Private Law of Scotland 1

Question 1

Void ab initio

Answer 1

Legally invalid from the contracts commencement.

Question 2

Define the ‘Law of Obligations’ (voluntary & involuntary)

Answer 2

Involuntary obligations are imposed by law.
Voluntary obligations arise from contract or promise.

Question 3

Unilateral obligation

Answer 3

“A relationship of corresponding rights and duties between persons” - one party has an obligation.

Question 4

Contractual (bilateral) obligation

Answer 4

Both parties have obligations to perform to complete the deal.

Question 5

Define ‘declarator’

Answer 5

Asking the court to provide a statement of your rights.

Question 6

Define ‘specific implement’

Answer 6

A compulsion to do something, usually enforced by courts.

Question 7

What three instances cause an offer to lapse (fail)?

Answer 7

When rejected or met with a counteroffer / when revoked by offeror / when not accepted in time.

Question 8

Which act states that ‘promises must be in writing unless made in the course of business’

Answer 8

Requirements of Writing (Scotland) Act 1995 s.1

Question 9

Summarise ‘May and Butcher Ltd v King (1934)’

Answer 9

Surplus of tents post WW2 agreed in writing to be sold to May&Butcher who placed 1k security payment. However, no price or quantity agreed so deemed an agreement to agree, not legally binding. Government withdrew from ‘contract’.

Question 10

Summarise ‘McArthur v Lawson (1877)’

Answer 10

Lawson employs McArthur, promising him in writing to promote him to partner after 2 years. Held that there’s no contractual agreement, just a vague understanding.

Question 11

Summarise ‘Scottish Wholefoods Collective Warehouse Ltd v Raye Investments Ltd (1994)

Answer 11

S.W.C.W wanted to buy land at a price to be determined. Raye agreed to sell, price unconfirmed. SWCW sought a declarator and decree, court found they were entitled to buy the building for the valuation despite Raye being unhappy with the price. The price had not entered the agreement, so the defendants argued it was merely an agreement to agree. Despite this, Scottish Wholefoods were successful as the clause stated it was open market value and did not have to be agreed upon at the time of the agreement.The seller was required to make genuine efforts to agree on a price, and failure to do so would constitute a breach of contract.

Question 12

Summarise ‘Foley v Classique Coaches (1934)’

Answer 12

Foley sold land adjoining the station to Classique Coaches Ltd. One of the conditions of the agreement was that Classique purchase all fuel from Foley’s filling station as long as he could provide. The agreement contained an arbitration clause. However, no price agreed. Classique complied with the terms of this agreement for three years until advised that as a price had not been indicated, so contract could be abandoned. Classique stopped buying fuel from Foley. Contract deemed enforceable as although price fluctuates, arbitration was agreed which means the contract wasn’t missing an essential term (price).

Question 13

Summarise ‘WS Karoulias SA v Drambuie Liqueur Co Ltd (2005)’

Answer 13

Drambuie is a liqueur company and has had two successful agreements of exclusive trading with WS. Third agreement drafted and unsigned, WS claiming there’s a contract and Drambuie attempted to walk away. Consensus in idem was reached, however the lack of signatures evidenced the wish to not be legally bound.

Question 14

Summarise ‘Muirhead and Turnbull v Dickson (1905)’

Answer 14

Piano merchants sued Dickson for not paying his monthly instalments for a piano hire. Dickson claims it is his property via deferred payment and will pay it off to keep. Sheriff court decides that it is not a hire purchase, so the pursuers are not entitled to recovery of the piano.

Question 15

Define ‘mutual error’ (bilateral)

Answer 15

Both parties are at cross purposes/incorrect. E.g., Mathieson Gee v Quigley.

Question 16

Which essential term was missing in the case of Earl of Orkney v Vinfra (1606)?

Answer 16

Consent - threatened with a dagger and in fear of his life.

Question 17

What did the Carlill v Carbolic Smoke Ball Co case establish?

Answer 17

An offer can be made to the whole world, and the wording of an advertisement may amount to an offer. (Promised to erase flu and if product failed then you’d be paid, woman caught flu and demanded payment and the business declined.

Question 18

What is the difference between facility and circumvention and undue influence?

Answer 18

F&C is when a vulnerable individual is taken advantage of. Undue influence is where a position of trust is abused. Both make contracts legally voidable.

Question 19

Define ‘voidable’

Answer 19

The contract is legally binding however it can be challenged, which can result in the contract being declared void.

Question 20

Summarise Mathieson Gee v Quigley

Answer 20

No contract existed, mutual error prevented consensus in idem, and the offer did not meet the acceptance.

Question 21

What is the new test on penalty clauses?

Answer 21

What legitimate interests are the party entitled to protect, and whether the specified sum is exorbitant (extortionate).

Question 22

What are ‘special’ damages?

