gives the innocent party the right to treat the contract as repudiated and terminate it. A breach of condition is an important term ‘going to the root of the contract.’

Answer 371

The law treats contractual terms regarding time performance or completion differently depending on whether time is of the essence. If time is of the essence, lateness can be a repudiatory breach. If time is not of the essence, the innocent party can make time of the essence by serving a notice on the defaulting party stating so.

Answer 372

Breach of terms implied by statute may be treated as a breach of warranty rather than a breach of condition if the breach is slight and it is unreasonable for the innocent party to repudiate the contract. In such cases, the innocent party is entitled to claim damages only.

Answer 373

The classification of terms implied by statute determines the available remedies in the event of a breach. Conditions give rise to the right to reject and claim a refund, while innominate terms and warranties allow for a claim for damages. However, the remedy for breach of implied terms may be altered by specific provisions.

Answer 374

Statements of fact made by the parties which they intend to be binding

Answer 375

The age of the person making the statement Correct. The age of the person making the statement is not relevant when deciding whether the parties intended the statement to be binding. The factors that are relevant include the timing and importance of the statement and whether the person making the statement had special knowledge or skills

Answer 376

The claimant was not given reasonable notice of the clause either before or at the time of contracting

Answer 377

The parties can include an ‘entire agreement’ clause in their written contract Correct. An entire agreement clause provides that a particular contract or set of contracts constitutes the entire agreement between the parties

Answer 378

Incorporation by agreement Correct. This is not a means of ascertaining the terms of a contract. The terms can be ascertained where there is a signed written contract, where there is incorporation by notice, or where there is incorporation by course of dealing

Answer 379

Under the common law This is the correct answer. Terms implied at common law are not implied in fact. The grounds for implying terms in fact are to give business efficacy to a contract, where the parties have dealt with each other consistently and regularly in the past and on the grounds of trade and professional customs.

Answer 380

The Sale of Goods Act 1979 implies a term that the seller of goods has a right to sell the goods This is the correct answer. The Act implies a term that the seller of goods has a right to sell the goods. This implied term is found in s.12(1) of that Act. The SGA applies to business-to-business contracts only, and not to consumer contracts ie between a trader and a consumer. Satisfactory quality under the Act is judged on an objective basis (s14(2)), and contracting parties can agree to exclude or restrict ss13,14 and 15 of the SGA 1979, subject to the Unfair Contract Terms Act 1977.

Answer 381

Contracts of sale of goods

Answer 382

Performed with reasonable care and skill

Answer 383

A trader and a consumer

Answer 384

The consumer has a right to require the trader to perform the service again to the extent necessary to complete its performance in conformity with the contract This is the correct answer. The right to repeat performance is governed by s.55 of the Consumer Rights Act 2015. Where a trader breaches the implied term that he must perform the services contract with reasonable care and skill, the consumer has only two remedies available to him under the 2015 Act. The first is the right to repeat performance already stated, and the second remedy is the right to a price reduction.

Answer 385

The innocent party can accept the repudiatory breach, affirm the contract and sue for damages This is the correct answer. The right to accept the repudiatory breach is mutually exclusive to the right to affirm the contract – the innocent party either accept the repudiatory breach or they can affirm the contract. They cannot do both. Please note that whichever option the innocent party takes, they will also have the right to sue for damages for the breach. The other options given in the answers are all open to the innocent party.

Answer 386

The term is classified as a condition, but it may be treated as a warranty if the breach is so slight that it would be unreasonable for the buyer to reject the goods

Answer 387

The innocent party is limited to suing for damages where the consequence of the breach is minor This is the correct answer. The remedy for breach of an innominate term can be identified by applying the test in the case of Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd. The test focuses on the consequences of the breach and asks the question whether the breach has deprived the innocent party of substantially the whole benefit of the contract. Where the question is answered in the affirmative, ie the consequences of the breach are serious, the term will be treated as a condition. Where the question is answered in the negative, ie the consequences of the breach are minor, the term will be treated as a warranty. Regarding the other options, note that the remedy of rescission is not available for breach of contract.

Answer 388

Factors the courts take into account in deciding whether, or not, reasonable notice has been given are: *Nature of the document. Is the document one on which a reasonable person would expect there to be contract terms? For example, a term on the back of a ticket that someone had been given after paying for the hire of a deckchair was held not to be a term of the contract. A reasonable person would simply have assumed that the ticket was proof of payment. *Timing. The notice must come before or at the time of the contract (eg on a quotation) and not afterwards (eg on an invoice). *Onerous terms (eg a term imposing a substantial fine if a particular condition is not met). The more onerous the term the more a party must do to bring it to the other party’s attention. *The exemption clause must be legible. *If the term is set out on the back of a document are there words on the front drawing the other party’s attention to them, such as ‘See terms overleaf’?

Answer 389

Incorporation of terms Terms may be incorporated into a contract in the following ways: *Signature *Reasonable notice before or at the time of the contract *A previous consistent course of dealing

Answer 390

a term may be implied into a contract where the parties have not expressly agreed something, but the contract would be unworkable without the relevant term. It is taken that the parties have implicitly agreed what is necessary to make commercial sense of their contract.

Answer 391

A contract might be discharged in one of the following ways: (a) Performance; (b) Expiry (c) Agreement; (d) Breach; or (e) Frustration.

Answer 392

A termination clause in a contract specifies that the contract will come to an end upon the occurrence of specified events, such as a particular date or other specified conditions.

Answer 393

The right of election refers to the choice made by the aggrieved party in response to a repudiatory breach of contract. They can either treat the breach as repudiating the contract and terminate it, or affirm the contract and continue with its performance.

Answer 394

A contract can be discharged by expiry when it is completed according to its own terms or when a stipulated event, such as the expiry of a fixed term, occurs. A contract can be discharged by performance when a complete performance of the contractual obligations is achieved.

Answer 395

The innocent party must make their decision to terminate the contract known to the party in default. This communication is necessary for the termination to be effective.

