1
Q
Is Contract a branch of civil law or private law?
A
Civil law!
Private law is also a branch of civil law.
2
Q
True or False: a contract needs to be in writing.
A
False
3
Q
What are the 3 basic principles of a contract?
A
1) Agreement by Parties
2) intention to be legally bound
3) consideration
4
Q
What 3 types of contracts MUST be in writing?
A
- Contracts of Guarantee
- Contracts to sell land
- Consumer Credit Agreements
5
Q
True or False: contracts made in electronic form will be treated as if they were in writing and will be considered properly executed
A
True
6
Q
Contracts by Deed
A
- A deed is a document which makes clear on its face that it is intended to be a deed.
-Must be executed by the parties to it in the presence of a witness and delivered.
-delivered in this context means that the parties to the deed must have shown their intention to be bound by it.
7
Q
True or False: promises were nothing is received or promised in return can be binding if they are made in a deed.
A
True
A classic example is a promise to make a gift
8
Q
True or False: a conveyance of land must be done by deed.
A
True
9
Q
What is an important difference between a simple contract and a contract by deed?
A
The time limit in which a claim for breach of contract can be made.
A claim under a contract which is not made by deed must be brought within six years from the date of the breach, put a claim under a contract by deed can be brought up to 12 years from the date of the breach.
10
Q
Elements of Contract: Agreement/Intent/Consideration
What are the elements of an agreement
A
Offer & Acceptance
11
Q
Elements of Contract: Agreement/Intent/Consideration
What are the elements of Consideration
A
Bargained-for exchange of something of legal value
OR
Substitute for consideration, such as promissory Estoppel
12
Q
Elements of Contract: Agreement/Intent/Consideration
What are the elements of intent
A
Presumption of intent in commercial arrangements
(not in domestic/social situations)
13
Q
What is a valid offer?
A
1) party making Offer is prepared to enter into contract
2) terms of Offer are sufficiently certain
3) offer is communicated to other party
14
Q
What does it mean that the ‘terms of Offer are sufficiently certain’
A
The terms must not be too vague, uncertain, or incomplete. They need to be capable of being enforced. The subject matter of the deal must be certain.
15
Q
Which other communications do not amount to an Offer?
A
-responses to requests for information
-invitations to treat
-advertisement
-Shop sales
-price listings
-tenders (submissions of offers)
-auctions
-price quotations (note: this is trickier based on prior correspondence)
16
Q
In which cases does an advertisement actually constitute an offer?
A
Unilateral contracts
17
Q
What is a unilateral contract?
A
A unilateral contract arises when the person making the Offer promises to do something if the person receiving the author does something in return and the offeree actually does what the offer is asked.
E.g. lost dog advert
18
Q
Can an offer be accepted after it has been terminated?
A
No
19
Q
What are the three ways an offer can be terminated?
A
1- termination by Offeror
2- termination by offeree
3- termination by operation of law
20
Q
Termination by Offeror - Revocation
A
revocation is the retraction of an offer by the Offeror
Directly - communicating the revocation to the offeree any time before acceptance
Indirectly - revoked if the offeree receives: 1) correct information, 2) from a reliable source, 3) of acts of the Offeror which would indicate to a reasonable person that the Offeror no longer wishes to make the offer.
21
Q
True or False: a revocation must be received by the offeree in order to be effective. However, the revocation has to be made directly by the Offeror.
A
False
The revocation must be received by the offeree in order to be effective, but it can be done by a reliable third-party.
22
Q
True or False: if you have a separate binding collateral contract not to revoke, you cannot revoke.
A
True
E.g. keeping Offer open for a few days in exchange of something like £10.
23
Q
True or False: once someone has started to do the thing, the Offeror cannot revoke
A
True
24
Q
True or False: beginning performance under an offer for a bilateral contract can be an acceptance
A
True. A bilateral contract arises from an offer that can be accepted by a promise or by performance. Provided that the offeror has not stipulated a method of acceptance, once the offeree begins performance, the offer has been accepted and thus revocation of the offer becomes impossible for that reason.