Answer 22

When circumstances were made known to the other party, designed to put you in the same financial position prior to the incident.

Question 23

What is the legal effect of unilateral error?

Answer 23

Of no legal effect, except the circumstance of error plus.

Question 24

Define error plus

Answer 24

Snatching at a bargain, taking advantage of error.

Question 25

Define uninduced in the context of errors

Answer 25

Uninduced means you did not enter the contract under misrepresentation or manipulation.

Question 26

Courts will not uphold a restrictive covenant if…

Answer 26

If it protects the genuine pre-estimates of loss.

Question 27

Define ‘prejudicial transaction’

Answer 27

A transaction a reasonable adult would not have entered into/entered before the age of legal capacity.

Question 28

Differentiate between resolutive and suspensive conditions.

Answer 28

Resolutive - contract is enforced UNTIL the condition is met. Suspensive - contract is enforced AFTER a condition is met.

Question 29

Define ‘lien’ (right)

Answer 29

The right to withhold performance and goods (Sale of Goods Act s.1)

Question 30

Which two ways can terms be validly incorporated into contracts?

Answer 30

Express terms - usually appear in the written form of a contract.
Implied terms - implied into all contracts. May be through common law, statutes, or custom.

Question 31

What is a ‘forced majeure clause’?

Answer 31

When something happens beyond reasonable control, the contract cannot be performed. E.g., war, extreme climate, labour conditions.

Question 32

Summarise R&J Dempster v Motherwell Bridge & Engineering Co Ltd (1964)

Answer 32

Agreement that price is not an essential term. Agreement to purchase steel, no agreement on price as the industry value fluctuates regularly. One party attempts to walk way claiming no contract as no agreement on price, however it was ruled that the contract was valid in this circumstance.

Question 33

Name three components of the factual matrix in regards to contract

Answer 33

Facts known to the parties at the time of contracting, purpose of the contract, prior communications.

Question 34

Name all seven valid contract termination methods and describe each one.

Answer 34

Acceptilation (acceptilatio) - mutually agree to terminate.
Novation (novatio) - a new, replacement contract.
Delegation (delegatio) - a new, replacement debtor/transferring obligations to someone else.
Confusion (confusio) - when the debtor and creditor are the same person in a patrimonial agreement. Example on pg 25 of notes.
Compensation - where two parties still owe each other obligations.
Prescription and Limitation - legal rights gained or lost due to passage of time.
Frustration - an external change of situation that makes performing obligations impossible.

Question 35

What does the ‘Prescription (Scotland) Act 2018’ discuss regarding short negative and long negative prescriptions? What are the time frames?

Answer 35

Short negative is 5 years, long negative is 20 years. Obligations are extinguished in both cases. Any contract issues must be raised within this time period.

Question 36

Summarise Cantiere San Rocco v Clyde Shipbuilding & Engineering Co Ltd (1923)

Answer 36

Before WW2, Cantiere and Clyde signed a contract for the building and selling of ships. Cantiere paid 2k of 11k and after the war demanded a repayment of the sum since Clyde could not build the ships. In the House of Lords, Clyde were made to repay the sum and fund all finances put towards the case.

Question 37

‘Unfair terms of consumer contracts and unfair consumer notices are not binding on the consumer’ - Which Act and section is this from?

Answer 37

Consumer Rights Act 2015 s61.

Question 38

What is the three-part test used to assess unfair terms?

Answer 38

Contrary to the requirement of good faith, causes a significant imbalance in the parties rights/obligations, to the detriment of the consumer.

Question 39

Are defective agreements void if there has been performance?

Answer 39

The contract may be void from the beginning but the Sale of Goods Act 1995 s.1 states that individuals should be reasonably compensated for their service/product. If payment is denied, he could claim damages via unjustified enrichment.

Question 40

Summarise Parkingeye Ltd v Beavis 2015

Answer 40

Sued customers for damages when they refused to pay the fine. Argued there’s no genuine pre-estimate of loss as it was a free car park. However, court deemed the fines were not unconscionable or excessive, and were only to deter people from violating the “two hour free period”. The fine was clearly signposted so it was ruled in Supreme Court that Beavis still had to pay the fine.

Question 41

Summarise Aberdeen City Council v Stewart Milne Group Ltd (2011).

Answer 41

SMG entered a contract with ACC to purchase land. Was then sold to partner business, however contract states price could have possible uplift under certain events. Supreme Court found they had to pay the uplift, expressly stated in the clause as 40% of 80% of gross sale proceeds. Implied term - the commercial purpose of the agreement was so ACC could have a share of development value of the projects.