Answer 396

Parties can discharge a contract by agreeing to do so in a subsequent binding contract. The new contract needs to be supported by consideration, unless it is effected by deed. Care should be taken when one party has already performed the old contract in full, as being released from it may not be considered good consideration.

Answer 397

Some contracts are clearly intended to be divided into parts, such as the payment of a salary under a fixed contract of employment. If this is the case, then the performing party is entitled to payment for each part that is performed.

Answer 398

The innocent party has the option to either terminate the contract or affirm it. The decision is based on their assessment of the benefits of each alternative.

Answer 399

A condition precedent is a condition that must be satisfied before any rights come into existence. It prevents the contract from becoming binding in the first place.

Answer 400

The innocent party has two options: (a) To sue for damages for breach of contract; or (b) To claim a quantum meruit.

Answer 401

The entire obligations rule states that a contractual obligation is discharged by a complete performance of the obligation. The contract is only discharged once all obligations are fulfilled.

Answer 402

Discharge by expiry occurs when a contract is completed according to its own terms or when a stipulated event, such as the expiry of a fixed term, occurs. Discharge by performance happens when a complete performance of the contractual obligations is achieved.

Answer 403

If the innocent party elects to affirm the contract, the contract survives and their rights under the contract are preserved. There may be commercial reasons why affirming the contract is a better option than termination.

Answer 404

A condition subsequent is a term in a contract that provides for the termination of the contract and the discharge of outstanding obligations upon the happening of a specific event.

Answer 405

Discharge by agreement occurs when the parties agree to release each other from some or all of their obligations. For it to be binding, the agreement needs consideration.

Answer 406

In an action for breach of contract for failing to perform an obligation, it is a good defense for the defendant to show that they ‘tendered performance’. This means that they unconditionally offered to perform their obligations in accordance with the terms of the contract, but the promisee refused to accept such performance. Tender of performance can relieve the defendant of liability for failing to perform.

Answer 407

A contract can expire when it is completed according to its own terms or when a stipulated event, such as the expiry of a fixed term, occurs.

Answer 408

A contract can be discharged by breach when one party breaches a term of the contract that is either a condition or an innominate term treated as a condition. The innocent party may treat the contract as terminated for repudiatory breach in certain circumstances.

Answer 409

When one party performs part of the agreed obligation and is then prevented from completing the rest by some fault of the other party, they will be entitled to payment despite not having completed the rest of the obligation. The innocent party can choose to sue for damages for breach of contract or claim a quantum meruit.

Answer 410

Discharge by breach occurs when one party breaches a term of the contract. The innocent party has the option to treat the contract as terminated for repudiatory breach and claim damages, or to affirm the contract and claim damages.

Answer 411

Affirming a contract does not waive the right to claim damages arising from the breach. The innocent party can still retain a claim for damages while affirming the contract. However, termination cannot be a result of affirming the contract.

Answer 412

The usual remedy for breach of contract is an award of compensatory damages, which is monetary compensation for the specific breach. However, the innocent party does not always acquire the right to terminate the contract as a result of a breach.

Answer 413

A contractual obligation is discharged by a complete performance of the obligation. The promisee is entitled to the benefit of complete performance exactly according to the promisor’s ‘undertaking’. If a promisor only performs part of their obligation, they are not discharged from that obligation.

Answer 414

Frustration refers to events that occur after the formation of the contract and render performance radically different from what was agreed upon. It relieves a party from further obligations under the contract.

Answer 415

To affirm a contract, there must be evidence of a clear and unequivocal commitment to continue with the contract. This commitment is typically demonstrated by the innocent party’s actions or statements.

Answer 416

A contract can be discharged by agreement in two ways: (a) By a subsequent binding contract between the parties; or (b) By operation of a term of the original contract.

Answer 417

If a promisor only performs part of their obligation, they are not discharged from that obligation. The promisee is entitled to the benefit of complete performance exactly according to the promisor’s ‘undertaking’.

Answer 418

Repudiatory breach of contract occurs when one party breaches a term of the contract that is either a condition or an innominate term treated as such. The innocent party may treat the contract as terminated for repudiatory breach.

Answer 419

Accord and satisfaction refers to the situation where there is an agreement to release an obligation (accord) and consideration for the promise to release a party from the obligation (satisfaction). It is a way to discharge a former obligation and form a new agreement in new terms.

Answer 420

The three categories of frustration mentioned in the lecture are performance becoming impossible, performance becoming illegal or prevented by government intervention, and frustration of a common purpose.

Answer 421

There are two important limitations on the innocent party’s right to affirm a contract in response to a repudiatory breach. First, the cooperation of the breaching party is required for continued performance of the contract. Second, the innocent party must have a legitimate interest, financial or otherwise, in affirming the contract and continuing with performance.

Answer 422

The entire obligations rule states that a contractual obligation is discharged by a complete performance of the obligation. If a promisor only performs part of their obligation, they are not discharged from that obligation. The promisee is entitled to the benefit of complete performance exactly according to the promisor’s ‘undertaking’

Answer 423

A condition precedent is a condition that must be satisfied before any rights come into existence. It suspends the contract until the condition is satisfied. On the other hand, a condition subsequent is a term providing for the termination of the contract and the discharge of outstanding obligations in the event of a specified occurrence.

Answer 424

Terminating a contract for repudiatory breach puts an end to all primary obligations of both parties that remain unperformed. The innocent party can claim damages not only for the specific breach but also for the loss of the contract caused by its termination. However, any rights and obligations that have accrued before termination remain enforceable.

Answer 425

The consequences of frustration in a contract are that the party affected by the frustration is relieved from further obligations under the contract. However, there are rules and limitations regarding the return of payments and other matters.

Answer 426

Terminating a contract for repudiatory breach puts an end to all primary obligations of both parties that remain unperformed. The innocent party can claim damages not only for the specific breach but also for the loss of the contract caused by its termination.

