Rules and Theory of Contract Law

Question 1

Agreement

Answer 1

• Making an agreement to do something, such as buying a car.

Question 2

Validity of Agreement

Answer 2

• Is there any misrepresentation (vitiating factors)?

Question 3

Terms of Contract

Answer 3

• Terms and obligations on both sides, some which are specifically stated, others of which are implied.

Question 4

Discharge of Contract

Answer 4

• Examining breaches of contract, non-performance or part-performance.
• Are there events outside of control of parties?

Question 5

Remedies

Answer 5

• Where the contract has been breached or been affected by a vitiating factor.

Question 6

Contract Law

- Statute?

Answer 6

• Derived from common law. Equity/fairness/morality always considered.
• Some provision plugs gaps, Sale of Goods Act 1979, Consumer Rights Act 2015.

Question 7

Freedom of Contract

Answer 7

• We are free to make any contract we want, even if it is disadvantageous.
• Based on the sanctity of a promise to be enforced by law.
• Some statutory protection.

Question 8

Reliance Theory

Answer 8

• Not a promise but an assumption of responsibility for a specified performance.

Question 9

FoC v Reliance. Who wins?

Answer 9

• Agreed terms must be certain.

If contract too vague, not valid contract (Guthing)

Question 10

Lord Denning Overview on Contract Law

Answer 10

• Should be an objective view that as soon as the last forms have been exchanged between parties and no objections raised that the terms are settled and a contract is valid.

Question 11

Implied Terms

Answer 11

• Placed in contracts that may have not been agreed.

- CRA 2015, Parliament stated that terms, rights and remedies cannot be excluded by a business.

Question 12

People for FreeOCont

Answer 12

• If you don’t like the terms, you don’t have to enter the contract.
• Others will say you have no choice.

Question 13

Good Faith

Answer 13

• Expectations are that both parties will do what they’ve said they will do.
• Criminal Sanctions for worst breaches, fraud.

Question 14

Victoria Laundry v Newman (Good Faith)

Answer 14

• Responsibility for any losses taken by the person at fault, but only losses that are reasonably within the contemplation of the parties may be recovered.

Question 15

Wellesley Partners LLP v Withers LLP

Answer 15

• Basic rules of contract, contracts are made between parties in good faith and that the damage resulting from the breach would have been the type in mind when the contract was made.

Question 16

Problems with Good Faith

Answer 16

• Businesses are competitive and so parties entering into contracts cannot be expected to disclose every aspect of their business deals.
• Balance needs to be struck between the interests of the parties to a contract by legislation, interpretation of common law, some equity.
• Result, lack of certainty.

Question 17

United Nations Convention on Contracts for International Sale of Goods

Answer 17

• There should be good faith in int’l commercial contracts, yet most int’l trade contracts state English Law will apply in London.

Question 18

Balance Interests and Justice

Answer 18

• Exclusion clauses, buyer beware, caveat emptor have brought mixed results.
• Olley, Thompson

Question 19

Who can take legal action in a contract?

Answer 19

• Only a party to the contract may do this. An agent, or someone acting on behalf of a third party in making a contract means the contract is between the third party and the principal. (other party)

Question 20

Jackson v Horizon Holidays

Answer 20

• Claimant was successful in seeking damages for himself and his family even though only he had signed the contract.

Question 21

Contract (Rights of Third Parties) Act 1999

Answer 21

• Allowed third parties to make claims where the contract made this clear, but since most contracts exclude these, largely not applicable.

Question 22

Law Reform (Frustrated Contracts) Act 1943

Answer 22

• Courts may order for a ‘just sum’ to be paid to balance interests and justice.

Question 23

Principle of Fault (MisRep)

Answer 23

• Responsibility in one theory in ContL. An untrue statement of a fact is a misrepresentation and a vitiating factor, therefore remedies will be appropriate.
• Degree of seriousness of misrepresentation: innocent, negligent or fraudulent.

Question 24

Obligation to Tell

Answer 24

• If one party doesn’t ask about something, there’s no obligation to tell, so silence isn’t misrepresentation, this is because there is freedom of contract.
• If there is deliberate to conceal a fact, then there’s liability.

Question 25

Level of Blameworthiness (Principle of Fault)

Answer 25

• Determines whether a person can end the contract or must continue it, but claim some compensation.

Question 26

Law Commission Report 1995

Answer 26

• Recommended no punitive (excessive) damages for breach of contract, although penalty clauses in some contracts suggest otherwise, subject to judicial review.

Question 27

ParkingEye v Beavis

Answer 27

• Lord Sumption, upholding a parking penalty of £85, stated that whilst the penalty rule was an interference with FreeOfCont; in a negotiated contract, parties themselves are the best judges of what is appropriate. Means as long as penalties are not excessive, they are legal.

Question 28

Morality in Contract

Answer 28

• Pearce v Brookes, contract between a cab owner and a prostitute in order for her to purse her trade was void for moral purposes.

Question 29

Parkinson v College of Ambulance (Morality)

Answer 29

• Purpose of which was to buy a knighthood (immoral).

Question 30

Dann v Curzon (Morality)

Answer 30

• Contract to commit a tort or a crime (immoral)

Question 31

Napier v National Business Agency

Answer 31

• A contract that set out to defraud (immoral)

Question 32

Tax Contracts

Answer 32

• Tax Avoidance (Legal), Tax Evasion (Illegal), are contracts that set out to help people avoid tax immoral?

Question 33

Estoppel

Answer 33

• Means if one party to a contract and the other party relies on that promise, then they cannot go back on the agreement as they are ‘estopped’ from breaking a promise.

Question 34

Central London Property Trust v High Trees

Answer 34

• Rent would be returned to the originally agreed price for future only. CLP couldn’t claim back the money during the war years.
• Lord Denning established promissory estoppel.
• This prevented CLP going back on their promise to accept a lower rent despite the fact that the promise was unsupported by consideration.

Question 35

Derry v Peek

Answer 35

• Tort of Deceit. It would be wrong to allow a contract to be obtained by fraud,
• Pay day loans rates? Are these moral? They are legal.
• In relation to contract law, morality is present with illegal contracts, economic duress, terms imposed in contracts and equitable.