UNIVERSITY OF COLOMBO, SRI LANKA FACULTY OF LAW

BACHELOR OF LAWS EXAMINATION, YEAR II - 2019 Law of Contracts

(Three Hours) Total Number of Questions: 07

Answer only FOUR (04) questions including question No. 1. (Candidates will be penalized for illegible handwriting.)

1. (i) Comment on the decision of Central London Property Trust Ltd. v. Hightrees House Ltd. [1947] KB 130.

(ii) Sheena who wished to go on a pilgrimage to Anuradhapura on 01.07.2019 reserved a villa online on 15.06.2019. However, on 16.06.2019 the hotel was badly damaged due to a tropical cyclone. Sheena now wants to get back the money she has paid as advance for her booking of the villa.

Advise Sheena.

(iii) Sheena owns a jewellery shop in Jaffna. Radha introduces herself as a famous film producer by the name ' Y' and purchases a diamond ring paying through a cheque. Sheena believes her statement and accepts the cheque that is later not paid for.

Discuss as to whether Sheena has any contractual rights.

(iv) What is meant by blue pencil rule? Explain giving an illustration.

(v) S offers to sell paddy to R on his printed form containing terms. R accepts on his printed form containing conflicting terms. S makes clarifications using his form and R clarifies by sending another form. In the end, a contract comes into existence, but the parties wonder on which terms the contract is made.

Discuss quoting authorities.

2. X contracts with Y, a house builder, to construct a hcjuse for him as per a model house shown to him within a period of six months. Discuss the following circumstances applying the law relating to discharge of contract: (i) One month after the contract and by the time the foundation stone for the building is to be

laid, the Government announces by way of a gazette notification prohibiting any development projects in the particular land in which the house is to be built.

(ii) X informs Y 2 weeks after the contract that he no longer requires the house and goes abroad. However, Y continues with the work and completes the house as per the contract.

(iii) The construction is completed, but X finds that the square area of the house is lesser than the proportional square area of the model house shown to him. The contract between X and Y refers to the model house and silent as to the square area.

3. 'It is not an easy task to determine, at the beginning of the contract, whether the contractual terms are conditions or warranties. The most effective way of differentiation between the terms is evaluating the consequences when a breach occurs'.

Do you agree with the above statement? Critically analyze the above statement in the light of judgments.

4. The threshold of valuable consideration is very low and it may be even equivalent to the value of a chocolate wrapper. In this sense, there is no substantive difference between valuable consideration and justa causa and these two are centred around the same notion. Compare and contrast consideration and justa causa citing case law illustrations.

5. (i) Ravi, an undergraduate, inherits a house from his parents who died in a car accident. Ravi wants to sell the house and consults Sunil, their family lawyer. Acting on Sunil's advice, Ravi sells the house to Senaka. Later Ravi comes to know that he has sold the property at undervalue and Senaka is a friend of Sunil.

Advise Ravi.

2

(ii) Suriya Flora (SF) is a flower exporting company^n Bandarawela. SF plans to modernize their nursery and seeks professional advice from Green Agricultural Company (GAC) to develop their new project. SF is directed to consult Sunil who is worlcing as a senior consultant at GAC. Sunil visits the nursery premises and advises SF to plant anthurium instead of roses saying that anthurium has high demand in the export market. GAC agrees with SF that Sunil would visit SF nursery once a month for two years. SF starts planting anthurium relying on Sunil's advice. After few months SF's modern flower project becomes futile and they get to know that climate of the nursery area in Bandarawela is unsuitable for mthurium. SF had invested one million for modernizing and struggles with financial difficulties.

Advise SF.

6. Rehan, a software developer is employed at X Co Ltd (X) and the contract: of employment provides, inter alia, a non-competition clause to the effect that Rehan cannot work for any Sri

•Lankan competitor of X for 2 years after his termination of services. Rehan resigns while he is a member of a team that is working on the development of a new software for automated vehicles. After 2 months it is found that Rehan is working for Y Co Ltd (Y), a Sri Lankan competitor of X. Soon Y launches driver-less cars.

(i) X seeks your advice as to whether they can successfully sue Rehan. Advise them quoting relevant authorities.

(ii) Would your answer be different if Y is a foreign company and the driver-less car is for foreign market?

(iii) Would your answer be different if the period under the non-competition clause is 10 years and not 2 years?

7. (i) The use of standard forms in contracts by one party affects the freedom of contract of the other. Do you agree with the above statement? Discuss using practical illustrations.

(ii) Discuss the following applying the law relating to damages:

Rehan contracts with Senaka to repair the roof of his house.

(a) Even after repairs there is leak in few places during heavy rain. Rehan leaves the house asking Senaka to re-do the work. Rehan returns when it is re-done and finds his valuable furniture and some electrical items are damaged due to the roof leak. Rehan sues Senaka the rental for his stay elsewhere during the period of re-doing and for the damages caused to the mrniture and electrical items. Will Rehan succeed?

(b) Senaka removes the old roofing tiles to replace with new. hi the meantime, neighbouring houses lit fireworks for a festival and some sparks fall inside Rehan's house damaging his valuable sofa. Rehan warns Senaka that the price of the sofa will be deducted from the contractual price for roof repairs. Can he do so?

*****

4

1