Answer 427

Terminating a contract for repudiatory breach involves a high degree of risk, particularly the risks of wrongful termination. If the termination is found to be wrongful, it can lead to counterclaims and damages against the terminating party.

Answer 428

The Law Reform (Frustrated Contracts) Act 1943 introduced changes to the law that help deal with issues arising from frustration in contracts, such as the return of payments and other matters.

Answer 429

A condition subsequent is a term that provides for the termination of the contract and the discharge of outstanding obligations if a specified occurrence happens. When the condition subsequent is fulfilled, the remaining obligations under the contract are discharged.

Answer 430

Anticipatory breach refers to a situation where a party indicates in advance that they will not perform their contractual obligations. This gives the innocent party an immediate right to accept the renunciation and treat the contract as terminated.

Answer 431

There are several exceptions to the entire obligations rule that mitigate its potentially harsh effect. These exceptions include acceptance of partial performance, substantial performance, divisible obligations, and wrongful prevention of performance.

Answer 432

Mutual waiver refers to a new contract formed by both parties agreeing to waive their rights under the old contract in consideration for being released from their obligations under the old contract. This type of arrangement is common in commercial situations where parties wish to end an existing contract and achieve commercial certainty.

Answer 433

Acceptance of partial performance occurs when the innocent party, instead of rejecting the work done, accepts that part of the performance. However, such acceptance is at the discretion of the innocent party. If the innocent party voluntarily accepts partial performance, the party in default will be entitled to payment on a quantum meruit basis.

Answer 434

Quantum meruit, meaning ‘as much as is deserved’, is a remedy whereby the party in default, who has given only partial performance of the contractual obligations, may be able to claim a reasonable sum so that the innocent party is not unjustly enriched. The court assesses the value of a quantum meruit award on an objective basis using available information, such as the usual market price for goods or services.

Answer 435

If one party has performed its obligations in their entirety but something remains to be done by the other party, the party to whom the obligation is owed may release the other party by a subsequent agreement under deed. This avoids the need for consideration because a gratuitous promise made in a contract in the form of a deed is enforceable without consideration.

Answer 436

When a condition precedent is not fulfilled, there is no true discharge because the rights and obligations under the contract were contingent upon an event that did not occur. In other words, the rights and obligations never came into existence in the first place.

Answer 437

Substantial performance occurs when a contract has been mostly performed, with only minor defects or aspects remaining. In such cases, the party who rendered substantial performance may be entitled to the contract price, subject to a deduction to reflect the cost of remedying the remaining defects. The court determines whether the defect goes ‘to the root of the contract’ and assesses the cost of remedying the defect against the contract price.

Answer 438

The remedy of quantum meruit allows the party in default, who has given only partial performance of the contractual obligations, to claim a reasonable sum so that the innocent party is not unjustly enriched. It prevents the party in default from receiving full payment without having fully performed their obligations.

Answer 439

Assessing substantial performance based on the ‘root of the contract’ allows the court to determine whether the defect or aspect that has not been performed goes to the core purpose of the contract. If the defect is too serious and goes to the root of the contract, the party who rendered the defective performance will not be entitled to recover any money.

Answer 440

The usual remedy for breach of contract is an award of compensatory damages, which is monetary compensation.

Answer 441

The Hong Kong Fir test refers to the uncertainty surrounding the test for determining whether a breach of contract is repudiatory. To inject certainty into their contracts, commercial parties often explicitly agree on a list of breaches that will give rise to a right to terminate.

Answer 442

Terminating a commercial contract for repudiatory breach often involves a high degree of risk for the terminating party. If a court later finds that the breach was not repudiatory, the terminating party’s notice to terminate may be considered wrongful. This can lead to a damages claim against the terminating party and potential reputational damage.

Answer 443

When a contract is affirmed, there are two options: elect to affirm or elect to terminate. Electing to affirm requires a clear and unequivocal commitment to continue with the contract, while electing to terminate requires notification and entitles the innocent party to damages.

Answer 444

The risks of wrongful termination in cases of repudiatory breach are exacerbated by the fact that the categorization of the breached term as a condition or warranty depends on the application of the Hong Kong Fir test. This test sets a high bar and can be difficult to establish. Additionally, terminating a contract without proper justification can turn the terminating party into the party in repudiatory breach, leading to potential damages claims.

Answer 445

The right of election refers to the choice given to the innocent party to either terminate the contract or affirm it. The innocent party must make their decision known to the party in default, and they are allowed a period of time to decide between these two alternatives.

Answer 446

Affirmation of a contract after a repudiatory breach requires clear and unequivocal commitment to continue with the contract. The innocent party must make their decision to affirm the contract known to the party in default. Affirmation preserves the contract and the rights of the innocent party, but does not waive damages from the relevant breach.

Answer 447

Commercial parties can explicitly agree on a list of breaches that will give rise to a right to terminate. This helps inject certainty into their contracts and provides clarity on the circumstances under which termination is justified.

Answer 448

If a party affirms a contract despite an indication of non-performance by the other party, the innocent party can still perform their own obligations and claim the sum due under the contract in a debt action. However, the innocent party retains a claim for damages arising from the breach and cannot terminate the contract as a result of it.

Answer 449

Performance of a contract may be radically different if it becomes impossible, illegal, or if the common purpose of the contract is frustrated. These events occur after the formation of the contract and render performance different from what was agreed upon.

Answer 450

If a contract becomes impossible to perform due to the total or partial destruction of an object necessary for performance, the contract may be frustrated. The innocent party is relieved from further obligations under the contract.

Answer 451

If a customer owes fees for services provided prior to termination of a contract for repudiatory breach, they would still be obliged to pay those fees. However, they would no longer be obliged to accept and pay for services going forward.

Answer 452

The co-operation of the breaching party is required for continued performance of the contract. If the innocent party requires the co-operation of the other contracting party to fulfill their obligations under the contract, this will prevent the innocent party from claiming the contract price.

Answer 453

Yes, frustration can be raised as a defense to an action for breach of contract. It relieves the party from further obligations under the contract.