25
In which ways can an offeree terminate an offer?
Express or implied rejection.
26
What is Express Rejection?
Statement by offeree that that they do not intend to accept the offer. The offeree cannot accept the offer in the future of the offeree changes their mind.
27
Does a Counteroffer count as a rejection?
The counteroffer is both a rejection and a new official offer.
28
True or False: A mere inquiry is a rejection.
False. A mere inquiry is not a rejection. The test is whether a reasonable person would believe that the original offer has been rejected.
29
True or False: because an agreement to keep the original offer open is often a collateral contract, a rejection of, or a counter offer to, the collateral contract does not terminate the original offer.
True.
30
True or False: An offer may be terminated by the offeree's failure to accept within the time specified in the offer. If no deadline was provided, then it will not terminate due to lapse of time.
False.
An offer offer is open for a certain amount of specified time and and offer is open for a reasonable amount of time when a time is not specified.
31
Types of offer termination by operation of law.
-Death of offeror or offeree;
-Destruction of subject matter;
-Supervening illegality; OR
-Failure of any condition contained in the offer.
32
Who can accept an offer?
-The person the offer can been made to.
-A member of a class to which an offer has been directed.
33
True or False: the offeree must know of the offer in order to validly accept it.
True.
E.g. guy who returned the dog without knowing of the reward. Can't claim it after.
34
What are the methods of acceptance for bilateral and unilateral contracts?
Any reasonable manner and by any medium reasonable under the circumstances.
Bilateral Contracts: By a promise to perform and by beginning the performance
Unilateral Contracts: by full performance.
35
True or False: If a particular method of acceptance required by the offeror and the offeree does not use that method, then there has been no valid acceptance.
True, BUT.
Exception: exception applies when the method of acceptance is different, but no less advantageous to the offeror.
36
True or False: Silence is a method of acceptance.
False. You need positive steps by offeree.
37
True or False: An offeree has an obligation to complete performance once they've gotten started.
False.
No need to keep going if you got started.
Note: different for unilateral contracts.
38
True or False: the offeree is not required to give the offeror notice that he has begun the requested performance, but is required to notify the offeror within a reasonable time after performance has been completed.
True.
39
Can an offer be accepted by conduct?
Yes. But the offeror must be aware of the offeree's conduct so as to satisfy the requirement of communication.
40
True or False: Acceptance of an offer to enter into a bilateral contract must be communicated to the offeror.
True
The offeror can waive the the requirement that acceptance of an offer must be communicated.
41
The Postal Rule
Acceptance by post creates a contract at the moment of posting, even if the letter gets lost in the post, unless: 1) the letter is not property addressed and stamped; 2) it was not reasonable for the acceptance to be communicated by post; or 3) the offer stipulates, expressly or by implication, that acceptance is not effective until received, that is, the parties have effectively contracted out of the postal rule.
Note: ONLY with acceptance, not rejection.
Note: does not apply with emails.
42
Battle of the Forms
Issue when both parties want to have the last word on the terms. Last party to make an offer on their own terms is likely to win the battle, because the other party will then have accepted the offer by their conduct in performing the contract.
43
Prevail clauses
Offeror can include a term in their draft contract stating that their terms will prevail over any terms which the offeree seeks to introduce. Rarely effective.
44
What are the 3 requirements for a contract to be formed?
Agreement + Consideration + Intent
45
Intention
The parties need to have intended to be legally bound by the contract.
46
Rebuttable presumptions of intention based on relationships of the parties.
-Domestic Situations
-Social Situations
Courts don't like to get involved. Usually there is no intent to be legally binding. Can be rebutted.
47
True or False: There is a strong presumption that partied to a commercial agreement intend to be legally bound.
True.
