Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Law > Contract Law > Flashcards

Contract Law Flashcards

You may prefer our related Brainscape-certified flashcards:
MPRE flashcards MBE flashcards Civil Procedure 1L flashcards
1
Q

What is a contract?

A

A legally enforceable agreement in which failure to perform according to terms of agreement enables the innocent party to remedies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are ‘remedies’?

A

financial compensation for the innocent party (damages), treating the contract as discharged or terminating the contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Why is the risk of unfulfillment less in contract?

A

risks to businesses, damage to reputation from adverse publicity/lawsuits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why do we need contracts?

A

We don’t trust that agreements made will be fulfilled and contracts foster artificial trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Why do foreign firms choose English law to govern their contracts?

A

English contract law prioritises certainty, autonomy and formalism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Why do contracts enable trust?

A

The law says the parties have to do certain things or they risk legal consequences (legal enforceability)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is ‘special performance’

A

When the court orders the party in breach to perform according to terms of contract (rare)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is ‘non-intervention’?

A

Courts don’t insert extra terms to make contracts ‘better’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is ‘formalism’?

A

The belief that contracts are made by the parties for the parties and that parties should have sovreignty over their contract (without intervention of the law)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is ‘caveat emptor’?

A

‘Let the seller beware’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is ‘autonomy”

A

When parties have sovreignty over their contract and therefore contracts entered into freely are sacred

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What if parties want extra protection from contracts?

A

Parties must put them in by themselves (caveat emptor)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are benefits of contracts?

A
  • provide backup to help allocate losses if problems arise

- allows parties to determine responsibility for themselves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Is legal enforceability concrete?

A

it doesn’t mean that all contracts will be fulfilled but risk of unfulfillment is less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Is flexibility good?

A

The more flexible the rules the easier it is in theory to achieve fair results in cases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

In what circumstances are remedies appropriate?

A

When there has been a breach in contract and it is very serious (repudiatory breach)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Disadvantages of flexibility in contract law

A
  • outcome of each case is more debateable
  • increased time to decide on outcomes
  • more expensive (poorer party my not be able to afford case delay)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Are inflexible/simple rules good?

A

No… increased potential for unfair results in cases

Yes… party with greater resources has less chance to identify/exploit loopholes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What do you need for a contract to be concluded?

A

-you need an agreement, contractual intention, consideration and compliance with formality (contract in writing)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is a bilateral contract?

A

when each side makes a set of promises to the other and each party has obligations owed to the other

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a unilateral contract?

A

(if contract) promise in return for performance of an act and obligations are on one side only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the main model for reaching an agreement in contract?

A
  • offer and acceptance

- before parties reach an agreement they can walk away with no liability and not be in breach of contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What happens the parties reach an agreement?

A
  • a legally binding contract now exists

- parties cannot walk away without being legally liable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is an offer?

A

An expression of willingness to contract on certain terms made with the intention that it will eventually become a binding contract when the other party accepts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Characteristics of acceptance

A
  • the offeree responding to the offer by accepting its terms
  • an unqualified yes to an offer
  • silence cannot be used as acceptance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is the tennis match idea?

A

-negotiations going backwards and forwards until an offer is proposed and accepted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

How do you test the verification of an offer?

A
  • objectivity (look objectively at communications between parties)
  • preparedness to commit and conduct (offers can arise through actions also)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is an invitation to treat?

A

preliminary communication/negotiation to elicit an offer which may then be considered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

How do auction sales work?

A
  • goods put up by auctioneer is invitation to treat
  • bids made are all offers (most aren’t accepted)
  • until the hammer falls anyone can retract their bid because the offer hasn’t been accepted and you’re still in negotiation phase
  • once hammer falls its changed from negotiation to legal commitment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How do auction sales with no reserve price work?

same legal analysis for auction with reserve price if highest bidder exceeds or meets reserve

A
  • reserve price is minimum price below which the goods won’t be sold
  • if seller refuses highest bid you can use a ‘collateral contract’ against the auctioneer
  • goods auctioneer put up are invitation to treat and because there is no reserve price they’re considered to have made an offer
  • auctioneer essentially implies a (collateral) unilateral contract that he will accept buyer with highest bid
  • highest bid is acceptance of auctioneer’s collateral offer and has therefore qualified for award and auctioneer’s failure to provide would be breach in contract
  • highest bidder can claim damages for breach of collateral contract
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What is a collateral contract?