Answer 454

The innocent party must communicate their decision to terminate the contract to the party in default. This ensures that the termination is legally effective.

Answer 455

When assessing whether unavailability is sufficient to amount to frustration, a multifactorial approach should be adopted. The factors to be considered include the terms of the contract itself, its matrix or context, the parties’ knowledge, expectations, assumptions, and contemplations, as well as the nature of the supervening event and the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances.

Answer 456

The key test is whether the event would have informed the manner in which the parties assessed the risk of entering into the contract. Highly theoretical risks that the parties would not have taken into account are not relevant.

Answer 457

Frustration of purpose occurs when the common purpose for which a contract was entered into can no longer be carried out due to some supervening event. This can lead to the contract being frustrated, even if it is still physically possible to perform the contract.

Answer 458

A force majeure clause is a contractual provision that states what will happen to the contractual relationship between the parties should a particular set of circumstances, which could otherwise amount to frustrating events, materialize. The inclusion of a force majeure clause allows the parties to allocate risks in relation to these events at the outset and may allow for the continuance of the contractual relationship in circumstances that would otherwise amount to frustration of the contract.

Answer 459

In the case of Krell v Henry, the defendant agreed to hire a room to view a coronation procession, but the procession did not take place due to the illness of King Edward VII. The Court of Appeal held that the common foundation of the contract was frustrated because the purpose of hiring the room was to view the procession. This case is an example of frustration of purpose.

Answer 460

An example of a contract that was not frustrated despite a change in circumstances is Herne Bay Steamboat Co Ltd v Hutton [1903] 2 KB 683. In this case, the plaintiff hired their steamboat to the defendant ‘for the purpose of viewing the Naval Review and for a day’s cruise round the fleet. The naval review was cancelled, but the cruise could still go ahead. The court held that the contract was not frustrated because viewing the naval fleet might have been the principal motivation for the defendant, but it was not the common foundation of the contract.

Answer 461

Under the Law Reform (Frustrated Contracts) Act 1943, money paid before the frustrating event can be recovered even if failure of consideration is only partial.

Answer 462

In cases of frustration of purpose, it is important that there is a joint purpose of the parties. It is not enough for it to be the purpose of just one party. The common foundation of the contract must be frustrated for the doctrine of frustration to apply.

Answer 463

Under the Law Reform (Frustrated Contracts) Act 1943, money payable but not yet paid ceases to be payable.

Answer 464

The doctrine of frustration must be applied within very narrow limits. It is not lightly invoked to relieve contracting parties of the normal consequences of imprudent commercial bargains. Additionally, frustration will not apply where the event was induced by one of the parties, meaning that self-induced frustration is not a valid defense. Furthermore, the doctrine of frustration is a means of allocating unforeseen risks, and it is unlikely that a contract will be frustrated merely because an event has occurred that renders the contracted-for performance worth less or more expensive.

Answer 465

Performance may be considered impossible if the contract becomes impossible to perform due to the total or partial destruction of some object necessary for performance. For example, if the subject matter of the contract is destroyed or an essential asset for performance is destroyed.

Answer 466

Under the Law Reform (Frustrated Contracts) Act 1943, the court has a discretionary power within specified limits to allow the party returning the money to retain a sum for expenses incurred in attempting to perform the contract.

Answer 467

Section 1(2) of the Act allows for the recovery of money paid before the frustrating event and the non-payment of money that should have been paid before the event. Expenses incurred by the payee can be recovered out of the total sum paid or payable before the event, subject to the court’s discretion

Answer 468

Contracts that become more difficult or expensive to perform due to unexpected events are not automatically frustrated. The fact that a contract becomes more onerous than anticipated is not by itself a ground for relieving a party of their obligations under the contract.

Answer 469

Self-induced frustration occurs when an event is induced by one of the parties, meaning it was their fault or choice. In such cases, the doctrine of frustration does not apply. If a party successfully proves that the frustrating event is self-induced, the defense of frustration fails and the party will be in breach of contract.

Answer 470

The doctrine of frustration is a means of allocating unforeseen risks. While most events are to some degree foreseeable, that does not mean they cannot lead to frustration. Even events that are not merely foreseen but made the subject of express contractual provision may lead to frustration if they go beyond the risk assumed under the contract and render performance radically different from what was contracted for. However, the less foreseeable an event is in its type and impact, the more likely it is to be a factor that may lead to frustration.

Answer 471

The purpose of a force majeure clause is to state what will happen to the contractual relationship between the parties should a particular set of circumstances, which could otherwise amount to frustrating events, materialize. It allows the parties to allocate risks in relation to these events at the outset and may allow for the continuance of the contractual relationship in circumstances that would otherwise amount to frustration of the contract.

Answer 472

The doctrine of frustration cannot override express and unambiguous contractual provision for the frustrating event. Commercial contracts often contain force majeure clauses, which state what will happen to the contractual relationship if specific circumstances, which could otherwise amount to frustrating events, occur. These clauses allow the parties to allocate risks and may allow for the continuance of the contractual relationship in circumstances that would otherwise frustrate the contract.

Answer 473

According to the Law Reform (Frustrated Contracts) Act 1943, when a party receives a non-monetary benefit prior to the frustrating event, the court must identify and value the benefit conferred, and make an assessment of a just sum to be paid by that party for the benefit.

Answer 474

The court has a discretionary power to order the retention or recovery of money as it thinks just in all the circumstances to account for expenses incurred by the payee (normally the supplier).

Answer 475

The amount retained or recovered by the court cannot exceed (i) the actual expenses incurred nor (ii) the amount paid or payable by the paying party.

Answer 476

Substantial performance This is the correct answer. A contractual obligation is discharged by a complete performance of the obligation. The effect of this is that a party is entitled to payment only after he has completed performance. However, an exception arises where a contract has been substantially performed. The party who rendered substantial performance may be awarded the contract price subject to a deduction to reflect the proportion of the obligation not performed. The other exceptions to the entire obligations rule are acceptance of partial performance, divisible obligations and wrongful prevention of performance.