Can try to rebut this with 'subject to contract' language.
The Court will always look at the context.
48
As well as being required to have the necessary legal intent , a party must also have _____ to enter into it.
Capacity
49
True or False: Lack of capacity will result in the contract being unenforceable.
True
50
What are the 3 groups that lack capacity?
1) Minors - less than 18 years old
2) Mental Incapacity
3) Intoxication (only if the other party to the contract knew that they lacked capacity)
51
What are the exceptions to Minors lacking Capacity?
- Any contract entered into by a minor for necessary goods or services at a reasonable price will be binding. Defined by the Sale of Goods Act 1979.
-Employment Contracts - provided terms of the contract are of benefit to them.
-Contracts for the acquisition of a permanent interest in property, unless child repudiates the contract.
-The Minors Act 1987 - if the other party has transferred property to the minor, a court may require the minor to transfer the property back to them, if it is just and equitable to do so.
52
True or False: A person lacking mental capacity can ratify upon recovery
True
53
A contract needs: Agreement + ___ + Intent
Consideration!
54
What is consideration
An act, paying money, or a promise to pay money in exchange for another party's performance of a task or delivery of an item.
(form both sides!)
55
Define Executed & Executory Consideration
Executed - actually doing it (e.g. fill tank with gas)
Executory - promise to do something (e.g. electrician)
56
True or False: The person who makes the promise, that's the person who will want to enforce the promise, must give consideration in return.
False.
The person to whom the promise is made, that's the person who will want to enforce the promise, must give consideration in return.
57
Explain: Consideration must be sufficient, but need not be adequate
The Courts will assess if there was sufficient consideration between the parties, NOT whether it was a good deal.
58
Illusory Consideration
The Courts require consideration to have actual value, not while illusory.
59
True or False: Performance of an existing obligation owed under a contract to the person making the promise is not good consideration.
True
60
True or False: If the promise is given in return for work which goes beyond the original obligation, then the parties are effectively entering into a new contract.
True
Extra work for extra money.
61
True or False: a practical benefit counts as a consideration.
True
E.g. an electrician comes earlier for more money.
62
True or False: a promise to perform or performance of an existing contractual duty owed to a third party other than the promisor is not sufficient consideration for a promise given by the promisor.
False.
IT is sufficient consideration.
63
True or False: Performance of a duty required by statute will not amount to good consideration.
True
BUT - if they go above and beyond, then they may charge for additional services. E.g. police.
64
True or False: Acts that were performed or promises that were made prior to the contract being formed will not be sufficient consideration.
True
Exception: if the earlier act or promise is given at the promisor's request, and there was an implied understanding that payment would follow, past consideration may be sufficient. E.g. left bike at the shop to be fixed. Note: payment has to be legally enforceable.
65
True or False: English law does not recognise a promise to accept part payment of a debt.
True.
Exceptions: disputed in good faith, unliquidated claims, payment at a different place or earlier payment, third party makes the payment, the payment is made by different means, or a composition (amount in satisfaction for all debts).
66
Promissory Estoppel
Principal that gives legal effect to an agreement unsupported by consideration. It prevents a party going back on their promise to do something on the basis that they are 'estopped' from doing so. Only a defence.
E.g. accepting that you will be paid a letter amount.
67
Under the CRTPA, a third party has a right to enforce a term of the contract if:
The contract expressly provides the third party may enforce the term; OR
A term of the contract purports to confer a benefit on a third party and it appears from the terms of the contract the parties intended the term to be enforced by the third party.
68
Exclusions of the CRTPA
-employment contracts
-articles of association
-if the contract says it will not apply
69
A ___ relationship arises when a person, the 'principal,' authorises another person, the 'agent', to negotiate and enter into a contract on their behalf with third parties.
agency
Note: they don't have an interest, but they can act.
70
A method whereby a contractual right can be transferred to a third person outside of the terms of the original contract.
