Contract Law

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Transcript of Contract Law

  • www.pearson-books.com

    Cover Getty Images

    The bestselling Elliott and Quinn series of law textbooks includes reliable and concise texts on Criminal Law, Contract Law, Tort Law and the English Legal System. The authors draw on their extensive experience to bring an unbeatable combination of authority, readability and clarity to this series of student-friendly texts. Written in a lively and engaging style, each book:

    explains the relevant law logically and clearly helps students to succeed in assessments and improve their legal

    skills looks at the context of law-making and its future direction

    It is essential for students on law and commercial degree programmes to have a clear understanding of contract law, yet the subject can be diffi cult to grasp for the newcomer. This book clarifi es the essential concepts behind the law, making it easier for you to understand and apply the legal rules. Each chapter also includes discussion of problems with the current law and also considers the forces affecting contract law today, such as the increase of e-commerce and the growing impact of Europe, and how the law may need to reform to meet modern needs.

    NEW TO THIS EDITION

    Leading case boxes help you identify and remember key cases and rulings

    Chapter introductions identify core themes and concepts to remember

    Topical issue boxes to help put the legal system into context More diagrams to visually explain points and processes of law

    LEGAL DEVELOPMENTS

    Recent important changes to the law have been fully analysed, including:

    An examination of unfair bank charges The impact of pre-nuptial contracts following a divorce The most recent House of Lords decision on remoteness of damages

    (Transfi eld Shipping v Mercator Shipping (2008)) The Consumer Protection from Unfair Trading Regulations (2008)

    Contract LawSEVENTH EDIT ION

    Catherine Elliott & Frances Quinn

    ABOUT THE AUTHORS

    Catherine Elliott is a qualifi ed Barrister and Lecturer in Law at City University. She has extensive experience of teaching law.

    Frances Quinn is an award-winning journalist, with a particular interest and experience in law.

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    SEVENTH EDIT ION

    Contract LawSEVENTH EDIT ION

    Catherine Elliott & Frances Quinn

    Elliott & Quinn Series

    CASE

    NA V I G AT

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    POWERED BY

    Visit www.pearsoned.co.uk/casenavigator for unique online support that helps improve case reading and analysis skills in Contract Law. The LexisNexis element of Case Navigator is only available to those who currently subscribe to LexisNexis Butterworths services.

    POWERED BY

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    This text is supported by mylawchamber which includes:

    For students: regular case and legislation updates, web-links, interactive self-test questions, key term fl ashcards and a glossary.

    For lecturers: a testbank of multiple-choice questions that can be used to assess students progress.

    All located at:www.mylawchamber.co.uk/elliottquinn

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  • Contract Law

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  • Contract Law7thedition7th

    edition

    Catherine Elliott andFrances Quinn

    CONL_A01.qxd 4/1/09 2:25 PM Page iii

  • Pearson Education Limited

    Edinburgh GateHarlowEssex CM20 2JEEngland

    and Associated Companies throughout the world

    Visit us on the World Wide Web at:www.pearsoned.co.uk

    First published in Great Britain 1996Second edition published 1999Third edition 2001Fourth edition 2003Fifth edition 2005Sixth edition 2007Seventh edition 2009

    Pearson Education Limited 1996, 2003, 2005, 2007, 2009

    The rights of Catherine Elliott and Frances Quinn to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

    All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 610 Kirby Street, London EC1N 8TS.

    Crown Copyright material is reproduced with the permission of the Controller of HMSO and the Queens Printer for Scotland.

    Law Commission Reports are reproduced under the terms of the Click-Use Licence.

    ISBN: 978-1-4058-9935-2

    British Library Cataloguing-in-Publication DataA catalogue record for this book is available from the British Library

    Library of Congress Cataloging-in-Publication DataElliott, Catherine, 1966

    Contract law / Catherine Elliott and Frances Quinn. 7th ed.p. cm.