Answer 477

An obligation is discharged by complete performance of the obligation. Until the obligation is completely performed, the performing party is not entitled to payment

Answer 478

It is a condition in a contract that must be fulfilled before the contract itself or certain contractual rights or obligations become binding

Answer 479

This is where one party breaches a term of the contract which is either a condition or an innominate term which is to be treated as a condition

Answer 480

two steps involved in a s.1(3) claim: (i) identification and valuation of the benefit and (ii) the assessment of a ‘just sum’. The court examined these two steps in detail in the decision. Regarding the other answers, Gamerco SA v ICM/Fair Warning (Agency) Ltd is the leading case on s.1(2) of the Act, and Appleby v Myers and Taylor v Caldwell are common law decisions that pre-date the Act.

Answer 481

The decision clarified that the court has a broad discretion under s 1(2) Law Reform (Frustrated Contracts) Act 1943 to order such retention or recovery of money as it thinks just in all the circumstances to account for expenses incurred by the payee.

Answer 482

(a) Government intervention (b) Unavailability of a specific person crucial to the contract (c) Illegality (d) Destruction of the subject matter (e) Non- occurrence of a fundamental event

Answer 483

Yes, they can put a force majeure clause in the contract Force majeure clauses will be upheld provided they satisfy the reasonableness test in the UCTA 1977. If there is a valid force majeure clause the contract will not be frustrated.

Answer 484

The default approach to compensating the innocent party in a breach of contract is to put them in the same position post-breach that they should have been in had the contract been performed. This is sometimes referred to as protecting the innocent party’s ‘expectation’ interest.

Answer 485

The measure of damages for breach of contract based on expected profit and actual profit is the difference between the expected profit and the actual profit.

Answer 486

The reliance interest is an alternative basis for assessing damages in breach of contract cases. It allows the claimant to recover the expenses incurred in preparing for or partially performing the contract, which have been rendered pointless by the breach. This measure aims to put the claimant in the position they would have been in had they never contracted.

Answer 487

No, damages for mental distress, anguish, or annoyance caused by breach of contract are not generally awarded. The general rule is that damages will not be awarded in relation to mental distress. However, there are exceptions to this rule in limited situations where the whole or a major purpose of the contract is to provide pleasure, relaxation, and peace of mind.

Answer 488

The first limb of the Hadley v Baxendale test considers losses that would naturally follow from the breach and are usually known risks. The second limb considers losses that were communicated to the defendant at the time of contracting and were reasonably supposed to have been in the contemplation of both parties.

Answer 489

The purpose of calculating the expectation interest in a breach of contract is to determine the sum of money needed to put the innocent party in the position they would have been in if the contract had been properly performed. This reflects the principle of compensating the innocent party for their loss.

Answer 490

The three mechanisms for ascertaining the expectation interest in assessing damages are the cost of cure, diminution in value, or loss of amenity.

Answer 491

The general rule is that damages will not be awarded for loss of reputation. However, in certain cases, such as when an employee’s employment prospects are adversely affected by the way their former employer’s business was run, damages for loss of reputation may be awarded.

Answer 492

The remoteness rules in contract law limit recoverable losses to those that a contracting party would or should have been aware of as likely to flow from the breach. This is based on the intention of the parties and the risks they accepted upon entering into the contract.

Answer 493

The court might award damages to compensate the ‘reliance interest’ when it is not possible or appropriate to award damages based on the ‘expectation interest’. This approach puts the claimant in the position they would have been in had they never contracted in the first place.

Answer 494

Damages for loss of chance can be awarded if the lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition. The courts are reluctant to treat the loss as too speculative and will award damages based on the expectation interest, even if the precise quantification of loss may not be straightforward.

Answer 495

When calculating the cost of cure in a breach of contract, the claimant must act reasonably in relation to the defective works. In some cases, the court may limit the award to the costs that would have been incurred in remedying the defects in the original building if the claimant acted unreasonably.

Answer 496

The reliance interest only allows recovery of wasted expenditure, not all expenditure. If the expenditure is not wasted and can be used for another purpose, it cannot be recovered. Additionally, reliance losses are losses incurred prior to the breach, not those incurred as a consequence of the breach.

Answer 497

The limiting factors that can affect the actual damages awarded are causation, remoteness, and mitigation.

Answer 498

Mitigation is important in a breach of contract as the injured party should take reasonable steps to minimize the effect of the breach. Failure to mitigate may result in losses that are not legally recoverable.

Answer 499

An alternative method for calculating the expectation interest in a breach of contract is by reference to the difference in value between the performance received and that promised in the contract. This is known as the diminution in value approach.

Answer 500

Causation: The claimant must establish a causal link between the defendant’s breach of contract and its loss in order to recover damages. Remoteness: Not all losses flowing from a breach of contract are recoverable. The law draws a line dictating which loss is recoverable and which is not. Mitigation: Damages can be reduced if the claimant has failed to take reasonable steps to mitigate their losses.

Answer 501

Factual causation refers to establishing that the defendant has caused the loss suffered by the claimant. Legal causation refers to ensuring there are no unlikely, intervening acts that break the chain of causation.

Answer 502

The reliance interest allows the claimant to recover expenses incurred in preparing for or partially performing the contract that have been rendered pointless by the breach.

Answer 503

Factual causation refers to whether the breach by the defendant has, as a matter of fact, caused the loss suffered by the claimant. In contract law, the courts adopt a ‘common sense approach’ to determine factual causation, considering whether the defendant’s breach was a ‘dominant’ or ‘effective’ cause of the loss.

Answer 504

Legal causation refers to whether the defendant should be held responsible for loss that has been caused by its breach, even if factual causation is established. If there is an intervening event that breaks the chain of causation, the claim may fail. However, if the intervening event was ‘likely to happen’, it generally will not be treated as breaking the chain of causation.