A

-contract comes into existence on an implied basis to support a possible primary contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Contractual reasoning of a ‘display of goods’

A
  • goods displayed in supermarket with attached price are invitation to treat
  • customer picking a good and taking it to checkout is offer
  • supermarket accepts/rejects through checkout assistant
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Contractual reasoning of Catalogue

A
  • HoL held that catalogue is invitation to treat
  • orders placed by customers were offers
  • merchant is free to accept/reject offers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Contractual reasoning of adverts inviting parties to submit tenders/bids

A
  • invitation to submit tender is invitation to treat
  • tenders/bids submitted are offers
  • it’s up to party that invited tenders to decide which offer to accept
  • no obligation to accept a tender that wins in terms of price BUT if party decided in advance that it would accept lowest/highest bid it must do so
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Certainty/completeness in contracts

A

-contracts need to be certain/complete to be enforceable in court

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Problems associated with determining certainty/completeness

A
  • unclear wording
  • vague/hard to discern wording
  • material omission (parties failing to address essential issues)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Sovereignty of the contract

A

courts don’t have the right to create a contract that the parties didn’t create for themselves
-courts do everything they can to uphold/give effect to a contract where it is clear that the parties intended to have one

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Is an agreement to agree valid?

A
  • -an agreement to agree on something in the future is no agreement at all
  • it is not recognised as a contract because there is uncertainty
  • it is impossible to say what the agreement would have been
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What happens if negotiation has no fixed duration?

A

-if there is a preliminary agreement with no fixed duration the courts will probably decide that there is only an agreement to negotiate which is not legally enforceable (Walford v Miles)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Sales of goods act section 8

terms to ascertain price

A
  1. the price in contract of sale may be fixed by contract/fixed manner agreed by parties themselves
  2. where price isn’t determined as mentioned before the buyer must pay a reasonable price
  3. What is a reasonable price is a question of fact depending on each particular case
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Sales of goods act section 9

A

if contract states price is to be determined by a third party but third party cannot/will not do it the agreement is void
-if this does not work the agreement is void

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Significance of performance

A
  • legal reasoning must take cues from reality
  • if you’re trying to argue that the contract is void after most of the subject matter has been performed courts will not believe you
  • if the deal is unworkable how did you work it up until this point?
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Possible responses to an offer

A
  • acceptance (offeree signifying that they agree to the offer as a whole)
  • rejection (offeree says no to package of the offer)
  • counter offer
  • enquiry
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Can an offeree pick and and choose bits and pieces of an offer?

A

If you say no to parts you say no to the entire contract (its indivisible)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What is a counter offer?

A
  • when offeree doesn’t say no or yes but says what about this instead
  • offeree that makes counter offer is turning down offer that has been received
  • rejection of first offer to make fresh offer awaiting response of other party
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is an enquiry?

A
  • offeree might not want to accept/reject
  • the offeree is not ready to make a final decision
  • offeree might want to continue negotiation and responds saying they want to continue to negotiate
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What happens if the method of accepting the offer is indicated?

A

-the stipulated method is the only allowed method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What happens if the method of accepting the offer are not indicated?

A
  • if there is no specific instruction the offeree can use the same method used by offeror to offer the contract
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What method of acceptance is expected with a unilateral contract?

A
  • offeror does not look for offeree to respond with acceptance they just expect them to perform the stipulated act
  • similar to acceptance by conduct
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Can acceptance be inferred from conduct?

