Contract Law Flashcards
1
Q
What is a contract?
A
A legally binding agreement between two or more people
2
Q
What is a unilateral contract + example?
A
A contract where only one party adds something e.g. a rewards poster
3
Q
What are the two types of contract?
A
Unilateral and Bilateral
4
Q
What is a bilateral contract + example?
A
A contract where two parties add something e.g. a car and £5000
5
Q
What are the things needed for a legally binding contract?
A
Offer, Acceptance, Consideration and Intention
6
Q
What are the ways an ‘Offer’ can be presented in a question?
A
Offer, Invitation to Treat or a Request for Information with a reply
7
Q
What is an Offer/what must it be?
A
The start of the contract, statement of terms upon which you are willing to be bound/ it must be communicated clearly and be certain (Gibson v Manchester City Council)
8
Q
What are the side rules for Offer?
A
Counter-offer, Revocation, Rejection, Lapse of Time, Death
9
Q
What is the side rule of Counter-offer?
A
It rejects and ENDS the previous offer, anything after is a new offer BUT must be communicated (Hyde v Wrench)
10
Q
What is the side rule of Revocation?
A
Can be revoked at any time BEFORE acceptance and must be communicated directly or through reliable 3rd party (Dickinson v Dodds)
11
Q
What is the side rule of Lapse of time?
A
If offer has time-limit, it will end after this or, if it doesn’t, it will end after a reasonable amount of time (Ramsgate Victoria Hotel)
11
Q
What is the side rule of Rejection?
A
Must be a clear rejection and must be communicated (Stevenson v Mcclean)
12
Q
What is the side rule of Death?
A
Can still be accepted until offeree knows about death, as estate will not die
13
Q
What is an Invitation to Treat?
A
NOT an offer, invites the other person to make an offer themselves
14
Q
What are the three types of ITT?
A
Adverts, Auctions and Items on Display
15
Q
What are the rules for Advert?
A
(Partridge v Crittenden) Will always be an ITT UNLESS if it is intended for specific audience OR a unilateral contract (Carlill v Carbolic Smokeball)
16
Q
What are the rules for Items on Display?
A
(Fisher v Bell) Invitation to treat as owner has ability to reject/accept
17
Q
What are the rules for Auction?
A
(BCA v Wright) Auctioneer has ITT and bidders make offers
18
Q
What is a Request for Information and Reply?
A
Where the other party simply asks for info, this is NOT an offer (Harvey v Facey)
19
Q
What is Acceptance?
A
An agreement to the terms of the offer, can be in any form except silence (Felthouse v Bindley) but needs positive act (Carlill v Carbolic Smokeball)
20
Q
What are the side rules under Acceptance?
A
Postal rule, Electronics
21
Q
What is the Postal rule?
A
Letters of acceptance valid as soon as posted (Adams v Lindsell) but only apply if: correctly stamped/dated, normal communication method, proof of postage
22
Q
What is the sub-side rule under Postage rule?
A
It can be avoided by putting terms into the offer such as ‘acceptance will only take place when communicated’
23
Q
What is the side rule of Electronic communication?
A
Accepting by fax, email or text counts only when it is received (Entores v Miles Far East) If office hours finished, the next working day applies
24
What is Consideration?
The 'thing' each party puts into the contract, it must be real, have value and be sufficient, meaning it exists **(Chappell v Nestle) (White v Bluett)**
24
What are the 4 side rules of Consideration?
Performance of an existing contractual duty, past consideration, part payment of debt, privity of contract
25
What is performance of an exisitng contractual duty?
Doing what was already being done is not good consideration **(Stilk v Myrick)** BUT there are exceptions: if extra is done, its good **(Hartley v Ponsonby)**or if the party gains an extra benefit **(Williams v Roffey)**
26
What is past consideration?
If consideration is done before agreement, there is no valid contract **(Re McArdle)** BUT if there is an implied promise to pay, this can be enforced **(Lampleigh v Braithwaite)**
27
What is part payment of debt?
Not good consideration, you can claim the rest even if you agreed**(PINNEL's case)**UNLESS accepted something other than money, paying a smaller amount on a date earlier than originally agreed, repay part of it on date at a different place at request of debtor
28
What is promissory estoppel under part payment of a debt?
An equittable remedy: if a promise is made that another person relies on to their detriment, the promisor is estopped/prevented from breaking that promise
29
What is privity of contract?
Only those who give consideration have rights under a contract **(Tweddle v Atkinson)** BUT **Contracts (Rights of Third Parties) Act 1999** states a person who isnt a party to a contract can enforce it if they are named in the contract or benefitd from it
30
What is Intention?
Both parties must intend to create legal relations
31
What are the two types of agreements under Intention?
Business Agreements or Social/Domestic Agreement
32
What are business agreements assumed to be under Intention?