Answer 505

Loss of amenity refers to the non-economic loss of pleasure or value that the innocent party suffers as a result of not receiving what was promised in the contract. Loss of amenity damages may be awarded when there is a non-economic loss that has value to the claimant. However, in a commercial setting, it is unusual for damages to be awarded for loss of amenity.

Answer 506

The expectation interest can be calculated by considering the cost of curing the defective performance, the difference in value between the performance received and that promised, or the loss in amenity. These factors determine the economic value of the performance and aim to put the innocent party in the same position they would have been in if the contract had been performed.

Answer 507

The rule of remoteness of damage in contract law states that not all losses flowing from a breach of contract are recoverable. The law draws a line dictating which loss is recoverable and which is not. This rule was established in the case of Hadley v Baxendale, where two limbs were identified: loss of a type ordinarily and naturally arising from the breach, and loss that the parties contemplated at the time of making the contract as the probable result of the breach.

Answer 508

Some examples of losses that can be caused by a breach of contract include mental distress, loss of reputation, and loss of a chance (e.g., a chance to win a new client or compete in a competition).

Answer 509

The defendant’s knowledge at the time of contracting is significant in determining recoverable losses. If the defendant knew or should have known about certain risks or circumstances, the losses associated with those risks or circumstances may be recoverable.

Answer 510

The foundation of the law on remoteness of damage in contract was set out by Baron Alderson in the case of Hadley v Baxendale. The case established two limbs: loss of a type ordinarily and naturally arising from the breach, and loss that the parties contemplated at the time of making the contract as the probable result of the breach.

Answer 511

The purpose of mitigation is for the injured party to take reasonable steps to minimize the effects of the breach. Failure to mitigate may result in losses that are not legally recoverable.

Answer 512

The expectation interest can be calculated by considering the cost of curing the defective performance, the difference in value between the performance received and that promised, or the loss in amenity. These factors determine the economic value of the performance and aim to put the innocent party in the same position they would have been in if the contract had been performed.

Answer 513

Damages for loss of chance can be awarded if the lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition. The courts are reluctant to treat the loss as too speculative and will award damages based on the expectation interest, even if the precise quantification of loss may not be straightforward.

Answer 514

Nominal damages are a token amount awarded to acknowledge that there has been a breach of contract in cases where no other remedy is available. They are awarded even if the claimant has not suffered any loss by reason of the breach.

Answer 515

The general rule is that damages cannot be recovered on behalf of another party or for losses suffered by another party. There are exceptions to this rule, but they are not considered in this context. The issue of privity of contract is relevant to this matter.

Answer 516

Restitution provides a remedy when there is a total failure of consideration. It occurs when one party has provided something of value under the contract but has received nothing in return. In such cases, the court may use the principles of restitution to prevent a party from benefiting from the lack of consideration

Answer 517

The principle of restitution operates to reverse the unjust enrichment of one of the parties. It allows the court to compensate the claimant based on the defendant’s unjust enrichment by holding the defendant accountable for the profit they have made as a result of breach.

Answer 518

The restitution interest represents the interest a claimant has in the restoration of benefits acquired by the defaulting party at the claimant’s expense. It can be claimed in exceptional circumstances where other remedies are inadequate.

Answer 519

According to section 23(2)(a), the trader must repair or replace the goods within a reasonable time and without significant inconvenience to the consumer. The determination of what is reasonable and significant takes into account the nature of the goods and the purpose for which they were acquired.

Answer 520

A liquidated damages clause makes clear to a party what is at stake if it fails to comply with its obligations in the contract. It helps the party take the risk into account when determining the price for the contract.

Answer 521

The purpose of contractual damages, according to the ‘no windfall’ principle, is to compensate the claimant for their loss. Damages cannot put the claimant in a better position than if the contract had been performed.

Answer 522

Liquidated damages clauses are very common in the construction and technology industries. They are used to deal with the consequences of non-performance, such as delay.

Answer 523

Specific performance is an order requiring a party to carry out its obligations under a positive term of the contract, while an injunction is a court order restraining a party from breaching a negative term. Specific performance is awarded in exceptional cases where damages would be an inadequate remedy, such as when a unique item is involved. Injunctions are also awarded in exceptional cases where damages would be inadequate, such as when an employee goes to work for a competitor.

Answer 524

The claimant must show that they have a legitimate interest in preventing the defendant’s profit-making activity and that no other remedy is adequate. The defendant has the burden of proving that the claimant would not have recouped the expenditure if the contract had been properly performed.

Answer 525

The expectation interest focuses on the party’s right to receive the benefit they expected from the contract. The reliance interest aims to compensate the party for losses incurred due to their reliance on the contract. In contrast, the principle of restitution measures damages by restoring to the claimant a benefit acquired by the defaulting party at their expense. Restitution is only awarded in exceptional cases when other remedies are inadequate.

Answer 526

If a clause is a secondary obligation, it will not be considered a penalty if it protects a legitimate business interest and imposes a detriment that is not disproportionate to protect that interest. The courts will hold such a clause as a valid liquidated damages clause.

Answer 527

While the starting point of contract law is to support parties’ agreements, there are instances where the court will intervene. The court can strike down a liquidated damages clause if it requires the party in breach to pay an excessive sum that becomes a ‘penalty’.

Answer 528

A liquidated damages clause is a clause in a contract that stipulates a certain sum to be payable on a particular breach of contract. It allows the parties to agree on the consequences of a breach in advance, providing greater certainty and reducing the need for costly litigation to determine damages.

Answer 529

The restitutionary measure in contract law refers to compensation for the ‘restitution’ interest, which is the interest a claimant has in the restoration of benefits acquired by the defendant at the claimant’s expense. It is a third possibility for compensatory purposes.

Answer 530

Under the Consumer Rights Act 2015, if goods sold to a consumer fail to meet the requirements of satisfactory quality, fitness for purpose, or correspondence with description, the consumer has three remedial options: the short-term right to reject, the right to repair or replacement, and the right to a price reduction or final right to reject.