A
  • it can provided the conduct is clearly relevant to the offer when viewed objectively and if the offeror is aware
  • conduct must be unequivocal
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Issues of acceptance by conduct

A
  • conduct relied upon can be ambiguous

- acceptance could equally be explained as a wish to carry n negotiations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Battle of the forms

A
  • business contracting parties approach contracts with their own established standard terms
  • each party wants to conclude on the basis of their terms
  • each party replies to offer from the other party with counteroffer (goes on for a while)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

Problems with offer acceptance by silence

A
  • if silence could act as acceptance in all circumstances we would have to vocally reject all things offered to us
  • junk mail and offers we don’t ask for would overwhelm us
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Is it ever possible for silence to constitute acceptance?

A
  • maybe if the offer has been requested
  • if the offeree asks offeror for an offer for their car
  • offeror comes up with price and says the price they want saying if they don’t hear from offeree by the next day the deal is done
  • it would definitely not work if there was no time limit for offeree to decide
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Requirement of communication in acceptance

A
  • for an acceptance to be valid it has to be communicated

- it must get through to the other party or it does not take effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Communicating acceptance by email

A
  • offer made by email and acceptance sent off by email
  • acceptance is not effectively communicated when it is read because it would depend on how often offeror checks his email/how efficient their staff is
  • unfair to say email is communicated when it is sent off cause of different time zones
  • email acceptance is communicated when it has been read
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What if acceptance by email does not get through? (problem with offeror’s internet)

A
  • it’s the offeror’s fault and the offeree wasn’t responsible for lack of communication
  • you usually get notification when something doesn’t deliver
  • law says there is no acceptance and you should try again
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What if you sent an acceptance off before the deadline but because of offeror’s IT failure it didn’t deliver in time?

A
  • its too late to send another message because deal had strict time limit
  • original communication met deadline so it would be enough
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Postal acceptance rule

A

-an acceptance sent off by post takes effect in law as soon as it is posted and a binding contract now exists (even if post is lost acceptance is technically valid)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Why does PAR exist?

A
  • post has risk of things being delayed/lost

- risk should fall on offeror because they initiated the use of post

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Does PAR always apply?

A
  • offeror can phrase contract so that although post is permissible method for acceptance PAR doesn’t apply
  • under those circumstances for acceptance to be valid the post must be delivered
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

What if PAR applies and the offeree posts acceptance but wants to change their mind?

A

-sends a second communication using a faster method like email to reject the offer if it arrivers before acceptance than it is valid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

Cons of allowing offeree to change their minds with PAR

A
  • unfair advantage to offeree
  • they can play the market at expense of offeror
  • if the deal is good offeree can post acceptance then if the market moves and the deal isn’t as good they can quickly send electronic rejection and escape contract
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

What is the impact of a rejection/counter-offer?

A

-They completely kill off the initial offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

When does a rejection/counteroffer occur?

A

When they get through to the offeror

-no such thing as postal rejection/counteroffer rule

66
Q

If the offeree does nothing after a reasonable time will the offer expire?

A
  • offer contains implied term that it’s only available for acceptance for a reasonable time
  • the failure of the offeree to respond within reasonable time a rejection
67
Q

Revocation of offer

A

-an offeror is free to revoke an offer until a legally binding contract has been concluded

68
Q

How does revocation of offer take effect?

A
  • it must be communicated to the offeree and must get through
  • if it has been sent off and doesn’t reach the other party it cannot work
  • revocation can be communicated by third party
69
Q

Revocation of unilateral offer

A
  • often made to large numbers of people (posted missing cat posters)
  • not possible to track everyone down
  • you just have to do a public revocation that is equivalent to offer that’s been made
70
Q

When is a unilateral offer acceped?

A
  • it’s accepted once the other party has performed the stipulated act
  • completion of stipulated act is acceptance
71
Q

What about unilateral contracts that require acts that take a long period of time to complete?