Presumed to be legally binding UNLESS it can be proved otherwise (rebuttable presumption) (Jones v Vernon's Pools)
33
What are social agreements assumed to be under Intention?
Presumed to not be legally binding UNLESS it can be proved otherwise (Balfour v Balfour) (Merritt v Merritt)
34
What are the two side rules under Intention?
Money changing hands and putting financial security at risk
35
What is the side rule of money changing hands under Intention?
Simpkins v Pays - if money changes hands, its more likely to be legally binding
36
What is the side rule of putting financial security at risk under Intention?
Parker v Clarke - If parties put their financial security at risk, it is more likely to be legally binding
37
What is breach under formation of a contract?
Where a contract exists but something has gone wrong
38
What are the two types of breach?
Actual and Anticipatory
39
What is actual breach?
Where a party has failed to fulfill their obligations, either breach of a warranty or breach of a condition
40
What is breach of a condition under actual breach?
Poussard v Spiers - the contract is ended (repudiated) and they can sure for damages, the more significant of the two
41
What is breach of a warranty under actual breach?
Bettini v Gye OR Hochester v de la Tour - the contract must carry on but damages can be claimed, the less significant of the two
42
What happens if you are unsure of an actual breach?
This will be an innonimate term and so you must look at the effect of the breach, if it deprives someone of benefit, it will be a breach of contract (Hong Kong Fir v Kawasaki)
43
What is anticipatory breach?
When a party gives notice is advance to the other party that he or she will not be performing or completing the contract - they can choose to claim or wait until it happens to claim more money
44
What are the remedies available under breach of contract?
Compensatory damages, the duty to mitigate loss and equittable remedies
45
What must happen in order to claim damages?
The C must prove that the damage was caused by the D's breach + the damages must place the C in the same position they were in prior to the breach
46
What can be claimed for in compensatory damages?
Loss of a bargain, Reliance loss and Restituion
46
What is reliance loss under recoverable loss?
Wasted expenditure by a C who relied on a contract being performed, which are spent in advance of a contract
47
What is restitution under recoverable loss?
Repayment of any money or benefit that was paid in advance of the contract
48
What is the duty ot mitigate loss?
Party must take steps to minimise their loss, but not to extraordinary lengths.
48
What is remoteness of damage?
(Victoria Laundry) Can only claim for damages that were reasonably foreseeable + special contracts can only be claimed for if the other party knew of them
49
What is an equittable remedy?
Provided at the discretion of the court, and only when damages are not enough
50
What are the types of equittable remedy?
Injunction, Specific performance, Recission
51
What is an injunction?
A court order which prevents someone from acting (Miller v Jackson) it can also be tailored (Kennaway v Thompson)
52
What is specific performance?
Where a party is ordered to fulfill their contractual obligation
53
What is recission?
The parties are simply placed back into the position they were in prior to forming the contract
54
What is an express term?
Terms which the parties agree on themselves
54
What is an implied term?
Terms which are added by the Government for protection
55
What are the three ways terms can be put into the contract?
By custom, by fact and by statute
56
What does a term being placed by fact mean?
Where the court presumes what the party would have added into the contract (Marks and Spencers v BNP Paribus) can also be done to make business sense
57
What does a term being placed by custom mean?
Where it is tradition to have them in the contract (Hutton v Warren)
58
What does a term being placed by statute mean?
Placed by the Consumer Rights Act 2015
59
What does the Consumer Rights Act 2015 state?
Applies to all contracts between consumers and traders + covers all contracts for goods, services and mixed contracts
60
What rights comes under a contract for goods?
s.9 goods must be of satisfactory quality, s.10 goods must be fit for purpose, s.11 goods must be as described
61
What does s.9 of the Consumer Rights Act state + the defenses against it?
s.9 goods must be of satisfactory quality, s.9(2) based on what a reasonable person would day, s.9(3) this means freedom from minor defects, state and condition, price and description BUT this will not apply if fault is shown to the customer prior to the contract
62
What does s.10 of the Consumer Rights Act state?
s.10 goods must be fit for purpose, for example, if the purpose is obvious or the business recommended those goods, the consumer must have relied on their skill and judgement + must be reasonable for them to do this (Baldry v Marshall)
63
What does s.11 of the Consumer Rights Act state + what is the side rule for this?
s.11 goods must be as described, side rule states this also applied to how they are packaged (Moore & Co. Ltd)
63
When is an exclusion clause valid?
An exclusion clause is valid when it is incorporated into the contract by signature (Curtis v Chemical Cleaning), by notice or by previous course of dealing (Olley v Marlborough Court Hotel)
64
What section under the Consumer Rights Act prevents business' from using exclusion clauses in contract for goods?
s.31 states a trader cannot exclude or limit their liability in regards to s.9, s.10 and s.11
65
What remedies come under a contract for goods?
s.20 short term right to reject, s.23 the right to repair or replace, s24 the right to a price reduction or final right to reject
66
What does s.20 of the Consumer Rights Act state?