Answer 531

A clause is considered a primary obligation if it furthers the commercial objective of the contract. It is considered a secondary obligation if it is triggered by a breach of contract to compensate the innocent party.

Answer 532

Lord Reed emphasized that common law damages for breach of contract cannot be awarded merely for the purpose of depriving the defendant of profits made as a result of the breach, except in exceptional circumstances.

Answer 533

The courts have developed a test to determine if a liquidated damages clause is penal. If the clause requires the party in breach to pay an excessive sum that becomes a ‘penalty’, the court may intervene. The test has evolved through case law and considers whether the sum is excessive in relation to the loss suffered.

Answer 534

A liquidated damages clause stipulates a certain sum payable on a particular breach of contract. A penalty clause is a liquidated damages clause that requires the party in breach to pay an excessive sum, making it a penalty. In such cases, the court will not uphold a penalty clause and will assess damages based on normal principles instead.

Answer 535

The short-term right to reject is available to consumers for 30 days from the time ownership has passed, the goods have been delivered, and the trader has notified the consumer that the required steps have been taken. During this period, the consumer can reject the goods and get a refund of the purchase price.

Answer 536

The test is derived from the Supreme Court decisions of ParkingEye Limited v Beavis [2015] UKSC 67 and Cavendish Square Holdings BV v Talal El Makdessi [2015] UKSC 67. The test involves determining whether the clause is a primary or secondary obligation and assessing whether the detriment imposed is out of proportion to any legitimate interest of the innocent party.

Answer 537

An ‘efficient breach’ is a breach where the breaching party deliberately breaches the contract to enter into a more profitable contract elsewhere, putting it out of their power to perform the original contract. An efficient breach alone does not justify the award of damages on a restitutionary measure.

Answer 538

A prohibitory injunction is a court order that restrains a party from breaching a negative term of the contract. It is awarded in exceptional cases where damages would be an inadequate remedy, such as when an employee goes to work for a competitor. A prohibitory injunction is more powerful than the original term of the contract.

Answer 539

The Makdessi approach considers whether a clause is a primary or secondary obligation. If it is a primary obligation, it will not engage the penalty rule and will be valid. If it is a secondary obligation, the clause will be considered a penalty if it imposes a detriment that is out of proportion to any legitimate interest of the innocent party in the performance of the primary obligation.

Answer 540

For non-conforming digital content, consumers have two remedial options under the Consumer Rights Act 2015: the right to repair or replacement and the right to a price reduction. These options are available within six months from the day the digital content was supplied.

Answer 541

The burden of proof is on the person alleging that the clause is a penalty to prove this.

Answer 542

The purpose of an account of profits in exceptional cases is to compensate the claimant for the profit made by the defendant from the breach of contract. It is a way of preventing the defendant from benefiting from their breach.

Answer 543

The law on penalties is a clear interference with freedom of contract. It will not be invoked lightly by the court to strike down a clause in a contract freely negotiated between parties of equal bargaining power.

Answer 544

The right to repair or replacement for non-conforming digital content requires the trader to provide the repair or replacement within a reasonable time and without significant inconvenience to the consumer. However, the consumer cannot require repair or replacement if it is impossible or disproportionate based on the nature and purpose of the digital content.

Answer 545

The criteria involve considering the legitimate business interest served and protected by the clause and assessing whether the detriment imposed is extravagant, exorbitant, or unconscionable.

Answer 546

Specific performance and prohibitory injunctions are discretionary and equitable remedies. They will not be granted if damages are deemed appropriate and adequate. Specific performance may be appropriate when the subject matter of the contract is unique, while prohibitory injunctions are granted when there is a need to restrain a party from breaching a negative term. The court exercises discretion based on well-established principles.

Answer 547

The right to a price reduction for non-conforming digital content is available when repair or replacement is impossible or when the trader has failed to provide repair or replacement within a reasonable time and without significant inconvenience to the consumer.

Answer 548

Liquidated damages clauses allow parties to agree in advance on the consequences of a breach of contract. By deciding ‘in advance’ what damages are payable, the parties can organize their affairs with greater certainty and reduce the need for costly litigation to determine the amount of damages.

Answer 549

Positive terms require a party to do something, while negative terms require a party not to do something. Positive terms involve obligations to perform certain actions, while negative terms involve restrictions on certain actions.

Answer 550

The right to a refund is available to consumers when the trader had no right to supply the digital content that was supplied. The consumer is entitled to receive a refund of all money paid for the digital content, and the refund must be given within 14 days using the same payment method used for the original purchase.

Answer 551

Specific performance is an order requiring a party to carry out its obligations under a positive term of the contract, while damages provide compensation for a party’s failure to fulfill its obligations. Specific performance is awarded in exceptional cases where damages would be an inadequate remedy.

Answer 552

A court order for specific performance requires a party to carry out its obligations under a positive term of the contract. Breaching such an order has more severe consequences than breaching the contract itself, as it can be treated as contempt of court and lead to imprisonment. This makes it unlikely for a party to refuse compliance with an order for specific performance.

Answer 553

According to the Consumer Rights Act 2015, if non-compliant digital content causes damage to a device or other digital content, the consumer is entitled to either repair or compensation. This right applies when the trader supplied the digital content, the damaged device or content belongs to the consumer, and the damage would not have occurred if the trader had exercised reasonable care and skill.

Answer 554

A prohibitory injunction is a court order that restrains a party from breaching a negative term of the contract. Similar to an order for specific performance, breaching a prohibitory injunction can be punished as contempt of court.

Answer 555

or non-conforming services, consumers have two remedial options under the Consumer Rights Act 2015: the right to require repeat performance and the right to a price reduction. The right to require repeat performance allows the consumer to request the supplier to provide the service again within a reasonable time and without significant inconvenience. The right to a price reduction is available when repeat performance is impossible or when the supplier has failed to provide repeat performance within a reasonable time and without significant inconvenience.