A
  • offer is accepted by commencing performance

- the contract is concluded by commencing the act but you don’t get the award until you complete the act

72
Q

Walk from london to york analogy

A
  • if you’re walking from london to york and you’re 3/4 of the way there
  • the offeror catches up to you and revokes the offer
  • the revocation didn’t work but you stop walking because you think it does
  • you would stop walking and loose the reward
  • there is potentially an implied collateral contract from offeror saying that once offeree starts performance they won’t do anything that prevents them from completing
  • sue for breach of collateral contract and can claim damages for loss of opportunity to complete walk
73
Q

What three components are needed to complete an agreement to be a contract?

A
  • intention to create legal relations
  • (some require) compliance with a given formality
  • consideration
74
Q

What counts as intent to create legal relation?

A

(it is an objective requirement)

  • as long as there are relevant words/conduct which indicate intent to create a legally binding contract
  • if the agreement was broken would it end up in court?
75
Q

Rule for formalities (putting contract in writing)

A

-contracts do not have to comply with formality unless it is specifically stipulated but because of common sense most people put significant contracts into writing

76
Q

When are formalities required?

A
  • if the subject matter is particularly important so courts want reliable record of transaction (land contracts have to be in writing)
  • contracts of guarantee also have to be in writing (statute of frauds, 1677)
  • in consumer law the contracts require the seller to give buyer a written statement of their rights
77
Q

What is consideration?

A
  • something that is given in return for a promise
  • it can be a benefit to the party making the promise or a detriment incurred by the promisee
  • there must be consideration for a contract to be legally enforceable
78
Q

Consideration in bilateral contracts

A

two sets of promises exchanged, in return to sellers’ promises the buyer makes a reciprocal promise and that is their consideration

79
Q

Consideration in unilateral contract

A

the performance of the stipulated act is consideration

80
Q

Can past consideration work?

A
  • no because it pre-dates the promise it is supposed to support
  • sometimes a later promise after the consideration may just make explicit what was already impliedly understood by both parties
81
Q

Consideration must move from the…

A
  • it must move from the promisee
  • to generate a bargain the consideration for the promisor’s promise must be provided by the promisee
  • promisee doesn’t have to give promise to promisor (promisor could make promise to promisee in return for promisee paying money to a third party)
82
Q

Do considerations have to be adequate?

A
  • no legal requirement for balance between value of agreement and value of consideration to make it binding
  • up to parties to look after their own interests (caveat emptor)
83
Q

What if the rights the promisee refrained from pursuing were invalid but promisee did not know this ? (consideration)

A
  • consideration doesn’t collapse
  • their forbearance is still good consideration as even if the promisee lost their case you would still have to pay legal fees etc
  • being relieved of that is a benefit
84
Q

what is good consideration

A

refraining from a suit or enforcing legal rights (forbearance)

85
Q

What if the rights the promisee refrain from pursuing were invalid and they knew?

A

it is not good consideration, it could be fraudulent

86
Q

What do you do if you have doubts that there is valid consideration?

A

use a deed (special document that derives its enforceability entirely from its form)
-a promise stated in a deed does not need consideration, it is enforceable in itself

87
Q

Argument for consideration not serving a purpose

A
  • very rare that contracts fail solely on consideration, usually because there also hasn’t been a proper bargain
  • Lord Mansfield believed the purpose of consideration was to provide evidence that the parties intended their argument to be legally binding and that consideration had no fundamental substance
88
Q

Arguments for consideration serving a purpose

A
  • HoL rejected Mansfield’s view
  • consideration held avoid contracts happening in informal circumstances
  • ‘importance of consideration is as a valuable signal that the parties intend to be bon=und by their agreement’ (supreme court of australia)
89
Q

What are vitiating factors?

A

Factors that taint the validity of an agreement (foundation of contract)

90
Q

Examples of vitiating factors?

A

misrepresentation, duress (coercion), undue influence (taking advantage of interdependent relationships), unconscionable bargains

91
Q

Duress/Coercion (vitiating factors)

A

party may complain that they were not left with any other alternative/effectively forced into contract

92
Q

Undue influence (vitiating factors)

A

one party says they were taken advantage of because they were in a position of weakness and were exploited

93
Q

What is the effect of vitiating factor on contract?

