Whole Module Flashcards
A case name and a good quote on what a promise is
A promise is a unilateral, gratuitous obligation, it only requires one party to undertake to perform and does not require the agreement or acceptance of a second party to be enforceable. As in formation of another contract the court applies an objective test, asking what the reasonable person would infer from the circumstances - royal bank of Scotland v Carlyle
Key characteristics of a promise
- The promisor must intend to be legally bound by his promise
- No need for the promisee to accept the promise for it to be binding
- Promises can be enforced through the courts by the promisee
- The existence of a promise is difficult to prove previously it required an oath (smith v Oliver) and now requires a formal written document unless conducted in the course of business
- A promise can have conditions attached to it but that does not mean the promise is bound to fulfil it.
Do promises need to be in writing?
The requirements of writing (Scotland) Act 1995 - gratuitous unilateral obligation must be in writing unless in the course of business! S1 2 a ii
Differences between a contract and a promise
A gratuitous contract = where only one party performs and gets nothing in return, but both parties have to agree to it
Onerous contract = both parties agree and perform obligations in exchange for performance
Promise = does not require acceptance and is legally binding as soon as it is made
Case which demonstrates a gratuitous contract
Morton’s Trustees v Aged Christian Friend Society of Scotland - entered an agreement to pay charitable donations subject to conditions fulfilled by the society. This was agreed. When he died he left two unpaid instalments the court held there was an enforceable contract
Case which demonstrates a gratutious contract
Morton’s Trustees v Aged Christian Friend Society of Scotland - entered an agreement to pay charitable donations subject to conditions fulfilled by the society. This was agreed. When he died he left two unpaid instalments the court held there was an enforceable contract
Case which demonstrates a promise
Smith v Oliver where a church stated Oliver had promised £7000 in her will, there was no record and court ruled it was a promise. As they couldn’t prove the promise their action failed
How are unilateral gratuitous promises constituted?
Clear and unambiguous
Written down unless in the nature of business - requirements of writing act 1995
Definition of a contract
A contract is an agreement between parties who have the capacity to make it in the form demanded by the law, to perform an act on one side or both that is not impossible, illegal, indeterminate, to create enforceable obligations in the court of law
What is the basic rule of a contract?
Agreement - would a reasonable person looking at ask the actings of the parties conclude they had reached an agreement on all the essentials of the contract - consensus in idem
What are the essential terms of a contract
Depends on what type of contract
Parties and subject matter
Not necessarily price because s8 of Sale of Goods Act allows court to fix a reasonable price
Mathieson Gee v Quigley
Asked to remove slit from pond, responded they would provide the necessary plant for removal - both thinking of different things no consensus in idem
Avintair v Ryder Airline Services
Parties may indicate they have moved forwards and one party may stay to perform obligations - court held that they were entitled to reasonable remuneration as the services provided were not intended to be free
Thomson v James
This case demonstrated the postal acceptance rule, which lies in favour of the person who is responding to the offer. Offer must be communicated to the offeree because if not the offer cannot be accepted
Glasgow steam shipping co v Watson
Even if there is no set time limit an offer will lapse after a reasonable time period has passed
Carlill v carbolic smoke ball co
Had issued a public offer to pay a reward if anyone who contracted influenza after having used the product as instructed. Court ruled it was a valid offer
Definition of acceptance
Unconditional agreement to all the terms of the offer by words or conduct
An acceptance is the final unqualified assent
Acceptance by action example
A vending machine - offers its contents and you accept by putting money in
Exception to qualified acceptance but case law is inconsistent
Erskine v glendinning - acceptance of the lease of a mill subject to lease drawn out - didn’t add anything of substance so no qualified acceptance
But
Stobo Ltd v Morrisons - similar fact different outcome - subject to contract clause - was a qualified acceptance
What are the 5 main grounds for challenging validity of a contract and what does it do - void/voidable
Capacity (void), force and fear (voidable), faculty and circumvention (voidable), undue influence (voidable, error and misrepresentation (voidable)
What is a void contract?
A contract although apparently formed has no legal force or binding effect and so never comes into existence
What happens if parties have fulfilled part of their obligations under an apparent (void) contract?
They cannot use the law of contract to reclaim any money or property passed over under the apparent contract because there is no contract.
How would someone reclaim money if a contract is void?
Through unjustified enrichment
What is a voidable contract?