A consumer is able to reject the good and claim a full refund within 30 days of delivery, and the trader must bear any reasonable costs of returning the goods
67
What does s.23 of the Consumer Rights Act state?
The right to repair or replacement - the trader must do this within a reasonable time and without significant inconvenience and bear all the costs of doing so
68
What does s.20 of the Consumer Rights Act state?
This will be allowed if a repair or replacement does not conform to the contract
69
What rights come under a contract for services?
s.55 the right to require repeat performance, s.56 the right to a price reduction
70
What does s.55 of the Consumer Rights Act state?
The right to require a specific performance, must be done within a reasonable amount of time and without any inconvenience to the consumer whilst bearing any costs
71
What does s.56 of the Consumer Rights Act state?
The right to a price reduction by an appropriate amount, this could be a refund up to full contract price, which must be provided within 14 days
72
What is needed for an exclusion clause to be properly constructed?
It must have clear wording and any ambiguity in terms of the meaning of the clause will go against the party relying on it (Contra proferentem rule)
73
What are the three ways an exclusion cause can be incorporated into a contract?
By signature, by reasonable notice and by course of previous dealing
74
What does a signature do to an exclusion clause in a contract?
If a person signs a contract, they are bound by the terms (Curtis v Chemical Cleaning) UNLESS it was verbally explained differently to the contract
75
What does a reasonable notice do to an exclusion clause in a contract?
It is valid if reasonable notice if provided into the contract (Olley v Marlborough Court) BUT the more serious it is, the more should be done to make party aware 'red hand rule'
76
What does previous course of dealing do to an exclusion clause in a contract?
If parties have dealt with each other before, with the same type of contract, the court presumes you will be aware of the terms (Hollier v Rambler Motors)
77
What does s.31 of CRA 2015 say?
A trader cannot limit their responsibility or liability in regards to s.9, s.10 and s.11 under a contract for goods
78
What does s.57 of CRA 2015 say?
A trader cannot limit their responsibility or liability in regard to s.49 and s.52 under a contract for services
79
What is the only way to end a contract under goods and services?
To argue that a condition, something that goes to the heart of the contract, has been breached
80
What are vitiating factors?
Ways to get out of a contract without being in breach
81
What do the effects of void and voidable mean?
Void - As if the contract never existed
Voidable - The consumer can choose to continue with the contract or claim remedies
82
What is Misrepresentation?
When a party to a contract has made an untrue statement the other party relied on, inducing them into entering the contract
82
What are the two vitiating factors?
Misrepresentation and Economics Durress
83
What is the first stage of misrepresentation?
Identify what makes it a misrepresntation with the following rules: Opinion, said wihtout intention, misrep by action/conduct, silence, part truth, change in circumstances
84
Under the first stage of misrepresentation, what does opinion mean?
The statement will not be misrep if it was made on opinion (Bissett v Wilikinson)
85
Under the first stage of misrepresentation, what does said without intention mean?
The statement will be misrepresentation if the person making it, based on evidence, couldn't have had that intention (Edginington v Fitzmaurice)
85
Under the first stage of misrepresentation, what does misrep by actions/conduct mean?
The statement will be a misrepresentation if they acted in a way which they knew was false (Spice Girls Ltd v Aprilia World)
86
Under the first stage of misrepresentation, what does silence mean?
Staying silent will not be a misrepresentation as there is no legal obligation upon a person to tell, but if asked, must tell the whole truth (Fletcher v Krell)
87
Under the first stage of misrepresentation, what does part truth mean?
Silence may be a misrep if the person only reveals half the truth deliberately (Dimmock v Hallett)
88
Under the first stage of misrepresentation, what does change in circumstances mean?
If the statement made was true, then the circumstances change and it became untrue and they did not correct it, this is misrep (With v O'Flanagan)
88
What is the side rule under the first stage of misrepresentation?
With relationships based on trust (e.g solicitor/client) any breach of that trust will always be misrep (Tate v Williamson)
Contracts of utmost good faith - must tell the whole truth (Lambert v Co-Operative Insurance)
89
What is the second stage of misrepresentation?
The misrepresentation musst induce the other part into entering the contract, meaning it must be a critical part of their decision (Attwood v Small)
90
What is the third stage of misrepresentation & what comes under it?
Identifty one of the three types of misrep:
Fraudulent, Negiligent and Innocent
91
What is fraudulent misrepresentation under the third stage of misrepresentation?
A false statement made without any belief that it is true; the only defence is if you believed it was true in any way
(Darry v Peak) + Remedies are recission and/or damages
92
What is negligent misrepresentation under the third stage of misrepresentation?