A

-contract is voidable which means the claimant is able to take it back but can also just act as normal

94
Q

What is rescission?

A

taking the whole contract apart, terminating it

-it reverses everything that resulted from the contract from the day it was concluded

95
Q

What is misrepresentation? (vitiating factor)

A

when the offeree is induced to agree to contract based on false statement (mislead)

96
Q

Characteristics for actionable misrepresentation?

A
  • must be a statement of fact
  • made by either of the two parties to the other
  • statement must be false
  • must induce the other party into the contract
97
Q

Does there need to be dishonesty for misrepresentation?

A

NO because a lie is intentionally untrue

-maker of misrepresentation can believe what they say and have solid reasoning

98
Q

What doesn’t qualify as fraud?

A
  • negligence–> if the reasonable person would know the statement was untrue this is NOT fraud
  • you’re only fraudulent when you know something is untrue/probably untrue
  • if you SHOULD have known it is negligence
99
Q

What about silent misrepresentation?

A

-if the D sells goods knowing they have a defect and keeps silent on their condition there is no remedy for what they do NOT say

100
Q

What happens if statement is true at the time it’s made but stops being true before contract is binding?

A

maker of statement needs to correct it and if they fail that is misrepresentation (With v O’Flanagan)

101
Q

Can statements of opinion constitute actionable misrepresentation? (rule)

A

NO–> it must be statement of fact

102
Q

Exceptions of actionable opinions as misrepresentation

A
  • if the statement of opinion implicitly involves certain statements of fact and the fact is wrong there will be liability because both the opinion and implicit fact are incorrect
  • if party provided opinion that required some factual thought and did a blind guess there could be liable misrepresentation
  • someone giving false opinion is misrepresentation
103
Q

Other exceptions to the actionable opinions as misrepresentation?

A
  • no reasonable grounds for opinion
  • representor holds itself as having special knowledge and that the representee can trust them
  • representor is in good position to know what truth is and is wrong
104
Q

What is a statement of intention?

A

a statement that contemplates what you will do in the future

105
Q

Are we allowed to change our minds with statement of intentions?

A
  • no law against changing your mind
  • failure to keep to intention in itself doesn’t warrant liability
  • person to whom statement is made cannot see statement as guarantee and if they do it is their problem
106
Q

When is a statement of intention misrepresentation?

A
  • what you’re saying is your opinion

- if you say it’s your intention to do X when it’s NOT that is misrepresentation of fact

107
Q

Who needs to make the statement in misrepresentation?

A

It needs to be made by or on behalf of the defendant

108
Q

What if the claimant is induced by 3rd party into contract? (3rd party liability)

A

-if C is induced into contract by something false said by 3rd party this generally is sufficient grounds to challenge contract

109
Q

What if the claimant is induced by 3rd party into contract? (defendant liability)

A

if misrepresentation is made by 3rd party and D is aware and knows it is misrepresentation and C is entering into contract based on that then D is liable

110
Q

What if claimant overheard Defendant’s misstatement and relied upon it and wanted to use it against D?

A

they would not be permitted to do so

111
Q

What is materiality? (misrepresentation)

A

whether a reasonable person in the position of the representee would regard the misstated fact as relevant in deciding whether to enter the contract

112
Q

What is the function of materiality?

A

to make sure representees don’t rely on statements that objectively no reasonable person would take seriously

113
Q

Examples of materiality in misrepresentation

A

there is no materiality in cases of advertising hype or obvious hyperbole

114
Q

What if someone enters into a contract without materiality?

A

they cannot claim misrepresentation

115
Q

How do you qualify for inducement (misrep)?

A

-claimant needs to show that without representation they would have not entered the contract/entered it on different terms

116
Q

What is the authority for the inducement requirement in misrepresentation?

A

Assicurazioni Generali v Arab Insurance Group

117
Q

Do you need to show if the misrepresentation is fraudulent for inducement??