Assignment
Note: can't use it to transfer obligations
71
Subrogation
insurer stands in the shoes of the policyholder and has all the rights that the policyholder would have against the person responsible for the loss which gave rise to the claim
72
Collateral Contracts
contract between the promisor and a third party, running alongside the main contract. There is reliance on it.
73
Trusts
When you hold something on trust for another.
Don't need to use the word 'trust'
74
Types of Terms of a Contract
Conditions & Warranties
Each can be express terms or implied terms.
75
Difference between terms and representations
Representations - statement relied on to enter into contract
Term - statement of fact or law made during negotiations for a contract
76
The Courts will take the following factors into consideration when determining whether a statement is a term or a representation.
-The importance of the term
-At what stage in the contract negotiations was the statement made
-whether the party making the statement has special knowledge
77
Difference between a condition, a warranty, and an innominate term.
seriousness of term and remedies.
78
Condition
term that is so fundamental that it goes to the root of the contract
Breach is VERY serious
Can get damages or termination of contract
79
Warranties
Less important terms, not fundamental to the contract.
Breach does not bring contract to an end.
80
Innominate Terms
When you cannot tell if it's a condition or a warranty, Court will use innominate terms to fix it.
81
'Time of the Essence'
If time is of the essence in respect of an obligation, that obligation is a condition and late performance entitles the innocent party to terminate the contract.
If time is not of the essence, it is a Warranty, and the innocent parties only remedy is to claim damages
82
Express terms
Can be oral or written, a term will form part of a contract only if the parties have reasonable notice
83
Implied terms
Terms that are just part of the contract
84
The parole evidence rule
If a contract is written, a rule known as the pro evidence rule exist to help decide whether evidence of terms outside the written contract can be taken into account so as to alter the written terms. There is a general presumption that external evidence cannot add to, subtract from, contradict, or vary the terms of a written contract.
85
Entire agreement clause
A common term in written contracts which provides that the written document constitutes the entire agreement between the parties
86
Four ways in which contract terms can be implied:
1) statute;
2) the courts;
3) custom and usage; or
4) the course of dealings between the parties
87
Terms implied by statute
E.g. sale of goods act 1979. Consumer rights act 2015.
SGA - requirement that the goods in question be fit for the purpose for which such goods are generally used and free from minor defects, and also safe and adorable.
SGSA - the supplier will carry out the service within a reasonable time and with reasonable care and skill
Unfair contract terms act 1977 - makes it difficult for a seller to exclude liability for breach of these implied terms
88
Terms implied by the CRA in contract for the sale and supply of goods to consumers
-Match their description
-Be of satisfactory quality
-Be fit for purpose
89
Terms implied by the CRA in contract for the provision of services to consumers
-Carried out with reasonable care and skill
-Completed in accordance with any information which the consumer relies on (eg price quotations)
-Completed for a reasonable price
-completed within a reasonable time
90
Terms implied by the courts
If there is something parties didn’t think of to make it work, the court will imply terms. Only that which is necessary to make the contract work.
91
Terms implied by custom and usage
If there is an industry or market standard in respect who the particular area for the parties to the contract are dealing, this may be enough to imply terms into the contract that are normal for that particular industry or market
92
Terms implied from a course of dealings between the parties
If the parties have contracted on the same terms on several occasions, enough to show a regular and consistent course of dealings, then the court will imply the same terms into a contract between the parties
93
What if terms don’t make sense or the contract is incomplete?
The court will help, but won’t add their own views
94
True or False: the use of the words ‘to be agreed’ (or similar) in relation to an essential term is likely to prevent any contract coming into existence because it is uncertain
True
95
True or False: if the courts are satisfied that the parties intended should be bound by the terms of the contract as they stand, they are likely to try to give effect to this intention.
True
96
Severing uncertain terms
If the courts are unable to find sufficient certainty to enforce a term, they may be able to sever the uncertain term from the agreement and allow enforcement of the remainder.