A contract that exists but only up to the point where it is set aside
Requirements for annulment
Restitution in integrum (restoration of original condition) is possible
contract has not been affirmed by s1(3) of ROWSA or age of legal capacity the
There has been no unnecessary delay in taking action to annul
McLeod v Kerr
Contract voidable due to fraud (using someone else’s id) car can not be recovered as rights of 3rd party would be affected
Describe lack of consensus and a case
Parties have to agree on the essential terms of the contract to have consensus in idem
Mathieson Gee v Quigley
Lack of capacity
A mental inability to enter into legal obligations
Starting point of capacity
All natural persons have active capacity until death except insofar as restricted or eliminated all together by the status of childhood or by mental illness or infirmity
What is the age of capacity
Under 16
What is a young person
16-17
Limits on young people
If a young person enters into a transaction then they may apply to the court to set the transaction aside, if before they reach the age of 21 - they consider the transaction to be a prejudicial transaction
Definition of prejudicial and what section of Age of Legal Capacity Act 1991
S3(2)
A transaction is one which an adult exercising reasonable prudence would not have entered into in the circumstances of that young person,
The transaction has caused or is likely to cause substantial prejudice to the young person
What adults do not have capacity - case
Insane person
Intoxicated - bar is very high - Taylor v Provan - intoxication has to be a very high level
Quote on intoxication and case
Erskine says persons while in a state of absolute drunkenness and consequently deprived the exercise of reason, cannot oblige themselves…to a lesser extent which only darkens reason, has not the effect of annulling the contract - Taylor v Provan
General rule of illegal contracts
They are unenforceable
But certain contracts which are illegal under statute may be void, voidable or unenforceable depending on the wording of the statute
Key case demonstrates restitutio in integrum (restoration to original condition)
Boyd and Forrest v Glasgow and South Western Rail Co = the railway was there, the bridges were built and working 2 years before the action was so restitutio in integrum not possible as that would be taking out an entire railway
Example of someone who voided a contract due to threat of physical assault
Early of Orkney v Vinfra- the earl sued Vinfra who claimed they feared their life as the ear, payed his hand upon his sword
Hislop v Dickson Motors LTD
An employee was suspected of embezzlement, admitted to taking money and said would repay it
Made her sign a blank cheque and court rules forceful removal of the money was not voluntary and she did not consent - while she was willing to trade off her assets at the threat of criminal prosecution she did not disclose the information of the second and so no consent was given
What is faculty and circumvention and where did it come from
Involves one party taking unfair advantage of another who is in a vulnerable state.
Developed from the concept of fraud
What three elements are required for faculty and circumvention
1 weakness and facility (age,bodily infirmity, distress or mental health)
2 circumvention and act of fraud
- Loss (disadvantage, lesion - a loss due to another party’s failure to perform)
Expand on the three elements of faculty and circumvention
When a contract is to be avoided on this ground not only must the party be shown to be ignoring it. At the the time of the contracts formation, but it must also be proved that the contract was to her disadvantage, she was induced to enter into the contract as a result of fraud and circumvention - can be difficult to establish circumvention
What must be shown for undue influence
A relationship of trust existed
Dominant party received a substantial benefit from the contract
Subservient party did not receive independent advice
Case that was the starting point for undue influence
Gray v Binny- 24 year old man, on the advice of his solicitor and mother, he was not adequately informed of the consequences of the deed and his legal rights. Court emphasised importance of protecting from undue influence. He was vulnerable to the influence of his mother and the solicitor
What are the different kinds of error
Dissensus - Mathieson Gee v Quigley
Unilateral error - only one party in error
Mutual error - both parties are in error
Misrepresentation
Concept of error plus
There is an additional factor that would justify the contract not been enforced
What are Mcbrydes four situations where error can be identified
Where the contract was induced
Where the party took advantage of the error
Where the contract was gratuitous
Where the error has been induced by the other party of the contract
What is misrepresentation
Misrepresentation must not be a trivial statement it must be an inaccurate statement of fact, trade puffs generally not accepted
Negligent misrepresentation
If a person fails to take reasonable care in the circumstances can make the contract voidable
Explain the concept of incorporation
Determining which terms are to be included in the contract
Terms can be implied or express but must be properly incorporated into the contract to have effect
General rule is that terms cannot be incorporated after the contract has taken effect unless the parties agree
Flynn v Scott
A term must be a statement of fact and not opinion
Claiming a car was in good running order was held to be a statement of opinion
Burnside v chestnut
Entire agreement clauses do not preclude implied terms. - very specific language needed to succeed in including implied terms as they are already a part of the contract
Bannerman v White
Claimant asked if sulphur had been used in the cultivation and that he would not buy if that was the case. He was assured that it hadn’t been used and thus was held to be a condition of the contract. If you make a statement just before agreeing the contract more likely to be a term.