    ISBN 978-1-4058-9935-2 (pbk.)1. ContractsEngland. 2. ContractsWales. I. Quinn, Frances. II. Title.KD1554.E44 2009346.4202dc22

    2009003485

    10 9 8 7 6 5 4 3 2 113 12 11 10 09

    Typeset in 9.5/13pt Stone Sans by 35Printed and bound by Ashford Colour Press Ltd., Gosport

    The publishers policy is to use paper manufactured from sustainable forests.

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  • v

    Brief contents

    Guided tour xivPreface xviiAcknowledgements xviiiTable of cases xixTable of statutes xxixTable of statutory instruments xxxiTable of EC legislation xxxii

    Introduction 1

    Part 1 The formation of a contract 9

    1 Offer and acceptance 112 Certainty 523 Intention to create legal relations 594 Capacity 695 Formalities 826 Consideration 88

    Part 2 The contents of a contract 119

    7 Terms of the contract 1218 Unfair contract terms 149

    Part 3 Vitiating factors 183

    9 Misrepresentation 18510 Mistake 20711 Illegality 23412 Duress and undue influence 251

    Part 4 The rights and liabilities of third parties 271

    13 Third parties 273

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  • Brief contents

    Part 5 Discharge and remedies 295

    14 Discharge of contract 29715 Remedies 330

    Part 6 Consumer protection 387

    16 Consumer contracts 389

    Appendix: Answering examination questions 415Glossary 421Index 425

    vi

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  • vii

    Contents

    Guided tour xivPreface xviiAcknowledgements xviiiTable of cases xixTable of statutes xxixTable of statutory instruments xxxiTable of EC legislation xxxii

    Introduction 1Why do we need contract law? 2The origins of contract law 3Freedom of contract 4Contract and fairness 4The objective approach 5The Human Rights Act 1998 6The influence of Europe 7Reading list 7Reading on the internet 8

    Part I THE FORMATION OF A CONTRACT 9

    1 Offer and acceptance 11Unilateral and bilateral contracts 12Offer 12Invitations to treat 14How long does an offer last? 17Acceptance 23Acceptance must be communicated 29Exceptions to the communication rule 29Ignorance of the offer 34Cross offers 34Time of the formation of the contract 35Offer and acceptance implied by the court 35Auctions, tenders and the sale of land 36How important are offer and acceptance? 41Problems with offer and acceptance 42

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  • Contents

    Answering questions 44Summary of Chapter 1 47Reading list 50Reading on the internet 51

    2 Certainty 52Provision for clarification 54Terms implied by statute 54Previous course of dealing 55Reasonableness 55Custom 55The officious bystander 55Removing minor uncertain terms 56

    Answering questions 56Summary of Chapter 2 57Reading list 58

    3 Intention to create legal relations 59Social and domestic agreements 60Commercial agreements 62How important is intention to create legal relations? 66

    Answering questions 66Summary of Chapter 3 67Reading list 68

    4 Capacity 69Minors 70Mental incapacity 75Corporations 76

    Answering questions 77Summary of Chapter 4 79Reading list 81Reading on the internet 81

    5 Formalities 82Contracts which must be made by deed 83Contracts which must be in writing 83Contracts which must be evidenced in writing 84

    Answering questions 86Summary of Chapter 5 86Reading on the internet 86

    viii

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  • Contents

    ix

    6 Consideration 88What is consideration? 89Performance of an existing duty 95Waiver and promissory estoppel 102Agreement by deed 107Consideration and conditional gifts 108Problems with consideration 108The future of consideration 110Reform 111

    Answering questions 112Summary of Chapter 6 114Reading list 117Reading on the internet 117

    Part 2 THE CONTENTS OF A CONTRACT 119

    7 Terms of the contract 121Express terms 122Oral statements 122Written terms 125Collateral contracts 127Oral and written statements 128Interpretation of express terms 128

    Implied terms 131Terms implied in fact 131Terms implied in law 134Terms implied by custom 135Terms implied by trade usage 135Entire agreement clauses 135

    The relative importance of contractual terms 137Conditions 137Warranties 138Innominate terms 138

    Answering questions 141Summa