Contract - Consolidation

What is the effect of economic duress on a contract?

the extra money paid because of duress can be returned (but the amount of money they were meant to pay will still need to be paid)

When should a bank be put on notice of potential undue influence?

1. relationship between the client and debtor was non-commercial

2. the loan was not for their joint benefit.

What are the remedies for breach of implied conditions from SGA?

- these are conditions, so technically breach of condition

- however, if the breach is so slight that it would be unreasonable for the buyer to reject the goods and repudiate the contract, the breach should be treated as a breach of warranty

- burden of proving breach is slight that buyer cannot reject the goods falls on the seller

What remedies are available for breach in a sale of goods under CRA?

- Short-term right to reject (30 days from passing ownership)

- Repair or replacement (unless impossible or disproportionate)

- Either price reduction or final right to reject

When can silence be misrepresentation?

- representor should put right a statement they made before

- misleading half-truths

- in contracts of utmost good faith/fiduciary relationships

is restitution possible when a buyer wants to rescind a contract to buy a business, and they have already made extensive alterations?

no

When will an auctioneer be making a unilateral contract?

at an auction with no reserve price

1. auctioneer made an offer of a unilateral contract when he said that the goods would be sold to the highest bidder

2. making a promise to sell to whoever made the highest bid

3. if he did not then sell to the highest bidder so he will be in breach of contract

When is acceptance of a contract deemed communicated?

when it is received

postal rule is an exception to this - accepted when sent

relationship between past consideration conferring practical benefit rule and duress:

- past consideration can be valid where it confers practical benefit

- but this will not apply where there is duress

Hong Kong Fir test for innominate terms:

look at the consequences of breach of this innominate term and ask:

"Does the breach deprive the other party of substantially the whole benefit which it was intended that he should obtain from the contract?"

yes = term is to be treated like a condition

no = term is to be treated like a warranty

e.g., cannot use ship for 3 months of the 1 year charter - breach of warranty as they can still use it for 9 months

When can a person claim from a guarantor?

guarantor is under secondary obligation

- to enforce against guarantor, must have first tried and failed to recover arrears from original debtor

what remedy is C entitled to if D broke an implied term of the contract?

a right to reject the goods and claim a good refund

does not have to accept offer of repair

how is the court likely to intepret ambiguity in an exclusion clause?

strictly against the party wishing to rely on the exclusion (contra proferentem rule)

What are the formalities for guarantee of a loan?

must be evidenced in signed writing

term vs representation

representation is an inducement to enter the contract, but not intended to be a term itself

false representation = misrepresentation, not breach of contract

What is the best option when claiming for a breach of contract where money is still owed?

claim for the amount of money (debt claim) rather than damages

What are negotiating damages and when can they be used?

the hypothetical fee a breaching party would have paid to be released from a contractual obligation, rather than actual financial loss

- will only be awarded where there is no financial loss other than the chance to negotiate the release (e.g., will not be awarded if there has also been loss of customers)

What is the rule about what money is recoverable for frustrated contracts?

- money paid before frustration is recoverable

- money to be paid before frustration is no longer payable

but court has discretion to allow a party to retain/recover amounts to make up for expenses incurred in preparation

When will a penal clause be a valid liquidated damages clause and not an invalid penalty clause?

will only be enforceable if it protects the party's legitimate interest, and amount payable is not out of proportion to that

When will a contract be frustrated?

supervening event renders performance impossible/illegal/radically different from what was originally planned

if the even only affects part of the contract's purpose, and the rest can be carried out, will not apply (eg can cruise around the fleet even when the King is ill and cannot see him)

Which terms cannot be excluded under CRA?

goods to be of satisfactory quality

goods to be fit for particular purpose

goods to be as described

goods to match a sample

trader to have right to supply the goods

A client owns a pub and employs someone to manage it. The manager is the exclusive face of the business; his name is on the bar and the licence of the pub. The client explicitly instructed the manager not to make any purchases outside of bottled ales and mineral waters, but the manager entered into an agreement for the purchase of cigars and in the event did not pay for them. The seller of the cigars discovered the client is the actual owner of the business and is suing the client for the price.

Buying cigars is within the usual authority of pub managers and so the manager had implied actual authority to buy them

when can C reclaim pre-contract expenditure from D who has breached/repudiated?

can recover wasted expenditure incurred from reliance on the contract from the other party, if the other party breaches/repudiates

but only if those costs were known or reasonably foreseeable to the breaching party at the time of contracting

can offer be revoked by 3rd party?

yes, if communicated by credible third party

even without authorisation

once recipient of offer is aware of the revocation, can no longer accept the offer

what is the effect of mistake about someone's attributes eg creditworthiness?

contract can be voidable for misrep

but not void for mistake - does not negate consent to contract