Couchman v Hill
Exception - partially written agreement
Called animal unserved but was actually meaning a calf. Oral assurance overrides a grouchier description constituting a term. The more important the statement, the more likely it is to be binding
Dick Bentley productions v Harold Smith Motors
If a party relies on the other party’s expertise, that’s more likely held to be a term
Oscar chess Ltd v Williams
Relative expertise of parties matters, an amateur dealing with a professional will cause certain things said to be considered a term
W part exchanges a car to a dealer calling it an older model then it actually was so less valuable. W had not intended to promise age of car as contractual term
Routeledge v McKay
If an oral statement is not referred to when ultimately captured in writing, less likely to be a term
Ecay v Godfrey
Maker asked recipient to verify statement - more likely to be a representation - get it surveyed
Hopkins v tanquery
If party insists doesn’t need to get surveyed - term relied on belief he was honourable
Red hand test
Onerous contracts should have a red hand and be written in red ink- liability for injury as well as property
The more unreasonable a clause the greater notice should be given to it.
Taylor’s v Glasgow corporation
A woman goes to the local baths and fell down the stairs and suffered injury. The baths were relying on an excemption clause in the back of the ticket - judge ruled this was not sufficient - not containing contractual conditions
Parker v South eastern railway
Left luggage - reasonable notice must be given to excemption clauses this means it should be brought to the party’s attention
Admitted he knew there was writing just didn’t read it
Montgomery Litho Ltd v Maxwell
Incorporation by signature - inner house held clause was not properly brought to his attention had not been given fair notice that he could be liable not company
McCurcheon v MacBrayne
A car ferry sank losing the claimants car. He had previously used the ferry and had sometimes been asked to sign an exclusion clause sometimes not. On this occasion he had not.
The court did not incorporate the term as it was not sufficiently regular to be implied
What is the nature of a breach of contract
A contract is an agreement forced by law, the terms of the contract determine the obligations owed by the parties to one another. Breach occurs when one or more parties break the terms of the contract without justification
What are the remedies for breach of contract
Retention, rescission, damages, specific implement, interdict
Wade v Waldon
Shows the narrow line between repudiation and rescission
A comedian contracted to appear at two Glasgow shows, looked for ads, found out the shows were cancelled, they referred him to a clause in the contract that all artists must provide bill matter, he offered to fulfil obligation. Then refused
They said he was repudiated the contract in the breach and they were entitled to rescind. The court disagreed did not go to the root of the contract so could not claim for damages
What is rescision
Rescision is the rightful act of the other party indicating that as a result of repudiation, he regards himself as no longer required to fulfil his contractual obligations I.e. to effectively treat his duties under the contract as at an end. Imitation of this fact is advisory, the contract remains alive
What does it mean to repudiate a contract
Make clear you will not perform the contract despite no right to withhold performance
Must go to the root of the contract
Does not terminate the contract
Interdict
A preventative remedy by which the court forbids the carrying out or continuation of some action
Stop someone from doing something I.e prevent someone from selling a house where there is a contract to sell it to you
How can mutuality cause problems
Where a party who is in breach cannot sue to enforce the contract where there is another party who breached first.
