Paper 3 revision

Question 1

contract intro

Answer 1

A contract is a legally binding agreement between two or more parties. There are four key components to a contract: offer, acceptance, consideration, and intention to create legal relations. There are also two types of contract: unilateral, where only one party has an obligation to fulfill, and bilateral, where both parties have an obligation to fulfill.

Question 2

Define offer

Answer 2

An offer is a statement of all the terms which you are willing to be bound by. It must be clear certain and communicated (Gibson vs MCC)

Question 3

Offer side rules

Answer 3

• Counter offer- rejects the original and creates a new offer (Hyde vs Wrench)
• Revocation- can be withdrawn any time before acceptance takes place, but this must be communicated- even if by a third party (Dickinson vs Dodds)
  -Rejection- must be a clear rejection and must be communicated (Stevenson vs Mclean)
  -Lapse of time- if the offer has a time limit and that runs out, otherwise it will end after a reasonable period of time (Ramsgate vs Victoria Hotel)
  -Death- of the offeror but the offer can still be accepted until the offeree knows about the death.

Question 4

Define ITT

Answer 4

An invitation to treat is not an offer. It simply invites the other party to make an offer which can then be accepted or rejected.

Question 5

3 types of ITT

Answer 5

1- Adverts will be an offer if (Partridge vs Crittenden)- made to a specific group of people, or it is unilateral.
2- Items on display (Fisher vs Bell)
3-Auctions (BCA vs Wright)

Question 6

Request for info

Answer 6

Harvey vs Facey rules that a request for information and a response to this request is not an offer

Question 7

define acceptance

Answer 7

Acceptance is the agreement to all of the terms of an offer. It is valid as soon as it is communicated. Acceptance can take place in any form except for silence (Felthous vs Bindley), but it must be done by positive conduct (Carlill vs Carbolic Smokeball)
- apply- has acceptance taken place

Question 8

Acceptance side rule 1

Answer 8

-Postal rule- A letter of acceptance takes effect at the moment it is sent (Adams vs Lindsell)
-The postal rule only applies if:
-Post is the usual or expected method of communication
-Letter is correctly stamped and addressed
-The claimant must be able to prove that the letter was posted

Question 9

Acceptance side rule 2

Answer 9

• Electronic and other forms of communication- acceptance takes place once it is received (Entores vs Miles Far East).
  -If the communication is to a business and it arrives out of office hours, it will be communicated at the start of the next working day.

Question 10

Consideration definition/ intro

Answer 10

Consideration is the “Thing” that each party puts into the contract. It is the benefit and detriment on both sides (Currie vs Misa) It must be real (White vs Bluett), and must be sufficient, but need not be adequate (Chappell vs Nestle)The parties that give consideration will be privy to the contract and therefore have rights under it (Tweddle vs Atkinson)

Question 11

Consideration side rule 1

Answer 11

• Performance of an existing contractual duty- if you only do what you were already bound to do, then this is not good consideration (Stilk vs Myrick). There are two exceptions:
  1- If you do something extra, then this is good consideration
  (Hartley vs Ponsonby)
  2- If the party gains an extra benefit Williams vs Roffey

Question 12

Consideration side rule 2

Answer 12

• Past consideration is not good consideration- By the time that the agreement takes place, the consideration is already done. Where the consideration is past, there will not be a valid contract (Re McArdle)
• Exception- Where there is an implied promise to pay for a particular task before the consideration is done, then this is enforceable (Lampleigh vs Braithwaite)

Question 13

Consideration side rule 3

Answer 13

• Part payment of a debt is not good consideration. This is a rule from Pinell’s Case- if you agree to only part payment of the debt owed to you, then you can still claim the rest. There are three exceptions to the rule:
  1- Accepting something other than money for the debt
  2- Paying a smaller amount on a date earlier than originally agreed
  3- Repay part of the debt on the due date at a different place at the
  request of the debtor.

Question 14

Consideration side rule 4

Answer 14

Privity of contract- only those who give consideration have rights under the contract (Tweddle vs Atkinson)
-Exception- Contracts (Rights of Third Parties) Act 1999- A person who is not a party to a contract can enforce the contract if he is named in the contract or he gains a benefit from it.

Question 15

Intention to create legal relations intro/ definition

Answer 15

Both parties must intend to create legal relations. This means that they both intended to be legally bound. There are two types of agreement: Social/domestic agreements, and business/ commercial agreements.

Question 16

Intention to create legal relations- type 1

Answer 16

-Social and domestic agreements- the starting presumption is that the parties did not intend to be legally bound (Merritt v Merritt)/ (Balfour v Balfour), unless there is proof of otherwise.

