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Contract weaker areas Flashcards

1
Q

Aim of damages

A

Compensate C (not to punsh D)

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2
Q

2 main ways of compensating C

A
  1. Awarding expectation interest, or
  2. Awarding reliance interest

C can choose which

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3
Q

Normal measure of damages

A

Expectation interest i.e. damages to put innocent party in same position post-breach they should have been in had contract been properly performed

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4
Q

3 ways expectation interest can be calculated

A
  1. Cost of curing defective performance (only if reasonable option, must not be disproportionate w benefit injured party will receive)
  2. Difference in value between performance received and that promised (often the same value as cost of cure)
  3. Loss in amenity (sum to represent that the performance received is less valuable to innocent party than promised, even if economic value is the same - e.g. swimming pool case)
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5
Q

Reliance interest and when used

A

Backward-looking and aims to put C in position as if they had never contracted (more likely to be used when expectation measure is hard to calculate)
* Allows recovery of wasted expenditure NOT all expenditure - e.g. actor pulling out of film
* Reliance losses are incurred prior to breach not as a consequence of breach

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6
Q

Exception to wasted expenditure i.e. when it cannot be used

A

Where party has entered into a bad bargain

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7
Q

Special rules for recovereability of damages for loss of enjoyment

A

Not generally recoverable, unless whole/major purpose of contract is to provide pleasure, relaxation and peace of mind

Rarely granted in commercial cases

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8
Q

Special rules for recovereability of damages for loss of reputation

A

Limited to financial loss only where it’s impossible to find a job after

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9
Q

Special rules for recovereability of damages for loss of chance

A
  • Recoverable if lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition
  • Chance should be below 50% (if more, recover expectation loss in usual way)
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10
Q

Special rules re damages for mental distress

A

Can recover where it results from physical inconvience e.g. distress after buying property with serious defects based on negligent survey

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11
Q

Factual causation

A

Whether D’s breach was a dominant or effective cause of the loss

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12
Q

Legal causation

A

No novus actus interveniens

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13
Q

2 principles of remoteness re damages

A

Damages cannot be recovered for losses which neither:
* arise naturally according to usual course of things from contract, nor
* were / should have been in contemplation of both parties

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14
Q

Limits to recoverability under reliance interest

A

Can only recover losses that could have been recouped had contract been properly performed

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15
Q

When will damages be awarded on the ‘restitution’ basis and what is this?

A
  • Measures damages on basis of ‘restoring’ C a benefit which D acquired at their expense
  • Only awarded in exceptional circumstances where other remedies are inadequate
  • E.g. breach was deliberate / allowed D to enter into more profitable contract elsewhere etc.
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16
Q

When might a restitution claim arise

A

Total failure of consideration i.e. one party has provided something of value under contract but received nothing in return

  • Restitution will operate to reverse the unjust enrichment of the party
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17
Q

Only when are injunctions and specific performance available

A

Damages are not appropriate - remember discretionary + equitable

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18
Q

4 exceptions to entire obligations rule

A
  1. Substantial performance (w minor defects)
  2. Voluntary acceptance of part performance
  3. Wrongful prevention
  4. Divisible obligations
    SAWD
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19
Q

What can be recovered if one party has substantially performed contract

A

Contract price less cost of remedying defect
* Discharge only permitted for breach that goes to root of contract, i.e. not minor

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20
Q

What can be recovered if one party has voluntarily accepted part performance?

A

Claim for benefit of work on a ‘quantum meruit’ basis i.e. a reasonable amount for benefit conferred
* Note: only available if non-breaching party cannot genuinely choose whether to accept part-performance (e.g. builder case)

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21
Q

What can be recovered if one party is wrongfully prevented from completing their contractual obligations?

A

Entitled to damages for breach of contract OR ‘quantum meruit’ i.e. a reasonable sum for what has already been done
* Note: can only terminate where there has been repudiatory breach

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22
Q

What can be recovered if contractual obligations are divisble?

