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Contracts Flashcards

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1
Q

What is a contract?

A

A legally binding agreement between two or more parties.
Oral, written, conduct.

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2
Q

What are the essential features of a contract?

A

Offer, Acceptance, Intention, Consideration.

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3
Q

What are the different types of contract?

A

Speciality, Simple, Bilateral & Unilateral contracts.

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4
Q

What are speciality contracts?

A

A written document, sealed & delivered as security for payment of a specifically indicated debt.
Consideration is not compulsory.

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5
Q

What are the 3 ways agreements are made in a speciality contract?

A
  • In the form of a deed (Law of Property Act, 1989).
  • In writing (cheques).
  • Evidenced in writing usually done by businesses.
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6
Q

What are simple contracts?

A

Contracts in no particialur way.
Oral, written, implied by conduct.
Must be good consideration to be enforced in courts.

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7
Q

What is a bilateral contract?

A

When parties exchange promises of actions which they become obligated to complete.

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8
Q

What is a unilateral contract?

A

One-sided contract where offeror makes a promise in exchange for a specific action from the offeree.
Binding once offeree begins action.

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9
Q

What is an offer?

A

An offeror proposes a set of terms to an offeree which become binding once accepted.

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10
Q

What is an invitation to treat?

A

Invitation to negotiate before an offer.
Not binding, vague statements.

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11
Q

What are example cases of an invitation to treat?

A
  • Partridge v Crittenden, 1968
  • Fisher v Bell, 1961
  • Pharmaceutical Society v Boots, 1953
  • Payne v Cave, 1789
  • Harvey v face, 1893
  • Blackpool & Flyde Aero Club v Blackpool Council, 1990
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12
Q

What is an example case of a unilateral contract?

A

Carlill v Carbolic Smoke Ball Co., 1893

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13
Q

How may a contract be terminated?

A
  • Rejection
  • Counteroffer
  • Revocation (cancellation)
  • Failure of a pre-condition
  • Lapse of time
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14
Q

What is an example case of an offer being terminated?

A

Stevenson, Jacques & Co. v McLean, 1880

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15
Q

What are example cases of revocation?

A
  • Routledge v Grant, 1828
  • Dickinson v Dodds, 1876
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16
Q

What is an example case showing that revocation must be communicated for an offer to be terminated?

A

Byrne v Teinhoven, 1880

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17
Q

Can a unilateral offer be revoked?

A
  • Not once the offeree has begun performing their action.
  • Errington v Errington, 1952
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18
Q

What is consideration?

A
  • Covers the “bargain” element of a contract, based on the exchange of promises.
  • Each party must provide something of value and receive a benefit/suffer a detriment.
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19
Q

What are key cases involving consideration?

A
  • Currie v Misa, 1875
  • Thomas v Thomas, 1842
  • Chappell v Nestle, 1960
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20
Q

What are the rules of consideration?

A
  • Parties must be aware of offer. (Lampleigh v Brathwaite, 1615).
  • Must be sufficient, not adequate.
  • Must be in present/future, not past. (Tweddle v Atkinson, 1861).
  • Existing public duties are not valid. (Exception = Williams v Roffrey Bros., 1991).
  • Part payment of debt not valid consideration for a promise to forgo a balance.
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21
Q

What is executed consideration?

A

One party promises to do something in return for the act of another.
Unilateral contract.
Just get on and do actions.

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21
Q

What is an executionary contract

A

Both parties promise to do something in the future.
Bilateral contract.
Contract then performance.

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22
Q

What is the difference between Sufficient Consideration and Adequate Consideration?

A
  • S = real/tangible and some recognisable value.
  • A = roughly equal value to the other parties’ consideration.
  • Not courts job to decide if the agreement is fair. Courts follow principle of freedom of contract.
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23
Q

Examples & Exception of the rule that consideration must not be past:

A
  • Example = Re McArdle (1951)
  • Exception = Lampleigh v Braithwaite (1615)
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24
Q

Examples & exceptions where performing an existing duty cannot be good consideration:

A
  • Examples = Collins v Godefrey (1831) and Stilk v Myrick (1809).
  • Exceptions = Glasbrook Bros. v Glamorgan County Council (1925) & Harris v Sheffield United (1987).
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25
Q

Examples where consideration must be sufficient, but not adequate:

A
  • Chappell & Co. Ltd (1959)
  • Thomas v Thomas (1842)
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26
Q

What is part-payment of a debt?