Test: can the contract survive without the term? If not, the whole contract may be void.
97
Exclusion clauses
A term of a contract that attempts to exclude or limit the liability of one of the contracting parties
98
What three issues need to be considered when thinking of exclusion clauses?
1) clause needs to be incorporated into the contract
2) clause has to cover what has happened (‘construction’)
3) some clauses are excluded based on legislation
99
An exclusion clause may be incorporated into the contract at the time one or before the contract is concluded. The incorporation can be done in three ways:
1) by signature,
2) by notice, OR
3) custom or previous dealings
100
True or False: an exclusion clause must have been brought to the attention of the other party before or at the time the contract was concluded
True
101
An exclusion class has to cover the event and the loss they tried to claim. AKA:
The wording of the exclusion clause must be effective to exclude liability for the loss that has been suffered. The language needs to be clear and unambiguous.
102
Contra Proferentem Rule
If there is any ambiguity when interpreting an exclusion clause, the courts will interpret the ambiguity against the parties taking to rely on the clause
103
UCTA 1977
Unfair Contract Terms Act 1977
Regulates exclusion classes only in business to business contracts
104
True or False: any class that attempts to exclude liability for death or personal injury caused by negligence will be automatically void under the UCTA
True
105
True or False: any class that attempt to exclude liability for any other loss caused by negligence, for example, damage to property, will be void unless reasonable.
True - UCTA
106
True or False: liability for breach of the implied condition as to title under the SGA 1979 or SGSA 1982 cannot be excluded or restricted by contract
True
107
True or False: liability for breach of obligation as to compliance with description, quality, or fitness for purpose can be excluded or restricted by the contract
False. It cannot be excluded or restricted by a contract unless reasonable.
108
Reasonableness requirement - UCTA
The UCTA test of reasonableness requires the term in question two “have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made”
109
CRA 2015
Consumer Rights Act 2015
Applies solely to contracts between traders and consumers
110
CRA - prohibited terms
A traitor cannot exclude or limit the statutory implied terms as to title, compliance with description, quality, or fitness for purpose.
A trader cannot exclude or limit the statutory implied term under which a service must be provided with reasonable care and skill, or reliability for a breach of the Strat outré implied term under which a service must be provided within a reasonable time.
Prohibited terms are not binding .
111
CRA - unfair term
If it causes an imbalance between the parties
Courts will decide
112
CRA - transparency and legibility
Terms must be transparent and legible
113
List of potentially unfair terms under the CRA
- Death of our personal injury
- Where the consumer decides not to conclude or perform the contract
- Enabling the trader to terminate a contract of indeterminant duration without reasonable notice
-Enabling the trader to alter the terms of the contract unilaterally without a valid reason
- Giving the trader the discretion to decide the price payable under the contract after the consumer has become bound by it.
114
True or False: if a term is a core transparent term, even if it’s an unfair term per the CRA, the term will not be assessed for fairness.
True
115
Vitiating Factors
Factors that prevent a contract from being effective
116
The contract that meets all the normal requirements for validity may be void or voidable due to one of the following reasons
-Mistake (void)
-Duress (voidable)
-Undue influence (voidable)
—
-Illegality or contravention of public policy (void)
-Misrepresentation (voidable)
117
A contract can be void for a mistake either at common law or in equity. What are the six types of mistakes?
1) common or identical mistake
2) mutual mistake
3) unilateral mistake
4) mistake as to identity
5) Non Est Factum
6) rectification
118
True or False: common mistakes occur when the parties are in agreement, but both have made the same mistake.
True.
Typically, this will be in respect of the subject matter of the contract.
E.g. contract to buy ship is made, ship no longer exist. Both parties didn’t know.
119
True or False: mutual mistake occurs where the parties are mutually mistaken but about different things, they are at cross purposes
True
E.g. contractor by ship, both refer to a different ship.