Scottish law commission had recommended statutory reform to address this in draft contract bill contained in their 2918 report, not implemented yet
Quote for mutuality
The remedies that are available to enforce performance and to secure future performance are dependant on the concept of mutuality
Graham v Turkey
Mutuality- cannot sell goods form other manufactures breached this clause
When one party tried to sue the other it was he,f that they breached the contract first - mutuality had ceased if you breach you can be sued
Quote on retention
Retention is of considerable practical importance as it serves to provide security of future peromance
Materiality
Means the degree of importance or how serious the breach is
Affects the remedy you may be able to get
What remedy would you use if breach not serious enough to justify recision
Retention and lien
Leading case for damages
General v Blake - the crown was entitled to recover the gains made by firmer British spy who had defected to the SU in the 1969s and later published a profitable memoirs in breach of his lifelong duty as an employee of the crown
When is retention often invoked
Leases - sometimes you want to enforce performance
What is a specific implement
Appropriate remedy when a positive act of performance other than the payment of money is sought from the contract breaker - such as the delivery of goods or rendering of services
Leading case for remoteness
Balfour Beatty v Scottish Power - involved in works to build a viaduct, generator failed and the work was ruined - but Scottish power not liable as loss suffered too remote
Tow stage test for remoteness
Loss was a normal result of breach
The parties were aware of special circumstances that made a particular loss more probable
Requirements of Writing (Scotland) Act 1995
The act specifies when writing is required for certain types of contracts to be valid
Contracts involving land or creation of real rights must be in writing
A gratuitous unilateral obligation must be constituted in writing unless in the conduct of business
Contracts of guarantee and creation, transfer or extinction of an interest in land must also be in writing
Ensures that specific transactions are formally documented to prevent disputes about their terms
S1(2) (a) ii of ROWSA - need for writing?
Hogg - it’s about whether the obligation is fined as a result of jurisdiction action of one party (unilateral) or two (bilateral)
Following that logic all contracts must be bilateral and no contracts can fall into the category of gratuitous unilateral obligation in ROWSA
This means that this section can only apply to promisee (which are definitely unilateral), not to contract - even if the contract is gratuitous (even if there is only one party has duties but for a gratutious contract there needs to be an agreement of both parties unlike a promise)
A contract of sale
Coma, sale of house or land,
Sale of goods in a shop
Contract of lease or hire
Person A transfers property to B, often in exchange for rental payment
Loan
Usually money
Property is transferred to possession of another and repaid/returned over time
Contract of carriage
A person getting on a ferry or train and buys a ticket
Contract of employment
Employee A agrees to provide their services to employer B in a regular basis in exchange for payment
Services contract
Person A agrees to provide some service to person B usually in exchange for payment
What types of obligations can be said to be gratuitous unilateral obligations and therefore require writing under s1(2)(a) (ii) (unless in course of business of course)
Yes - promises where the promisor obtains no benefit (only one party involved in creation so unilateral, only one party required to perform so gratuitous)
Yes - promises where the promisor obtains a benefit (creation by only one party so unilateral, only one party required to perform so gratuitous but argument that benefit obtained by the promisor renders it onerous)
No - contracts where both parties have to perform an onerous obligation. (Both parties created it so bilateral, both parties required to perform so onerous)
No - contracts where only one party has to perform a substantive obligation ( both parties created so bilateral, only one party required to perform so gratutious)
What are the essential elements of a contract that must be agreed for consensus in idem
The parties to the contracts (Fleming buildings Ltd v Forrest - tried to act through their business but that’s a separate entity to themselves as it was their personal house)
Is the contract on of sale - goods or land to be sold must be identified and price agreed -
BUT price need not always be agreed s8 of Sale of goods act 1979 allows court to fix a reasonable price where contract of sale is agreed,
The nature of identification depends on what’s been sold fungible property may only be classified by one, whereas property will require more identification
Essential terms if a lease are subjects, rent,duration, (maybe rent review clause, purchase option)
Time limits of contract
An offer once made can be revoked at any time before the offerees acceptance is communicated to the offeror - revocation of an offer need not comply with any set of formalities (McMillan v Caldwell)
If time limit set for accepting the offer then offer will lapse on expiry (flaws v international oil pollution compensation fund)
Even if n time limit offer will lapse after a reasonable period - Glasgow steam shipping v Watson
If you promise to keep an offer open for a certain time you will be held to that promise
Things which are not an offer
A unilateral promise - no acceptance needed
Replies to a request for information or enquiry as to willingness to sell - Harvey v facey
Party recapping its negotiating position - Glasgow city council v smith
Invitation to treat
Invitations to treat
Display of goods in a shop - fisher v bell
Goods displayed on supermarket shelf - pharmaceutical society of GB v Boots cash chemists
Putting items up for auction or inviting tenders for supply of materials/tenders
Automated machines - probably standing offer - Thornton v shoe lane parking
Adverts presumed to be ITT even if calls itself an offer - Fenwick v macdonald Fraser
BUT carlill v carbolic smoke ball - even so if this was in Scotland it would be a promise