A

The agreement to accept a lower sum is not binding unless supported by fresh consideration.

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27
Q

Example of part payment of a debt:

A
  • Rule from Pinnel’s case (1602)
  • Foakes v Beer (1884)
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28
Q

What is the part payment of a debt rule from the Pinnel Case, 1602?

A

Principle of accord and satisfaction.
- Agreeing to accept lesser sum paid earlier
- Agreeing to pay in a different way
- Promissory Estoppel

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29
Q

What is a promissory estoppel?

A

Legal principle that a promise is enforceable by law, even without formal consideration, when a offeror has made a promise to a offeree who then relies on that promise to his subsequent detriment.

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30
Q

What is an example case of Promissory Estoppel?

A
  • Central London Property Trust Ltd. v High Trees House Ltd. (1947).
  • D&C Builders v Rees, 1966
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31
Q

What are the rules of promissory estoppel?

A
  • Offeree relied on promise and acted equitably.
  • Only used in a defence.
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32
Q

What is the rule of Privity of Contract?

A

Anyone not party to contract, can’t sue or be sued on that contract even if it benefits 3rd party.
Must be privy to enforce contract.

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33
Q

What are case examples of Privity of Contract?

A
  • Dunlop Pneumatic Tyres Co. Ltd. V. Selfridge & Co. Ltd. (1915)
  • Tweddle v. Atkinson (1831)
  • Themis Avraamides v Colwill and Martin (2006)
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34
Q

What was the Contract Act, 1999?

A
  • Considered Privity Rule unfair.
  • Added rights for 3rd parties if contract expressly provides for it or they benefit from it.
  • 3rd party must be named in contract.
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35
Q

What does the “Intention to Create Legal Relation” mean?

A
  • Intention for legal relation necessary for a binding contract.
  • Business and commercial arrangements, not necessarily domestic arrangements.
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36
Q

Example cases of Intention to Create Legal Relations:

A
  • Balfour v Balfour (1919)
  • Merritt v Merritt (1970)
  • Simpkins v Pays (1955)
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37
Q

What is Certainty of Terms?

A

Courts may:
- ignore meaningless terms in a contract.
- look to particular customs in industry to remove uncertainty in party’s intentions.
- Ignore statements considered too vague.

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38
Q

What is an example of good consideration in regards to existing duties or entitlement?

A

Must exceed existing duty, Williams v Roffrey Bros., 1991.
No consideration otherwise.

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39
Q

Example relationships where there is intention to create legal relations:

A

-Parties to a commercial contract.
- Husband and wife who are separated.
- Friends who are part of a lottery syndicate.

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40
Q

Which case established the doctrine of promissory estoppel?

A

Central London Property Trust v High Trees House Ltd, 1947.

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41
Q

What is a valid contract?

A

A legally binding contract.

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42
Q

What is a void contract?

A

No crontract exists, or ever existed.

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43
Q

What is a voidable contract?

A

Contract exists, but injured party can choose whether to continue or avoid the contract.

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44
Q

What is the capacity of a minor when enterring a contract?

A
  • U18s have capacity to enter most contracts, but in some cases they may require protection and these contracts may be voidable.
  • Sales of shares, leasing property, contract of partnership.
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45
Q

What are Necessaries and how do they allow minors to void contracts?

A
  • Necessaries reflect a minors social status, which is determined on an individuals basis.
    Nash v Inman, 1908 & Peters v Fleming, 1927.

Conflicting case = Clements v London and North Western Railway Co, 1894.

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46
Q

What are the 3 sections in the Minors’ Contract Act, 1987?

A

Section 1 -
Upon turning 18, debts ratified (binding) to them.

Section 2 -
3rd party acting as guarantor for minor in contracts unenforceable against them, the contract is enforceable against them.

Section 3 -
Remedy of Restitution requires minor to return any property acquired under even in an unenforceable contract, offering some protection for those entering contracts with minors if the contract is breached.

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47
Q

What is the Mental Capacity Act, 2005?

A
  • Protects “patient” from entering a contract.
  • Sale of Goods Act (1979) states that if contract is beneficial for “patient”, contract is valid, even if party knows of the “patients” incapacity.
  • To avoid contract,”patient” must demonstrate that at the time of concluding contract they didn’t understand the nature of the agreement, and the other party should have known of the incapacity.
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48
Q

What grounds does intoxication have to void a contract?