Question 17

Intention to create legal relations- type 2

Answer 17

• Business and commercial agreements- The starting presumption is that the parties did intend to be legally bound, unless there is proof of otherwise (Jones v Vernon’s Pools)

Question 18

Intention to create legal relations- side rules

Answer 18

Side rule 1- Money changes hands (Simpkins vs Pays)
Side rule 2- The parties put their financial security at risk (Parker vs Clarke)

Question 19

Breach intro

Answer 19

A breach of contract is where a valid contract has been formed an exists, but something has gone wrong. There are two types of breach: Actual and Anticipatory.

Question 20

Breach type 1

Answer 20

Actual breach= this is where a party has failed to perform their obligations under the contract. However, it depends on what type of term has been breached:
- Breach of a condition (Poussard vs Spiers)- the contract is ended
and/ or sue for damages
-Breach of a warranty (Bettini vs Gye)= The contract must carry on, but damages can be claimed

Question 21

Breach type 2

Answer 21

Anticipatory breach- This is when a party to a contract gives notice in advance to the other party that he or she will not be performing or completing the contract.
Breach of a condition or a warranty= claimant chooses whether to sue immediately, or wait for the consequences of the breach to happen, and then sue.

Question 22

Consumer rights intro

Answer 22

The Consumer Rights Act (CRA) 2015 applies to all contracts between traders and consumers. It covers all all contracts for good, services, and mixed contracts (Both).

Question 23

CRA 2015- section 9

Answer 23

• Section 9 rules that the goods must be of a satisfactory quality. Which is what a reasonable person would consider satisfactory.
  • However, section 9 will not apply if -9(2):
    
    • The fault is drawn to the consumers attention
      -The consumer examines the goods and this should have
      revealed the fault.
    • Goods supplied by sample and inspection of the sample was inspected.

Question 24

CRA 2015- section 10

Answer 24

• section 10 rules that the goods must be fit for purpose.
• If the buyer makes known a particular purpose for goods, or the purpose is obvious, or the salesperson has recommended the goods, then there is an implied term that the goods were fit for that purpose.
• If the goods were recommended by the trader, the consumer must have relied on the skill and judgement of the trader and it must have been reasonable for them to do this (Baldry vs Marshall)

Question 25

CRA 2015–section 11

Answer 25

• Section 11 rules that the goods must be as described. This can be an implied description.
  
  • Side rule- This section also applies to how the goods are packaged (Moore&Co Ltd)

Question 26

CRA 2015- section 31

Answer 26

• Under section 31, a trader cannot exclude or limit liability with regards to section 9,10,11.

Question 27

Remedies Under CRA 2015 for Goods

Answer 27

• Section 20- Short term right to reject the goods- claim a full refund within 30 days of delivery, must be issued within 14 days, with the trader bearing any costs.
• Section 23- The right to repair or replacement- must be within a reasonable time and without significant inconvenience to the consumer.
• section 24- The right to a price reduction or a final right to reject. This is allowed if after the repair or replacement the goods do not conform to the contract.

Question 28

CRA 2019- section 49

Answer 28

• Section 49 rules that the service must be carried out with reasonable care and skill. This is the same standard as negligence- skill of an ordinary and competent person.
• The standard is higher for those with special skill and experience (Thake vs Maurice)

Question 29

CRA 2015- section 52

Answer 29

• Section 52 rules that the service must be done within a reasonable time. Where the contract does not specify a time. What is a reasonable time is a question of fact which will depend on the circumstances.

Question 30

CRA 2015- section 57

Answer 30

Section 57 rules that a trader cannot exclude or limit liability with regards to section 49 or section 52.

Question 31

CRA 2015- Remedies for services

Answer 31

• Section 55- the right to require repeat performance- in accordance with the contract. within a reasonable time and without significant inconvenience to the consumer. The trader must also bear any necessary costs.
• Section 56- The right to a price reduction- by an appropriate amount for the trader’s failure to perform. This could be giving a refund, up to the full contract price. This must be given within 14 days.

Question 32

Exclusion clause definition and intro

Answer 32

An exclusion clause is a clause that it put into a contract to try to exclude or limit liability under a contract.
- The wording must be clear and free from ambiguity. If it is ambiguous, the clause will be read against the party who place it into a contract.

Question 33

Ways in which an exclusion clause can be incorporated into a contract

Answer 33

• Signature= if they sign it, they are bound whether they read it or not (Curtis vs Chemical cleaning)
  -By reasonable notice= can be valid if this is given before party enters. The more serious the clause, the greater effort should be taken to bring it to the party’s attention (Red Hand Rule) (Olley vs Marlborough Hotel)
  -By previous course of dealing- as long as those dealings are consistent and must be same type of contract (Hollier vs Rambler motors)

Question 34

Explain UCTA

Answer 34

The unfair contract terms act of 1977 is for contracts between businesses (Not involving consumers).
-Section 2(1)- A person cannot exclude liability for death or personal injury caused by negligence
- Section 2(2)- In the case of other loss or damage (Financial loss or property damage), a person cannot exclude liability except in so far it is reasonable to do so.
- Section 3- imposes a reasonableness test, the party who imposed it has to show it is reasonable in all circumstances.