You believed the statement but had no reason for doing so; the only defence is if they had reasonable grounds to believe it
(s.2(1) Misrepresentation Act 1967) + Remedies are recission and/or damages
93
What is innocent misrepresentation under the third stage of misrepresentation?
You believed the statement was true and had reasonable grounds to believe it, you just made a mistake; there are no defences + Remedies are recission but under s.2(2) the court may provide damages
94
What is the fourth stage of misrepresentation?
Remedies:
Recission - Unscrambling the contract to put the parties in their pre-contract positions, which is an equitable remedy
Damages
95
What is economic duress?
Economic duress is where a person is forced into entering a contract as a result of a financial threat
96
What are the conditions for economic duress + case?
This must be due to illegitimate pressures, which leave the victim with no real choice, causing them to enter the contract (Universe Tankships)
97
What case decided the factors for economic duress?
Pao On
98
What is the first deciding factor of economic duress?
Did the person who claimed to be coerced protest about being pressured?
99
What is the second deciding factor of economic duress?
Did that person have any other available course of action, that was reasonable?
100
What is the third deciding factor of economic duress?
Were they independently advised before taking action?
101
What is the fourth deciding factor of economic duress?
After entering into the contract, did they take steps to make the contract void?
102
What is the side rule of the deciding factors of economic duress?
If it was a lawful threat, it is not economic duress (CTN Cash & Carry v Gallagher)
103
What is the remedy for economic duress?
Restitution - placing the person back into their pre-contract position
104
What is a force majeure clause in frustration?
Most contracts contain this, it excludes liability for the parties to delay in performance if there are extraordinary events
104
What is Frustration?
When a contract becomes impossible to perform due to an event out of control and contemplation
105
What is the first stage of Frustration?
Identify the possible grounds for frustration: Impossibility of performance, Subsequent illegality or a radical change of circumstances
106
What is the impossibility of performance under Frustration?
Where the contract becomes impossible to perform due to destruction or unavailability of the subject matter; Place (Taylor v Caldwell), Person/Party (Robinson v Davidson)
107
What is subsequent illegality under frustration?
If performing the contract becomes an illegal act, such as importing goods that become illegal, e.g. war (Denny, Mott & Dickson Ltd)
107
What is a radical change of circumstances under frustration?
Where the essential commercial purpose of the contract cannot be achieved, e.g if the event was the main purpose but becomes cancelled (Krell v Henry)
108
What is the second stage of frustration?
Identify the counter-arguments for frustration; Self-induced frustration, Contract less profitable, Foreseeable risk
109
What is self-induced argument under frustration?
Frustration will not apply when event is in the control of a party (Maritime National Fish Ltd v Ocean Trawlers Ltd)
110
What is the reduced profitability argument under frustration?
If a contract becomes less profitable or more difficult to complete, this is not a reason for frustration (Davis Contractors Ltd)
111
What is the foreseeable risk argument under frustration?
If the frustrating event was foreseeable, or placed in the contract, this will not be frustration (Amalgamated Investments v John Walker)
112
What is the fourth stage of Frustration?
Remedies; Common Law & Law Reform (Frustrated Contracts) Act 1943, s1
112
What does common law state as a remedy for frustration?
Automatically terminates the contract, and any existing obligations must be completed, whereas future obligations are terminated
113
What comes under the Law Reform (Frustrated Contracts) Act 1943?
s1, money already paid is recoverable nd money due under the contract is not payable
s1(2), it is at the court's discretion to order compensation for work done and expenses incurred before frustrating event
s1(3), the court may require compensation for any benefit received by either party
114
What is performance?
Where both parties have satisfied their duty under the contract, and so it comes to an end
115
What is the strict rule under performance?
Performance must be complete and exact to fulfill the contract, meaning you must do exactly what you said you would do (Cutter v Powell)
116
What are the exceptions to the performance rule?
Acceptance, Prevention, Divisibility and Substantiality
117
What is acceptance under performance?
Where one party agrees to the other not needing to complete the entire contract BUT if the innocent part is forced to accept it, this is not consent (Sumpter v Hedges)
118
What is prevention under performance?
If one party prevents the other from completing the contract in its entirety (Planche v Colburn)
119
What is a divisible contract under performance?
Where a contract can be split into different parts, and not completing something ISNT a breach of the entire contract (Ritchie v Atkinson)
120
What is substantiality under performance?
If a party has done a substantial amount of what they were required to do, there must be payment for what has been done (Hoenig v Isaacs)
120
What is the side rule under the first stage of performance?
Time; time will be seen as a condition in some circumstances, if it is expressed that 'time is of the essence' the completing time is crucial but if it isn't, it will be a warranty so the contract cannot be repudiated (Union Eagle v Golden Achievement)
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