Question 42

Summarise Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] (Liquidated Damages & Penalty Clauses)

Answer 42

Dunlop stipulated in its contract with retailer, New Garage, that it would be fined £5 for every tyre sold below the price stated in the contract, ‘by way of liquidated damages and not as a penalty’. When D sued NG for breach of contract, it was argued whether the clause was a penalty clause, thus void. HoL determined the clause was not void as a penalty since it was a genuine pre-estimation of loss.

Question 43

Describe the difference between induced and uninduced unilateral error.

Answer 43

Induced - a party entered the contract under misrepresentation (was misled).
Uninduced - entered of own free will and possession of necessary information.

Question 44

Summarise William Morton & Co v Muir 1907 (Implied Terms of Contract)

Answer 44

Court of session - inner house. A placed orders for lace from B and provided the lace design. B produced cards to manufacture the curtains. The cards belong to B. B produced their own curtains to sell and it was obvious the designs matched A’s. It was custom in the industry for manufacturers to only produce lace designs with express consent from the designers, so was implied into this specific contract. However, A never registered the design. It was found that the custom is upheld by law and B were interdicted.

Question 45

Summarise Balfour Beatty Construction (Scotland) Ltd v Scottish Power Plc 1994 (Remedies and Enforcement)

Answer 45

Balfour Beatty was constructing an aqueduct, Scottish Power was responsible for supplying electricity to Balfour Beatty’s concrete batching plant. SP breached the contract (did not provide continuous stream) so BB claimed for damages. The specific loss in question related to the demolition and reconstruction of the aqueduct due to a power supply failure. Since this was unforeseeable, BB were not permitted damages.

Question 46

Define ‘contra proferentem’

Answer 46

An ambiguous term in the contract.

Question 47

Summarise Life Association of Scotland v Foster (1873)

Answer 47

When filling out life insurance form, she claimed to be suffering no illness. However, unknown to herself she was suffering from terminal illness causing her death months later. Clause refusing payout if people did not report any illnesses or conditions known to them. Court deemed the clause contra proferentem, as she did not know she was suffering at the time. They were made to pay out.

Question 48

What is the ‘last shot’ analysis courts apply to Battle of the Forms cases?

Answer 48

Whichever set of terms are provided last, before acceptance, are the applicable terms governing the contract.

Question 49

Summarise Arnold v Britton 2015. (Interpretation)

Answer 49

A leisure park (a) selling 99 year leases, clearly stating a 10% increase in compound interest every year succeeding the first. B takes A to court, arguing the clause is 10% each year taken from the original amount, not the increased. However, supreme court ruled in favour of A. The clause was clear, and when looking at the ordinary meaning of words, B interpreted it incorrectly. “Would be sensical to a reasonable businessman”.

Question 50

Differentiate between liquidated damages clauses and penalty clauses.

Answer 50

LD is enforceable and expresses penalties for breaches of contract. P is unenforceable and encloses punishment. Often unproportionable to the damages caused by the breach.

Question 51

Evaluate - Jakob promises to lend sister Ingrid £250 until the end of the month but now cannot afford it. His sister has already made plans to use the money and threatens to seek legal advice

Answer 51

Promises are enforceable in Scotland. Cannot be revoked regardless of the time period. Do not require acceptance but do have to be in writing (RWSA 1995) unless in the course of business. Unilateral obligation and has to be serious intention to be bound. Could be rejected. Subject to conditions. Must reach third stage of desire, resolution, and engagement.

Question 52

Evaluate - Boris got rather drunk in a pub and ‘vaguely’ remembers chatting to someone called Sid Swindle about buying a car. Boris let slip that his eighteenth birthday had just passed and that he received funds from a trust that his grandmother left him. Sid seemed most interested in this and explained that he had a Porsche he was putting up for sale. Boris is approached by Sid the next day, who claims Boris has ‘formally agreed’ to buy the car and plays a video recording of Boris agreeing to pay £68,000.

Answer 52

Boris would likely be unable to claim incapacity due to his intoxication level not being high enough. Could review this in the video. No intent to be legally bound from Boris.

Question 53

Summarise X v BBC

Answer 53

A 17 year old girl agreed to be in a project with BBC under the influence of Buckfast and valium before entering the contract pleading incapacity. This was a prejudicial transaction, however it was commonly entered by people her age in the industry. Judge ruled that her speech and actions seemed rational, so therefore the contract remained enforceable.

Question 54

Summarise Felthouse v Bindley 1862

Answer 54

Uncle sends nephew letter stating if there is no response, he has bought and has ownership of nephews horse. Nephew did not see letter and horse was accidentally sold at auction. Uncle sues auctioneer as he claims the horse was his property. Court ruled that silence does not stipulate acceptance, and acceptance must be expressed clearly.

Question 55

Name two forms of agreement which are not considered contracts/legally binding.

Answer 55

Commercial and social.