A

Payment can be made for each specific part, with each treated like a separate contract

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23
Q

Repudiatory breach

A

Breach of condition OR very serious breach of innominate term
* effect goes to root of contract

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24
Q

Requirements to discharge contract under agreement

A
  1. New contract must be supported by consideration
  2. Must be future obligations to discharge
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25
Rights given re breach of warranty vs condition
* Warranty - damages only * Condition - damages PLUS right to affirm
26
What must party do before terminating contract
Notify the other party
27
What type of obligation is an indemnity and formalities
* Primary obligation (can sue surety first) * Need not be in writing
28
What type of obligation is a guarantee and formalities
* Secondary obligation (can only be sued once debtor defaults) * Must be **in writing** / evidenced in writing, **signed** by guarantor & **exist before** enforcement)
29
When are damages calculated & exception
* At time of breach * However, court can calculate on another date if **necessary to avoid injustice**
30
2 situations where restitutionary damages should be awarded
1. Account of wrongdoer's profits (exceptional circumstances e.g. retired spy) 2. Where C suffers no discernible financial loss other than loss of opportunity - would be unfair to allow D to take full benefit of breach *NOTE: where clear financial loss, conventional damages should be awarded*
31
3 situations where contract is frustrated
1. **Impossible** (e.g. subject matter destroyed, person dies, means of performance becomes unavailable) 2. **Illegal** (can never be provided for, but if law changes to render future performance illegal) 3. Where **common purpose of both parties is lost** (e.g. coronation)
32
4 things that a frustrating event is NOT
1. Merely an **increase in expense / onerousness** / inconvenience 2. Caused by **default** of party / **self-induced** 3. Something parties could have **reasonably contemplated** 4. Provided for in **contract**
33
What test must force majeure clause meet
Reasonableness test in UCTA
34
Effect of frustration
Both parties discharged from all future obligations under contract automatically
35
Recoverability of money paid before frustrating event
Recoverable by paying party
36
Recoverability of money due to be paid after frustrating event
No longer payable
37
Recoverability of expenses incurred before frustrating event
**At court's discretion** - may be recovered out of total sum having regard to all circumstances (not exceeding amount received under contract)
38
Recoverability in relation to a valuable benefit a party has received before frustrating event
Court may allow party who gave benefit to recover a **just amount** to reflect that benefit
39
Question to ask to assess whether mistaken identity is mistake or misrepresentation?
* *Intention to contract with someone else* (distance communications + face-to-face if seller can rebut presumption that decision to sell made on basis of identity) = void (mistake) * Mistake as to someone's *attributes* e.g. creditworthiness = voidable (misrepresentation)
40
3 requirements to rely on unilateral mistake
1. **Other party was aware** / should have been aware of mistake at time contract was made 2. Mistake was re term that *induced* party to conract **NOT collateral matter**, and 3. Mistaken party was **not at fault**
41
When is there held to be no mutual mistake (cross-purposes)
Where court determines that **one party is at fault** for the mistake and *did NOT have reasonable grounds to justify* mistake (parties bound)
42
Common mistake and 3 limitations
Where both parties have made *same fundamental mistake* (simple mistake re quality of subject matter unlikely to suffice) 3 limitations: * will NOT operate where **one party at fault** * contract MUST NOT make **express provision** on matter * mistake must be **fundamental** i.e. render it impossible / radically different
43
Remedies re fraudulent misrep
1. Rescission 2. Damages in tort of deceit * how much '*out of pocket*' * extends to **ALL consequential losses**
44
Test re negligent misrep at common law
1. Special relationship between representor / representee (duty) 2. Breach of duty
45
Remedies re negligent misrep at common law
1. Rescission 2. Damages * **ALL direct loss** flowing from transaction * must be **reasonably foreseeable**! *Apparently can damages may be in lieu rescission*
46
Test re negligent misrep under statute
Once statement shown to be false, representor MUST prove: 1. that he had **reasonable grounds to make the statement** & 2. that he **believed the statement was true** *up until contract was concluded* NOTE: *no special relationship required*
47
Remedies re negligent misrep under statute
1. Rescission 2. Damages * **ALL direct losses**
48
Test for innocent misrep
Reasonable grounds to believe statement was true
49
Remedies re innocent misrep
1. Rescission 2. Damages **in lieu of** rescission * not automatic! * discretionary - if court considers equitable having regard to circumstances as whole *Can only have 1 remedy*
50
Aim of damages for term vs representation
* Term - To put representee in position they would have been in **if the contract had been properly performed** * Misrepresentation - To put the representee in position they would have been in **if the contract had not been made**