A
  • If drunk or on drugs when a contract is concluded, it is still binding contract. Held by courts that they are aware of their actions. Even if other party is unaware.
  • If the intoxicated party do not know the consequences of the agreement , and the other party is aware, the contract is voidable.
  • If the other party is unaware of the intoxication the contract is enforceable.
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49
Q

What grounds does illegality have to void a contact?

A

Contracts associated with illegal nature (Resale Prices Act, 1976), against public policy, or seeks to promote immorality (Everet v Williams, 1725), are voided.

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50
Q

What is the general rule concerning mistakes when making contracts?

A
  • Caveat Emptor = “buyer beware”.
  • An individual buys at their own risk.
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51
Q

What is the capacity of mistakes to void a contract?

A
  • Must be fundamental to the contract.
  • Can’t be voided if contract is simply a bad bargain or a party has 2nd thoughts.
  • Mistakes don’t concern attributes of an item, unless it is actually misrepresented to buyer.
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52
Q

What are the 3 types of mistakes that are not voidable?

A

Common, Mutual, Unilateral.

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53
Q

What is a Common Mistake?

A

When both parties make the same mistake.
- Great Peace Shipping Ltd. V. Tsavliris Salvage International Ltd. (2002).
- Bell v Lever Bros (1932).

Mistake as to the existence of goods = Couturier v. Hastie (1856)

54
Q

What is a Mutual Mistake?

A

In negotiations, both parties are at cross purposes as to the nature of the contract/subject matter.
Raffles v Wichelhaus, 1864.

55
Q

What is a Unilateral Mistake?

A

One party mistakes terms of contract or identity of the other party.
- Cundy v Lindsay, & Kings Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd (1897)
- Phillips v Brooks (1919)
- Shogun Finance Ltd. V. Hudson (2004)

56
Q

What type of mistake can make a contract void?

A

Operative mistake.
Mistake strikes heart of, not just a minor/careless error.
Couturier v Hastie (1856).

57
Q

What is Misrepresentation, and what are its ground to void a contract?

A

When one party makes false statement/fact which induces the other party to enter the contract.
- Spice Girls Ltd. V. Aprilia World Service BV (2002).
- Bissett v. Wilkinson (1927).
- Attwood v. Small (1838).

58
Q

Can silence be classified as misrepresentation?

A

No, unless:
- Relationship of good faith
- If answered with silence or half-truth is misleading
- Contract of utmost good faith, such as insurance
- Failure to disclose a change in circumstances (With v. O’Flanagan, 1936)

59
Q

What are the different types of misrepresentation?

A
  • Fraudulent Misrepresentation.
  • Negligent Misrepresentation.
  • Wholly Innocent Misrepresentation.
60
Q

What is Fraudulent Misrepresentation?

A
  • Statement was made knowing/believing/caring if it was untrue.
  • Most severe & difficult to prove.
  • Risky, potentially opening yourself up to a counter sue for false allegations.
61
Q

What is Negligent Misrepresentation?

A

Misrepresentation Act 1967 definition, a statement being made honestly believing it to be true, but without reasonable grounds for such a belief.

62
Q

What is Wholly Innocent Misrepresentation?

A

A false statement made honestly believing it to be true, with reasonable grounds for such a belief.

63
Q

What is the Burden of Proof in Misrepresentation?

A
  • Fraudulent Misrepresentation, claimant must prove beyond reasonable doubt.
  • Negligent Misrepresentation, claimant must prove misrepresentation was made.
  • Wholly Innocent Misrepresentation, defendant must prove they had reasonable grounds to believe it was true. If defendant succeeds, will be wholly innocent misrepresentation; if not, will be negligent misrepresentation.
64
Q

What are the Remedies for Misrepesentation?

A
  • Recession, an equitable remedy designed to restore parties to pre-contractual position.
  • Available for all 3 types of misrepresentation.
65
Q

Why may one lose the right to rescind if trying to remedy misrepresentation?

A
  • Contract is affirmed (Leaf v International Galleries, 1950). Too much time has passed.
  • Impossible to restore to pre-contractual position.
  • 3rd party has acquired rights.
66
Q

How are damages redemedied for misrepresentation?

A
  • Fraudulent = Calculated as in the tort of deceit, damages including representation. Recession.
  • Negligent = Calculated on a tort basis. Recession.
  • Innocent = Recession.
67
Q

What grounds does duress/undue influence void a contract?