Question 56

Summarise McCutheon v David MacBrayne Ltd (1964)

Answer 56

McCutheon left his car with the shipping company to be transported overseas. Car is destroyed as ship sank (due to negligence) and company forgot to send out risk form exempting themselves from liability. Therefore, McCutheon sued for the value of his car. MacBrayne argued that due to previous dealings, he had signed them before so they were clearly implied in oral contract the final time. However, McCutheon claims to have never read them and court found them unincorporated into the present contract, and unenforceable. Previous dealings are only capable of importing a term into later contracts where definitive knowledge of the terms is established.

Question 57

Summarise Thornton v Shoe Lane Parking 1971.

Answer 57

Thornton drove his car to a car park. Outside the park, prices were displayed and a notice stated cars were parked at their owner’s risk. An automatic ticket machine provided a ticket, a barrier was raised and Thornton. In small print on the ticket it was stated to be issued subject to conditions displayed on the premises. On a pillar opposite the machine was a notice stating SLP are not liable for injuries on their premises. Thornton had an accident and sought damages from SLP. SLP say contract was made when Thornton took the ticket and parked, and the ticket clearly stated the terms. Thornton says the notice outside and the entrance to the car park was the contract. There was offer and acceptance. The ticket added terms not agreed upon at the time of contracting (before he entered). Court ruled in favour of Thornton, as you cannot incorporate new terms after acceptance.

Question 58

Summarise Taylor v Glasgow Corporation 1952

Answer 58

Taylor bought entry for the hot bath owned by Glasgow Corp and fell on the stairs, severely injuring herself. Defendant argued the ticket was the contract with all the terms. However, the ticket was not considered a ticket. She paid for the hot bath, was given the voucher. She took the voucher to the operator, who exchanged it for her entry. The law would not pay the same attention to a ‘ticket’ of this nature as it would to other examples such as a railway ticket. Therefore, seeing as it is not a ticket, the pursuer could not be reasonably expected to study it as a physical contract and its conditions. The defenders did not do what was reasonably sufficient to give the pursuer notice of the condition. The judges were in agreement and ruled in favour of Taylor.

Question 59

Summarise Taylor v Glasgow Corporation 1922

Answer 59

Court of Session
The father of a seven-year-old boy sued GC for damages after sons death from eating berries from a poisonous plant that was growing the Botanics. The gardens were open to the public and managed by GC. The father argued the defendants had kids pass through their grounds frequently yet did not attempt to warn or alleviate the danger caused by the poisonous plant to children. The plant was enclosed by a wooden fence which was open to the public and easily accessed by children. Court held that GC was liable. They had permitted children to go on to the land and it is understandable that the berries would have appealed to visiting children. The defendants were aware of this danger and did nothing to prevent the damage. Ruled in favour of T.

Question 60

Name three remedies for unjustified enrichment.

Answer 60

Restitution (return of property), recompense (repayment of unjustified expenditure), repetition (return of money).

Question 61

Promises can be gratuitous or onerous. Distinguish between the two.

Answer 61

Gratuitous - expecting nothing in return. Onerous - conditional.

Question 62

Summarise Avintair Ltd v Ryder Airline Services (1994)

Answer 62

A introduced RAS to new clients that would give them work. Whilst the contract was drafted and prices still negotiated, RAS did not want to proceed and did not pay for services already provided. Court found Avintair were entitled to reasonable renumeration (quantum meruit) as their services were not intended to be free. It was an implied term that they would be paid.

Question 63

Summarise Harvey v Facey 1893

Answer 63

A sent a telegram to B, “Will you sell Bumper Hall Pen? Telegraph lowest cash price”. B replied “Lowest price £900”.
A telegraphed “We agree to buy… for £900 asked by you”. Held by Privy Council that B’s telegram was not an offer but an indication of the minimum price they would want, if they decided to sell. A’s second telegram could not be an acceptance.

Question 64

Summarise Fisher v Bell 1960

Answer 64

A shopkeeper displayed a flick knife with a price tag in the window. The Restriction of Offensive Weapons Act 1959 made it an offence to ‘offer for sale’ a ‘flick knife’. The shopkeeper was prosecuted in the magistrates’ court but the Justices declined to convict on the basis that the knife had not, in law, been ‘offered for sale’. Decision upheld by the Queen’s Bench Divisional Court. Lord Parker CJ stated: “It is clear that according to ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract.”

Question 65

Summarise Hyde v Wrench

Answer 65

Wrench offered to sell the farm he owned to Hyde. He offered to sell the property for £1,200, but this was declined. Wrench decided to write to the complainant with another offer; this time to sell the farm to him for £1,000. He made it clear that this would be his final offer regarding the property. In response, Hyde offered £950 for the farm in his letter. This was refused by Mr Wrench and he confirmed this with him. Hyde agreed to buy the farm for £1,000, which was previously offered. However, Mr Wrench refused to sell his farm. No contract due to counter-offer.