120
Unilateral Mistake
Occurs when one party is mistaken as to the terms of the contract and the other party is aware of the mistake.
Note: the mistake cannot relate to the quality, if it does the contract might still be valid
121
When can a mistake as to identity occur?
Occurs when one party beliefs they are contracting with a person that the other party is pretending to be.
The courts then have to determine if the party would’ve still come to the contract had they known the true identity.
122
Non Est Factum
The doctrine that operates to protect those who sign a document in the mistaken belief that it represents something completely different from what it actually does represent.
-Must be fundamental and radical difference between what was signed and what the signatory thought they were signing, and
-The mistaken signatory must not have been careless in signing the document
Burden on the party seeking to rely on the defence
123
True or False: rectification is possible if the parties agree on the terms of a contract but, for whatever reason, they are recorded incorrectly when the contract is reduced to writing. The courts is open to rectify the mistake provided that the written document failed to express the common intention of the parties accurately. Common intention can be deduced from evidence.
True
124
Duress make a contract voidable. What are the types of duress?
- Illegitimate pressure
- Duress of the person (physical)
-Duress of goods (holding goods)
- Economic Duress (commercial pressure, many vary payable consideration)
125
Undue Influence (voidable)
Does not require bad faith
Someone puts pressure on the innocent party
Based on the relationship between the parties
126
What are the 3 ways of providing undo influence?
1) actual undue influence - requires the innocent party to prove that the other party overly influenced them into entering into a contract by improper pressure
2) presumed undue influence - requires a relationship of trust and confidence between the parties
3) third-party undue influence - contract may be set aside based on undue influenced by a third-party (e.g. Husband’s business, wife gets loan from bank)
127
True or False: courts may be able to sever the legal side of the contract
True
128
What is the consequence of a contract being illegal/contrary to public policy at formation and performance.
At formation - void
At performance - unenforceable by party committing the illegal act
129
Misrepresentation makes the contract voidable. What is required for a misrepresentation claim?
A false statement of fact or law to be made by one party to another to induce the them to enter into contract.
130
True or False: a misrepresentation can be oral, written, by conduct, and by silence.
False.
Silence will not usually amount to an actionable misrepresentation. The others, yes.
131
Uberrimae Fidei
(Utmost Good Faith)
Where it is incumbent on the parties to make full disclosure. This is an exception to misrepresentation.
The reason is that one of the parties has knowledge essential to the contract which is impossible for the other party to check.
132
Duty to correct
If something changes prior to finalising the contract, statements true of first, now not so much, need to be corrected.
133
True or False: the misrepresentation does not have to be the only reason the innocent party entered into the contract, but it needs to be a substantial reason.
True
That’s why it’s voidable
134
Types of misrepresentation
1) fraudulent (most serious-knowingly false)
2) negligent; and
3) innocent
135
Types of Misrepresentation Remedies
1) contract is voidable (for all)
2) recession (parties are put back into the position they would have been in had that misrepresentation never taken place)
3) Damages - not for innocent misrepresentation, but can in lieu of rescission.
136
4 situations where you cannot rescind.
-affirmation
-Lapse of time
-Impossibility of restitution
-third-party rights
137
True or False: Any attempt to exclude liability or any remedy for misrepresentation will be void unless it is reasonable
True
138
How does a contract come to an end.
Discharge and variation of contract.
139
Discharge by agreement
Some contracts will contain terms allowing for discharge before full performance.
Some contract will create a contract to end the contract.
Consideration must be present from all parties
140
True or False: detriments constitute consideration
True
If parties have unformed obligations and they create a contract to end a contract, there is enough consideration for the new agreement given that each party will suffer at detriment by giving up rights under the original contract.
141
If any party has already performed their obligations in full, any release of the other parties from their obligations is a kin to allowing them to walk away from a debt. An agreement to accept part payment of a debt is not binding because of lacking consideration, thus the following is needed.
A deed!