A
  • Parties must enter contract freely & voluntarily or it may be voidable for duress.
  • Includes violence, threats of violence, economic duress.
68
Q

What are 4 factors considered when determining if there was duress or undue influence in a contract?

A
  • Did the person claiming to be coerced protest?
  • Did they have any alternative course of action?
  • Did they seek independent advice?
  • Did they take steps to avoid the contract?
68
Q

What is an example case of economic duress?

A

Atlas Express Ltd. V. Kafco Ltd. (1989).

69
Q

What is Undue Influence?

A
  • More subtle than duress.
  • In certain fiduciary relationships, courts assume that one party is dominant and can influence the other. Presumed to have resulted from undue influence, unless proved otherwise.
  • Undue influence renders a contract voidable.
70
Q

What is included in a fiduciary relationship?

A
  • Doctor and patient
  • Solicitor and client
  • Parent and child or guardian and ward
  • Trustee and beneficiary
  • Normally not the banker/client relationship, exception = Lloyds Bank v. Bundy (1975)

Outside these relationships, claimant must prove undue influence:
Royal Bank of Scotland v. Etridge (No. 2 (2001))

71
Q

What are the three different types of statements made prior to the contract?

A

Terms, Representation, Sale “puffs”.

72
Q

What is a sale “puff”?

A

Sales hype which objectively shows no intention to be taken seriously. Statements that aren’t verifiable (Red Bull). Alone, not enough for legal action.

72
Q

What is a term?

A

Part of the contract, if breached, innocent party entitled to remedy for breach of contract - compensation and right to end contract.

73
Q

How to distinguish between a term and representation?

A
  • Relative knowledge (representation), especially if the party claiming misrepresentation is an expert in the field. Oscar Chess Ltd v Williams (1957)
  • Reliance placed on the statement (term). Bannerman v White (1861)
  • Strength of the statement (stronger = term). Schawel v Reade
74
Q

How are terms incorporated into contracts?

A
  • Express terms
  • Implied terms
75
Q

What are express terms?

A

Term contained within a contract, becoming part of contract once accepted.

76
Q

What is an implied term?

A
  • Terms put into contracts without parties needing to agree to them.
  • Implied by courts for business efficacy (The Moorcock, 1889), or implied by custom and previous dealings (Spurling v Bradshaw, 1956), or implied by statute (Consumer Rights Act, 2015, & SOGA, 1979) (protects consumers).
77
Q

What are the 3 types of terms?

A

Conditions, Poussard v Spiers (1876)
Warranties, Bettini v Gye (1876)
Innominate terms, Hongkong Fir Shipping Co v Kawasaki (1962)

78
Q

What are the remedies for a breach of a condition?

A

Repudiate contract (go back on their part of the contract) & claim for damages.

79
Q

What is the remedy for a breach of an innominate term?

A

Remedy is decided at the time of the breach.

80
Q

What is the remedy for a breach of warranty?

A

Claim for damages only.

81
Q

Examples of Implied Terms in action:

A

Rowland v Divall, 1923
Grant v Australian Knitting Mills Ltd, 1936
Godley v Perry, 1960

82
Q

What is an exclusion exemption clause?

A

An express term which seeks to exclude one party’s liability in the event of a breach.
Three stage test to see if viable:
- Is the exclusion clause incorporated into the contract?
- Is the exclusion clause clear and unambiguous?
- Is it valid under Unfair Contract Term Act (1977) and CRA (2015)?

83
Q

Examples of how exclusion clauses are incorporated:

A
  • Party signing a document freely will be bound by its contents. L’Estange v Gaucob, 1934.
  • For unsigned documents, must show that a reasonable person would think it to be part of the contract. Chapelton v Barry UDC, 1940.
  • Notice of the exemption clause must be given before or at the time the contract was made.Olley v. Marlborough Court Hotel Ltd., 1949.
  • Attempts to incorporate the exclusion clause later will be ineffective. Thornton v Shoe Lane Parking Ltd, 1971.
84
Q

What is considered reasonable notice within a contract?

A

More unreasonable the clause, the greater the notice which must be given (red hand rule). Some clauses must be printed in red ink on face of doc with a red hand before notice is considered sufficient. Spurling v Bradshaw, 1956.

85
Q

What is the Contra Proferentum rule?

A

Where there is doubt about the meaning of the contract, the words will be construed against the person who put them forward.

86
Q

What is the Consumer Rights Act, 2015?

A

Only applies to consumer contacts between a trader and a consumer.