A

-no you just need to show that the representation was a relevant reason as to why C entered into contract

118
Q

What does section 13 of the sales of goods act say?

A
  • when goods are sold by description it’s implied that they should match description
  • even if the goods are described pre-contractually those statements have contractual effect
119
Q

What duress concerned with?

A
  • illegitimate exercise of coercion

- draws line between legitimate and illegitimate coercion

120
Q

What are three requirements for coercion? (duress)

A
  • illegitimate threat
  • causation
  • sufficient coercive power
121
Q

What is an illegitmate threat?

A

-threat made to do something unlawful such as personal harm or threat to property and threat to break contract

122
Q

an example of what does not constitute duress?

A
  • a threat to not conclude future contracts

- they are threatening to exercise a right they have

123
Q

What is the Obiter dictum of CTN Cash and Carry v Gallagher, used to argue lawful act duress cases?

A

L.J Stain said to determine L.A.D we have to consider whether the party genuinely believed they had the right to make that threat

124
Q

How does LJ Leggatt address lawful act duress in Al Nehayan case?

A

-if the threat is lawful but does not meet minimum standards it is illegitimate

125
Q

What does LJ Leggatt address as the minimum standards of acceptable behaviour in Al Nehayan?

A
  • D had no reasonable grounds to make demand

- threat would not be considered by reasonable people to be a proper means of reinforcing demand

126
Q

The ‘but for’ test in duress (general rule)

A

-without the making of the threat the coerced party would have declined entering the contract or entered on different terms

127
Q

Can you qualify for duress if it is a threat the claimant could resist or reasonably should resist?

A
  • NO

- according to the law you have voluntarily acquiesced to the threat

128
Q

How do you satisfy sufficient coercive power requirement for duress?

A

-courts look for evidence that Cs are put in situations which there was no realistic alternative

129
Q

requirements to help determine sufficient coercive power (duress) set out in Pao On v Lau Yiu

A
  • did they protest at the time?
  • any sensible alternative?
  • did they take independent legal advice?
  • did C take steps to rescind pressure removed?
130
Q

Ingredients for undue influence?

A

-some unacceptable form of persuasion and causation

131
Q

What causation do you have to show for undue influence?

A

-simply that the undue influence is what induced the party into the contract

132
Q

What is actual undue influence?

A

-proved by direct evidence

133
Q

What is presumed undue influence?

A

-proved by circumstantial evidence

134
Q

How do we determine presumed undue influence?

A
  • relationship of trust of confidence

- transaction that is out of the ordinary within the context

135
Q

Can you refute presumed undue influence?

A
  • if they can show that C entered into the contract because they wanted to the transaction could stand and not be rescinded
  • evidence C thought about contract properly such as obtaining independent legal advice
136
Q

What is the doctrine of unconscionable bargains concerned with?

A

-its concerned with exploitation of vulnerability

137
Q

What is the general rule for minors entering contracts? (unconscionable bargains)

A
  • minors lack contractual capacity and cannot consent to a contract
  • if one party is a minor the contract is void
138
Q

What is the general rule for people with mental incapacities entering contracts? (unconscionable bargains)

A
  • their mental incapacity must be what causes them to not understand the contract
  • protection is granted on proof of their M.I and that the other party knew
  • there is a contract but it is voidable
139
Q

What are the characteristics needed for a qualifying unconscionable bargains case?

A
  • special susceptibility that merits protection
  • incapacity of vulnerable party must rob them of ability to comprehend contract properly
  • susceptibility must be exploited (unconscientious exploitation)
  • dominant party must be aware of the susceptibility (substantive imbalance)
140
Q

What are possible rebuttals to unconscionable bargains?

A
  • if you can show you knew about their speical susceptibility so you had it explained to them by a professional in a way they understood
  • it is no longer exploitation because they were properly informed before they made decision
141
Q

What is the primary remedy of vitiating factors?

