Contract Law

Question 1

Name three types of contract you may encounter in your personal lives.

Answer 1

Insurance, consumer, construction

Question 2

Name three type of contract you may encounter in your professional lives.

Answer 2

Employment, commercial, insurance

Question 3

There are certain requirements necessary to make a contract valid. The first of these is to make an ‘offer’.
(a) Define what an ‘offer’ is.
(b) Set out the other requirements necessary to make a contract.
(c) Explain what ‘consideration’ is in a contract.

Answer 3

(a) An offer is a real and definite intention to make a contract.
“…an expression of willingness to contract made with the intention (actual or apparent) that is shall become binding on the person making it as soon as it is accepted by the person to whom it is addressed.” (Treitel 10th edition p.8)

(b) Acceptance, consideration, intention to create legal relations, capacity, formalities

(c) Promisee should not be able to enforce a promise unless they have given or promised to give something in exchange for the promise or unless the promisor has obtained (or been promised) something in return. (The price you pay for the promise).

Question 4

Compare and contrast the use of ‘implied terms’ and ‘express terms’ in a contract. In what was are they similar and how are they different?

Answer 4

Implied terms are not written in the contract (by court “something so obvious that is goes without saying”, by custom e.g. trade usage, by statute e.g. Sale of Goods Act 1979).
Express terms are those included/written in the contract (e.g. employee’s salary, working hours).
Both define the contract and what is to be expected (agreements from both parties), however, implied terms are not directly stated but rather assumed, while express terms are those explicitly defined/agreed.

Question 5

Explain the legal significance of the following:
(a) Carlill v. Carbolic Smoke Ball Company (1893)
(b) Promissory Estoppel
(c) Exclusion Clauses
(d) Implied terms

Answer 5

(a) Definition of offer, the intent to make a contract; poster promising cure for hay fever.

(b) Exception to consideration; “Where A makes a promise to B which is intended to be binding and to be acted upon, and is in fact acted upon, then A is bound by the promise even where B has provided no consideration for it.”; allows a promise to be enforced by law if someone has suffered a loss because they relied on that promise.

(c) Terms of clause intended to prevent one or other party from being in breach and/or attempting to exclude liability.
Not always fair; controlled by common law control (courts) & statutory control (Unfair Contract Terms Act 1977)

(d) Not written in contract but implicitly agreed upon.
- By court:
“Something so obvious that is goes without saying”
Liverpool Country Council v. Irwin (1977) - Landlord should take reasonable care to keep lifts and staircases in good repair.
- By custom (e.g. trade usage)
- By statute (e.g. Sale of Goods Act 1979)
Goods should be fit for purpose and of satisfactory quality

Question 6

‘Damages’ are the most common remedy for breach of contract.
(a) Explain briefly what ‘damages’ are.
(b) According to the case Anglia Television v. Reed, what is the reason behind using this remedy? And what is it not meant to do?

Answer 6

(a) Mitigate loss(es) due to breach of contract

(b) Cover losses due to breach of contract. Object to compensate Plaintiff and not punish Defendant.

Question 7

Sarah, a recently qualified engineer has brought her newly designed product to market. She has described her innovative battery pack as ‘award winning’ and claims she has sold 20,000 units. She has in fact won no awards and sold 8,000 units.
(a) You buy this battery pack based on her description and then find out the truth about her claims. On what basis is the contract of sale invalid?
(b) What remedy or remedies might be available to you?