87
Q

What is the Sales of Goods Act, 1979?

A

Concerned with business to business contacts.

88
Q

What are the imposed terms in the CRA 2015 & SOGA 1979?

A

S17/S12 - ensures seller has ownership to supply the goods
S11/S13 - goods will match the description not the sample. Sale could be turned down even if theres no defect. Counts if buyer (expert knowledge) and seller (novice knowledge).
S9/S14(2) - quality of goods supplied is satisfactory. Buyer merely has to prove defect exists not how it happened. Voided if it’s a private seller, defect is known prior by buyer, buyer failed to follow instruction.
S10/S14(3) - goods supplied are reasonably fit for purpose. Implicit Reliance = buyer neither knowledgably inspects goods to check suitability nor he asks Q’s.
Explicit Reliance = buyer may question seller about what the goods may be used for or ask for recommendation for which product will suit the buyers purposes.
S13/S15 - goods supplied by sample will match the sample. Defects in bulk not present in sample, esepcailly if buyer has professional knowledge. Cross over with description (S13)

89
Q

Describe statutory control of exclusion clauses:

A
  • Business-to-business exclusion clauses are covered by the Unfair Contract Terms Act (UCTA).
  • UCTA are either render it void or subjects it to a test of reasonableness;
    S.2(1) - cannot exclude liability for death/personal injury through negiligence.
    S.2(2) - can only exclude liability for other types of loss/damage from negligence if reasonable.
90
Q

How may consumer contracts be subject to the test of fairness under the CRA, 2015?

A
  • S.62 - term unfair if it causes significant imbalance in rights/obligations of contract to the detriment of consumer. Cheaper doesn’t = poorer service.
  • S.64 - terms specifying the subject matter of contract or setting price not subject to fairness test.
  • S.68 - written term of consumer contract, or consumer notice in writing is transparent. Ambiguity = court chooses interpretation which favours consumer. Consumer protection.
91
Q

What is the “Greylist” schedule 2 of the CRA, 2015?

A

Contains an indicative and non-exhaustive list of terms which may be regarded as unfair.
Examples:
- Permits trader to increase price of goods, without giving consumer right to cancel contract if final price is too high.
- Or if consumer decides to terminate contract due to trader price change, must pay the trade a disproportionately high sum.

92
Q

What are the remedies for a breach of a SOGA?

A
  • Right to reject goods - injured party can reject goods and refuse to pay the sum agreed, or to claim for any money paid.
  • However, such rights are lessened in business-to-business sales (s.15A) and the defect in those situations has to be reasonable to allow a rejection.
  • Term can be treated as condition if buyer acts in a reasonable time, else term = warranty and buyer won’t be able to repudiate; they may seek damages/ the goods to be repaired or replaced.
93
Q

Describe the right to repair a breached SOGA…

A

Can repair instead of reject goods.
S.36(6) enables buyer to have good repaired without interference from action they accepted for teh good. Preserves the right to later reject the goods.

94
Q

Describe the right to claim damages in a breached SOGA…

A
  • Injured party (buyer) is entitled to claim damages and repudiate contract.
  • Damages designed to place injured party in position before the breach as closely as possible.
95
Q

Describe the right to reject CRA…

A
  • Indication that they want the right to reject can be implied by something they say/do. Must be sufficiently clear.
  • Traders duty to refund consumer, and consumers duty to make goods available for trader to collect.
  • Trader must bear any reasonable costs of returning them.
96
Q

What is the time limit for short-term right to reject?

A

Right to reject ends after 30 days, beginning with the first day after:
- Ownership/possession of good is transferred.
- Good has been delivered.
- If action by trader is necessary for consumer to use good, after this is complete.

If the goods are of the kind expected to perish after a short period than the right to reject would be before the good perishes.

97
Q

Describe the right to repair/replace following a breach of CRA?

A

Consumer can repair or replace good, but trader must do so within a reasonable time and without significant inconvenience to the consumer, and bear any necessary costs incurred in doing so.

98
Q

What are the four ways contractualy obligations may be discharged?

A
  • Performance - parties have done what was agreed and terms of contract has been met.
  • Agreement - parties agree to end contract.
  • Frustration - something happens outside control of parties to a contract, making it not possible/illegal to perform.
  • Breach of a condition - only entitles injured party to damages.
99
Q

What is an example case of a contractual obligation being discharged through performance?

A

Cutter v Powell, 1795.