A

recission

142
Q

Can you use recission to alter the contract to deal with the misrepresentation?

A

No, if you rescind you are terminating the contract completely

143
Q

How do you rescind?

A
  • self help remedy

- you just have to contact the other party and let them know

144
Q

What happens in fraud cases when the 1st party cannot tell the other party they want to rescind? (Caldwell case)

A
  • by making ‘caldwell noises’
  • try to give publicity to the fraud
  • in caldwell they notified the police and automobile association and CA held it was enough to rescind
145
Q

What are the bars to recission?

A
  • unjust enrichment
  • intervening third party rights
  • affirmation
146
Q

What is the doctrine of unjust enrichment (recission) ?

A
  • if you’re unable to reverse the contractual terms and give back complete restitution the rescission cannot be done
  • if one party cannot give back what they received they will be unjustly enriched
147
Q

What is the doctrine of intervening third party (recission) ?

A
  • fraudster tricks the owner of goods into selling and pays with bad cheque
  • third party buys the goods from the fraudster
  • if the seller did not rescind before F sold to 3rd party they cannot rescind because the 3rd party’s rights override theirs
148
Q

What is the doctrine of affirmation (recission) ?

A
  • if you decide to not rescind the remedy of rescission is gone
  • affirmation is being aware of whatever vitiating factor has occurred but choosing not to rescind
149
Q

Is recission affected by time?

A
  • In Allcard she did not choose to excercise her R for a long time and she was aware of it so it was conduct for affirmation
  • recission may not be granted if too much time has passed (implied affirmation)
150
Q

What is indemnity (rescission) ?

A

it covers expenditure incurred as a result of entering the contract but NOT by reason of the wrongdoing

151
Q

When do you need damages in misrepresentation?

A
  • recission is not available

- if further loss has been sustained which recission does not cover

152
Q

What tort is most useful to recover for misrepresentation?

A
  • the tort of deceit

- it can recover all losses caused by misrep

153
Q

What does section 2 (1) of the misrepresentation act 1967 say?

A
  • created a liability for misrepresentation when a person entered into contract because of it and suffers loss
  • if the defendant proves he had reasonable grounds to believe the facts he presented were true there is no liability
154
Q

What does section 2 (2) do?

A
  • it gives the courts judicial discretion to award damages for innocent misrepresentation in lieu of rescission
  • you cannot claim this section it is up to courts
155
Q

What is actual notice?

A

where the bank would know of the wrondoing by the spouse to make the other spouse grant security
-bank is not allowed to take the security

156
Q

What is constructive notice?

A
  • bank has knowledge of circumstances which should alert them to possibility of wrondoing
  • bank must take reasonable steps to respond to this
  • if they take reasonable steps their constructive notice is discharged and they can enforce security
157
Q

How does the law conclude that a bank is alive to possibility of husband committing wrongdoing according to O’Brien case?

A
  • trust and confidence (risk of undue influence)
  • informal relationship (risk of misrep)
  • extends to all stable emotional relationships not just H/W
  • if it is a non commercial suretyship (W gains nothing)
158
Q

What is the next step the banks should take after being alerted to constructive notice according to Etridge?

A
  • bank must ensure the wife takes advice from solicitor who she is content with (formal confirmation)
  • recieve confirmation from S that he has given advice
159
Q

If the solicitor fails to give proper advice is the bank liable?

A
  • no
  • if the solicitor fails to provide proper advice and the bank is not aware they are not liable as long as they have brought him in
160
Q

requirements for solicitor’s advice to wife

A
  • explain why they are involved
  • obtain W’s confirmation she is happy for S to act for her
  • explain nature of transaction and risks
  • ask if W is happy to proceed
  • ask if she is happy for S to tell bank they have given her advice
  • W needs to be aware of full context of granting security
161
Q

What if solicitor fails to give proper advice? Who is liable?

A
  • bank is not liable they are entitled to assume the solicitor performed their function properly and do not have to check
  • wife can sue the solicitor
  • S owed W professional care

Law (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions