Contract Law (Q&A Revision Guide)

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Law Express Question and Answer: Contract Law (Q&A Revision Guide)ContraCt Law
Develop your legal skills
Written to help you develop the essential skills needed to succeed on your course and prepare for practice.
Available from all good bookshops or order online at: www.pearsoned.co.uk/law
97814479226509781408261538
97814479051419781408226100
ContraCt Law 3rd edition
Marina Hamilton Latterly Associate Dean of the Law School at the University of Hertfordshire
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Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk
First published 2012 Second edition published 2014 (print and electronic) Third edition published 2016 (print and electronic)
© Pearson Education Limited 2012 (print) © Pearson Education Limited 2014, 2016 (print and electronic)
The right of Marina Hamilton to be identified as author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988.
The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.
The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author’s and the publishers’ rights and those responsible may be liable in law accordingly.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.
Contains public sector information licensed under the Open Government Licence (OGL) v2.0. www.nationalarchives .gov.uk/doc/open-government-licence.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978–1-292–06694–3 (print) 978–1-292–06696–7 (PDF) 978–1-292–06697–4 (ePub) 978-1-292-06698-1 (eText)
British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library
10 9 8 7 6 5 4 3 2 1 19 18 17 16 15
Front cover bestseller data from Nielsen BookScan (2009–2013, Law Revision Series).
Print edition typeset in 10/13 Helvetica Neue LT W1G by 35 Print edition printed and bound in Malaysia by CTP-PJB
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
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Acknowledgements vii What you need to do for every question in Contract Law viii Guided tour x Guided tour of the companion website xii Table of cases and statutes xiii
Chapter 1: Formation of a contract 1 Chapter 2: Consideration 37 Chapter 3: Privity 67 Chapter 4: Express and implied terms 79 Chapter 5: Misrepresentation 117 Chapter 6: Mistake 147 Chapter 7: Duress and undue influence 167 Chapter 8: Discharge, performance and breach 187 Chapter 9: Frustration 207 Chapter 10: Remedies for breach of contract 227
Bibliography 247 Index 251
vi
Supporting resources Visit the Law Express Question&Answer series companion website at www.pearsoned.co.uk/lawexpressqa to find valuable learning material including:
Additional essay and problem questions arranged by topic for each chapter give you more opportunity to practise and hone your exam skills.
Diagram plans for all additional questions assist you in structuring and writing your answers.
You be the marker questions allow you to see through the eyes of the examiner by marking essay and problem questions on every topic covered in the book.
Download and print all Before you begin diagrams and Diagram plans from the book.
Also: The companion website provides the following features:
Search tool to help locate specific items of content.
Online help and support to assist with website usage and troubleshooting.
For more information please contact your local Pearson sales representative or visit www.pearsoned.co.uk/lawexpressqa
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Marina Hamilton
Publisher’s acknowledgements Our thanks go to all reviewers who contributed to the development of this text, including students who participated in research and focus groups that helped to shape the series format.
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viii
What you need to do for every question in Contract Law
Contract law is predominantly taught and assessed through problem scenarios. These scenarios can be long and the facts complicated: for instance, a question on offer and acceptance can have a series of communications between the parties involved. It is essential that you identify the legal issues raised by the question, so ask yourself what the status of each communication is, and what is the authority for such an assertion. Having a plan before you write will assist with this. Ensure that you do not retell the facts of the problem: focus on the issues raised by those facts. Once you have identified, discussed and supported your legal argument, apply that analysis back to the facts of the question. There will be multiple issues in contract problems: deal with them logically and ensure that the
HoW To uSE THiS Book
Books in the Question and Answer series focus on the why of a good answer alongside the what, thereby helping you to build your question answering skills and technique.
This guide should not be used as a substitute for learning the material thoroughly, your lecture notes or your textbook. It will help you to make the most out of what you have already learned when answering an exam or coursework question. Remember that the answers given here are not the only correct way of answering the question but serve to show you some good examples of how you could approach the question set.
Make sure that you regularly refer to your course syllabus, check which issues are covered (as well as to what extent they are covered) and whether they are usually examined with other topics. Remember that what is required in a good answer could change significantly with only a slight change in the wording of a question. Therefore, do not try to memorise the answers given here, instead use the answers and the other features to understand what goes into a good answer and why.
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ix
answer has a natural flow. Equally with essays: answer the question set. Do not write everything you know on that topic area. For instance, if an essay concerns silence and misrepresentation, you will not gain marks for discussing statements of opinion.
A strong introduction can often focus your structure and attention on the question set. A conclusion draws together all the lines of argument and analysis into a succinct answer to the issues raised by that question.
The best way to cope with large amounts of case law is to learn your authorities as you learn the principle concerned. One of the commonest criticisms of contract law papers is a lack of supporting authority for the point made.
WHAT YOU NEED TO DO FOR EVERY qUESTION IN CONTRACT LAW
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x
Guided tour
Before you begin – Use these diagrams as a step-by-step guide to help you confidently identify the main points covered in any question asked. Download these from the companion website to add to your revision notes.
What you need to do for every question in Contract Law
Contract law is predominantly taught and assessed through problem scenarios. These scenarios can be long and the facts complicated: for instance, a question on offer and acceptance can have a series of communications between the parties involved. It is essential that you identify the legal issues raised by the question, so ask yourself what the status of each communication is, and what is the authority for such an assertion. Having a plan before you write will assist with this. Ensure that you do not retell the facts of the problem: focus on the issues raised by those facts. Once you have identified, discussed and supported your legal argument, apply that analysis back to the facts of the question. There will be multiple issues in contract problems: deal with them logically and ensure that the
HoW to use tHis book
Books in the Question and Answer series focus on the why of a good answer alongside the what, thereby helping you to build your question answering skills and technique.
This guide should not be used as a substitute for learning the material thoroughly, your lecture notes or your textbook. It will help you to make the most out of what you have already learned when answering an exam or coursework question. Remember that the answers given here are not the only correct way of answering the question but serve to show you some good examples of how you could approach the question set.
Make sure that you regularly refer to your course syllabus, check which issues are covered (as well as to what extent they are covered) and whether they are usually examined with other topics. Remember that what is required in a good answer could change significantly with only a slight change in the wording of a question. Therefore, do not try to memorise the answers given here, instead use the answers and the other features to understand what goes into a good answer and why.
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What to do for every question – Identify the key things you should look for and do in any question and answer on the subject, ensuring you give every one of your answers a great chance from the start.
Answer plans and Diagram plans – A clear and concise plan is the key to a good answer and these answer and diagram plans support the structuring of your answers, whatever your preferred learning style.
2Consideration
How this topic may come up in exams To be enforceable in law a promise must be supported by sufficient consideration. Questions will analyse what will amount to sufficient consideration and often what will not. You must be confident with the application of the rules as regards past consideration, performance of an existing public or private contractual duty. Ensure you fully understand the different definition of sufficiency when dealing with the variation of an agreed term. The exceptions to the rule that part payment of a debt cannot satisfy the whole debt are a favourite area of examiners. Focus is particularly put on promissory estoppel and its limitations.
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Before you begin It’s a good idea to consider the following key themes of formation of a contract before tack- ling a question on this topic.
A printable version of this diagram is available from www.pearsoned.co.uk/lawexpressqa
Has there been an OFFER?
Has there been ACCEPTENCE?
Question 2
43
Answer plan Focus closely on the application that the bonus for the cake would amount to past
consideration. Consider whether the monthly increase is for the performance of an existing contractual
duty.
the amount due to Gastro Publicans Association will depend on whether or not the corks form part of the consideration paid for the book. Focus the discussion on the court’s requirement of sufficiency rather than adequacy of consideration.
evaluate whether the payment to the police is for services they provided over and above those required as part of their public duty.
Question 2 Ramsey White is the owner of a well-known local gastro pub, the Fox and Grapes. Ramsey promises Michel, his chef, a £50 bonus for the wedding cake he specially prepared for Ramsey’s daughter’s wedding last week. He has also promised Michel £100 a month extra if he will stop moaning about the extra work involved in corporate bookings. The Gastro Publicans Association publish the Great Gastro Pub Guide which Ramsey has been selling for £1 and three wine corks from bottles consumed on the premises. Ramsey has agreed to pay the Gastro Publicans Association 10 per cent of the money made from sales of the book in return for his inclusion in the publication. The Gastro Publicans Association are claiming that 10 per cent of the sale price is 10 per cent of the book price and three bottles of wine, representing an average of £6–10 rather than 10p per copy. Ramsey has also received a £5,000 bill from Yorkester Metropolitan Police Force to cover the extra costs incurred, at his request, in providing protection for the leader of a local right-wing extremist party during their annual conference dinner held at the Fox and Grapes. Advise Ramsey as to whether or not he has a legal obligation to pay any of these sums in the light of the doctrine of consideration.
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How this topic may come up in exams – Understand how to tackle any question on this topic by using the handy tips and advice relevant to both essay and problem questions. In-text symbols clearly identify each question type as they occur.
Diagram plan
A printable version of this diagram plan is available from www.pearsoned.co.uk/lawexpressqa
Answer
Promises are only enforceable if they are supported by consideration. Consideration is that which is given in return for a promise which has sufficient value in law. Consideration cannot be past, nor can the performance of an existing contractual or public duty provide consideration for a fresh promise.1
Consideration must be given in return for the promise or act of the other party. If there is no consideration, then the promise is a gratuitous one which may impose a moral but not a legal obliga- tion. A promise that is made to reward an act already completed is also unenforceable as the consideration is past. The consideration does not support the promise made as it has already been given. In Re McArdle [1951] Ch 669 the promise of reimbursement from other family members, who had an interest in the property, of expenses incurred in making house improvements by the residents was made after the work had been done. Therefore the promise was unenforce- able, as a gratuitous promise was unsupported by consideration and not made under deed.2 The promise to pay a bonus for the baking of the wedding cake was made after the cake had been made and presented at the wedding. The offer of the bonus was made after
1 The marker immediately knows you have recognised the pertinent legal issues raised by the question.
2 This additional point raised demonstrates that such a gratuitous promise could be enforceable but only if made under deed.
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Essay question
Problem question
answer
a misrepresentation is an unambiguous statement of existing fact which has induced the other party to enter a contract. the effect of a misrepresentation is to render the contract voidable, giving the innocent party the potential remedy of rescission and/or damages. it is prudent in negotiations for parties not to get carried away in closing the deal by making extravagant claims or promises which they cannot later fulfil.1
the definition of misrepresentation given above limits an action to statements of existing fact. this would preclude liability for mere ‘sales talk’ (Dimmock v Hallet (1866) Lr 2 Ch app 21). Care has to be taken by the maker of the statement that claims about the product are not precise enough to be misrepresentations of fact. this dividing line can be difficult to draw at times, as can be the distinc- tion between a statement of fact and a mere statement of opinion.2 Venturing an opinion on subject matter beyond the usual experience and expertise of the maker will not amount to a misrepresentation
1 the introduction highlights the potential liability that may arise if promises as to standards are made, and allows the answer then to develop on the balance between sales talk and misrepresentation.
2 this practical articulation of the problem faced in negotiations demonstrates to the marker an understanding of the legal principles in their real-world context.
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Answer with accompanying guidance – Make the most out of every question by using the guidance to recognise what makes a good answer and why. Answers are the length you could realistically hope to produce in an exam to show you how to gain marks quickly when under pressure.
Case names clearly highlighted – Easy-to- spot bold text makes those all-important case names stand out from the rest of the answer, ensuring they are much easier to remember in revision and an exam.
Bibliography – Use this list of further reading to really delve into the subject and explore areas in more depth, enabling you to excel in exams.
Make your answer stand out – Really impress your examiners by going the extra mile and including these additional points and further reading to illustrate your deeper knowledge of the subject, fully maximising your marks.
Don’t be tempted to – Points out common mistakes ensuring you avoid losing easy marks by understanding where students most often trip up in exams.
6 Mistake
160
uncertainties created by cases such as Ingram v Little [1960] 3 all eR 332, which appear to contradict the reasoning in both Philips v Brooks and Lewis v Averay. in this case, Hudson had been sold a car by a third party who had arranged finance while in the dealership on hire-purchase terms with shogun. shogun had been contacted by the dealership to arrange the finance and therefore were not trans- acting face to face. the client in the dealership had said his name was Patel and had given details which were verified as creditworthy. shogun was able successfully to claim that the HP agreement was void on the grounds of mistake as they had only intended to contract with Mr Patel and no one else.
Common mistake and unilateral mistake share the same character- istic, as the mistake has to be a fundamental one. the issue of a mistake as to quality being insufficient for the doctrine to operate has similar reasoning to a mistake as to attributes with regard to identity. the doctrine has to have narrow application, as the losses will be borne by innocent third parties.11
11 a strong conclusion drawing together the analysis from the main body of the work and addressing the core elements to the question.
Make your answer stand out
add depth to your analysis by demonstrating the developments of the decision in the Great Peace case as regards common mistake as to quality.
Consider the restriction put on the potential to consider a common mistake in equity following the Great Peace case. Pawlowski, M. (2002) Common mistake: law v equity. NLJ, 152: 132 will assist in your understanding of this point.
Read MacMillan, C. (2004) Mistake as to identity clarified? LQR, 120: 369. this academic article will support your analysis on the effect of the Shogun case, adding depth to your analysis.
Consider that, although the identity of the other party will only render the contract void if it is fundamental to the contract, this will not be the case for a unilateral mistake as to terms of the contract (Hartog v Colin & Shields [1939] 3 all eR 566).
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Bibliography
Andrews, N. (2001) Strangers to justice no longer – the reversal of the privity rule under the Contracts (Rights of Third Parties) Act 1999. Cambridge Law Journal 353.
Atiyah, P.S. (1986) Consideration: a re-statement, in Essays on Contract. Oxford: Oxford University Press: 179.
Baatz, Y.…