Flashcards · 9084 · A Level Topic 3

Law of contract (A Level) flashcards

26 cards on A Level Topic 3, subtopics 3.1 to 3.4. Pick a subtopic or study them all.

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3.1 Formation of a valid contract

What is the difference between an offer and an invitation to treat?: An offer is a definite promise to be bound on certain terms. An invitation to treat invites offers, e.g. goods on a shelf (Pharmaceutical Society v Boots, 1953) or an advertisement (Partridge v Crittenden, 1968).
What did Carlill v Carbolic Smoke Ball Co (1893) decide?: An advertisement can be a unilateral offer to the whole world, accepted by anyone who performs the stated conditions; the deposit of £1,000 showed intention to be bound.
What is the mirror image rule, and what is a counter-offer?: Acceptance must match the offer exactly. A counter-offer rejects the original offer, which cannot then be accepted (Hyde v Wrench, 1840).
What is the postal rule?: Where post is a reasonable means of acceptance, acceptance is complete when the letter is posted, not when it arrives (Adams v Lindsell, 1818).
Can silence be acceptance?: No. Acceptance must be communicated; an offeror cannot impose silence as acceptance (Felthouse v Bindley, 1862).
What is consideration?: Something of value given by each party in return for the other’s promise. It must be sufficient but need not be adequate (Chappell v Nestle, 1960), and must not be past (Roscorla v Thomas, 1842).
What did Williams v Roffey Bros (1991) decide?: Performing an existing contractual duty can be good consideration for a promise of extra payment if the promisor obtains a practical benefit, there is no duress, and the promise was not obtained by fraud.
How is intention to create legal relations presumed?: Social and domestic agreements: presumed not intended (Balfour v Balfour, 1919), rebuttable, e.g. separated spouses (Merritt v Merritt, 1970). Commercial agreements: presumed intended.

3.2 Contents of a contract

What is the difference between a term and a representation?: A term is part of the contract, and breaking it is a breach. A representation is a statement that induced the contract but is not part of it. Relevant factors include importance (Bannerman v White, 1861) and special knowledge (Oscar Chess v Williams, 1957; Dick Bentley v Harold Smith Motors, 1965).
What is the difference between a condition and a warranty?: Condition: an essential term; breach allows the innocent party to end the contract and claim damages (Poussard v Spiers, 1876). Warranty: a minor term; breach gives damages only (Bettini v Gye, 1876).
What is an innominate term?: A term that is neither condition nor warranty: the remedy depends on how serious the consequences of the breach are (Hong Kong Fir Shipping v Kawasaki Kisen Kaisha, 1962).
How are terms implied by the courts?: In fact, where needed to give business efficacy or so obvious it goes without saying; or in law, for all contracts of a type (Liverpool City Council v Irwin, 1977).
Which terms does the Consumer Rights Act 2015 imply into consumer contracts for goods?: That goods are of satisfactory quality (s9), fit for a particular purpose made known (s10), and as described (s11).
When is an exclusion clause incorporated into a contract?: By signature (L’Estrange v Graucob, 1934), or by reasonable notice given before or at the time the contract is made (Olley v Marlborough Court Hotel, 1949: notice too late).
How does statute control exclusion clauses?: The Unfair Contract Terms Act 1977 (business contracts) bans excluding liability for death or personal injury caused by negligence and makes other exclusions subject to reasonableness. The Consumer Rights Act 2015 controls unfair terms in consumer contracts.

3.3 Discharge of a contract

What are the four ways a contract can be discharged?: Performance, agreement, frustration and breach.
What is the strict rule on performance and how is it softened?: Performance must be complete and exact (Cutter v Powell, 1795). Exceptions include substantial performance (Hoenig v Isaacs, 1952), divisible contracts and prevented performance.
What is frustration of a contract?: An event after the contract is made, not the fault of either party, makes performance impossible, illegal or radically different, e.g. the hall burning down in Taylor v Caldwell (1863).
When is a contract not frustrated?: When performance is just more difficult or expensive (Tsakiroglou v Noblee Thorl, 1962), when the main purpose can still be achieved (Herne Bay Steam Boat v Hutton, 1903), or when the frustration is self-induced (Maritime National Fish v Ocean Trawlers, 1935).
What is anticipatory breach?: One party indicates before performance is due that they will not perform. The other may sue at once, without waiting for the performance date (Hochster v De la Tour, 1853).

3.4 Remedies for breach of a contract

What is the aim of damages for breach of contract?: To put the claimant, as far as money can, in the position they would have been in if the contract had been performed.
What is the test for remoteness of damage in contract?: Hadley v Baxendale (1854): losses are recoverable if they arise naturally from the breach, or were reasonably in the contemplation of both parties when the contract was made.
What is the difference between expectation and reliance loss?: Expectation: the benefit the claimant expected from performance. Reliance: money wasted in relying on the contract, e.g. preparation costs (Anglia Television v Reed, 1972).
Can damages be awarded for disappointment in contract?: Yes, where the contract’s purpose is to provide pleasure or relaxation, such as a holiday (Jarvis v Swans Tours, 1973).
What is the difference between liquidated damages and a penalty clause?: Liquidated damages: a sum fixed in the contract, enforceable. A penalty is unenforceable if it is out of all proportion to the innocent party’s legitimate interest in performance (Cavendish Square Holding v Makdessi, 2015).
What are specific performance and an injunction?: Equitable remedies, given at the court’s discretion where damages are inadequate. Specific performance orders the contract to be carried out (Beswick v Beswick, 1968); an injunction orders a party not to do something (Warner Brothers v Nelson, 1937).