142
Variation
If parties wish to vary an existing contract, the legal position is the same as for discharge: all the parties must agree, and the agreement must be supported by consider consideration.
143
If a party promises not to enforce another party’s obligations under the contract, the court may conclude that the first party has ___ it’s right in respect of the non-performance.
Waived
144
True or False: the party waving their rights can reinstate their original terms by giving reasonable notice
True
145
Implied variation or waiver
It is common for parties to proceed as though there were a new understanding between them, even though nothing is actually said. The courts will often find that there is an implied variation to the contract. If there is no consideration, then there may still be an employed waiver.
146
A contract can be discharged by weight of performance. What is the general rule for performance?
The general rule known as ‘entire obligations rule’, is that only full (exact and precise) performance will discharge the contract.
147
The rule requiring for performance can have unfair results, so number of common exceptions have arisen, what are they?
-substantial performance (substantial but imprecise is okay)
-divisible contracts (divide large contract into pieces)
-partial performance acceptance by the other party (agreed and quantum merit)
-performance is prevented (innocent party can terminate)
148
When does a breach of contract occur?
When one party does not fulfil its obligations under the contract, through either:
-non-performance or defective performance (actual breach), or
-when it indicates it will not fulfil its obligations under the contract (anticipatory breach).
149
True or False: if the party in breach repudiates (refuses) the contract altogether, or if it breach as a condition, the innocent party can terminate the contract and claim damages
True
150
True or False: Termination for breach means rights and obligations which occurred before termination are no longer in place.
False.
Rights an obligations which have occurred before termination remain in place and the innocent party may be able to claim damages for breach.
151
If guts have been delivered under the contract, but there has been a breach of contract because the goods do not conform to the contract, and the buyer terminate the contract - they must take the following actions:
-The buyer is not obliged to pay for them; but
-The buyer must return them; and
-They can also claim damages for failure to supply goods in conformity with the contract.
152
If a voidable contract is rescinded, what happens?
It is treated as though it was never effective.
153
True or False: once a contract has been affirmed, the right to terminate is lost.
True
154
Define actual breach
A breach taking place at the time due for performance.
155
Define anticipatory breach
Breach occurs if before performance is due by either party, one party indicates (expressly or impliedly) that they are not going to fulfil their obligations under the contract.
156
If the anticipatory breach is a breach of condition or is otherwise fundamental to the contract, then…
The innocent party has an immediate right to accept the breach, terminate, and claim damages.
They don’t have to wait until performance is due.
157
What happens if a contract is frustrated? Define it.
If a contract is frustrated, it will be automatically discharged.
The crucial element of frustration is that the frustrating event occurs without any fault on the part of either of the parties due to external events.
158
Three types of frustration
1) subject matter destroyed
2) performance is now illegal
3) a subsequent event makes performance of the contract radically different from what the parties intended
E.g. coronation cases
159
What does not constitute frustration?
-More difficult or expensive to perform (especially if it is foreseeable)
-Self-induced frustration
-events that could be foreseen
160
True or False: the effect of frustration is to release the parties from any further liability to each other. No breach of contract is committed by either party for failing to complete their obligations under the contract, and the contract is effectively discharged from the moment. The frustrating event occurred.
True
161
LRFCA
Law Reform (Frustrated Contracts) Act 1943
-all sums paid before discharge can be recovered
-all sums payable before discharge cease to be payable
-A party may retain the amount of expenses
-A party may have to pay for a valuable benefit
Note: the court cannot order a party to cover a sum not already paid
162
When does the LRFCA not apply?
-Character parties or the carriage of goods by sea
-Contract of insurance; or
-Contracts for the sale of goods where the contract is frustrated by reason of the fact that the goods have perished.
163
Force Majeure Clauses
Closest allocating risk. Allows for the termination of a contract on the occurrence of an event outside the control of the parties which prevents performance of the contract, such as an outbreak of war or an act of God.