Question 35

Misrepresentation intro

Answer 35

Misrepresentation is when a party to a contract makes an untrue statement is mad during negotiations, on which the other party relies on, and was induced into the contract by. The statement complained of must have been made before or at the time of the contract.
- Briefly explain why you think there has been a misrep.

Question 36

Misrepresentation step 1

Answer 36

• The statement made must be false
  -Identify what makes the statement a misrep using the following rules:
  1- An opinion will not be a misrep (Bisset vs Wilkinson)
  2- The statement will not be a misrep if the person making it, could not, based on the evidence, have had that opinion or intention (Edgington vs Fitzmaurice)
  3- The statement is a misrepresentation by actions or conduct (Spice Girls vs Aprilia world
  4- Silence cannot be a misrepresentation. There is no obligation on a person to make any statement, but anything said must be true (Fletcher vs Krell)

Question 37

Misrepresentation part 1 - when will silence amount to a misrep

Answer 37

Silence can be a misrepresentation if:
- The person only reveals a part truth and deliberately withheld other information (Dimmock vs Hallet)
- If the statement made was true, then circumstances changed and the statement became untrue as a result, but you died not correct the statement ( With vs OFlannagan)

Question 38

Misrep step 1 side rules

Answer 38

• Side rule 1: Trust relationships. With relationships built on trust, any breach of that trust will always be a misrepresentation (Tate vs Williamson)
• side rule 2 : Contracts of utmost good faith. All material facts ,must be disclosed whether they have been asked for or not. If you fail to do this, then this is a misrep (Lambert vs Co-Operative insurance)

Question 39

Misrepresentation step 2

Answer 39

Has the misrepresentation induced the other party into the contract? This means that the statement must be a critical part of making the decision (Atwood vs Small).
- Apply to the scenario- why did they enter the contract? Was there anything else that they could have been induced by?

Question 40

Misrepresentation step 3

Answer 40

-You must identify the types of misrep and state why it is untrue:
There are three types of misrep: Fraudulent, negligent , and innocent
1- Fraudulent= a false statement is made without nay belief that it is true
2- Negligent- You believe that the statement was true, but you had no reasonable grounds for having that belief.
3- Innocent= You believed that the statement was true and you did have reasonable grounds to believe the statement was true. You have just made a mistake.

Question 41

Misrep step 4

Answer 41

Apply remedies available:
- Rescission means that the contract is “Unscrambled” so that both parties are returned to their pre contract positions. This is an equitable remedy, so will only be granted if the courts deem it to be fair and possible in all the circumstances to both sides.
- Damages- all actual damage or loss flowing directly from the misrep is claimable

Question 42

Explain the defences and remedies for each type of misrep

Answer 42

• Fraudulent- The only defence you have is if you believed the statement you made was true (Derry vs Peak). remedies= rescission and/ or damages
• Negligent- S.2(1) Misrepresentation act 1967: the only defence is the person making the statement had reasonable grounds to believe the statement was true. Remedies= rescission and / or damages.
• Innocent- The only remedy is rescission, but under S.2(2) of misrep act 1967, the courts could give you damages instead at their discretion.

Question 43

Economic duress intro

Answer 43

-(Name) may have a claim under economic duress against (name) as…
- Economic duress is when someone enters into a contract as a result of financial threats.

Question 44

Economic duress step 2/3

Answer 44

• The key requirements are that there must be pressure which is illegitimate, leaves the victim with no no real choice and causes them to enter into the contract (Universal Tankships)
• Fully explain and apply the case to the scenario

Question 45

Economic duress step 4

Answer 45

• The court in the case of Poa On identified the following factors to help decide whether economic duress was present:
  1- Did the person claiming to be coerced protest about the pressure
  2- Did that person have any other available course of action that was reasonable.
  3-Were they independently advised before taking the action?
  4-Did he or she take steps to make the contract void
  -Side rule- If the threat was lawful, it is not economic duress (CTN Cash&Carry vs Gallagher)

Question 46

Remedies for economic duress

Answer 46

• The D cannot claim damages but can instead ask for the court to make an order for the restitution (Giving back) of property or money extracted under duress, and also the avoidance of any contract that has been induced by it.
• Restitution is an equitable remedy that restores a person to the position they would have been in if not for the improper action of another.