100
Q

What are exceptions to a contractual obligation being discharged through performance?

A
  • Divisible contract (each section enforced separetly) - Ritchie v Atkinson (1808).
  • Substantial performance - compare Hoenig v Isaacs (1952) to Bolton v Mahadeva (1972).
  • Acceptance of partial performance - Sumpter v Hedges (1898).
  • Prevention of performance (quantum meruit) - Planche v Colburn (1831).
101
Q

How may a contractual obligation be discharged through agreement?

A

An agreement to abandon or vary a contract must have accord (agreement to vary/end contract) and satisfaction. Fresh consideration as agreement is second contract.
Bilateral Discharge and Unilateral Discharge.

102
Q

What is bilateral discharge?

A

If contract is still wholly or partially executory, each party is giving up their rights.

103
Q

What is unilateral discharge

A

If one party has completely performed and the other party wants to be released from their obligations, they must provide some material benefit in return.

104
Q

How may a contractual obligation be discharged through performance?

A

Parties to a bilateral contract must fully carry out what they agreed.

105
Q

How may a contractual obligation be discharged through frustration?

A

If after the contract is made, a change in circumstances makes it impossible/illegal to perform or radically different from what the parties contemplated, the contract is frustrated.

106
Q

Examples of contracts discharged due to frustration…

A
  • Impossibility = Taylor v Caldwell (1863)
  • Illegality = Fibros Spolka Akcyjna v Fairbarn Lawson Combe Barbour Ltd (1943)
  • Contract radically changed = compare Krell v Henry (1903) and Herne Bay Steam Boat Co. v Hutton (1903).
107
Q

When does frustration of a contract not apply?

A
  • If the parties have foreseen the frustrating event; parties may include a clause in the contract covering potential events.
  • Self-induced frustration; Maritime National Fish Ltd v Ocean Trawlers Ltd (1953).
  • If contract merely becomes more difficult/expensive to perform; Davis Contractors Ltd v Fareham UDC (1956).
108
Q

What are the consequences of frustration?

A

Law Refrom (Frustrated Contracts) Act 1943:
- Money owed ceases to be payable
- Money already paid can be recovered, subject to deduction of expenses incurred
- s1(3): if one party has received a ‘valuable benefit’, court can order that they pay compensation for this.

109
Q

What is a “valuable benefit” in regard to consequences of frustration under s1(3) of Law Reform (Frustracted Contracts) Act 1943?

A

-Court do their own valuations.
- S1(3) interpreted purposively to prevent either party gaining an unfair financial advantage.
- BP Exploration Co v Hunt (1982).

110
Q

How may contractual obligations be discharged through breach?

A
  • Breach of condition = discharged. Breach of warranty = not discharged.
  • Anticipatory breach is where one party indicated before time of performance that they don’t intend to perform, other party may accept this and sue for damages immediately: Hochester v De La Tour (1853), or wait until performance is due: House Ltd v Lee (2010).
111
Q

Before a contract can be remedied by awarding damages, what questions must be asked?

A

Is the loss too remote? What can can actually be recovered?
How do we quantify the loss?

112
Q

How is the remoteness of damages tested when remedying contacts?

A
  • Objectively – what is a natural consequence for the breach. Based on fact.
  • Subjectively – based on specific knowledge of potential losses in the minds of both parties at the time contract was formed.
    Hadley v. Baxendale (1854)
113
Q

What are the general rules for assessing damages following considerations?

A

Do the damages arise naturally in the normal and ordinary course of the contract?

Are the damages within the ‘reasonable contemplation’ of the parties?

114
Q

How is the quantum of damages tested when remedying contacts?

A

Not designed to punish defendant. Based off of 3 assessments:
1. Loss of a bargain - Place claimant in same financial position as if contract had been properly performed.
2. Reliance loss - Anglia TV V. Reed (1971).
3. Restitution - recovery of any made payments to date in advance of contract being breached.

Duty to mitigate losses:
Brace v. Calder (1895) p258

115
Q

What is the difference between “expectation loss’ and reliance loss when awarding damages?

A
  • Expectation loss = placing innocent party in position they would have been had contract been performed properly. Per Parke B. in Robinson v Harman (1848). Jarvis v Swans Tours Ltd (1973), or, Jackson v Horizon Holidays (1975).
  • Reliance loss = Innocent party placed in the position they were in before the contract. Anglia Television v Reed (1972).

Where loss it too speculative, court may refuse to award expectaiton loss, instead awarding reliance loss.