164
When things go wrong, you need a remedy. What are the types of remedies?
-Monetary remedies - damage
-Debt claim
-Equitable remedies
-Remedies under the Consumers Act 2015
-Restitutionary remedies
165
The usual remedy available to the innocent party is damages to compensate them for their loss. How are damages calculated?
Damages should be calculated to put the innocent party back into the position they would have been in had the contract been performed properly.
Not for punishment .
166
Types of Damages (remedy)
-Expectation interest - designed to put the innocent party back in the position they would have been and had the contract been performed. Either (1) how much it would take to cure the defect, or (2) the difference in value between what was actually provided and what should have been provided under the terms of the contract .
-Reliance Interest - aims to put the parties back into the position they would have been if they had never entered into the contract
-Non-Monetary Losses - damages awarded for physical injury, as long as the loss is not too remote from the breach of contract
-Punitive damages - damage damages to punish the party in breach (generally not awarded)
-Nominal damages - £1
167
When are damages assessed?
At the date the contract is breached.
168
If the loss is too remote, the courts will not allow recovery because:
-fairly and reasonably be considered to arise naturally from breach, or
-Have been in the reasonable contemplation of both parties to the contract as probable result of the breach.
Remoteness is considered at the time the contract was entered into, not when the breach.
169
The party in breach will be liable only for losses cost by their breach. What is the applicable test and what points need to be kept in mind?
Test: whether the breach of contract was an ‘ effective cause’ of the loss. The court will take a common sense approach.
Note:
-An intervening event which could reasonably have been expected will not break the chain of causation
-If the breach is one of two effective causes of the loss, the party in breach will still be liable for the loss
-if the innocent parties losses cost partly by an intervening act by a third-party, the courts may sometimes still award damages for that loss against the party in breach of contract
170
Contributory negligence
A concept usually associated with tort law, but there are situations in which a party is in breach of a contractual duty to take care which looks similar to a duty in tort.
171
Mitigation
When seeking damages, the innocent party must have taken reasonable steps to mitigate their loss. A party cannot recover losses that are a direct consequence of failure to mitigate their loss.
172
Liquidated damages and penalty clauses
In many cases, the parties to a contract will attempt to pre-determine what damages may be payable in the event of a breach by including the class to this effect in the contract.
173
Debt claim
The innocent party may be claiming the amount due under the contract rather than compensation for a breach of contract
174
Equitable Remedies and types
Granted at the discretion of the court of damages are perceived to be inadequate.
-specific performance (unusual, many defences)
-Injunction (not to breach contract)
-Recession (cancellation of avoidable contract)
175
Defences to claim for equitable remedies
-Unconscionable behaviour by the claimant
-Waiver
-Unreasonable delay in enforcing the claim
176
Remedies under the consumer act 2015
-Right to reject defective goods within 30 days after they were supplied
-If goods were not rejected or 30 days have passed, right to require the trader to repair or replace them at the trader’s expense
-right to require the traitor to reduce the price or to reject the goods in return for a refund if a repair or replacement is not successful or cannot be carried out in a reasonable time
177
Restitutionary remedies
Based on preventing unjust enrichment when one party has acquired a benefit at the expense of the other in an unjust manner
178
Account of profits
If damage is awarded under normal principles are not available or will not compensate the innocent party for their loss, the court may instead order that the party and breach account to the innocent party for the profits that they have made (exceptional cases)
SQE1
flashcards
Decks in class (15)
# Cards
-
Constitutional & Administrative Law & EU Law149
-
Ethics & Progessional Conduct46
-
Legal System of England & Wales42
-
Legal Services70
-
Contract178
-
Tort145
-
Dispute Resolution238
-
Business Law and Practice250
-
Land Law160
-
Property Practice390
-
Solicitor's Accounts65
-
Wills & the Administration of Estates315
-
Trusts136
-
Criminal Law99
-
Criminal Practice187