51
Calculation of damages re term vs representation
* Term - All losses incurred by the representee that were within the **reasonable contemplation** of both parties at time of contract * Representation - **All direct losses**
52
Only when are unfair terms enforceable
a) They have been incorporated into the contract b) The wording in the clause covers the claim, AND c) They are not rendered unenforceable by statute
53
RE all SGA terms except right to sell, what is a bar to rejecting goods in addition to acceptance?
Where breach is **so slight** that it would be **unreasonable to reject** the goods * Treated as breach of warranty * damages only * burden on seller to prove
54
Only when will specific performance be granted
Where promisee under original contract is willing to enforce its rights under the contract i.e. promisor not yet performed in full
55
3 requirements for agency to be established:
1. Principal **named** and clear agent contracting on their behalf, and **intended to be protected** by limitation clause 2. Agent **authorised** to act 3. **Consideration moved** from the principal
56
Agency - 3 requirements for apparent / ostensible authority
1. At some stage the principal must have **represented** (by words or conduct) that the agent had authority 2. The 3rd party must **rely** on this representation, believing the agent has authority, AND 3.The 3rd party must **alter** their position
57
4 requirements for assignment to be effective
1. Must be permitted under the terms of the relevant agreement 2. Absolute (final) 3. In writing 4. Notice given to person against whom 3rd party acquires rights
58
Requirements for C(RTP)A 1999 to apply
1. Contract expressly states that the 3rd party may enforce a term of the contract / acquire a benefit, OR 2. A term in the contract purports to confer a benefit on the 3rd party * UNLESS not intended to be enforceable by 3rd party *NOTE: can be excluded*
59
When is a person not bound re mental incapacity
1. That they did not have mental capacity at the time they entered into the agreement, AND 2. That the other party to the contract knew, or should have known, that this was the case
60
Is performance of duty imposed by law good consideration
Not unless they go above and beyond what is expected
61
Is performance of existing contractual duty owed to 3rd party consideration?
Yes
62
Is performance of existing contractual duty between two parties consideration?
No
63
When is consideration not required
Deed
64
Is a promise to pay more than initially agreed good consideration?
Not unless: 1. Promisee provides consideration by **doing more than initially agreed** / **exceeding their duty** / makes **additional promise** OR 2. Promisor obtains **practical benefit** (*unless made unde duress / threats* - variation voidable)
65
Is promise to pay less than owed under existing contract good consideration?
Not unless: * Early payment / different place than initially agreed (i.e. **some new element introduced**) * Gives creditor something **in return for creditor's promise to forgo debt** (not part-payment) * **Agreement** with ALL creditors to pay a **% of debt owed** * Part-payment of debt made by **3rd party** *Practical benefit NOT consideration here*
66
3 requirements of promissory estoppel
1. Must be a **clear & unambiguous promise** from promisor that they will not enforce their legal rights 2. Promisee must have **relied** on that promise (*not necessarily to detriment*), AND 3. It must be **inequitable** in all the circumstances for promisor to go back on his promise
67
4 limits to promissory estoppel
1. Shield not a sword - **defence** only 2. With ongoing payments e.g. rent, doctrine operates to suspend the legal right (**cannot claim back payments for concessionary period** - only once given *reasonable notice*) 3. Party must have **clean hands** 4. Applies to **amendments only**
68
Can implied terms under SGA be excluded?
Yes except s 12 in relation to title (but must be reasonable)
69
Can liability for death or personal injury resulting from negligence be excluded?
NO - void
70
Can liability for loss (other than death or PI) resulting from negligence be excluded re B2B
Yes if reasonable
71
Can liability for breach of contract be excluded re B2B
Yes if reasonable
72
When does UCTA apply and when does CRA apply re exemption clauses
UCTA - between businesses CRA - B2C
73
Can liability be excluded re B2C for death / personal injury resulting from negligence
NO
74
Can liability for breach of CRA terms re satisfactory quality, fit for purpose, correspondence with description be excluded / restricted? B2C
No - will not bind consumer
75
Can liability re services to be performed with reasonable care & skill be excluded / limited under CRA?
* If excluded - not binding * If restricted / limited - not binding if prevents recovery of price paid
76
Can liability for transparent & prominent terms specifying main subject matter of contract / price in B2C contract be excluded?
Cannot be assessed for fairness
77
Can liability for any other term under B2C contracts (CRA) be excluded?
Not binding unless meets fairness test (good faith - no significant imbalance in parties' rights & obligations to detriment of consumer)
78
Can liability for CRA implied terms as to reasonable time & reasonable price be restricted (B2C)?
Not if it would prevent the consumer from getting a refund

SQE 2 (19 decks)

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