Answer 556

Orders for specific performance or prohibitory injunctions will not be granted if damages are considered appropriate and adequate. The court will assess whether the subject matter of the contract is unique or irreplaceable, or if an award of damages would be ineffective in providing adequate compensation. Additionally, these remedies are discretionary and equitable, meaning the court considers all relevant circumstances and exercises discretion based on established principles.

Answer 557

The standard test case of the Consumer Rights Act 2015 involves a consumer buying a kettle from a trader. If the kettle is non-compliant within a day or two, the consumer may reject the kettle and get a refund, accept a replacement, or insist on repair within 30 days. However, if the problem arises after the short-term right to reject has expired, the consumer is likely to be satisfied with an exchange or refund.

Answer 558

Specific performance will not be awarded if it would cause undue hardship on the defendant. A promise given for no consideration is not specifically enforceable, even if made as a deed. Specific performance will not be awarded for breach of contracts of employment or for obligations that require constant court supervision. It will also not be awarded for contracts that are not binding on both parties.

Answer 559

Liquidated damages are predetermined damages specified in a contract, while unliquidated damages are damages assessed in the normal way, without a predetermined amount.

Answer 560

An interim injunction in a breach of contract case is sought to prevent the defendant from terminating the agreement and withholding the supply. It is a temporary court order that aims to maintain the status quo until the case is resolved.

Answer 561

The court has the power to decide the extent of any prohibitory injunction it grants and may limit it to what it considers reasonable in the circumstances. Prohibitory injunctions are granted only when it is just and convenient to do so. The court looks at the substance of the proposed remedy, not just the wording of the injunction. The court will consider all relevant circumstances and exercise discretion based on established principles.

Answer 562

An interim injunction is a temporary court order that restrains a party from breaching a negative term of the contract. On the other hand, an order for specific performance requires a party to carry out its obligations under a positive term of the contract. An interim injunction is sought to maintain the status quo, while an order for specific performance aims to enforce the contract.

Answer 563

The test involves considering the legitimate business interest served and protected by the clause and assessing whether the detriment imposed is extravagant, exorbitant, or unconscionable. The burden of proof is on the person alleging that the clause is a penalty.

Answer 564

The purpose of a court order requiring the defendant to carry out its obligations under a positive term of the contract is to ensure that the defendant fulfills their contractual obligations.

Answer 565

A guarantee is a promise by a party to ensure that another party carries out its obligations, or a promise to fulfill those obligations itself if the other party does not do so. It provides additional protection to the party owed the obligation.

Answer 566

The usual method of calculating the expectation interest in contracts involving defective building works is the cost of cure. This represents the cost of substitute or remedial work required to put the claimant in the position they would have been in had the contract been properly performed.

Answer 567

A guarantee is a promise to ensure that another party carries out its obligations, while an indemnity is a promise to reimburse someone in the event that they suffer a stated loss. A guarantee’s obligation is defined by the obligated party’s obligation, while an indemnity’s obligation is legally independent of the obligated party’s obligation.

Answer 568

Firstly, the substance of the provision matters more than the heading ‘guarantee’ or ‘indemnity’. Secondly, if the obligated party’s obligation ceases, a guarantee’s obligation also ceases, while an indemnity remains in force. Thirdly, changes to the contract may discharge a guarantee but not an indemnity. Lastly, guarantees require certain formalities, while indemnities do not.

Answer 569

An indemnity is a promise to reimburse someone in the event that they suffer a stated loss. It provides additional protection to the party suffering the loss.

Answer 570

If there is a change to the contract between the obligated party and the party owed the obligation, a guarantee would almost always be discharged, while an indemnity would remain in force. Additionally, if the obligated party’s obligation ceases, a guarantee’s obligation also ceases, but an indemnity remains in place.

Answer 571

A guarantee must be in writing and signed by the guarantor. In contrast, an indemnity does not have such formal requirements

Answer 572

Yes, it is possible for both a guarantee and an indemnity to be given at the same time. This provides the party owed the obligation with the benefit of both forms of additional protection

Answer 573

Loss of reputation This is the correct answer. Expectation interest can be calculated using one of the following mechanisms: cost of cure, diminution in value or loss of amenity

Answer 574

An award of damages is aimed at compensating the innocent party for the damage or loss they have suffered as a result of the other party’s breach of contract

Answer 575

Damages will be awarded for loss of chance if the lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition

Answer 576

The test is whether the defendant’s actions were a dominant or effective cause of the loss

Answer 577

The damages which arise naturally according to the usual course of things from the breach, or those which the parties contemplated at the time they made the contract would probably be caused by a breach of contract.

Answer 578

The claimant will not be able to recover the losses attributable to the failure to mitigate

Answer 579

An innocent party cannot recover expenses that would have been wasted whether or not the breach of contract occurred

Answer 580

In exceptional circumstances where traditional remedies are inadequate A further requirement is that the claimant must show that they have a legitimate interest in depriving the defendant of his profit

Answer 581

30 days running from the time that: (i) ownership has passed (or, in the case of contracts for hire or the like, possession has been transferred) and (ii) the goods have been delivered and (iii) in cases where the trader is required to install the goods or to take other action to enable the consumer to use the goods, the trader has notified the consumer that the required steps have been taken

Answer 582

The consumer has a right to a price reduction

Answer 583

The right to repeat performance

Answer 584

A clause which stipulates a certain sum of money which is payable in the event of a particular breach of contract

Answer 585

The liquidated damages clause will be struck down and the claimant will be entitled to unliquidated damages assessed by the court using the normal rules of contract law

Answer 586

It is an obligation triggered by breach of contract to compensate the innocent party

Answer 587

It is an order restraining a party from breaching a term in a contract which requires him not to do something

Answer 588

(a) Affirmation. The innocent party on discovering the misrepresentation may elect to treat the contract as continuing – and doing nothing may amount to affirmation. Once the innocent party has affirmed the contract they cannot then change their mind and rescind. (b) Undue delay. (c) Where an innocent purchaser has acquired an interest in the subject matter of the contract before purported rescission of the contract. (d) Where it is impossible substantially to restore goods or property.