116
Q

Example of when the performance of a contract was unsatisfactory, but the cost of cure is excessive?

A

Decided in court.
Ruxley Electronics v Forsyth (1996).

117
Q

What is a liquidated damage clause?

A

Business’ can agree beforehand the amount to be paid if contract is breached. Courts not relied on to determine issues.
Liquidated damages = predetermination of damages payment.
Damages determined by the court = unliquidated damages.
Courts will accept this sum if it represents a genuine attempt to assess losses.

Dunlop Pneumatic Tyres Co. Ltd. V. New Garage & Motor Co. Ltd. (1915)

118
Q

What are equitable remedies?

A

Operate where an award of damages is an inadequate remedy and justice will not be served. Not available as of right, only at the discretion of the court.

119
Q

What is the criteria for courts to move to equitable remedies instead of damages?

A
  • Subject matter of contract is unique, and no adequate alternative is available
  • Where damages are too difficult to assess
  • Where the defendant will be realistically unable to pay damages
120
Q

What are types of equitable remedies?

A
  • Specific Performance - an order to force a party to carry out their contractual obligations. Mountford v Scott (1975).
  • Injunctions - an order to prevent a party from breaching their contractual obligations. Warner Bros v Nelson (1936).
  • Rectification - an order to rectify a mistake in the written contract where it doesn’t reflect the agreement reached. A Roberts & Co. v Leicestershire CC (1961)
121
Q

What is the Consumer Protection Act, 1987?

A
  • Protects individuals who suffered injury/damage due to a product they purchased.
  • No need to prove defendant was at fault as liability is strict.
  • Law of contract entitles claimant protection against the faulty product, but not for losses attributed to this.
122
Q

Who are the parties who can claim under the Consumer Protection Act (CPA), 1987?

A
  • S.5 - any injured party or those whose private property has been damaged by a defective product.
  • S.2 - producer, manufacturer, own-brand labeller, importer, or suppler may be the defendant.
123
Q

What is the criteria for a successful claim under the CPA (1987)?

A
  • Product must contain a defect which caused claimant damage
  • Defendant was a producer, marketer, importer, or supplier into EU
  • Claim must be brought within 3 yrs of awareness of damage or defect in product

Supplier must be able to identify supply chain, else is automatically held liable.

124
Q

What is considered to be the “product” in CPA, 1987?

A

S.1 - A “product’ can include packaging, instructions, agricultural products, water, electricity, etc…
A v. National Blood Authority (2001).

125
Q

What is considered to be a “defect”?

A
  • Dangerous and the standard of safety is that which people generally are entitled to expect.
  • Claimant must show product is defective/unsafe.
    Richardson v LRC Products Ltd (2000)
126
Q

What are the conditions for a loss which is recoverable?

A
  • Death/personal injury, damage to land, or damage to goods (>£275), then one can make a claim.
  • If these damages are worth below £275, a claim cannot be made.
  • No need to prove defendant was careless, strict liability applies.
127
Q

What is the difference between strict liability and faulty liability?

A
  • In tort of negligence, liability is based on fault, where defendant’s behaviour does not meet an objective standard.
  • For claim under CPA, liability is strict, so is not based on fault. Claimant has to prove product was defective and that they have suffered some harm; not how or why it was defective.
128
Q

Cases where CPA in action against negligence…

A

Aboiuzaid v Mothercare Ltd (2001) - prodcut blinded claimant via defect as more could have been done to prevent such injury. Liable.

Tesco Ltd v Pollard (2006) - baby swalloed dishwasher powder, mother claims powder bottle to be defective. No breach as bottle was more difficult to open than an ordinary screw top.

129
Q

Defences under the CPA S4…

A
  • Defect caused by compliance with UK or EU legislation (law).
  • Defect did not exist at the relevant time.

Main defence is ‘state of the art/ developments risk’ defence: that technical knowledge at the time was not such that a producer might have been expected to discover it.

130
Q

What does consideration take into account when deciding whether a product is defective?

A
  • The time which the product was supplied
  • What might reasonably been expected to have been done with the product
  • The manner of marketing
131
Q

What was established from the Donoghue v Stevenson case?

A
  • No contractual relationship is necessary to found an action for negligence
  • There must be a sufficient degree of proximity or neighbourhood between the parties
  • A manufacturer could owe a duty of care to a person who did not actually buy its goods

Business Law (3 decks)

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